Exhibit 10.02
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AMENDED AND RESTATED DECLARATION
OF TRUST
by and among
WILMINGTON TRUST COMPANY,
as Institutional Trustee,
WILMINGTON TRUST COMPANY,
as Delaware Trustee,
TOWER GROUP, INC.,
as Sponsor,
and
MICHAEL H. LEE, STEPHEN L. KIBBLEHOUSE and FRANCIS M.
COLALUCCI,
as Administrators,
Dated as of January 25, 2007
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TABLE OF CONTENTS
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Page
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ARTICLE I. INTERPRETATION AND DEFINITIONS................................1
Section 1.1. Definitions.............................................1
ARTICLE II. ORGANIZATION.................................................10
Section 2.1. Name...................................................10
Section 2.2. Office.................................................10
Section 2.3. Purpose................................................10
Section 2.4. Authority..............................................10
Section 2.5. Title to Property of the Trust.........................10
Section 2.6. Powers and Duties of the Trustees
and the Administrators.................................11
Section 2.7. Prohibition of Actions by the Trust
and the Institutional Trustee..........................15
Section 2.8. Powers and Duties of the Institutional Trustee.........16
Section 2.9. Certain Duties and Responsibilities of
the Institutional Trustee and Administrators...........17
Section 2.10. Certain Rights of Institutional Trustee................19
Section 2.11. Delaware Trustee.......................................21
Section 2.12. Execution of Documents.................................21
Section 2.13. Not Responsible for Recitals or
Issuance of Securities.................................21
Section 2.14. Duration of Trust......................................21
Section 2.15. Mergers...............................\................22
ARTICLE III. SPONSOR......................................................23
Section 3.1. Sponsor's Purchase of Common Securities................23
Section 3.2. Responsibilities of the Sponsor........................23
Section 3.3. Reports................................................24
Section 3.4. Expenses...............................................24
Section 3.5. Right to Proceed.......................................25
ARTICLE IV. INSTITUTIONAL TRUSTEE AND ADMINISTRATORS.....................25
Section 4.1. Number of Trustees.....................................25
Section 4.2. Delaware Trustee.......................................25
Section 4.3. Institutional Trustee; Eligibility.....................25
Section 4.4. Certain Qualifications of
the Delaware Trustee Generally.........................26
Section 4.5. Administrators.........................................26
Section 4.6. Initial Delaware Trustee...............................26
Section 4.7. Appointment, Removal and Resignation of
Institutional Trustee and Administrators...............26
Section 4.8. Vacancies Among Trustees...............................28
Section 4.9. Effect of Vacancies....................................28
Section 4.10. Meetings of the Trustees and the Administrators........28
Section 4.11. Delegation of Power....................................29
Section 4.12. Conversion, Consolidation or Succession to Business....29
ARTICLE V. DISTRIBUTIONS................................................29
Section 5.1. Distributions..........................................29
ARTICLE VI. ISSUANCE OF SECURITIES.......................................30
Section 6.1. General Provisions Regarding Securities................30
Section 6.2. Paying Agent, Transfer Agent and Registrar.............31
Section 6.3. Form and Dating........................................31
Section 6.4. Book-Entry Capital Securities..........................32
Section 6.5. Registration of Transfer and Exchange of
Capital Securities Certificates........................34
Section 6.6. Mutilated, Destroyed, Lost or Stolen Certificates......35
Section 6.7. Temporary Securities...................................35
Section 6.8. Cancellation...........................................35
Section 6.9. CUSIP Numbers..........................................36
Section 6.10. Rights of Holders; Waivers of Past Defaults............36
ARTICLE VII. DISSOLUTION AND TERMINATION OF TRUST.........................38
Section 7.1. Dissolution and Termination of Trust...................38
ARTICLE VIII. TRANSFER OF INTERESTS........................................39
Section 8.1. General................................................39
Section 8.2. Transfer Procedures and Restrictions...................40
Section 8.3. Deemed Security Holders................................43
ARTICLE IX. LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
INSTITUTIONAL TRUSTEE OR OTHERS..............................43
Section 9.1. Liability..............................................43
Section 9.2. Exculpation............................................44
Section 9.3. Fiduciary Duty.........................................44
Section 9.4. Indemnification........................................44
Section 9.5. Outside Businesses.....................................47
Section 9.6. Compensation; Fee......................................47
ARTICLE X. TAX AND ACCOUNTING...........................................48
Section 10.1. Fiscal Year............................................48
Section 10.2. Certain Accounting Matters.............................48
Section 10.3. Banking................................................48
Section 10.4. Withholding............................................48
Section 10.5. Intention of the Parties...............................49
ARTICLE XI. AMENDMENTS AND MEETINGS......................................49
Section 11.1. Amendments.............................................49
Section 11.2. Meetings of the Holders of the Securities;
Action by Written Consent..............................51
ARTICLE XII. REPRESENTATIONS OF INSTITUTIONAL TRUSTEE and the
delaware trustee.............................................52
Section 12.1. Representations and Warranties of
Institutional Trustee..................................52
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Section 12.2. Representations of the Delaware Trustee................53
ARTICLE XIII. MISCELLANEOUS................................................53
Section 13.1. Notices................................................53
Section 13.2. Governing Law..........................................54
Section 13.3. Intention of the Parties...............................55
Section 13.4. Headings...............................................55
Section 13.5. Successors and Assigns.................................55
Section 13.6. Partial Enforceability.................................55
Section 13.7. Counterparts...........................................55
Annex I....................Terms of Securities
Exhibit A-1................Form of Capital Security Certificate
Exhibit A-2................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TOWER GROUP STATUTORY TRUST VI
January 25, 2007
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of January 25, 2007, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and the
holders, from time to time, of undivided beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;
WHEREAS, the Trustees, the Administrators and the Sponsor established
Tower Group Statutory Trust VI (the "Trust"), a statutory trust under the
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of January 11, 2007 (the "Original Declaration"), and a Certificate of Trust
filed with the Secretary of the State of Delaware on January 11, 2007 (the
"Certificate of Trust"), for the sole purpose of issuing and selling the
Securities (as defined herein) representing undivided beneficial interests in
the assets of the Trust, investing the proceeds thereof in the Debentures (as
defined herein) of the Debenture Issuer (as defined herein) and engaging in
those activities necessary, advisable or incidental thereto;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, the Trustees, the Administrators and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the Securities,
subject to the provisions of this Declaration, and, in consideration of the
mutual covenants contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties, intending to be legally
bound hereby, amend and restate in its entirety the Original Declaration and
agree as follows:
ARTICLE I.
INTERPRETATION AND DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration and each Annex and Exhibit hereto, as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice versa.
"Additional Interest" has the meaning set forth in the Indenture.
"Additional Sums" has the meaning set forth in the Indenture.
"Administrative Action" has the meaning set forth in paragraph 4(a) of
Annex I.
"Administrators" means each of Michael H. Lee, Stephen L. Kibblehouse
and Francis M. Colalucci, solely in such Person's capacity as Administrator of
the Trust created and continued hereunder and not in such Person's individual
capacity, or such Administrator's successor in interest in such capacity, or
any successor appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Applicable Depositary Procedures" means, with respect to any transfer
or transaction involving a Book-Entry Capital Security, the rules and procedures
of the Depository for such Book-Entry Capital Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(b) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
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"Book-Entry Capital Security" means a Capital Security, the ownership
and transfers of which shall be made through book entries by a Depositary.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in New York City or Wilmington, Delaware are
permitted or required by any applicable law to close.
"Capital Securities" has the meaning set forth in paragraph 1(a) of
Annex I.
"Capital Security Certificate" means a definitive Certificate in fully
registered form representing a Capital Security substantially in the form of
Exhibit A-1.
"Certificate" means any certificate evidencing Securities.
"Closing Date" has the meaning set forth in the Placement Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Common Securities" has the meaning set forth in paragraph 1(b) of
Annex I.
"Common Security Certificate" means a definitive Certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Company's Significant Subsidiary" means Tower Insurance Company of
New York.
"Comparable Treasury Issue" has the meaning set forth in paragraph 4(a)
of Annex I.
"Comparable Treasury Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Corporate Trust Office" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 1100 North Market Street,
Wilmington, Delaware 19890-1600, Attn: Corporate Trust Administration.
"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.
"Creditor" has the meaning set forth in Section 3.4.
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"Debenture Issuer" means Tower Group, Inc., a Delaware corporation,
in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the Fixed/Floating Rate Junior Subordinated
Deferrable Interest Debentures due 2037 to be issued by the Debenture Issuer
under the Indenture.
"Defaulted Interest" has the meaning set forth in the Indenture.
"Definitive Capital Securities Certificates" means Capital Securities
issued in certificated, fully registered form that are not Global Capital
Securities.
"Delaware Trustee" has the meaning set forth in Section 4.2.
"Depositary" means an organization registered as a clearing agency
under the Exchange Act that is designated as Depositary by the Sponsor or any
successor thereto. DTC will be the initial Depositary.
"Depositary Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.
"Determination Date" has the meaning set forth in paragraph 2(a) of
Annex I.
"Direct Action" has the meaning set forth in Section 2.8(d).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(b)
of Annex I.
"Distribution Period" means (i) with respect to the first Distribution
Payment Date, the period beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in March
2012 and (ii) thereafter, with respect to each Distribution Payment Date, the
period beginning on (and including) the preceding Distribution Payment Date and
ending on (but excluding) such current Distribution Payment Date.
"Distribution Rate" means, for the period beginning on (and including)
the date of original issuance and ending on (but excluding) the Distribution
Payment Date in June 2007, the rate per annum of 8.155%, and for the period
beginning on (and including) the Distribution Payment Date in March 2012, and
thereafter, the Coupon Rate.
"DTC" means The Depository Trust Company or any successor thereto.
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"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 an Indenture Event of Default; or
(b) default by the Trust in the payment of any Optional Redemption
Price of any Security when it becomes due and payable; or
(c) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Institutional Trustee in this
Declaration (other than those specified in clause (a) or (b) above) and
continuation of such default or breach for a period of 60 days after there has
been given, by registered or certified mail to the Institutional Trustee and to
the Sponsor 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
(d) the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, and any
successor statute thereto, in each case as amended from time to time.
"Extension Period" has the meaning set forth in paragraph 2(b) of
Annex I.
"Federal Reserve" has the meaning set forth in paragraph 4(a) of
Annex I.
"Fiduciary Indemnified Person" shall mean each of the Institutional
Trustee (including in its individual capacity), the Delaware Trustee (including
in its individual capacity), any Affiliate of the Institutional Trustee or
Delaware Trustee and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee or Delaware Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1.
"Fixed Rate Period Remaining Life" has the meaning set forth in
paragraph 4(a) of Annex I.
"Global Capital Security" means a Capital Securities Certificate
evidencing ownership of Book-Entry Capital Securities.
"Guarantee" means the guarantee agreement, dated as of January 25,
2007, of the Sponsor in respect of the Capital Securities.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Statutory Trust Act.
"Indemnified Person" means a Company Indemnified Person or
a Fiduciary Indemnified Person.
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"Indenture" means the Indenture dated as of January 25, 2007, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental indenture may be amended, supplemented or otherwise modified
from time to time.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Independent Director" means a director of the Company who is not
interested in the specified transaction and meets the requirements of an
independent director as determined under the applicable provisions of the
Exchange Act and the rules and regulations of the NASDAQ stock exchange (or its
successor) or any other stock exchange in which the Company may later be listed,
provided that such stock exchange has substantially similar requirements of an
independent director as those required by the NASDAQ stock exchange.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.3
"Interest" means any interest due on the Debentures including any
Additional Interest and Defaulted Interest.
"Interest Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3 of
Annex I.
"Majority in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Maturity Date" has the meaning set forth in paragraph 2(a) of Annex I.
"Officers' Certificates" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person, and, with respect
to the Administrators, a certificate signed by at least two Administrators. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant providing for it in this Declaration shall include:
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(a) a statement that each individual signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each individual in rendering the Officers'
Certificate;
(c) a statement that each such individual signing the Officers'
Certificate has made such examination or investigation as, in such individual's
opinion, is necessary to enable such individual 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 each such
officer, such condition or covenant has been complied with.
"Optional Redemption Date" has the meaning set forth in paragraph 4(a)
of Annex I.
"Optional Redemption Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Owner" means each Person who is the beneficial owner of Book-Entry
Capital Securities as reflected in the records of the Depositary or, if a
Depositary Participant is not the beneficial owner, then the beneficial owner as
reflected in the records of the Depositary Participant.
"Paying Agent" has the meaning set forth in Section 6.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Placement Agreement" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit C.
"Primary Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I.
"Property Account" has the meaning set forth in Section 2.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"Quotation Agent" shall be a designee of the Trustee, after receiving
consent from the Company, who is a Primary Treasury Dealer.
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"Redemption/Distribution Notice" has the meaning set forth in paragraph
4(e) of Annex I.
"Reference Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I.
"Reference Treasury Dealer Quotations" has the meaning set forth in
paragraph 4(a) of Annex I.
"Registrar" has the meaning set forth in Section 6.2.
"Relevant Trustee" has the meaning set forth in Section 4.7(a).
"Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, any secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or other officer of the Corporate Trust Office of the Institutional Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Restricted Securities Legend" has the meaning set forth in Section
8.2(b).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
"Special Redemption Date" has the meaning set forth in paragraph 4(a)
of Annex I.
"Special Redemption Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Sponsor" means Tower Group, Inc., a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss.ss. 3801, et seq. as may be amended from time to time.
"Subsidiary" means with respect to any Person, (a) any corporation at
least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its subsidiaries, or by such
Person and one or more of its subsidiaries, (b) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its subsidiaries, or by such Person and one or more of its
subsidiaries, and (c) any limited
8
partnership of which such Person or any of its subsidiaries is a general
partner. For the purposes of this definition, "voting stock" means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
"Successor Entity" has the meaning set forth in Section 2.15(b).
"Successor Delaware Trustee" has the meaning set forth in Section
4.7(e).
