EXHIBIT 4.1
FIRST AMENDMENT TO INDENTURE
This First Amendment to Indenture (the "AMENDMENT") is entered into
effective May 13, 2003, and constitutes the First Amendment to the Indenture
dated as of July 16, 1999, between ▇▇▇▇▇▇▇▇ (USA), Inc., an Oklahoma
corporation (the "COMPANY"), and The Bank of New York Trust Company of
Florida, N.A. as successor trustee to U.S. Trust Company of Texas, N.A., as
Trustee (the "TRUSTEE") regarding the 8.75% senior debentures due 2014 issued
by the Company.
WHEREAS, the Indenture was made and entered into as of July 16, 1999,
between the Company and U.S. Trust Company of Texas, N.A., as trustee; and
WHEREAS, as a result of various transactions The Bank of New York Trust
Company of Florida, N.A., became the successor Trustee and is referred to
hereinafter as "TRUSTEE"; and
WHEREAS, pursuant to SECTION 8.2 of the Indenture, the Company, Trustee,
and the Holders of at least a majority principal amount of the Debentures
currently outstanding have deemed it desirable to amend the Indenture;
WHEREAS, immediately following the effectiveness of this Amendment, the
Company is purchasing $5 million principal amount of Debentures from each of
the undersigned Holders, for a total of $10 million principal amount of
Debentures to be purchased (the "INITIAL REDEEMED DEBENTURES");
NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by all parties hereto, the Company, Trustee, and the undersigned
Holders agree as follows:
1. Terms used but not defined in this Amendment and defined in the Indenture
shall have the respected meanings ascribed to such terms in the Indenture.
2. The following defined terms shall be added to SECTION 1.1 of the Indenture
in appropriate alphabetical sequence:
"Capital Securities" shall mean the "Capital Securities" issued by the CS
Trust, as defined in SECTION 6.1(a) of the CS Trust Declaration. Capital
Securities shall be deemed to be Preferred Stock for purposes of this
Indenture.
"CS Trust Securities Payments" has the meaning ascribed to such term in
SECTION 4.3(d)(i)(C).
"CS Trust Securities Payment Obligations" has the meaning ascribed to such
term in SECTION 4.4.
"Common Securities" shall mean the "Common Securities" issued to the
Company by the CS Trust, as defined in SECTION 6.1(a) of the CS Trust
Declaration.
"CS Trust Debt Securities" shall mean the Fixed Rate Junior Subordinated
Debt Securities due 2033 issued pursuant to the CS Trust Indenture.
"CIMI" shall mean ▇▇▇▇▇▇▇▇ Insurance Managers, Inc., an Oklahoma
corporation.
"CS Trust" shall mean ▇▇▇▇▇▇▇▇ Capital Trust I, a statutory trust under
Chapter 38 of Title 12 of the Delaware Code.
"CS Trust Declaration" shall mean the Amended and Restated Declaration of
Trust of the Trust in the form attached hereto as EXHIBIT A.
"CS Trust Guaranty" shall mean the Guarantee Agreement in the form attached
hereto as EXHIBIT B.
"CS Trust Indenture" shall mean Indenture in the form attached hereto as
EXHIBIT C, to be entered into between the Company, as issuer, and the CS
Trustee, as trustee.
"CS Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation.
"NAICO" shall mean National American Insurance Company, an Oklahoma
corporation.
3. Clause (ii) of the definition of "Permitted Debt and Preferred Stock" in
SECTION 1.1 of the Indenture is amended to read in its entirety as follows:
"(ii) Debt or Preferred Stock issued to and held by the Company or a
Wholly Owned Subsidiary of the Company (other than the CS Trust), but only
so long as held or owned by the Company or a Wholly Owned Subsidiary of
the Company (other than the CS Trust);"
4. A new section (vii) is added to the definition of "Permitted Debt and
Preferred Stock" and existing clause (vii) of the definition of "Permitted
Debt and Preferred Stock" is amended and renumbered clause (viii), each of
which clause (vii) and clause (viii) shall read in its entirety as set forth
below:
"(vii) Debt and Preferred Stock as permitted to be Incurred and to
exist as set forth in SECTION 4.3(b),(c), (d) AND (e); and
(viii) Debt not otherwise permitted to be incurred pursuant to clause
(i) through (vii) above which, together with the sum of all other outstanding
Debt Incurred pursuant to this clause (viii) has an aggregate principal amount
not in excess of $2.0 million."