"Successor Institutional Trustee" has the meaning set forth in Section
4.7(b).
"Successor Securities" has the meaning set forth in Section 2.15(b).
"Super Majority" has the meaning set forth in paragraph 5(b) of
Annex I.
"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
"10% in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"3-Month LIBOR" has the meaning set forth in paragraph 2(a) of Annex I.
"Transfer Agent" has the meaning set forth in Section 6.2.
"Treasury Rate" has the meaning set forth in paragraph 4(a) of Annex I.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property 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 Institutional Trustee pursuant to the trusts of this
Declaration.
"Trustee or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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"U.S. Person" means a United States Person as defined in Section
7701(a)(30) of the Code.
ARTICLE II
ORGANIZATION
Section 2.1. Name. The Trust is named "Tower Group Statutory Trust VI," as
such name may be modified from time to time by the Administrators following
written notice to the Institutional Trustee and the Holders of the Securities.
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrators.
Section 2.2. Office. The address of the principal office of the Trust is
c/o Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware
19890-1600. On at least 10 Business Days written notice to the Institutional
Trustee and the Holders of the Securities, the Administrators may designate
another principal office, which shall be in a state of the United States or in
the District of Columbia.
Section 2.3. Purpose. The exclusive purposes and functions of the Trust are
(a) to issue and sell the Securities representing undivided beneficial interests
in the assets of the Trust, (b) to invest the gross proceeds from such sale to
acquire the Debentures, (c) to facilitate direct investment in the assets of the
Trust through issuance of the Common Securities and the Capital Securities, and
(d) except as otherwise limited herein, to engage in only those other activities
necessary, advisable or incidental thereto. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, pledge any of its
assets, or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust.
Section 2.4. Authority. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a Trustee
in accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders. The
Institutional Trustee shall have the right, but shall not be obligated except as
provided in Section 2.6, to perform those duties assigned to the Administrators.
Section 2.5. Title to Property of the Trust. Except as provided in Section
2.8 with respect to the Debentures and the Property Account or as otherwise
provided in this Declaration, legal title to all assets of the Trust shall be
vested in the Trust. The Holders shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
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Section 2.6. Powers and Duties of the Trustees and the Administrators.
(a) The Trustees and the Administrators shall conduct the affairs of the
Trust in accordance with the terms of this Declaration. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Trustees and the Administrators shall
have the authority to enter into all transactions and agreements determined by
the Institutional Trustee to be appropriate in exercising the authority, express
or implied, otherwise granted to the Trustees or the Administrators, as the case
may be, under this Declaration, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) Each Administrator shall have the power, duty and authority to act on
behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Securities;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, such agreements as may be necessary,
advisable or incidental thereto in connection with the purposes and function
of the Trust, including agreements with the Paying Agent;
(C) ensuring compliance with the Securities Act and applicable
securities or blue sky laws of states and other jurisdictions;
(D) the sending of notices (other than notices of default), and other
information regarding the Securities and the Debentures to the Holders in
accordance with this Declaration including notice of any notice received from
the Debenture Issuer of its election to defer payments of interest on the
Debentures by extending the interest payment period under the Indenture;
(E) the consent to the appointment of a Paying Agent, Transfer Agent
and Registrar in accordance with this Declaration, which consent shall not be
unreasonably withheld or delayed;
(F) execution and delivery of the Securities in accordance with this
Declaration;
(G) execution and delivery of closing certificates pursuant to the
Placement Agreement and the application for a taxpayer identification number;
(H) unless otherwise determined by the Holders of a Majority in
liquidation amount of the Securities or as otherwise required by the
Statutory Trust Act, to execute on behalf of the Trust (either acting alone
or together with any or all of the Administrators) any documents that the
Administrators have the power to execute pursuant to this Declaration;
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(I) the taking of any action as the Sponsor or an Administrator may
from time to time determine is necessary, advisable or incidental to the
foregoing to give effect to the terms of this Declaration for the benefit of
the Holders (without consideration of the effect of any such action on any
particular Holder);
(J) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(K) to duly prepare and file all applicable tax returns and tax
information reports that are required to be filed with respect to the Trust
on behalf of the Trust.
(L) to negotiate the terms of, and the execution and delivery of, the
Placement Agreement providing for the sale of the Capital Securities;
(M) to employ or otherwise engage employees, agents (who may be
designated as officers with titles), managers, contractors, advisors,
attorneys and consultants and pay reasonable compensation for such services;
(N) to incur expenses that are necessary, advisable or incidental to
carry out any of the purposes of the Trust; and
(O) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory trust under the laws of each
jurisdiction (other than the State of Delaware) in which such existence is
necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust
was created.
(ii) As among the Trustees and the Administrators, the Institutional Trustee
shall have the power, duty and authority, and is hereby authorized, to act on
behalf of the Trust with respect to the following matters:
(A) the establishment of the Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments made
in respect of the Debentures in the Property Account;
(D) the distribution through the Paying Agent of amounts owed to the
Holders in respect of the Securities;
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(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;
(F) the sending of notices of default and other information regarding
the Securities and the Debentures to the Holders in accordance with this
Declaration;
(G) the distribution of the Trust Property in accordance with the
terms of this Declaration;
(H) to the extent provided in this Declaration, the winding up of the
affairs of and liquidation of the Trust and the preparation, execution
and filing of the certificate of cancellation with the Secretary of State of
the State of Delaware;
(I) after any Event of Default (provided that such Event of Default is
not by or with respect to the Institutional Trustee) the taking of any action
incidental to the foregoing as the Institutional Trustee may from time to
time determine is necessary, advisable or incidental to the foregoing to give
effect to the terms of this Declaration and 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); and
(J) to take all action that may be necessary for the preservation and
the continuation of the Trust's valid existence, rights, franchises and
privileges as a statutory trust under the laws of the State of Delaware.
(iii) The Institutional Trustee shall have the power and authority to act
on behalf of the Trust with respect to any of the duties, liabilities, powers or
the authority of the Administrators set forth in Section 2.6(a)(i)(D), (E) and
(F) herein but shall not have a duty to do any such act unless specifically
requested to do so in writing by the Sponsor, and shall then be fully protected
in acting pursuant to such written request; and in the event of a conflict
between the action of the Administrators and the action of the Institutional
Trustee, the action of the Institutional Trustee shall prevail.
(b) So long as this Declaration remains in effect, the Trust (or the
Trustees or Administrators acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, neither the Trustees nor the Administrators
may cause the Trust to (i) acquire any investments or engage in any activities
not authorized by this Declaration, (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 (A) to cause the Trust
to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes or (B) to require the trust to register as an Investment
Company under the Investment Company Act, (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
Institutional Trustee shall, at the sole cost and expense of the Trust, 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 Trust or the Holders in their
capacity as Holders.
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(c) In connection with the issuance and sale of the Capital Securities, the
Sponsor shall have the right and responsibility to assist the Trust with respect
to, or effect on behalf of the Trust, the following (and any actions taken by
the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary to obtain an exemption from the
Securities Act;
(ii) the determination of the jurisdictions 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 which must be
taken by or on behalf of the Trust, and the advice to the Administrators of
actions they must take on behalf of the Trust, and the preparation for execution
and filing of any documents to be executed and filed by the Trust or on behalf
of the Trust, as the Sponsor 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 Placement Agreement providing for the sale of the Capital Securities; and
(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 Administrators and
the Holders of a Majority in liquidation amount of the Common Securities are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust will not (i) be deemed to be an Investment Company
required to be registered under the Investment Company Act, and (ii) fail to be
classified as a "grantor trust" for United States federal income tax purposes.
The Administrators and the Holders of a Majority in liquidation amount of the
Common Securities shall not take any action inconsistent with the treatment of
the Debentures as indebtedness of the Debenture Issuer for United States federal
income tax purposes. In this connection, the Administrators and the Holders of a
Majority in liquidation amount of the Common Securities are authorized to take
any action, not inconsistent with applicable laws, the Certificate of Trust or
this Declaration, as amended from time to time, that each of the Administrators
and the Holders of a Majority in liquidation amount of the Common Securities
determines in their discretion to be necessary or desirable for such purposes.
(e) All expenses incurred by the Administrators or the Trustees pursuant to
this Section 2.6 shall be reimbursed by the Sponsor, and the Trustees and the
Administrators shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
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(g) Legal title to all Trust Property shall be vested at all times in the
Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee and the Administrators for the benefit
of the Trust in accordance with this Declaration.
(h) If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor, the Institutional Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Institutional Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 2.7. Prohibition of Actions by the Trust and the Institutional
Trustee.
(a) The Trust shall not, and the Institutional Trustee shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of the Securities
pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust Property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever other than as
expressly provided herein;
(vi) issue any securities or other evidences of beneficial ownership of,
or beneficial interest in, the Trust other than the Securities;
(vii) carry on any "trade or business" as that phrase is used in the Code;
or
(viii) other than as provided in this Declaration (including Annex I), (A)
direct the time, method and place of exercising any trust or power conferred
upon the Debenture Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise any right to
rescind or annul any declaration that the principal of all the Debentures shall
be due and payable, or (D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have received a written opinion of counsel to the effect that
such modification will not cause the Trust to cease to be classified as a
"grantor trust" for United States federal income tax purposes.
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Section 2.8. Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held of record
in the name of the Institutional Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 4.7. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators or to the Delaware Trustee.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive control
of the Institutional Trustee, maintained in the Institutional Trustee's trust
department, on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Property Account and make payments, or
cause the Paying Agent to make payments, to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account in
accordance with Section 5.1. Funds in the Property Account shall be held
uninvested until disbursed in accordance with this Declaration;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Administrators in
accordance with the terms of the Securities, engage in such ministerial
activities as shall be necessary or appropriate to effect the distribution of
the Debentures to Holders of Securities upon the occurrence of certain
circumstances pursuant to the terms of the Securities.
(d) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust that arise out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional
Trustee's duties and obligations under this Declaration; provided, however, that
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or premium,
if any, on or principal of the Debentures on the date such interest, premium, if
any, or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of the Capital Securities may directly institute
a proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on the Debentures having a principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
Holder (a "Direct Action") on or after the respective due date specified in the
Debentures.
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In connection with such Direct Action, the rights of the Holders of the Common
Securities will be subrogated to the rights of such Holder of the Capital
Securities to the extent of any payment made by the Debenture Issuer to such
Holder of the Capital Securities in such Direct Action; provided, however, that
no Holder of the Common Securities may exercise such right of subrogation so
long as an Event of Default with respect to the Capital Securities has occurred
and is continuing.
(e) The Institutional Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of the Securities pursuant to the terms
of the Securities and this Declaration; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 4.7.
(f) The Institutional Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a Holder of the Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
The Institutional Trustee must exercise the powers set forth in this
Section 2.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 2.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 2.3.
Section 2.9. Certain Duties and Responsibilities of the Institutional
Trustee and Administrators.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 6.10), the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) The duties and responsibilities of the Institutional Trustee and the
Administrators shall be as provided by this Declaration. Notwithstanding the
foregoing, no provision of this Declaration shall require the Institutional
Trustee or Administrators to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers if the Institutional Trustee or
such Administrator shall have reasonable grounds to believe that repayment of
such funds or adequate protection against such risk of liability is not
reasonably assured to Institutional Trustee or such Administrator. Whether or
not therein expressly so provided, every provision of this Declaration relating
to the conduct or affecting the liability of or affording protection to the
Institutional Trustee or Administrators shall be subject to the provisions of
this Article.
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Nothing in this Declaration shall be construed to relieve an Administrator or
the Institutional Trustee from liability for the Institutional Trustee's or such
Administrator's own negligent act, Institutional Trustee's or such
Administrator's own negligent failure to act, or the Institutional Trustee's or
such Administrator's own willful misconduct. To the extent that, at law or in
equity, the Institutional Trustee or an Administrator has duties and liabilities
relating to the Trust or to the Holders, the Institutional Trustee or such
Administrator shall not be liable to the Trust or to any Holder for the
Institutional Trustee's or such Administrator's good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
the Institutional Trustee otherwise existing at law or in equity, are agreed by
the Sponsor and the Holders to replace such other duties and liabilities of the
Administrators or the Institutional Trustee.
(c) All payments made by the Institutional Trustee or a Paying Agent in
respect of the Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Institutional Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its acceptance of a 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 Trustees and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.
This Section 2.9(c) does not limit the liability of the Trustees expressly set
forth elsewhere in this Declaration.
(d) The Institutional Trustee shall not be liable for its own acts or
omissions hereunder except as a result of its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by an Authorized Officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Institutional Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities or the Common Securities, as applicable, relating to the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the Property Account
shall be to deal with such property in a similar manner as the Institutional
Trustee deals with similar property for its fiduciary accounts generally,
subject to the protections and limitations on liability afforded to the
Institutional Trustee under this Declaration;
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(iv) the Institutional Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with the
Sponsor; and money held by the Institutional Trustee need not be segregated from
other funds held by it except in relation to the Property Account maintained by
the Institutional Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for monitoring
the compliance by the Administrators or the Sponsor with their respective duties
under this Declaration, nor shall the Institutional Trustee be liable for any
default or misconduct of the Administrators or the Sponsor.