5. A new SECTION 3.7 shall be added to the Indenture and said SECTION 3.7
shall read in its entirety as follows:
"SECTION 3.7 CERTAIN TRANSACTIONS NOT REDEMPTION. The purchase of
Debentures by the Company through private treaty or on the open market for
an agreed price of less than the sum of the principal amount and accrued
interest shall not be deemed or construed to be a redemption of the
Debentures so purchased."
6. A new SECTION 3.8 shall be added to the Indenture and said SECTION 3.8
shall read in its entirety as follows:
"SECTION 3.8 CANCELLATION ON REDEMPTION OR PURCHASE.
(a) All Debentures redeemed by the Company pursuant to this
Article 3 or otherwise purchased by the Company or any Subsidiary of the
Company as contemplated by SECTION 3.7 shall, immediately upon the
effectiveness of such redemption or purchase, surrender or delivery to the
Trustee, be cancelled by the Trustee. If any Debenture so redeemed or
purchased by the Company or any Subsidiary of the Company is delivered to
the Company or any Subsidiary of the Company, the Company shall, or shall
cause such Subsidiary, immediately upon receipt, to forward such Debenture
to the Trustee for cancellation.
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(b) Upon any redemption or purchase by the Company or any
Subsidiary of the Company of any Debenture, from and after the
effectiveness of such redemption or purchase, all such Debentures so
redeemed or purchased shall not be deemed to be outstanding and shall not
be taken into account and shall be disregarded for purposes of Article 8
or any other provision of this Indenture requiring any consent, approval,
direction or waiver by Holders of Debentures in determining whether the
holders of the requisite aggregate principal amount of Debentures shall
have concurred in or approved any such consent, approval, direction or
waiver, and neither the Company nor any Subsidiary of the Company shall be
deemed a Holder of Debentures for purposes of this Indenture."
7. SECTION 4.3 of the Indenture is amended to read in its entirety as follows:
"SECTION 4.3 LIMITATION ON SUBSIDIARY DEBT AND PREFERRED STOCK.
(a) The Company shall not permit any Subsidiary of the Company to
Incur or suffer to exist any Debt or issue any Preferred Stock except for
Permitted Debt and Preferred Stock.
(b) The CS Trust shall be permitted to issue and permit to exist
Capital Securities provided that:
(i) the greater of the face amount or amount payable upon
any liquidation, dissolution or winding up of the CS Trust for all
outstanding Capital Securities shall not exceed (A)(1) $24 million
minus (2) the principal amount of Debentures outstanding plus (B) to
the extent the issuance of any Capital Securities by the CS Trust
prior to May 30, 2003, causes the limit in (A) above to be exceeded,
the amount of such excess up to an additional $3 million (provided
that, if this clause (B) is relied upon for compliance with
this SECTION 4.3(b)(i), no additional Capital Securities may
subsequently be issued or permitted to exist except in accordance
with this SECTION 4.3(b)(i) without regard to this clause (B)).
(ii) the Company owns 100% of the outstanding Capital Stock
of NAICO and CIMI, the CS Trust is wholly owned directly by the
Company and the CS Trust does not own, directly or indirectly through
any other Subsidiary of the Company, any Capital Stock of any other
Subsidiary of the Company at the time of issuance and at all times
any Capital Securities remain outstanding;
(iii) the proceeds from the issuance of Capital Securities
and Common Securities by the CS Trust, (A) upon receipt by the CS
Trust, shall be distributed to the Company in exchange for the CS
Trust Debt Securities and (B) to the extent not utilized by the
Company (w) to pay reasonable fees and expenses incurred in
connection with the issuance of the Capital Securities, the Common
Securities and the CS Trust Debt Securities, (x) to redeem,
repurchase or discharge and defease Debentures within 10 business
days after the Company's receipt of such proceeds, (y) for payment or
discharge of taxes, charges, fees or expenses associated with or
related to the redemption, repurchase or discharge and defeasance of
Debentures that are redeemed, purchased or discharged and defeased
within 10 business days after the Company's receipt of such proceeds
or (z) otherwise used as permitted by SECTION 4.3(d)(i), contributed
to NAICO; and
(iv) Capital Securities shall not by their terms (or by the
terms of any document or instrument governing Capital Securities,
including without limitation the CS
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Trust Declaration) permit any holder of Capital Securities to require
the Company or any Subsidiary of the Company (including the CS
Trust) to redeem the Capital Securities, in whole or in part, prior
to July 16, 2014.