Section 2.10. Certain Rights of Institutional Trustee. Subject to the
provisions of Section 2.9:
(a) the Institutional Trustee may conclusively rely and shall fully 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, direction, 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, sent or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's written instructions as to the course of action
to be taken and the Institutional Trustee shall take such action, or refrain
from taking such action, as the Institutional Trustee shall be instructed in
writing, in which event the Institutional Trustee shall have no liability except
for its own negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators contemplated
by this Declaration shall be sufficiently evidenced by an Officers' Certificate;
(d) whenever in the administration of this Declaration, the Institutional
Trustee shall deem it desirable that a matter be proved or established before
undertaking, suffering or omitting any action hereunder, the Institutional
Trustee (unless other evidence is herein specifically prescribed) may request
and conclusively rely upon an Officers' Certificate as to factual matters which,
upon receipt of such request, shall be promptly delivered by the Sponsor or the
Administrators;
(e) the Institutional Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
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(f) the Institutional Trustee may consult with counsel of its selection
(which counsel may be counsel to the Sponsor or any of its Affiliates) 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
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(g) the Institutional Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Declaration at the request or
direction of any of the Holders pursuant to this Declaration, unless such
Holders shall have offered to the Institutional Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; provided,
that nothing contained in this Section 2.10(g) shall be taken to relieve the
Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an
Event of Default (that has not been cured or waived pursuant to Section 5.7 of
the Indenture), of the power to exercise such of the rights and powers vested in
it by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs;
(h) the Institutional Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, 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
Institutional Trustee may make such further inquiry or investigation into such
facts or matters as it may see fit;
(i) the Institutional 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 and the Institutional Trustee shall not be responsible for
any misconduct or negligence on the part of or for the supervision of, any such
agent or attorney appointed with due care by it hereunder;
(j) whenever in the administration of this Declaration the Institutional
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the
Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Capital
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 fully protected in acting in
accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration, the
Institutional Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders services in
connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally;
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(m) the Institutional Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from any Holder, the Sponsor or the Debenture
Trustee;
(n) any action taken by the Institutional Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities, and the signature of the
Institutional Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as to
the authority of the Institutional Trustee to so act or as to its compliance
with any of the terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Institutional Trustee's or its agent's taking such
action; and
(o) no provision of this Declaration shall be deemed to impose any duty or
obligation on the Institutional Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
Section 2.11. Delaware Trustee. Notwithstanding any other provision of this
Declaration other than Section 4.1, the Delaware Trustee shall not be entitled
to exercise any powers, nor shall the Delaware Trustee have any of the duties
and responsibilities of any of the Trustees or the Administrators described in
this Declaration (except as may be required under the Statutory Trust Act).
Except as set forth in Section 4.1, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Statutory Trust Act.
Section 2.12. Execution of Documents. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required by the
Statutory Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute and deliver on
behalf of the Trust any documents, agreements, instruments or certificates that
the Trustees or the Administrators, as the case may be, have the power and
authority to execute pursuant to Section 2.6.
Section 2.13. Not Responsible for Recitals or Issuance of Securities. The
recitals contained in this Declaration and the Securities shall be taken as the
statements of the Sponsor, and the Trustees do not assume any responsibility for
their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.
Section 2.14. Duration of Trust. The Trust, unless earlier dissolved
pursuant to the provisions of Article VII hereof, shall be in existence for 35
years from the Closing Date.
Section 2.15. Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Sections 2.15(b) and (c) and except in connection with the
liquidation of the Trust and the distribution of the Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 3 of
Annex I.
(b) The Trust may, with the consent of the Institutional Trustee and
without the consent of the Holders of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided that:
(i) if the Trust is not the surviving entity, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under the
Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor Securities")
so that the Successor Securities rank the same as the Securities rank with
respect to Distributions and payments upon Liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor Entity
that possesses substantially the same powers and duties as the Institutional
Trustee as the Holder of the Debentures;
(iii) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any material respect;
(iv) the Institutional Trustee receives written confirmation from a
nationally recognized statistical rating organization that rates securities
issued by the initial purchaser of the Capital Securities that it will not
reduce or withdraw the rating of any such securities because of such merger,
conversion, consolidation, amalgamation or replacement;
(v) such Successor Entity has a purpose substantially identical to that
of the Trust;
(vi) prior to such merger, consolidation, amalgamation or replacement,
the Trust has received an opinion of a nationally recognized independent counsel
to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any material respect;
22
(B) following such merger, consolidation, amalgamation or replacement,
neither the Trust nor the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a "grantor trust" for United States federal income tax
purposes;
(vii) the Sponsor guarantees the obligations of such Successor Entity
under the Successor Securities at least to the extent provided by the Guarantee;
(viii) the Sponsor owns 100% of the common securities of any Successor
Entity; and
(ix) prior to such merger, consolidation, amalgamation or replacement,
the Institutional Trustee shall have received an Officers' Certificate of the
Administrators and an opinion of counsel, each to the effect that all conditions
precedent under this Section 2.15(b) to such transaction have been satisfied.
(c) Notwithstanding Section 2.15(b), the Trust shall not, except with the
consent of Holders of 100% in aggregate liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE III.
SPONSOR
Section 3.1. Sponsor's Purchase of Common Securities. On the Closing Date,
the Sponsor will purchase all of the Common Securities issued by the Trust in an
amount at least equal to 3% of the capital of the Trust, at the same time as the
Capital Securities are sold.
Section 3.2. Responsibilities of the Sponsor. In connection with the issue
and sale of the Capital Securities, the Sponsor shall have the exclusive right
and responsibility to engage in, or direct the Administrators to engage in, the
following activities:
(a) to determine the jurisdictions in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary, advisable or incidental thereto in order to comply with the
applicable laws of any such jurisdictions; and
(b) to negotiate the terms of and/or execute and deliver on behalf of the
Trust, the Placement Agreement and other related agreements providing for the
sale of the Capital Securities.
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Section 3.3. Reports. In the event that either (a) an Event of Default
occurred and is continuing, or (b) the Company has elected to defer payments of
interest on the Debentures by extending the interest payment period under the
Indenture, Sponsor shall provide to the Trustee and the Trustee shall provide to
the Holders of the Capital Securities (i) all public filings (including any Form
A or Form D) with any governmental authority, (ii) any private filing relating
to financial statements or financial condition of the Company and any other
material private filings with any governmental authority (it being understood
and agreed that any private filings relating to acquisitions, divestitures,
recapitalizations, financing transactions, payments or distributions on capital
stock or transactions with affiliates shall be material and it be further
understood and agreed that such private filings are to be held confidentially
and the Trustee shall not disclose such filings to any person (other than the
Placement Agents or the Holders of Capital Securities who shall also hold such
private filings confidentially) without the consent of the Company), provided
such governmental authority does not object to sharing such material filings
and, (iii) all annual and quarterly financial statements, including, but not
limited to financial statements prepared in accordance with GAAP and SAP, in
each case of (i), (ii) and (iii) above relating to the Company, the Company's
Significant Subsidiary or the Trust.
Section 3.4. Expenses. In connection with the offering, sale and issuance
of the Debentures to the Trust and in connection with the sale of the Securities
by the Trust, the Sponsor, in its capacity as Debenture Issuer, shall:
(a) pay all reasonable costs and expenses relating to the offering, sale
and issuance of the Debentures, including compensation of the Debenture Trustee
under the Indenture in accordance with the provisions of the Indenture;
(b) be responsible for and shall pay all debts and obligations (other than
with respect to the Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust), the offering, sale and issuance of
the Securities (including fees to the placement agents in connection therewith),
the fees and expenses (including reasonable counsel fees and expenses) of the
Institutional Trustee and the Administrators, the costs and expenses relating to
the operation of the Trust, including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, Paying Agents,
Registrars, Transfer Agents, duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets and the enforcement
by the Institutional Trustee of the rights of the Holders; and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
The Sponsor's obligations under this Section 3.3 shall be for the
benefit of, and shall be enforceable by, any Person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 3.3 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the provisions of
this Section 3.3.
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Section 3.5. Right to Proceed. The Sponsor acknowledges the rights of
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.
ARTICLE IV.
INSTITUTIONAL TRUSTEE AND ADMINISTRATORS
Section 4.1. Number of Trustees. The number of Trustees shall initially be
two, and;
(a) at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holder of a Majority in liquidation amount
of the Common Securities voting as a class at a meeting of the Holder of the
Common Securities; provided, however, that there shall be a Delaware Trustee if
required by Section 4.2; and there shall always be one Trustee who shall be the
Institutional Trustee, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements, in which case Section 2.11 shall have no
application to such entity in its capacity as Institutional Trustee.
Section 4.2. Delaware Trustee. If required by the Statutory Trust Act, one
Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which is organized under the laws of
the United States or any state thereof or the District of Columbia, has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, including ss. 3807 of the Statutory Trust Act.
Section 4.3. Institutional Trustee; Eligibility.
(a) There shall at all times be one Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit enhancement to the Trust; and
(iii) be a banking corporation or national association organized and
doing business under the laws of the United States of America or any state
thereof or the District of Columbia and authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least fifty
million U.S. dollars ($50,000,000.00), and subject to supervision or examination
by Federal, state, or District of Columbia authority.
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If such corporation or national association publishes reports of condition
at least annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this Section
4.3(a)(iii), the combined capital and surplus of such corporation or national
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be eligible to
so act under Section 4.1(a), the Institutional Trustee shall immediately resign
in the manner and with the effect set forth in Section 4.3(a).
(c) If the Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act of
1939, as amended, the Institutional Trustee shall either eliminate such interest
or resign, to the extent and in the manner provided by, and subject to this
Declaration.
(d) The initial Institutional Trustee shall be Wilmington Trust Company.
Section 4.4. Certain Qualifications of the Delaware Trustee Generally. The
Delaware Trustee shall be a U.S. Person and either a natural person who is at
least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
Section 4.5. Administrators. Each Administrator shall be a U.S. Person, 21
years of age or older and authorized to bind the Sponsor. The initial
Administrators shall be Michael H. Lee, Stephen L. Kibblehouse and Francis M.
Colalucci. There shall at all times be at least one Administrator. Except where
a requirement for action by a specific number of Administrators is expressly set
forth in this Declaration and except with respect to any action the taking of
which is the subject of a meeting of the Administrators, any action required or
permitted to be taken by the Administrators may be taken by, and any power of
the Administrators may be exercised by, or with the consent of, any one such
Administrator.
Section 4.6. Initial Delaware Trustee. The initial Delaware Trustee shall
be Wilmington Trust Company.
Section 4.7. Appointment, Removal and Resignation of Institutional Trustee
and Administrators.
(a) Notwithstanding anything to the contrary in this Declaration, no
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this Section 4.7.
(b) Subject to the immediately preceding paragraph, a Trustee may resign at
any time by giving written notice thereof to the Holders of the Securities and
by appointing a successor Relevant Trustee. Upon the resignation of the
Institutional Trustee, the Institutional Trustee shall appoint a successor by
requesting from at least three Persons meeting the eligibility requirements
their expenses and charges to serve as the successor Institutional Trustee on a
form provided by the Administrators, and selecting the Person who agrees to the
lowest expense and charges (the "Successor Institutional Trustee").
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If the instrument of acceptance by the successor Relevant Trustee required by
this Section 4.7 shall not have been delivered to the Relevant Trustee within 60
days after the giving of such notice of resignation or delivery of the
instrument of removal, the Relevant Trustee may petition, at the expense of the
Trust, any Federal, state or District of Columbia court of competent
jurisdiction for the appointment of a successor Relevant Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Relevant Trustee. The Institutional Trustee shall have no liability for the
selection of such successor pursuant to this Section 4.7.
(c) Unless an Event of Default shall have occurred and be continuing, any
Trustee may be removed at any time by an act of the Holders of a Majority in
liquidation amount of the Common Securities. If any Trustee shall be so removed,
the Holders of the Common Securities, by act of the Holders of a Majority in
liquidation amount of the Common Securities delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee, and such successor Relevant
Trustee shall comply with the applicable requirements of this Section 4.7. If an
Event of Default shall have occurred and be continuing, the Institutional
Trustee or the Delaware Trustee, or both of them, may be removed by the act of
the Holders of a Majority in liquidation amount of the Capital Securities,
delivered to the Relevant Trustee (in its individual capacity and on behalf of
the Trust). If any Trustee shall be so removed, the Holders of Capital
Securities, by act of the Holders of a Majority in liquidation amount of the
Capital Securities then outstanding delivered to the Relevant Trustee, shall
promptly appoint a successor Relevant Trustee, and such successor Trustee shall
comply with the applicable requirements of this Section 4.7. If no successor
Relevant Trustee shall have been so appointed by the Holders of a Majority in
liquidation amount of the Capital Securities and accepted appointment in the
manner required by this Section 4.7, within 30 days after delivery of an
instrument of removal, the Relevant Trustee or any Holder who has been a Holder
of the Securities for at least 6 months may, on behalf of himself and all others
similarly situated, petition any Federal, state or District of Columbia court of
competent jurisdiction for the appointment of the successor Relevant Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a successor Relevant Trustee or Trustees.
(d) The Institutional Trustee shall give notice of each resignation and
each removal of a Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 13.1(d) and shall give notice to the
Sponsor. Each notice shall include the name of the successor Relevant Trustee
and the address of its Corporate Trust Office if it is the Institutional
Trustee.
(e) Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become incompetent or incapacitated, the vacancy
created by such death, incompetence or incapacity may be filled by the
Institutional Trustee following the procedures in this Section 4.7 (with the
successor being a Person who satisfies the eligibility requirement for a
Delaware Trustee set forth in this Declaration) (the "Successor Delaware
Trustee").
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(f) In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (i) 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
Securities and the Trust and (ii) shall add to or change any of the provisions
of this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Institutional Trustees as 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 Trust or any successor Relevant Trustee, such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Securities and the Trust
subject to the payment of all unpaid fees, expenses and indemnities of such
retiring Relevant Trustee.
(g) No Institutional Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(h) The Holders of the Capital Securities will have no right to vote to
appoint, remove or replace the Administrators, which voting rights are vested
exclusively in the Holder of the Common Securities.
(i) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Delaware Trustee in
the State of Delaware.
Section 4.8. Vacancies Among Trustees. If a Trustee ceases to hold office
for any reason and the number of Trustees is not reduced pursuant to Section 4.1
a vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees, shall
be conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 4.7.
Section 4.9. Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust or terminate this Declaration. Whenever a vacancy in the number
of Trustees shall occur, until such vacancy is filled by the appointment of a
Trustee in accordance with Section 4.7, the Institutional Trustee shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by this Declaration.
Section 4.10. Meetings of the Trustees and the Administrators. Meetings of
the Administrators shall be held from time to time upon the call of an
Administrator. Regular meetings of the Administrators may be held in person in
the United States or by telephone, at a place (if applicable) and time fixed by
resolution of the Administrators. Notice of any in-person meetings of the
Trustees with the Administrators or meetings of the Administrators shall be hand
delivered or otherwise delivered in writing
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(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. Notice of any telephonic meetings of the Trustees
with the Administrators or meetings of the Administrators or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where the Trustee or
an Administrator, as the case may be, attends a meeting for the express purpose
of objecting to the transaction of any activity on the grounds that the meeting
has not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Trustees or the Administrators, as the case may
be, may be taken at a meeting by vote of a majority of the Trustees or the
Administrators present (whether in person or by telephone) and eligible to vote
with respect to such matter, provided that a Quorum is present, or without a
meeting by the unanimous written consent of the Trustees or the Administrators.
Meetings of the Trustees and the Administrators together shall be held from time
to time upon the call of any Trustee or an Administrator.
Section 4.11. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 that is a U.S.
Person his or her power for the purpose of executing any documents contemplated
in Section 2.6; and
(b) the Administrators shall have power to delegate from time to time to
such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrators
or otherwise as the Administrators may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
Section 4.12. Conversion, Consolidation or Succession to Business. Any
Person into which the Institutional 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 the
Institutional Trustee or the Delaware Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee shall be the successor of the
Institutional Trustee or the Delaware Trustee hereunder, provided such Person
shall be otherwise qualified and eligible under this Article and, provided,
further, that such Person shall file an amendment to the Certificate of Trust
with the Secretary of State of the State of Delaware as contemplated in Section
4.7(i).
ARTICLE V.
DISTRIBUTIONS
Section 5.1. Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of Interest or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee shall and is directed to, to the extent funds are available for that
purpose, make a distribution (a "Distribution") of such amounts to Holders.
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ARTICLE VI.
ISSUANCE OF SECURITIES
Section 6.1. General Provisions Regarding Securities.
(a) The Administrators shall, on behalf of the Trust, issue one series of
capital securities, evidenced by a certificate substantially in the form of
Exhibit A-1, representing undivided beneficial interests in the assets of the
Trust and having such terms as are set forth in Annex I and one series of common
securities, evidenced by a certificate substantially in the form of Exhibit A-2,
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Capital Securities and
the Common Securities. The Capital Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.
(b) The Certificates shall be signed on behalf of the Trust by one or more
Administrators. Such signature shall be the facsimile or manual signature of any
Administrator. In case any Administrator of the Trust who shall have signed any
of the Securities shall cease to be such Administrator before the Certificates
so signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Administrator, and any Certificate may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such Security, shall be an
Administrator of the Trust, although at the date of the execution and delivery
of the Declaration any such person was not such an Administrator. A Capital
Security shall not be valid until authenticated by the facsimile or manual
signature of an Authorized Officer of the Institutional Trustee. Such signature
shall be conclusive evidence that the Capital Security has been authenticated
under this Declaration. Upon written order of the Trust signed by one
Administrator, the Institutional Trustee shall authenticate the Capital
Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Capital Securities. A Common Security need not be so
authenticated and shall be valid upon execution by one or more Administrators.
(c) The Capital Securities issued to QIBs shall be, except as provided in
Section 6.4, Book-Entry Capital Securities issued in the form of one or more
Global Capital Securities registered in the name of the Depositary, or its
nominee and deposited with the Depositary or a custodian for the Depositary for
credit by the Depositary to the respective accounts of the Depositary
Participants thereof (or such other accounts as they may direct). The Capital
Securities issued to a Person other than a QIB shall be issued in the form of
Definitive Capital Securities Certificates
30
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and,
except as provided in Section 9.1(b) with respect to the Common Securities,
non-assessable.
(f) Every Person, by virtue of having become a Holder in accordance with
the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration and the
Guarantee.
Section 6.2. Paying Agent, Transfer Agent and Registrar. The Trust shall
maintain in Wilmington Delaware, an office or agency where the Securities may be
presented for payment ("Paying Agent"), and an office or agency where the
Securities may be presented for registration of transfer or exchange (the
"Transfer Agent"). The Trust shall keep or cause to be kept at such office or
agency a register for the purpose of registering Securities, transfers and
exchanges of Securities (the "Register"), the Register to be held by a registrar
(the "Registrar"). The Administrators may appoint the Paying Agent, the
Registrar and the Transfer Agent and may appoint one or more additional Paying
Agents or one or more co-Registrars, or one or more co-Transfer Agents in such
other locations as they shall determine. The term "Paying Agent" includes any
additional paying agent, the term "Registrar" includes any additional registrar
or co-Registrar and the term "Transfer Agent" includes any additional transfer
agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.
Section 6.3. Form and Dating. The Capital Securities and the Institutional
Trustee's certificate of authentication thereon shall be substantially in the
form of Exhibit A-1, and the Common Securities shall be substantially in the
form of Exhibit A-2, each of which is hereby incorporated in and expressly made
a part of this Declaration. Certificates may be typed, printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrators, as conclusively evidenced by their execution thereof. The
Securities may have letters, numbers, notations or other marks of identification
or designation and such legends or endorsements required by law, stock exchange
rule, agreements to which the Trust is subject if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the
Sponsor). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Institutional Trustee in writing.
Each Capital Security shall be dated on or before the date of its
authentication. The terms and provisions of the Securities set forth in Annex I
and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the
terms of this Declaration and to the extent applicable, the Institutional
Trustee, the Delaware Trustee, the Administrators and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby. Capital Securities will be issued only in
blocks having an aggregate liquidation amount of not less than $100,000.00 and
any multiple of $1,000.00 in excess thereof.
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The Capital Securities are being offered and sold by the Trust pursuant
to the Placement Agreement in definitive, registered form without coupons and
with the Restricted Securities Legend.
Section 6.4. Book-Entry Capital Securities.
(a) A Global Capital Security may be exchanged, in whole or in part, for
Definitive Capital Securities Certificates registered in the names of the Owners
only if such exchange complies with Section 6.5 and (i) the Depositary advises
the Administrators and the Institutional Trustee in writing that the Depositary
is no longer willing or able to properly discharge its responsibilities with
respect to the Global Capital Security, and no qualified successor is appointed
by the Administrators within ninety (90) days of receipt of such notice, (ii)
the Depositary ceases to be a clearing agency registered under the Exchange Act
and the Administrators fail to appoint a qualified successor within ninety (90)
days of obtaining knowledge of such event, (iii) the Administrators at their
option advise the Institutional Trustee in writing that the Trust elects to
terminate the book-entry system through the Depositary or (iv) an Indenture
Event of Default has occurred and is continuing. Upon the occurrence of any
event specified in clause (i), (ii), (iii) or (iv) above, the Administrators
shall notify the Depositary and instruct the Depositary to notify all Owners of
Book-Entry Capital Securities, the Delaware Trustee and the Trustee of the
occurrence of such event and of the availability of the Definitive Capital
Securities Certificates to Owners of the Capital Securities requesting the same.
Upon the issuance of Definitive Capital Securities Certificates, the Trustees
shall recognize the Holders of the Definitive Capital Securities Certificates as
Holders. Notwithstanding the foregoing, if an Owner of a beneficial interest in
a Global Capital Security wishes at any time to transfer an interest in such
Global Capital Security to a Person other than a QIB, such transfer shall be
effected, subject to the Applicable Depositary Procedures, in accordance with
the provisions of this Section 6.4 and Section 6.5, and the transferee shall
receive a Definitive Capital Securities Certificate in connection with such
transfer. A holder of a Definitive Capital Securities Certificate that is a QIB
may, upon request and in accordance with the provisions of this Section 6.4 and
Section 6.5, exchange such Definitive Capital Securities Certificate for a
beneficial interest in a Global Capital Security.
(b) If any Global Capital Security is to be exchanged for Definitive
Capital Securities Certificates or canceled in part, or if any Definitive
Capital Securities Certificate is to be exchanged in whole or in part for any
Global Capital Security, then either (i) such Global Capital Security shall be
so surrendered for exchange or cancellation as provided in this Article VI or
(ii) the aggregate Liquidation Amount represented by such Global Capital
Security shall be reduced, subject to Section 6.3, or increased by an amount
equal to the Liquidation Amount represented by that portion of the Global
Capital Security to be so exchanged or canceled, or equal to the Liquidation
Amount represented by such Definitive Capital Securities Certificates to be so
exchanged for any Global Capital Security, as the case may be, by means of an
appropriate adjustment made on the records of the Registrar, whereupon the
Institutional Trustee, in accordance with the Applicable Depositary Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records.
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Upon any such surrender to the Administrators or the Registrar of any Global
Capital Security or Securities by the Depositary, accompanied by registration
instructions, the Administrators, or any one of them, shall execute the
Definitive Capital Securities Certificates in accordance with the instructions
of the Depositary. None of the Registrar, Administrators or the Trustees shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be fully protected in relying on, such instructions.
(c) Every Definitive Capital Securities Certificate executed and delivered
upon registration or transfer of, or in exchange for or in lieu of, a Global
Capital Security or any portion thereof shall be executed and delivered in the
form of, and shall be, a Global Capital Security, unless such Definitive Capital
Securities Certificate is registered in the name of a Person other than the
Depositary for such Global Capital Security or a nominee thereof.
(d) The Depositary or its nominee, as registered owner of a Global Capital
Security, shall be the Holder of such Global Capital Security for all purposes
under this Declaration and the Global Capital Security, and Owners with respect
to a Global Capital Security shall hold such interests pursuant to the
Applicable Depositary Procedures. The Registrar, the Administrators and the
Trustees shall be entitled to deal with the Depositary for all purposes of this
Declaration relating to the Global Capital Securities (including the payment of
the Liquidation Amount of and Distributions on the Book-Entry Capital Securities
represented thereby and the giving of instructions or directions by Owners of
Book-Entry Capital Securities represented thereby and the giving of notices) as
the sole Holder of the Book-Entry Capital Securities represented thereby and
shall have no obligations to the Owners thereof. None of the Administrators,
Trustees nor the Registrar shall have any liability in respect of any transfers
effected by the Depositary.
(e) The rights of the Owners of the Book-Entry Capital Securities shall be
exercised only through the Depositary and shall be limited to those established
by law, the Applicable Depositary Procedures and agreements between such Owners
and the Depositary and/or the Depositary Participants; provided, solely for the
purpose of determining whether the Holders of the requisite amount of Capital
Securities have voted on any matter provided for in this Declaration, to the
extent that Capital Securities are represented by a Global Capital Security, the
Administrators and the Trustees may conclusively rely on, and shall be fully
protected in relying on, any written instrument (including a proxy) delivered to
the Institutional Trustee by the Depositary setting forth the Owners' votes or
assigning the right to vote on any matter to any other Persons either in whole
or in part. To the extent that Capital Securities are represented by a Global
Capital Security, the initial Depositary will make book-entry transfers among
the Depositary Participants and receive and transmit payments on the Capital
Securities that are represented by a Global Capital Security to such Depositary
Participants, and none of the Sponsor, the Administrators or the Trustees shall
have any responsibility or obligation with respect thereto.
(f) To the extent that a notice or other communication to the Holders is
required under this Declaration, for so long as Capital Securities are
represented by a Global Capital Security, the Administrators and the Trustees
shall give all such notices and communications to the Depositary, and shall have
no obligations to the Owners.
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Section 6.5. Registration of Transfer and Exchange of Capital Securities
Certificates.
(a) The Institutional Trustee shall keep or cause to be kept, at the
Corporate Trust Office, a register or registers (the "Securities Register") in
which the registrar and transfer agent with respect to the Securities (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Capital Securities Certificates
and Common Securities Certificates and registration of transfers and exchanges
of Capital Securities Certificates as herein provided. The provisions of Article
IV shall apply to the Institutional Trustee in its role as Registrar.
(b) Subject to this Section 6.5, upon surrender for registration of
transfer of any Capital Securities Certificate at the office or agency
maintained pursuant to Section 6.5(f), the Administrators or any one of them
shall execute by manual or facsimile signature and deliver to the Institutional
Trustee, and the Institutional Trustee shall authenticate and 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 as may be required by this Declaration dated the date of
execution by such Administrator or Administrators. At the option of a Holder,
Capital Securities Certificates may be exchanged for other Capital Securities
Certificates in authorized denominations and of a like aggregate Liquidation
Amount upon surrender of the Capital Securities Certificate to be exchanged at
the office or agency maintained pursuant to Section 6.5(f). Whenever any Capital
Securities Certificates are so surrendered for exchange, the Administrators or
any one of them shall execute by manual or facsimile signature and deliver to
the Institutional Trustee, and the Institutional Trustee shall authenticate and
deliver, the Capital Securities Certificates that the Holder making the exchange
is entitled to receive.
(c) 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 fifteen (15) days before the day of selection for
redemption of such Capital Securities pursuant to Section 4 of Annex I hereto
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.
(d) Every 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 the Securities
Registrar duly executed by the Holder or such Holder's attorney duly authorized
in writing and (i) if such Capital Securities Certificate is being transferred
to a QIB, accompanied by a certificate of the transferor substantially in the
form set forth as Exhibit A-1 hereto or (ii) if such Capital Securities
Certificate is being transferred otherwise than to a QIB, accompanied by a
certificate of the transferee substantially in the form set forth as Exhibit
A-1-9 hereto.
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(e) No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Institutional Trustee on
behalf of the Trust may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Capital Securities Certificates.
(f) The Administrators shall designate an office or offices or agency or
agencies where Capital Securities Certificates may be surrendered for
registration of transfer or exchange. The Sponsor initially designates the
Corporate Trust Office as its office and agency for such purposes. The
Administrators shall give prompt written notice to the Sponsor, the
Institutional Trustee and to the Holders of any change in the location of any
such office or agency.