(c) The Company shall not, and will not permit any Subsidiary,
including the CS Trust, to:
(i) redeem or repurchase, in whole or in part, any Capital
Securities;
(ii) issue or otherwise distribute or transfer to the CS
Trust any Capital Stock of the Company or any Subsidiary of the
Company or any Debt or other instrument convertible into or
exchangeable or exercisable for any Capital Stock of the Company or
any Subsidiary of the Company;
(iii) except as permitted by SECTION 4.3(d), make any
payments, distributions or contributions, or advance moneys (as a
loan, contribution or otherwise), to the CS Trustee, the CS Trust,
the holders of any Capital Securities or otherwise on account of or
as credit or payment against any CS Trust Debt Securities or Capital
Securities;
(iv) merge with or into the CS Trust or any Subsidiary of
the CS Trust;
(v) except as permitted by SECTION 4.3(e), Guarantee any
obligation of the CS Trust or under the Capital Securities or the
obligations of the Company under the CS Trust Indenture or the CS
Trust Debt Securities;
(vi) modify, amend or waive any terms or provisions of the
CS Indentures, the CS Trust Debt Securities, the CS Guarantee, the
CS Trust Declaration or any other document or instrument governing
the rights of the holders of CS Trust Debt Securities or Capital
Securities; or
(vii) sell, transfer, pledge, assign or otherwise dispose of
any interest in the CS Trust Debt Securities or the Common Securities;
until, in each case, (x) all outstanding Debentures have been repurchased
by the Company or redeemed in accordance with Article 3 or (y) all
principal, interest and any and all other amounts outstanding under or
payable with respect to the outstanding Debentures under this Indenture or
the Debentures shall have been paid in full or discharged and defeased in
accordance with Article 7.
(d) Notwithstanding SECTION 4.3(c) but subject to SECTION 4.3(f),
(i) the Company may make cash payments, distributions or
contributions, or advance moneys (as a loan, contribution or
otherwise), to the CS Trust or the CS Trustee (on account of the CS
Trust Debt Securities) as follows:
(A) in an amount not to exceed the reasonable costs
and expenses required to initially organize and form the CS
Trust;
(B) in an amount not to exceed, in any calendar year,
amounts necessary to fund the reasonable costs of the ordinary
operations of the CS Trust; and
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(C) in accordance with the CS Trust Indenture, to the
extent and in the amounts required to pay interest payable
pursuant to the terms of the CS Trust Debt Securities, which
payments, distributions, contributions and advancements shall
not exceed the amount of cash dividends or interest payable
pursuant to the terms of the Capital Securities and the Common
Securities ("CS TRUST SECURITIES PAYMENTS") and shall be
limited to amounts required to pay such CS Trust Securities
Payments that are due and payable pursuant to the terms of the
Capital Securities and the Common Securities within 10
business days of such payment, distribution, contribution or
advance; and
(ii) the CS Trust or CS Trustee may make payments to holders
of Capital Securities and the Common Securities in amounts required
to pay regularly scheduled CS Trust Securities Payments in accordance
with the terms of the CS Trust Declaration and the Capital Securities
and the Common Securities on or within five business days prior to
their regularly scheduled applicable Distribution Payment Date (as
defined in the CS Trust Declaration);
provided that the Company shall not, and shall not permit the CS
Trust to, do any of the foregoing if (1) the Company has defaulted in
any payment of interest on any Debenture when the same has become due
and payable and such default is continuing; (2) an Event of Default
under SECTION 5.1(i) OR (ii) of the Indenture shall have occurred
(including as a result of a declaration of acceleration of payment
due dates in accordance with SECTION 5.2 which has not been
rescinded) and not been waived or (3) a Default under SECTION
5.1(iii), (iv) OR (viii) of the Indenture shall have occurred and be
continuing and the Trustee or Holder of at least 25% in principal
amount of the outstanding Debentures shall have given written notice
to the Company of intent to declare the principal of and accrued but
unpaid interest on all Debentures due and payable upon expiration of
the applicable grace period if such Default is not cured (provided if
such Default shall be cured within such grace period this clause (3)
shall no longer prohibit such action with respect to such Default).
(e) The Company may Guarantee the payment of principal, interest
and other amounts payable on account of the Capital Securities pursuant to
the CS Trust Guaranty.