Section 6.6. Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Registrar, or
if the Registrar shall receive evidence to its satisfaction of the destruction,
loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the Administrators and the
Institutional Trustee such security or indemnity as may be required by them to
keep each of them harmless;
then, in the absence of notice that such Certificate shall have been acquired by
a protected purchaser, an Administrator on behalf of the Trust shall execute
(and in the case of a Capital Security Certificate, the Institutional Trustee
shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 6.6, the Registrar or the Administrators may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 6.7. Temporary Securities. Until definitive Securities are ready
for delivery, the Administrators may prepare and, in the case of the Capital
Securities, the Institutional Trustee shall authenticate, temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Administrators consider appropriate for
temporary Securities. Without unreasonable delay, the Administrators shall
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate, definitive Securities in exchange for temporary Securities.
Section 6.8. Cancellation. The Administrators at any time may deliver
Securities to the Institutional Trustee for cancellation. The Registrar shall
forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.
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Section 6.9. CUSIP Numbers. The Trust in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Institutional
Trustee shall use CUSIP numbers in any notice of redemption as a convenience to
Holders, provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption and that
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Trust shall
promptly notify the Institutional Trustee in writing of any change in the CUSIP
numbers.
Section 6.10. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in the
Institutional Trustee (in its capacity as such) in accordance with Section 2.5,
and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Trust except as described below. The
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no preemptive
or similar rights.
(b) For so long as any Capital Securities remain outstanding, if upon an
Indenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in writing
to the Institutional Trustee, the Sponsor 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 Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default, the Holders of a Majority
in liquidation amount of the Capital Securities, by written notice to the
Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:
(i) the Debenture Issuer 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) any accrued Additional Interest on all of the Debentures,
(C) the principal of (and premium, if any, on) any Debentures that
have become due otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne by the Debentures,
and
(D) 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 Institutional Trustee, their agents
and counsel; and
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(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 5.7 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 Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest
(unless such default or Indenture 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 under the Indenture or an Indenture 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 waiver
shall affect any subsequent default or impair any right consequent thereon.
Upon receipt by the Institutional 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
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, 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 6.10.
(c) Except as otherwise provided in paragraphs (a) and (b) of this Section
6.10, the Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital 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 Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
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ARTICLE VII.
DISSOLUTION AND TERMINATION OF TRUST
Section 7.1. Dissolution and Termination of Trust.
(a) The Trust shall dissolve on the first to occur of:
(i) unless earlier dissolved, on March 15, 2042, the expiration of the
term of the Trust;
(ii) upon a Bankruptcy Event with respect to the Sponsor, the Trust or
the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation or similar
transaction not prohibited by the Indenture, this Declaration or the Guarantee,
as the case may be) upon (A) the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, and (B)(I) upon the consent of Holders
of a Majority in liquidation amount of the Securities voting together as a
single class to file a certificate of cancellation with respect to the Trust or
(II) upon the revocation of the charter of the Sponsor and the expiration of 90
days after the date of revocation without a reinstatement thereof;
(iv) upon the distribution of the Debentures to the Holders of the
Securities following the exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as provided in Section 3 of
Annex I hereto;
(v) upon the entry of a decree of judicial dissolution of the Holder of
the Common Securities, the Sponsor, the Trust or the Debenture Issuer;
(vi) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to the
Holders in accordance with the terms of the Securities; or
(vii) before the issuance of any Securities, with the consent of all of
the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 7.1(a), and after satisfaction of liabilities to creditors of the
Trust as required by applicable law, including of the Statutory Trust Act, and
subject to the terms set forth in Annex I, the Institutional Trustee shall
terminate the Trust by filing a certificate of cancellation with the Secretary
of State of the State of Delaware.
(c) The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.
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ARTICLE VIII.
TRANSFER OF INTERESTS
Section 8.1. General.
(a) Subject to Section 6.4 and 8.1(c), where Capital Securities are
presented to the Registrar or a co-registrar with a request to register a
transfer or to exchange them for an equal aggregate liquidation amount of
Capital Securities represented by different certificates, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfer and exchanges, the
Trust shall issue and the Institutional Trustee shall authenticate Capital
Securities at the Registrar's request.
(b) Upon issuance of the Common Securities, the Sponsor shall acquire and
retain beneficial and record ownership of the Common Securities and for so long
as the Securities remain outstanding, the Sponsor shall maintain 100% ownership
of the Common Securities; provided, however, that any permitted successor of the
Sponsor, in its capacity as Debenture Issuer, under the Indenture that is a U.S.
Person may succeed to the Sponsor's ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Capital Securities. To the fullest extent permitted by
applicable law, any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the Holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Registrar shall provide for the registration of Securities and of
transfers of Securities, which will be effected without charge but only upon
payment (with such indemnity as the Registrar may require) in respect of any tax
or other governmental charges that may be imposed in relation to it. Upon
surrender for registration of transfer of any Securities, the Registrar shall
cause one or more new Securities of the same tenor to be issued in the name of
the designated transferee or transferees. Any Security issued upon any
registration of transfer or exchange pursuant to the terms of this Declaration
shall evidence the same Security and shall be entitled to the same benefits
under this Declaration as the Security surrendered upon such registration of
transfer or exchange. Every Security surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form satisfactory to
the Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Security surrendered for registration of transfer
shall be canceled by the Institutional Trustee pursuant to Section 6.8. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.
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(e) The Trust shall not be required (i) to issue, register the transfer of,
or exchange any Securities during a period beginning at the opening of business
fifteen (15) days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except, in the case of
any such Security to be redeemed in part, any portion thereof not to be
redeemed.
Section 8.2. Transfer Procedures and Restrictions.
(a) The Capital Securities shall bear the Restricted Securities Legend,
which shall not be removed unless there is delivered to the Trust such
satisfactory evidence, which may include an opinion of counsel satisfactory to
the Institutional Trustee and the Sponsor, as may be reasonably required by the
Trust, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of the Securities Act. Upon provision of such satisfactory evidence, the
Institutional Trustee, at the written direction of the Trust, shall authenticate
and deliver Capital Securities that do not bear the legend.
(b) Except as permitted by Section 8.2(a), each Capital Security shall
bear a legend (the "Restricted Securities Legend") in substantially the
following form and a Capital Security shall not be transferred except in
compliance with such legend, unless otherwise determined by the Sponsor, upon
the advice of counsel expert in securities law, in accordance with applicable
law:
[IF THIS IS A GLOBAL SECURITY INSERT: THIS CAPITAL SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A
NOMINEE OF DTC. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO
DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC TO TOWER GROUP STATUTORY TRUST VI OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE
SPONSOR OR THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A,
(D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH
THE DECLARATION, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE
TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
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THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE")
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS"
BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING
"PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH
PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN
THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE
ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR
(ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF
SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00
SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
THIS SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF TREASURY
REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND
WITHHOLDING TAX PURPOSES.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
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(c) To permit registrations of transfers and exchanges, the Administrators
shall execute and the Institutional Trustee shall authenticate Capital
Securities at the Registrar's request.
(d) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Registrar or the
Sponsor may require) in respect of any tax or other governmental charge that may
be imposed in relation to it.
(e) All Capital Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration as
the Capital Securities surrendered upon such registration of transfer or
exchange.
Section 8.3. Deemed Security Holders. The Trust, the Administrators, the
Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat the
Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof
ARTICLE IX.
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS
Section 9.1. Liability.
(a) Except as expressly set forth in this Declaration, the Guarantee and
the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of the Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to the Statutory Trust Act, the Holders of the Capital
Securities shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.
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Section 9.2. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Trust and upon such information, opinions, reports or
statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts pertinent
to the existence and amount of assets from which Distributions to Holders of
Securities might properly be paid.
Section 9.3. Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of the Indemnified
Person.
(b) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or by
applicable law.
Section 9.4. Indemnification.
(a) The Sponsor shall indemnify, to the full extent permitted by law, any
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Trust) arising out of or in connection with the acceptance or
administration of this Declaration by reason of the fact that he is or was an
Indemnified Person against expenses
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(including reasonable attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) The Sponsor shall indemnify, to the full extent permitted by law, any
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor arising out of or in connection with
the acceptance or administration of this Declaration by reason of the fact that
he is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust; provided, however, that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(c) To the extent that an Indemnified Person shall be successful on the
merits or otherwise (including dismissal of an action without prejudice or the
settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
9.4, or in defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification of an Administrator under paragraphs (a) and (b) of
this Section 9.4 (unless ordered by a court) shall be made by the Sponsor only
as authorized in the specific case upon a determination that indemnification of
the Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (i) by the Administrators by a majority vote of a
Quorum consisting of such Administrators who were not parties to such action,
suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (iii) by the Common Security
Holder of the Trust.
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(e) To the fullest extent permitted by law, and subject to paragraph (c)
above, expenses (including reasonable attorneys' fees and expenses) incurred by
an Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (a) and (b)
of this Section 9.4 shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 9.4. Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Administrators by a majority vote of a Quorum of
disinterested Administrators, (ii) if such a Quorum is not obtainable, or, even
if obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (iii) by the Common Security
Holder of the Trust, that, based upon the facts known to the Administrators,
counsel or the Common Security Holder at the time such determination is made,
such Indemnified Person acted in bad faith or in a manner that such Indemnified
Person did not believe to be in the best interests of the Trust, or, with
respect to any criminal proceeding, that such Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Administrators, independent legal counsel
or the Common Security Holder reasonably determine that such Indemnified Person
deliberately breached his duty to the Trust or its Common or Capital Security
Holders.
(f) The Trustees, at the sole cost and expense of the Sponsor, retain the
right to representation by counsel of their own choosing in any action, suit or
any other proceeding for which it is indemnified under paragraphs (a) and (b) of
this Section 9.4, without affecting their right to indemnification hereunder or
waiving any rights afforded to them under this Declaration or applicable law.
(g) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other paragraphs of this Section 9.4 shall not be deemed
exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4 shall be deemed to be provided by a
contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this Section 9.4 is in effect. Any repeal or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.
(h) The Sponsor or the Trust may purchase and maintain insurance on behalf
of any Person who is or was an Indemnified Person against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Sponsor would have the power to indemnify him
against such liability under the provisions of this Section 9.4.
(i) For purposes of this Section 9.4, references to "the Trust" shall
include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
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(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section 9.4 shall, unless otherwise provided when authorized
or ratified, (i) continue as to a Person who has ceased to be an Indemnified
Person and shall inure to the benefit of the heirs, executors and administrators
of such a Person, and (ii) survive the termination or expiration of this
Declaration or the earlier removal or resignation of an Indemnified Person.
Section 9.5. Outside Businesses. Any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders of Securities shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive
with the business of the Trust, shall not be deemed wrongful or improper. None
of any Covered Person, the Sponsor, the Delaware Trustee or the Institutional
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the
right to take for its own account (individually or as a partner or fiduciary)
or to recommend to others any such particular investment or other opportunity.
Any Covered Person, the Delaware Trustee and the Institutional Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent
for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
Section 9.6. Compensation; Fee. The Sponsor agrees:
(a) to pay to the Trustees from time to time such compensation for all
services rendered by them hereunder as the parties shall agree from time to time
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust); and
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this
Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct.
The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
any Trustee.
No Trustee may claim any lien or charge on any property of the Trust as
a result of any amount due pursuant to this Section 9.6.
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ARTICLE X.
TAX AND ACCOUNTING
Section 10.1. Fiscal Year. The fiscal year (the "Fiscal Year") of the
Trust shall be the calendar year, or such other year as is
required by the Code.
Section 10.2. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Administrators
shall keep, or cause to be kept at the principal office of the Trust in the
United States, as defined for purposes of Treasury Regulations Section
301.7701-7, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be maintained, at the Sponsor's expense, in accordance with generally
accepted accounting principles, consistently applied. The books of account and
the records of the Trust shall be examined by and reported upon (either
separately or as part of the Sponsor's regularly prepared consolidated financial
report) as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be duly prepared and delivered to
each of the Holders of Securities all annual United States federal income tax
information statements required by the Code, if any, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Administrators shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(c) The Administrators, at the Sponsor's expense, shall cause to be duly
prepared at the principal office of the Sponsor in the United States, as `United
States' is defined in Section 7701(a)(9) of the Code (or at the principal office
of the Trust if the Sponsor has no such principal office in the United States),
and filed an annual United States federal income tax return on a Form 1041 or
such other form required by United States federal income tax law, if any, and
any other annual income tax returns required to be filed by the Administrators
on behalf of the Trust with any state or local taxing authority.
Section 10.3. Banking. The Trust shall maintain in the United States, as
defined for purposes of Treasury Regulations Section 301.7701-7, one or more
bank accounts in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
Section 10.4. Withholding. The Institutional Trustee or any Paying Agent and
the Administrators shall comply with all withholding requirements under United
States federal, state and local law. The Institutional Trustee or any Paying
Agent shall request, and each Holder shall provide to the Institutional Trustee
or any Paying Agent, such forms or certificates as are necessary to establish an
exemption from withholding with respect to the Holder, and any representations
and forms as shall reasonably be requested by the Institutional Trustee or any
Paying Agent to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Administrators shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions.
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To the extent that the Institutional Trustee or any Paying Agent is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Institutional Trustee or any Paying Agent
may reduce subsequent Distributions by the amount of such withholding.
Section 10.5. Intention of the Parties. It is the intention of the parties
hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
ARTICLE XI.
AMENDMENTS AND MEETINGS
Section 11.1. Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable
terms of the Securities, this Declaration may only be amended by a written
instrument approved and executed by the Institutional Trustee, or (ii) if the
amendment affects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, by the Delaware Trustee..
(b) Notwithstanding any other provision of this Article XI, an amendment
may be made, and any such purported amendment shall be valid and effective only
if:
(i) the Institutional Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the Sponsor
that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the
Trust) that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities) and all conditions
precedent to the execution and delivery of such amendment have been
satisfied; and
(ii) the result of such amendment would not be to
(A) cause the Trust to cease to be classified for purposes of United
States federal income taxation as a grantor trust; or
49
(B) cause the Trust to be deemed to be an Investment Company required
to be registered under the Investment Company Act.
(c) Except as provided in Section 11.1(d), (e) or (h), no amendment shall
be made, and any such purported amendment shall be void and ineffective unless
the Holders of a Majority in liquidation amount of the Capital Securities shall
have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution on the
Securities or any redemption or liquidation provisions applicable to the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date, or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.
(e) Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be amended
without the consent of all of the Holders of the Securities.
(f) Article III shall not be amended without the consent of the Holders of
a Majority in liquidation amount of the Common Securities.
(g) The rights of the Holders of the Capital Securities or Common
Securities, as applicable, under Article IV to appoint and remove the Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Capital Securities or Common Securities, as
applicable.
(h) This Declaration may be amended by the Institutional Trustee and the
Holders of a Majority in liquidation amount of the Common Securities without the
consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may be
defective or inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor; or
(iv) modify, eliminate or add to any provision of this Declaration to
such extent as may be necessary to ensure that the Trust will be classified
for United States federal income tax purposes at all times as a grantor trust
and will not be required to register as an "investment company" under the
Investment Company Act (including without limitation to conform to any change in
Rule 3a-5, Rule 3a-7 or any other applicable rule under the Investment Company
Act or written change in interpretation or application thereof by any
legislative body, court, government agency or regulatory authority) which
amendment does not have a material adverse effect on the rights, preferences or
privileges of the Holders of Securities;
50
provided, however, that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any
material respect the powers, preferences or special rights of Holders of Capital
Securities.
Section 11.2. Meetings of the Holders of the Securities; Action by Written
Consent.
(a) Meetings of the Holders of the Capital Securities or the Common
Securities may be called at any time by the Administrators (or as provided in
the terms of the Securities) to consider and act on any matter on which Holders
of such Securities are entitled to act under the terms of this Declaration or
the terms of the Securities. The Administrators shall call a meeting of the
Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such Securities. Such direction shall be given by
delivering to the Administrators one or more notices in a writing stating that
the signing Holders of such Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of the Securities calling a meeting shall specify in writing the Certificates
held by the Holders of the Securities exercising the right to call a meeting
and only those Securities represented by such Certificates shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities,
the following provisions shall apply to meetings of Holders of the Securities:
(i) notice of any such meeting shall be given to all the Holders of the
Securities having a right to vote thereat at least 7 days and not more than 60
days before the date of such meeting. Whenever a vote, consent or approval of
the Holders of the Securities is permitted or required under this Declaration,
such vote, consent or approval may be given at a meeting of the Holders of the
Securities. Any action that may be taken at a meeting of the Holders of the
Securities may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by the Holders of the Securities owning not less
than the minimum liquidation amount of Securities that would be necessary to
authorize or take such action at a meeting at which all Holders of the
Securities having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Holders of the
Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot submitted to the Holders of
the Securities for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrators;
(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder of the Securities executing
it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation; each meeting of the
Holders of the Securities shall be conducted by the Administrators or by such
other Person that the Administrators may designate; and
51
(iii) unless the Statutory Trust Act, this Declaration, or the terms of the
Securities otherwise provides, the Administrators, in their sole discretion,
shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting at
which any matter is to be voted on by any Holders of the Securities, waiver of
any such notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any other
matter with respect to the exercise of any such right to vote; provided,
however, that each meeting shall be conducted in the United States (as that term
is defined in Treasury Regulations section 301.7701-7).
ARTICLE XII.
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE
Section 12.1. Representations and Warranties of Institutional Trustee. The
initial Institutional Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:
(a) the Institutional Trustee is a banking corporation or national
association with trust powers, duly organized and validly existing under the
laws of the United States of America or any state thereof with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;
(b) the Institutional Trustee has a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000);
(c) the execution, delivery and performance by the Institutional Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Institutional Trustee. This Declaration has been duly executed
and delivered by the Institutional Trustee, and it constitutes a legal, valid
and binding obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity (regardless of whether considered
in a proceeding in equity or at law);
(d) the execution, delivery and performance of this Declaration by the
Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(e) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the execution,
delivery or performance by the Institutional Trustee of this Declaration.
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Section 12.2. Representations of the Delaware Trustee. The Trustee that
acts as initial Delaware Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration, and each Successor Delaware Trustee
represents and warrants to the Trust and the Sponsor at the time of the
Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee
that:
(a) if it is not a natural person, the Delaware Trustee is duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) if it is not a natural person, the execution, delivery and performance
by the Delaware Trustee of this Declaration has been duly authorized by all
necessary corporate action on the part of the Delaware Trustee. This Declaration
has been duly executed and delivered by the Delaware Trustee, and under Delaware
law (excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether considered in a proceeding in equity or at law);
(c) if it is not a natural person, the execution, delivery and performance
of this Declaration by the Delaware Trustee does not conflict with or constitute
a breach of the charter or by-laws of the Delaware Trustee;
(d) it has trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration;
(e) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority governing the trust powers of
the Delaware Trustee is required for the execution, delivery or performance by
the Delaware Trustee of this Declaration; and
(f) the Delaware Trustee is a natural person who is a resident of the State
of Delaware or, if not a natural person, it is an entity which has its principal
place of business in the State of Delaware and, in either case, a Person that
satisfies for the Trust the requirements of Section 3807 of the Statutory Trust
Act.
ARTICLE XIII.
MISCELLANEOUS
Section 13.1. Notices. All notices provided for in this Declaration shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:
(a) if given to the Trust in care of the Administrators at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Securities):
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Tower Group Statutory Trust VI
c/o Tower Group, Inc.
120 Broadway, 31st Floor
New York, New York 10271
Attention: Francis M. Colalucci
Telecopy: 212-655-2199
(b) if given to the Delaware Trustee, at the Delaware Trustee's mailing
address set forth below (or such other address as the Delaware Trustee may give
notice of to the Holders of the Securities):
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-1600
Attention: Corporate Trust Administration
Telecopy: 302-636-4140
(c) if given to the Institutional Trustee, at the Institutional Trustee's
mailing address set forth below (or such other address as the Institutional
Trustee may give notice of to the Holders of the Securities):
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-1600
Attention: Corporate Trust Administration
Telecopy: 302-636-4140
(d) if given to the Holder of the Common Securities, at the mailing address
of the Sponsor set forth below (or such other address as the Holder of the
Common Securities may give notice of to the Trust):
Tower Group, Inc.
120 Broadway, 31st Floor
New York, New York 10271
Attention: Francis M. Colalucci
Telecopy: 212-655-2199
(e) if given to any other Holder, at the address set forth on the books and
records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
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Section 13.2. Governing Law. This Declaration and the rights and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the law of the State of Delaware and all rights and remedies
shall be governed by such laws without regard to the principles of conflict of
laws of the State of Delaware or any other jurisdiction that would call for the
application of the law of any jurisdiction other than the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the Trustees
or this Declaration any provision of the laws (statutory or common) of the State
of Delaware pertaining to trusts that relate to or regulate, in a manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (d) fees or other sums payable to trustees, officers,
agents or employees of a trust, (e) the allocation of receipts and expenditures
to income or principal, or (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.
Section 13.3. Intention of the Parties. It is the intention of the parties
hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
Section 13.4. Headings. Headings contained in this Declaration are inserted
for convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
Section 13.5. Successors and Assigns. Whenever in this Declaration any of
the parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit
of their respective successors and assigns, whether or not so expressed.
Section 13.6. Partial Enforceability. If any provision of this Declaration,
or the application of such provision to any Person or circumstance, shall be
held invalid, the remainder of this Declaration, or the application of such
provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 13.7. Counterparts. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees and Administrators to any of
such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
all of the signers had signed a single signature page.
Signatures appear on the following page
55
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
WILMINGTON TRUST COMPANY
as Institutional Trustee
By: /s/ Christopher J. Slaybaugh
----------------------------
Name: Christopher J. Slaybaugh
Title: Senior Financial Services Officer
WILMINGTON TRUST COMPANY
as Delaware Trustee
By: /s/ Christopher J. Slaybaugh
----------------------------
Name: Christopher J. Slaybaugh
Title: Senior Financial Services Officer
TOWER GROUP, INC., as Sponsor
By: /s/ Francis M. Colalucci
------------------------
Name: Francis M. Colalucci
Title: Senior Vice President and CFO
By: /s/ Michael H. Lee
------------------
Michael H. Lee, Administrator
By: /s/ Stephen L. Kibblehouse
--------------------------
Stephen L. Kibblehouse, Administrator
By: /s/ Francis M. Colalucci
------------------------
Francis M. Colalucci, Administrator
56
ANNEX I
TERMS OF SECURITIES
Pursuant to Section 6.1 of the Amended and Restated
Declaration of Trust, dated as of January 25, 2007 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration):
1. Designation and Number.
(a) 20,000 Fixed/Floating Rate Capital Securities of Tower Group
Statutory Trust VI (the "Trust"), with an aggregate stated liquidation amount
with respect to the assets of the Trust of Twenty Million Dollars ($20,000,000)
and a stated liquidation amount with respect to the assets of the Trust of
$1,000.00 per Capital Security, are hereby designated for the purposes of
identification only as the "Capital Securities". The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.
(b) 619 Fixed/Floating Rate Common Securities of the Trust (the
"Common Securities") will be evidenced by Common Security Certificates
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
(a) Distributions will be payable on each Security for the period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Distribution Payment Date in March 2012 at a rate per annum of
8.155% and shall bear interest for each successive Distribution Period beginning
on (and including) the Distribution Payment Date in March 2012, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each, a "Distribution Period") at a rate
per annum equal to the 3-Month LIBOR, determined as described below, plus 3.00%
(the "Coupon Rate") applied to the stated liquidation amount thereof, such rate
being the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears for more than one quarterly
period will bear interest thereon compounded quarterly at the applicable
Distribution Rate (to the extent permitted by law). Distributions, as used
herein, include cash distributions, any such compounded distributions and any
Additional Sums payable on the Debentures unless otherwise noted. A Distribution
is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available therefor.
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The amount of the Distribution payable (i) for any Distribution Period
commencing on or after the date of original issuance but before the Distribution
Payment Date in March 2012 will be computed on the basis of a 360-day year of
twelve 30-day months, it being understood that if a Distribution is payable on a
non Business Day, and the Distribution Payment Date is on the next succeeding
Business Day, no additional interest or other Distributions shall accrue in
respect of any such delay, and (ii) for the Distribution Period commencing on or
after the Distribution Payment Date in March 2012 and each succeeding
Distribution Period will be calculated by applying the Distribution Rate to the
stated liquidation amount outstanding at the commencement of the Distribution
Period and multiplying each such amount by the actual number of days in the
Distribution Period concerned divided by 360. All percentages resulting from any
calculations on the Capital Securities will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point, with five one-millionths
of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting
from such calculation will be rounded to the nearest cent (with one-half cent
being rounded upward)).
"3-Month LIBOR" means the London interbank offered interest rate for
three-month, U.S. dollar deposits determined by the Debenture Trustee in the
following order of priority:
(1) the rate (expressed as a percentage per annum) for U.S.
dollar deposits having a three-month maturity that appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (as defined below). "Telerate Page 3750" means the display
designated as "Page 3750" on the Moneyline Telerate Service or such
other page as may replace Page 3750 on that service or such other
service or services as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits;
(2) if such rate cannot be identified on the related
Determination Date, the Debenture Trustee will request the principal
London offices of four leading banks in the London interbank market to
provide such banks' offered quotations (expressed as percentages per
annum) to prime banks in the London interbank market for U.S. dollar
deposits having a three-month maturity as of 11:00 a.m. (London time)
on such Determination Date. If at least two quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations;
(3) if fewer than two such quotations are provided as requested
in clause (2) above, the Debenture Trustee will request four major New
York City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such Determination Date. If
at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and
(4) if fewer than two such quotations are provided as requested
in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR determined
with respect to the Distribution Period immediately preceding such
current Distribution Period.
If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.
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The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
"Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.
"Interest Rate" means for the period beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in March 2012 the rate per annum of 8.155% and for each Distribution Period
thereafter, the Coupon Rate.
"Maturity Date" means March 15, 2037.
(b) Distributions on the Securities will be cumulative, will accrue from
the date of original issuance, and will be payable, subject to extension of
distribution payment periods as described herein, quarterly in arrears on June
15th, September 15th, December 15th and March 15th of each year or if such day
is not a Business Day, then the next succeeding Business Day (each a
"Distribution Payment Date"), commencing on the Distribution Payment Date in
June 2007 when, as and if available for payment. The Debenture Issuer has the
right under the Indenture to defer payments of interest on the Debentures, so
long as no Indenture Event of Default has occurred and is continuing, by
deferring the payment of interest on the Debentures for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to
time, subject to the conditions described below, during which Extension Period
no interest shall be due and payable. During any Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest will
accrue at an annual rate equal to the Distribution Rate in effect for each such
Extension Period, compounded quarterly (from the date such interest would have
been payable were it not for the Extension Period, to the extent permitted by
law (such interest referred to herein as "Additional Interest") during any
Extension Period. No Extension Period may end on a date other than a
Distribution Payment Date. At the end of any such Extension Period the Debenture
Issuer shall pay all interest then accrued and unpaid on the Debentures
(together with Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date and provided further,
however, that during any such Extension Period, the Debenture Issuer shall not,
and shall not permit any Affiliate of the Debenture Issuer controlled by the
Debenture Issuer to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Debenture Issuer's or such Affiliates' capital stock (other than payments of
dividends or distributions to the Debenture Issuer or a Subsidiary of the
Debenture Issuer) or make any guarantee payments with respect to the foregoing,
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Debenture Issuer or any
Affiliate of the Debenture Issuer controlled by the Debenture Issuer that rank
pari passu in all respects with or junior in interest to the Debentures or (iii)
enter into, amend or modify any contracts with shareholders holding more than
10% of the outstanding shares of common stock of the Company that could require
cash payments by the Company to such shareholders, unless the transaction in
which such contract or amendment to or modification to such contract relates is
entered into on an arm's length basis in the ordinary course of business
I-3
(it being understood and agreed that for the purpose of this clause (iii) a
transaction shall be conducted on an arm's length basis if such contract was
approved by a committee of the Company's Independent Directors) (other than,
with respect to clauses (i) and (ii) above, (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Debenture Issuer or any
Subsidiary of the Debenture Issuer in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Debenture Issuer or of such Subsidiary (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period, (b) as a result of any exchange or conversion of any class or
series of the Debenture Issuer's capital stock (or any capital stock of a
Subsidiary of the Debenture Issuer) for any class or series of the Debenture
Issuer's capital stock (or in the case of a Subsidiary of the Debenture Issuer,
any class or series of such Subsidiary's capital stock) or of any class or
series of the Debenture Issuer's indebtedness for any class or series of the
Debenture Issuer's capital stock (or in the case of indebtedness of a Subsidiary
of the Debenture Issuer, of any class or series of such Subsidiary's
indebtedness for any class or series of such Subsidiary's capital stock), (c)
the purchase of fractional interests in shares of the Debenture Issuer's capital
stock (or the capital stock of a Subsidiary of the Company) pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) any declaration of a dividend in connection with any
stockholders' rights plan, or the issuance of rights, stock or other property
under any stockholders' rights plan, or the redemption or repurchase of rights
pursuant thereto, (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the termination
of any Extension Period, the Debenture Issuer may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Securities shall be deferred for a period
equal to the Extension Period. If Distributions are deferred, the Distributions
due shall be paid on the date that the related Extension Period terminates, to
Holders of the Securities as they appear on the books and records of the Trust
on the record date immediately preceding such date. Distributions on the
Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust's
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Guarantee.