(f) The Company shall provide written notice to the Trustee, the
CS Trust Trustee and the Holders of:
(i) the occurrence or existence of any claim asserted or
threatened against the Company or any Subsidiary of the Company under
the CS Trust Guaranty promptly upon the Company's (or such
Subsidiary's) receipt of any such asserted or threatened claim;
(ii) the occurrence or existence of any "Event of Default"
as defined in the CS Trust Guaranty;
(iii) the occurrence or existence of any "Default" or "Event
of Default" as defined in the CS Trust Declaration;
(iv) the occurrence or existence of any "Default" or "Event
of Default" as defined in the CS Trust Indenture; or
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(v) the occurrence or existence of any Default or Event of
Default under this Indenture.
The written notice required by this SECTION 4.3(f) shall be given
promptly upon (and in any event with 2 business days after) the
occurrence of each event requiring such notice and shall state with
reasonable specificity the event requiring notice. Upon the occurrence of
any event described in clause (i) through (v) of this SECTION 4.3(f), the
Company shall not make any payment, distribution or contribution, or
advance moneys (as a loan, contribution or otherwise), to the CS Trustee,
the CS Trust, any holders of Capital Securities or otherwise on account of
or as credit or payment against any CS Trust Debt Securities, Common
Securities or Capital Securities until at least 10 business days after
such notice is given to the Trustee and the Holders and, after such time,
only to the extent otherwise permitted under this Indenture. The
provisions of this SECTION 4.3(f) shall not be deemed to permit any
payment, distribution, contribution or advancement of moneys that
otherwise is prohibited by this Indenture.
8. SECTION 4.4 of the Indenture shall be amended to read in its entirety as
follows:
"SECTION 4.4 LIMITATION ON LIENS. The Company shall not, and shall not
permit any Subsidiary of the Company to, Incur any Lien on any property or
assets of the Company or any Subsidiary to secure Debt without making, or
causing such Subsidiary to make, effective provision for securing the
Debentures (and, if required by its governing instruments, any other Debt
of the Company or of such Subsidiary that is not subordinate to the
Debentures) equally and ratably with such Debt as to such property or
assets for so long as such Debt will be so secured or, in the event such
Debt is Debt of the Company which is subordinate in right of payment to
the Debentures, prior to such Debt as to such property or assets for so
long as such Debt will be secured; provided, however, that (i) nothing
contained in this covenant shall prevent, restrict or apply to, and there
shall be excluded from secured Debt in any computation under this Section,
Liens existing on the date of this Indenture and Permitted Liens and (ii)
neither the Company nor any Subsidiary of the Company may Incur any Lien on
any property or assets of the Company or any Subsidiary of the Company to
secure any Debt evidenced by any Capital Securities, any CS Trust Debt
Securities or any principal, interest or other amounts payable on account
of the CS Capital Securities or the CS Trust Debt Securities (collectively,
with the CS Trust Securities Payments, the "CS TRUST SECURITIES PAYMENT
OBLIGATIONS").
9. Clause (iii) of SECTION 5.1 of the Indenture is amended to read in its
entirety as follows:
"(iii) subject to and except as provided in clause (ix) of this
SECTION 5.1, the Company fails to comply with any of its covenants or
agreements in the Debentures or this Indenture (other than those referred
to in (i) or (ii) above) and such failure continues for 60 days after the
notice specified below;"
10. New clauses (ix), (x), (xi) and (xii) shall be added to SECTION 5.1 of the
Indenture and said clauses (ix), (x), (xi) and (xii) shall read in their
entirety as follows:
"(ix) the Company fails to comply with any of its covenants in SECTIONS
4.3(b), (c), (d), (e) OR (f) of this Indenture.;
(x) the Company defaults, or any event of default (or any event or
occurrence which with the passage of time and with or without notice would
result in a default or event of default) occurs, under the CS Trust
Guaranty, the CS Trust Indenture or any other agreement or instrument
evidencing any CS Trust Securities Payment Obligation, any "Event of
Default" as defined in the
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CS Trust Guaranty or the CS Trust Indenture occurs or any "Default" as
defined in the CS Trust Indenture occurs; or
(xi) the CS Trust or CS Trustee defaults in the payment of any dividend,
interest or distribution payment with respect to any Capital Securities or
suspends or extends the payment date of any dividend, interest or
distribution payment with respect to Capital Securities beyond its
initially scheduled payment date or any "Event of Default" or "Default" as
defined in the CS Trust Declaration occurs; or
(xii) the Company makes any payment, distribution, contribution or
advancement of moneys under or pursuant to the CS Trust Guaranty at any
time prior to the time which (A) all outstanding Debentures have been
repurchased by the Company or redeemed in accordance with Article 3 or (B)
all principal, interest and any and all other amounts outstanding under or
payable with respect to the outstanding Debentures under this Indenture or
the Debentures shall have been paid in full or discharged and defeased in
accordance of Article 7.