I-4
(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant record
dates. The relevant record dates shall be 15 days before the relevant
Distribution Payment Date. Distributions payable on any Securities that are not
punctually paid on any Distribution Payment Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, as the case may be,
when due (taking into account any Extension Period), will cease to be payable to
the Person in whose name such Securities are registered on the relevant record
date, and such defaulted Distribution will instead be payable to the Person in
whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture.
(d) In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the
aggregate of the stated liquidation amount of $1,000.00 per Security plus
accrued and unpaid Distributions thereon to the date of payment, to the extent
the Trust shall have funds available therefor, and (ii) the amount of assets of
the Trust remaining available for contributions to Holders in liquidation of the
Trust (such amount being, the "Liquidation Distribution"), unless in connection
with such Liquidation, the Debentures in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Securities, with an
interest rate equal to the Distribution Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, and
having the same record date as, such Securities, after paying or making
reasonable provision to pay all claims and obligations of the Trust in
accordance with the Statutory Trust Act, shall be distributed on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event) and, after satisfaction of liabilities to
creditors of the Trust, cause the Debentures to be distributed to the Holders of
the Securities on a Pro Rata basis in accordance with the aggregate stated
liquidation amount thereof.
If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by
the Institutional Trustee not to be practical, in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities of creditors of the Trust to
the extent not satisfied by the Debenture Issuer, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.
I-5
If, upon any such Liquidation the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Securities
on a Pro Rata basis, except that if an Event of Default has occurred and is
continuing, the Capital Securities shall have a preference over the Common
Securities with regard to such distributions.
After the date for any distribution of the Debentures upon dissolution
of the Trust (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) upon surrender of a Holder's Securities certificate, such
Holder of the Securities will receive a certificate representing the Debentures
to be delivered upon such distribution, (iii) any certificates representing the
Securities still outstanding will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount with an interest rate identical to
the Distribution Rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance (and
until such certificates are so surrendered, no payments of interest or principal
shall be made to Holders of Securities in respect of any payments due and
payable under the Debentures; provided, however that such failure to pay shall
not be deemed to be an Event of Default and shall not entitle the Holder to the
benefits of the Guarantee), and (iv) all rights of Holders of Securities under
the Declaration shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.
4. Redemption and Distribution.
(a) The Debentures will mature on March 15, 2037. The Debentures
may be redeemed by the Debenture Issuer, in whole or in part on any Distribution
Payment Date on or after the Distribution Payment Date in March 2012, at the
Optional Redemption Price. In addition, the Debentures may be redeemed by the
Debenture Issuer at the Special Redemption Price, in whole but not in part, at
any Distribution Payment Date, upon the occurrence and continuation of a Special
Event within 120 days following the occurrence of such Special Event at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
holders of such Debentures so long as such Special Event is continuing. The
Sponsor shall appoint a Quotation Agent for the purpose of performing the
services contemplated in or by reference in, the definition of Special
Redemption Price. Any error in the calculation of the Special Redemption Price
by the Quotation Agent or the Debenture Trustee may be corrected at any time by
notice delivered to the Sponsor and the holders of the Capital Securities.
Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given, expressed, made or obtained for the purposes of the provisions relating
to the payment and calculation of the Special Redemption Price on the Debentures
or the Capital Securities by the Debenture Trustee, the Quotation Agent or the
Institutional Trustee, as the case may be, shall (in the absence of willful
default, bad faith or manifest error) be final, conclusive and binding on the
holders of the Debentures and the Capital Securities, the Trust and the Sponsor,
and no liability shall attach (except as provided above) to the Debenture
Trustee, the Quotation Agent or the Institutional Trustee in connection with
the exercise or non-exercise by any of them of their respective powers, duties
and discretion.
I-6
"Comparable Treasury Issue" means with respect to any Special
Redemption Date the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Fixed Rate Period Remaining Life
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the Fixed Rate Period Remaining Life. If no United
States Treasury security has a maturity which is within a period from three
months before to three months after the Distribution Payment Date in March 2012,
the two most closely corresponding fixed, non-callable United States Treasury
securities, as selected by the Quotation Agent, shall be used as the Comparable
Treasury Issue, and the Treasury Rate shall be interpolated and extrapolated on
a straight-line basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means (a) the average of five Reference
Treasury Dealer Quotations for such Special Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (b) if the
Quotation Agent obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System and any successor federal agency.
"Fixed Rate Period Remaining Life" means, with respect to any
Debenture, the period from the Special Redemption Date for such Debenture to the
Distribution Payment Date in March 2012.
"Investment Company Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Trust is or, within 90 days of the date of such opinion, will be considered
an Investment Company that is required to be registered under the Investment
Company Act which change or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the issuance of the
Debentures.
"Maturity Date" means March 15, 2037.
"Optional Redemption Date" shall mean the date fixed for the redemption
of Capital Securities, which shall be any Distribution Payment Date on or after
the Distribution Payment Date in March 2012.
"Optional Redemption Price" means 100% of the principal amount of the
Debentures being redeemed, plus accrued and unpaid interest on such Debentures
to the Optional Redemption Date.
"Primary Treasury Dealer" means either a nationally recognized primary
United States Government securities dealer or an entity of recognized standing
in matters pertaining to the quotation of treasury securities that is reasonably
acceptable to the Sponsor and the Institutional Trustee.
I-7
"Quotation Agent" shall be a Primary Treasury Dealer designated by the
Trustee, after receiving consent from the Sponsor.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Trustee after consultation with
the Sponsor.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Debenture Trustee by such Reference
Treasury at 5:00 p.m., New York City time, on the third Business Day preceding
such Redemption Date.
"Special Event" means a Tax Event or an Investment Company Event.
"Special Redemption Date" means a date on which a Special Event
redemption occurs, which shall be any Distribution Payment Date.
"Special Redemption Price" means (a) if the Special Redemption Date
occurs before the Distribution Payment Date in March 2012, the greater of (i)
107.5% of the principal amount of the Debentures, plus accrued and unpaid
Interest on the Debentures to the occurrence of the Special Redemption Date, or
(ii) as determined by the Quotation Agent, (A) the sum of the present values of
the scheduled payments of principal and Interest on the Debentures during the
Fixed Rate Period Remaining Life of the Debentures (assuming the Debentures
matured on the Distribution Payment Date in March 2012 discounted to the Special
Redemption Date on a quarterly basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate, plus (B) accrued and unpaid Interest
on the Debentures to such Special Redemption Date, or (b) if the Special
Redemption Date occurs on or after the Distribution Payment Date in March 2012,
100% of the principal amount of the Debentures being redeemed, plus, in each
case, accrued and unpaid interest (including any Additional Interest) on such
Debentures to the Special Redemption Date.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action")) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Debenture Issuer or the Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of original issuance of the Debentures, there is more
than an insubstantial risk that: (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) interest payable
by the Debenture Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes; or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes (excluding withholding taxes), duties or other
governmental charges.
I-8
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the week immediately prior to the date of calculation, appearing
in the most recently published statistical release designated H.15 (519) or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Fixed Rate Period Remaining Life (if no maturity
is within three months before or after the Fixed Rate Period Remaining Life,
yields for the two published maturities, most closely corresponding to the Fixed
Rate Period Remaining Life shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis, rounding
to the nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated by the Quotation Agent on the third Business
Day preceding the Special Redemption Date.
(b) Upon the repayment in full at maturity or redemption in
whole or in part of the Debentures (other than following the distribution of the
Debentures to the Holders of the Securities), the proceeds from such repayment
or payment shall concurrently be applied to redeem Pro Rata at the applicable
Optional Redemption Price or Special Redemption Price, as applicable, Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed; provided, however, that holders of such
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption (other than at the scheduled maturity of the Debentures).
(c) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be redeemed Pro Rata from
each Holder of Capital Securities.
(d) The Trust may not redeem fewer than all the outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of or notice of distribution of
the Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this paragraph 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of
such Securities. Each Redemption/Distribution Notice
I-9
shall be addressed to the Holders of such Securities at the address of each
such Holder appearing on the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect to any
Holder shall affect the validity of the redemption or exchange proceedings with
respect to any other Holder.
(ii) If the Securities are to be redeemed and the Trust
gives a Redemption/Distribution Notice, which notice may only be issued if
the Debentures are redeemed as set out in this paragraph 4 (which notice
will be irrevocable), then, provided that the Institutional Trustee has a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures, the Institutional Trustee will, with respect to Book Entry
Capital Securities, irrevocably deposit with the Depositary for such Book
Entry Capital Securities, to the extent available therefor, funds sufficient
to pay the relevant Optional Redemption Price or Special Redemption Price
and will give such Depositary irrevocable instructions and authority to pay
such Optional Redemption Price or Special Redemption Price, as applicable, to
the Owners of the Capital Securities and with respect to Capital Securities
that are not Book Entry Capital Securities, the Institutional Trustee will
pay, to the extent available therefor, the relevant Optional Redemption
Price or Special Redemption Price, as applicable, to the Holders of such
Securities by check mailed to the address of each such Holder appearing on the
books and records of the Trust on the Optional Redemption Date or Special
Redemption Date. If a Redemption/Distribution Notice shall have been given and
funds deposited as required then immediately prior to the close of business on
the date of such deposit Distributions will cease to accrue on the Securities so
called for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities to
receive the applicable Optional Redemption Price or Special Redemption Price
specified in paragraph 4(a), but without interest on such Optional Redemption
Price or Special Redemption Price. If any date fixed for redemption of
Securities is not a Business Day, then payment of any such Optional Redemption
Price or Special Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day. If payment of the Optional Redemption
Price or Special Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Trust or by the Debenture Issuer
as guarantor pursuant to the Guarantee, Distributions on such Securities will
continue to accrue at the Distribution Rate from the original Optional
Redemption Date or Special Redemption Date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Optional Redemption Price or Special
Redemption Price. In the event of any redemption of the Capital Securities
issued by the Trust in part, the Trust shall not be required to (i) issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business 15 days before any selection for redemption of the
Capital Securities and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given to all
Holders of the Capital Securities to be so redeemed, or (ii) register the
transfer of or exchange any Capital Securities so selected for redemption, in
whole or in part, except for the unredeemed portion of any Capital Securities
being redeemed in part.
I-10
(iii) Redemption/Distribution Notices shall be sent by the
Administrators on behalf of the Trust to (A) in respect of the Capital
Securities, the Holders thereof and (B) in respect of the Common Securities, the
Holder thereof.
(iv) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), and provided that
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under paragraphs 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights. The Administrators are required to call a
meeting of the Holders of the Capital Securities if directed to do so by Holders
of at least 10% in liquidation amount of the Capital Securities.
(b) Subject to the requirements of obtaining a tax opinion by
the Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Capital Securities, voting separately as a class, have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture as the holder of the
Debentures, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable, or (iv) consent on behalf of all
the Holders of the Capital Securities to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
would require the consent or act of the holders of greater than a simple
majority in aggregate principal amount of Debentures (a "Super Majority")
affected thereby, the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Capital Securities outstanding which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. If the Institutional Trustee fails to enforce its rights under the
Debentures after the Holders of a Majority in liquidation amount of such Capital
Securities have so directed the Institutional Trustee, to the fullest extent
permitted by law, a Holder of the Capital Securities may institute a legal
proceeding directly against the Debenture Issuer to enforce the Institutional
Trustee's rights under the Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest or principal on the Debentures on the date the interest or
principal is payable (or in the case of redemption, the Optional Redemption Date
or the Special Redemption Date, as applicable), then a Holder of record of the
Capital Securities may directly institute a proceeding for enforcement of
payment on or after the respective due dates specified in the Debentures, to
such Holder directly of the principal of or interest on the Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder.
I-11
The Institutional Trustee shall notify all Holders of the Capital
Securities of any default actually known to the Institutional Trustee with
respect to the Debentures unless (x) such default has been cured prior to the
giving of such notice, or (y) the Institutional Trustee determines in good faith
that the withholding of such notice is in the interest of the Holders of such
Capital Securities, except where the default relates to the payment of principal
of or interest on any of the Debentures. Such notice shall state that such
Indenture Event of Default also constitutes an Event of Default hereunder.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clauses (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, the Trust will not be classified as other than a grantor trust
for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of Holders of the Capital Securities may be given at a separate meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the Securities in the Trust or pursuant to written consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought, and (iii) instructions
for the delivery of proxies or consents. No vote or consent of the Holders of
the Capital Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Capital Securities were not
outstanding.
I-12
In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.
6. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 6(b), 6(c) and 7 and as
otherwise required by law and the Declaration, the Common Securities will have
no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article IV of the Declaration, to vote to appoint, remove or
replace any Administrators.