11. (a) The undersigned Holders agree that for purposes of SECTION 4.3(b)(i)
of this Indenture, the Initial Redeemed Debentures shall be deemed to have been
purchased by the Company and cancelled and no longer outstanding immediately
prior to the effectiveness of this Amendment notwithstanding that such purchase
and cancellation may occur after the effective date of this Amendment; provided
that this entire SECTION 11 shall cease to be effective if the purchase and
cancellation of the Initial Redeemed Debenture shall not have occurred on or
before May 30, 2003.
(b) Subject to SECTION 11(a), to the extent required under the terms of
the Indenture, this SECTION 11 shall constitute a waiver by the undersigned
Holders of SECTION 4.3(b)(i) of the Indenture with respect to any Capital
Securities (as defined in the Indenture), up to a maximum face amount (or, if
greater, liquidation preference or value) of $13 million, issued between the
effective date of this Amendment and the earlier of (i) the closing of the
purchase of the Initial Redeemed Debentures or (ii) May 30, 2003 (the "GRACE
PERIOD"), (x) that could have been issued had the purchase of the Initial
Redeemed Debentures occurred prior to the issuance of such Capital Securities
and (y) if after giving effect to the foregoing clause (x) the issuance of
such Capital Securities exceeds the limits of SECTION 4.3(b)(i), to the extent
and for so long as such Capital Securities exceeds the limit in SECTION
4.3(b)(i). For clarity and example, if the face amount, or, if greater
liquidation preference or value, of all Capital Securities issued during the
Grace Period is $13 million and $10 million of Debentures are purchased by the
Company during the Grace Period, SECTION 4.3(b)(i) shall be waived only to the
extent necessary to allow such Capital Securities to be issued and remain
outstanding, but no additional Capital Securities may be issued other than in
compliance with SECTION 4.3(b)(i), determined giving effect to all outstanding
Capital Securities, including the Capital Securities issued during the Grace
Period.
12. The Company covenants and agrees that the Initial Redeemed Debentures will
be cancelled in accordance with SECTION 3.8(b) of the Indenture.
13. This Amendment shall cease to be effective and shall be void AB INITIO if
the Company shall not have purchased (or irrevocably tendered payment for the
purchase of) on or before the earlier of (i) one business day after the date
of funding of the CS Trust's first issuance of the Capital Securities or (ii)
May 30, 2003, the Initial Redeemed Debentures identified below for the price
as set forth in the letters, from the Company to each of the following
delivered by cover letter dated May 6, 2003:
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DEBENTURE HOLDER PRINCIPAL AMOUNT
------------------ ----------------
Swiss Reinsurance America Corporation $5,000,000
Southwest Securities (held through Cede & Co.) $5,000,000
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The foregoing Amendment is agreed to by the Trustee and the Company and
consented to by the undersigned effective as of the 13th day of May, 2003.
THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
▇▇▇▇▇▇▇▇ (U.S.A.), INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
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W. ▇▇▇▇▇ ▇▇▇▇▇▇, Chairman of the Board and Chief
Executive Officer
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The undersigned, Southwest Securities, Inc. states that as of the
effective date it is the Holder of $11,586,000 in principal amount of the
Debentures currently outstanding and hereby consents to the above and
foregoing Amendment.
SOUTHWEST SECURITIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer
The undersigned, Swiss Reinsurance America Corporation states that as of
the effective date it is the Holder of $5,000,000 in principal amount of the
Debentures currently outstanding and hereby consents to the above and
foregoing Amendment.
SWISS REINSURANCE AMERICA CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, in his capacity as Managing Director
of Swiss Re Asset Management (America) Inc., investment
manager for Swiss Reinsurance America Corporation
SWISS REINSURANCE AMERICA CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, in his capacity as Vice President
of Swiss Re Asset Management (America) Inc., investment
manager for Swiss Reinsurance America Corporation
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