(c) Subject to Section 6.10 of the Declaration and only after
each Event of Default (if any) with respect to the Capital Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waiving any past
default and its consequences that is waivable under the Indenture, or (iii)
exercising any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable; provided, however, that, where a
consent or action under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Common Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. Notwithstanding
this paragraph 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action described in (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration to the
fullest extent permitted by law, any Holder of the Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of the Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of the Common Securities.
I-13
Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought, and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 11.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Trustees, Sponsor or Administrators otherwise propose to effect, (i) any action
that would adversely affect the powers, preferences or special rights of the
Securities, whether by way of amendment to the Declaration or otherwise, or (ii)
the Liquidation of the Trust, other than as described in Section 7.1 of the
Declaration, then the Holders of outstanding Securities, voting together as a
single class, will be entitled to vote on such amendment or proposal 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 Securities, affected
thereby; provided, however, if any amendment or proposal referred to in clause
(i) above would adversely affect only the Capital Securities or only the Common
Securities, then only the affected Securities will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
a Super Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
(c) Notwithstanding the foregoing, no amendment or modification
may be made to the Declaration if such amendment or modification would (i) cause
the Trust to be classified for purposes of United States federal income taxation
as other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of the Institutional Trustee, or (iii) cause the Trust to be deemed an
Investment Company which is required to be registered under the Investment
Company Act.
(d) Notwithstanding any provision of the Declaration, the right
of any Holder of the Capital Securities to receive payment of Distributions and
other payments upon redemption, liquidation or otherwise, on or after their
respective due dates, or to institute a suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder. For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.
I-14
8. Pro Rata. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of the Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities then outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking. The Capital Securities rank pari passu with and
payment thereon shall be made Pro Rata with the Common Securities except that,
where an Event of Default has occurred and is continuing, the rights of Holders
of the Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Optional Redemption Price (or Special Redemption Price) of,
any Common Security, and no other payment on account of 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 Optional Redemption Price (or Special Redemption
Price) the full amount of such Optional Redemption Price (or Special Redemption
Price) on all outstanding Capital Securities then called for redemption, shall
have been made or provided for, and all funds immediately available to the
Institutional Trustee shall first be applied to the payment in full in cash of
all Distributions on, or the Optional Redemption Price (or Special Redemption
Price) of, the Capital Securities then due and payable.
10. Acceptance of Guarantee and Indenture. Each Holder of the
Capital Securities and the Common Securities, by the acceptance of such
Securities, agrees to the provisions of the Guarantee and the Indenture,
including the subordination provisions therein.
11. No Preemptive Rights. The Holders of the Securities shall
have no, and the issuance of the Securities is not subject to, preemptive or
similar rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the
Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee,
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-15
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS CAPITAL SECURITY IS
A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A
NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC)
MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO [TRUST NAME] STATUTORY TRUST [I] OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND
THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
A-1-1
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION
(DEFINED HEREIN), A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST.
HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS
SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
THIS SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF TREASURY
REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND WITHHOLDING
TAX PURPOSES.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
A-1-2
Certificate Number P-1 20,000 Capital Securities
January 25, 2007
Certificate Evidencing Fixed/Floating Rate Capital Securities
of
Tower Group Statutory Trust VI
(liquidation amount $1,000.00 per Capital Security)
Tower Group Statutory Trust VI, a statutory trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of 20,000 capital securities or such
other number of Capital Securities represented hereby as may be set forth in the
records of the Securities Registrar hereinafter referred to in accordance with
the Declaration (as defined below) of the Trust representing undivided
beneficial interests in the assets of the Trust, (liquidation amount $1,000.00
per capital security) (the "Capital Securities"). Subject to the Declaration,
the Capital Securities are transferable on the books and records of the Trust in
person or by a duly authorized attorney, upon surrender of this Certificate duly
endorsed and in proper form for transfer. The Capital Securities represented
hereby are issued pursuant to, and the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities shall in all respects be subject to, the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of January 25, 2007,
among Michael H. Lee, Stephen L. Kibblehouse and Francis M. Colalucci, as
Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Institutional Trustee, Tower Group, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Trust, including the designation of the terms of the Capital Securities as set
forth in Annex I to such amended and restated declaration as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Guarantee and the Indenture to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Guarantee, and the Indenture to the Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this Security, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and shall be construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.
Signatures appear on following page
A-1-3
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
TOWER GROUP STATUTORY TRUST VI
By:
--------------------------------------
Name:
Title: Administrator
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
WILMINGTON TRUST COMPANY,
as the Institutional Trustee
By:
--------------------------------------
Authorized Officer
A-1-4
[FORM OF REVERSE OF CAPITAL SECURITY]
Distributions payable on each Capital Security will be payable at an
annual rate equal to [FIXED RATE]% beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date
(defined herein) in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL] and at an
annual rate for each successive period beginning on (and including) the
Distribution Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL],
and each succeeding [INTEREST1], [INTEREST2], [INTEREST3] and [INTEREST4] of
each year or if such day is not a Business Day, then the next succeeding
Business Day (each a "Distribution Payment Date"), commencing on the
Distribution Payment Date in [MONTH OF FIRST DISTRIBUTION PAYMENT] 200X, and
ending on (but excluding) the next succeeding Distribution Payment Date (each
such period, a "Distribution Period"), equal to 3-Month LIBOR, determined as
described below, plus 3.00% (the "Coupon Rate"), applied to the stated
liquidation amount of $1,000.00 per Capital Security, such rate being the rate
of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears will bear interest thereon compounded quarterly at the
Distribution Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes payments of cash distributions and any
such compounded distributions and any Additional Sums payable on the Debentures
unless otherwise noted. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Institutional Trustee
and to the extent the Institutional Trustee has funds available therefor. As
used herein, "Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period. The amount of the Distribution payable (i) for any
Distribution Period commencing on or after the date of the original issuance but
before the Distribution Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE
YEAR CALL] will be computed on the basis of a 360-day year of twelve 30-day
months, it being understood that if a Distribution is payable on a non Business
Day, and the Distribution Payment Date is on the next succeeding Business Day,
no additional interest or other Distributions shall accrue in respect of any
such delay, and (ii) for the Distribution Period commencing on or after the
Distribution Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL]
and each succeeding Distribution Period will be computed on the Distribution
Rate to the stated liquidation amount outstanding at the commencement of the
Distribution Period and multiplying each such amount by the actual number of
days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Moneyline Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum)
A-1-5
to prime banks in the London interbank market for U.S. dollar deposits
having a three-month maturity as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
"Interest Rate" means for the period beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL] the rate per annum of
[FIXED RATE]% and for each Distribution Period thereafter, the Coupon Rate.
The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
All percentages resulting from any calculations on the Capital
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on each Distribution Payment Date,
commencing on the Distribution Payment Date in [MONTH OF FIRST DISTRIBUTION
PAYMENT] 200X. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures, so long as no Indenture Event of Default
has occurred and is continuing, by extending the interest payment period for up
to 20 consecutive quarterly periods (each an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described below,
during which Extension Period no interest shall be due and payable. During any
Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest will accrue at an annual rate equal to the
Distribution Rate in effect for each such Extension Period, compounded quarterly
from the date such interest would have been payable were it not for the
Extension Period, to the extent permitted by law (such interest referred to
herein as "Additional Interest"). No Extension Period may end on a date other
than a Distribution Payment Date. At the end of any such Extension Period the
Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however, that
no Extension Period may extend beyond the Maturity Date. Prior to the
termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date.
A-1-6
Upon the termination of any Extension Period and upon the payment of all
accrued and unpaid interest and Additional Interest, the Debenture Issuer may
commence a new Extension Period, subject to the foregoing requirements. No
interest or Additional Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest. During any Extension Period, Distributions on the Capital
Securities shall be deferred for a period equal to the Extension Period. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, to Holders of the Securities as they
appear on the books and records of the Trust on the record date immediately
preceding such date. Distributions on the Securities must be paid on the dates
payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account of the Trust. The Trust's funds available for Distribution to the
Holders of the Securities will be limited to payments received from the
Debenture Issuer. The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-1-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
----------------------------------------------------------------
(Insert assignee's social security or tax identification number)
----------------------------------------------------------------
----------------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably appoints
-----------------------------------------------------------------
agent to transfer this Capital Security Certificate on the books
of the Registrar. The agent may substitute another to act for him or her.
Date:
---------------------------------------
Signature:
----------------------------------
(Sign exactly as your name appears on the other side
of this Capital Security Certificate)
Signature Guarantee:(1)
- ------------------------------------------
(1) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-1-8
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION (DEFINED HEREIN).
THIS COMMON SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF
TREASURY REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND
WITHHOLDING TAX PURPOSES.
A-2-1
Certificate Number C-1 619 Common Securities
January 25, 2007
Certificate Evidencing Fixed/Floating Rate Common Securities
of
Tower Group Statutory Trust VI
Tower Group Statutory Trust VI, a statutory trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Tower Group,
Inc. (the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust (the
"Common Securities"). Subject to the Declaration (as defined below), the Common
Securities are transferable on the books and records of the Trust in person or
by a duly authorized attorney, upon surrender of this Certificate duly endorsed
and in proper form for transfer. The Common Securities represented hereby are
issued pursuant to, and the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities shall in all
respects be subject to, the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of January 25, 2007, among Michael H. Lee,
Stephen L. Kibblehouse and Francis M. Colalucci, as Administrators, Wilmington
Trust Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, Tower Group, Inc. as Sponsor, and the holders from time to time of
undivided beneficial interest in the assets of the Trust including the
designation of the terms of the Common Securities as set forth in Annex I to
such amended and restated declaration, as the same may be amended from time to
time (the "Declaration"). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Guarantee and the Indenture to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture
to the Holder without charge upon written request to the Sponsor at its
principal place of business.
As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of Holders of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Floating Rate Junior Subordinated
Deferrable Interest Debentures ("Debentures") as indebtedness and the Common
Securities as evidence of undivided beneficial ownership in the Debentures.
This Common Security is governed by, and shall be construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.
A-2-2
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
TOWER GROUP STATUTORY TRUST VI
By:
--------------------------------------
Name:
Title: Administrator
A-2-3
[FORM OF REVERSE OF COMMON SECURITY]
Distributions payable on each Common Security will be payable at an
annual rate equal to [FIXED RATE]% beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date
(defined herein) in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL] and at an
annual rate for each successive period beginning on (and including) the
Distribution Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL],
and each succeeding [INTEREST1], [INTEREST2], [INTEREST3] and [INTEREST4] of
each year or if such day is not a Business Day, then the next succeeding
Business Day (each a "Distribution Payment Date"), commencing on the
Distribution Payment Date in [MONTH OF FIRST DISTRIBUTION PAYMENT] 200X, and
ending on (but excluding) the next succeeding Distribution Payment Date (each
such period, a "Distribution Period"), equal to 3-Month LIBOR, determined as
described below, plus 3.00% (the "Coupon Rate"), applied to the stated
liquidation amount of $1,000.00 per Common Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears will bear interest thereon compounded quarterly at the
Distribution Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes payments of cash distributions and any
such compounded distributions and any Additional Sums payable on the Debentures
unless otherwise noted. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Institutional Trustee
and to the extent the Institutional Trustee has funds available therefor. As
used herein, "Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period. The amount of the Distribution payable (i) for any
Distribution Period commencing on or after the date of the original issuance but
before the Distribution Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE
YEAR CALL] will be computed on the basis of a 360-day year of twelve 30-day
months, it being understood that if a Distribution is payable on a non Business
Day, and the Distribution Payment Date is on the next succeeding Business Day,
no additional interest or other Distributions shall accrue in respect of any
such delay, and (ii) for the Distribution Period commencing on or after the
Distribution Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL]
and each succeeding Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Moneyline Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum)
A-2-4
to prime banks in the London interbank market for U.S. dollar deposits
having a three-month maturity as of 11:00 a.m. (London time) on such
Determination Date. If at least two quotations are provided, 3-Month LIBOR will
be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
"Interest Rate" means for the period beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL] the rate per annum of
[FIXED RATE]% and for each Distribution Period thereafter, the Coupon Rate.
The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
All percentages resulting from any calculations on the Common
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on each Distribution Payment Date,
commencing on the Distribution Payment Date in [MONTH OF FIRST DISTRIBUTION
PAYMENT] 200X. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures, so long as no Indenture Event of Default
has occurred and is continuing, by extending the interest payment period for up
to 20 consecutive quarterly periods (each an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described below,
during which Extension Period no interest shall be due and payable. During any
Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest will accrue at an annual rate equal to the
Distribution Rate in effect for each such Extension Period, compounded quarterly
from the date such interest would have been payable were it not for the
Extension Period, to the extent permitted by law (such interest referred to
herein as "Additional Interest"). No Extension Period may end on a date other
than a Distribution Payment Date. At the end of any such Extension Period the
Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however, that
no Extension Period may extend beyond the Maturity Date.
A-2-5
Prior to the termination of any Extension Period, the Debenture Issuer may
further extend such period, provided that such period together with all such
previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Common Securities
shall be deferred for a period equal to the Extension Period. If Distributions
are deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Common Securities as they appear
on the books and records of the Trust on the record date immediately preceding
such date. Distributions on the Common Securities must be paid on the dates
payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account of the Trust. The Trust's funds available for Distribution to the
Holders of the Common Securities will be limited to payments received from the
Debenture Issuer.
The Common Securities shall be redeemable as provided in the
Declaration.
A-2-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
------------------------------------------------------------------
------------------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably appoints
------------------------------------------------------------------
agent
-------------------------------------------------------
to transfer this Common Security Certificate on the books of
the Registrar. The agent may substitute another to act for
him or her.
Date:
------------------------------------------------
Signature:
-------------------------------------------
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature:
-------------------------------------------
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature Guarantee(2)
- ------------------------------------------
(1) Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union,
meeting the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-2-7
EXHIBIT B
SPECIMEN OF INITIAL DEBENTURE
See Tab No. _____
EXHIBIT C
PLACEMENT AGREEMENT
See Tab No. ____