Exhibit 4.2
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AMENDED AND RESTATED DECLARATION
OF TRUST
by and among
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Institutional Trustee,
PROSPERITY BANCSHARES, INC.,
as Sponsor,
and
H.E. "XXX" XXXXXXX, JR., XXXXX XXXXXXXX, and
XXXXX XXXXXX
as Administrators,
Dated as of July 31, 2001
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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
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ARTICLE II ORGANIZATION................................................................................. 7
Section 2.1. Name............................................................................... 7
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Section 2.2. Office............................................................................. 7
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Section 2.3. Purpose............................................................................ 7
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Section 2.4. Authority.......................................................................... 7
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Section 2.5. Title to Property of the Trust..................................................... 8
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Section 2.6. Powers and Duties of the Institutional Trustee and the Administrators.............. 8
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Section 2.7. Prohibition of Actions by the Trust and the Institutional Trustee.................. 11
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Section 2.8. Powers and Duties of the Institutional Trustee..................................... 11
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Section 2.9. Certain Duties and Responsibilities of the Institutional Truste and
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Administrators..................................................................... 13
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Section 2.10. Certain Rights of Institutional Trustee............................................ 14
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Section 2.11. Execution of Documents............................................................. 16
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Section 2.12. Not Responsible for Recitals or Issuance of Securities............................. 16
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Section 2.13. Duration of Trust.................................................................. 16
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Section 2.14. Mergers............................................................................ 16
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ARTICLE III SPONSOR..................................................................................... 18
Section 3.1. Sponsor's Purchase of Common Securities............................................ 18
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Section 3.2. Responsibilities of the Sponsor.................................................... 18
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Section 3.3. Expenses........................................................................... 18
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Section 3.4. Right to Proceed................................................................... 19
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ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS..................................................... 19
Section 4.1. Institutional Trustee; Eligibility................................................. 19
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Section 4.2. Administrators..................................................................... 19
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Section 4.3. Appointment, Removal and Resignation of Institutional Trustee and
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Administrators..................................................................... 20
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Section 4.4. Institutional Trustee Vacancies.................................................... 21
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Section 4.5. Effect of Vacancies................................................................ 21
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Section 4.6. Meetings of the Institutional Trustee and the Administrators....................... 21
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Section 4.7. Delegation of Power................................................................ 21
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Section 4.8. Conversion, Consolidation or Succession to Business................................ 22
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ARTICLE V DISTRIBUTIONS................................................................................. 22
Section 5.1. Distributions...................................................................... 22
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ARTICLE VI ISSUANCE OF SECURITIES....................................................................... 22
Section 6.1. General Provisions Regarding Securities............................................ 22
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Section 6.2. Paying Agent, Transfer Agent and Registrar......................................... 23
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Section 6.3. Form and Dating.................................................................... 23
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Section 6.4. Mutilated, Destroyed, Lost or Stolen Certificates.................................. 24
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Section 6.5. Temporary Securities............................................................... 24
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Section 6.6. Cancellation....................................................................... 24
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Section 6.7. Rights of Holders; Waivers of Past Defaults....................................... 24
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ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST....................................................... 26
Section 7.1. Dissolution and Termination of Trust.............................................. 26
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ARTICLE VIII TRANSFER OF INTERESTS..................................................................... 27
Section 8.1. General........................................................................... 27
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Section 8.2. Transfer Procedures and Restrictions.............................................. 27
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Section 8.3. Deemed Security Holders........................................................... 29
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ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS........... 30
Section 9.1. Liability......................................................................... 30
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Section 9.2. Exculpation....................................................................... 30
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Section 9.3. Fiduciary Duty.................................................................... 30
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Section 9.4. Indemnification................................................................... 31
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Section 9.5. Outside Businesses................................................................ 33
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Section 9.6. Compensation; Fee................................................................. 33
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ARTICLE X ACCOUNTING................................................................................... 33
Section 10.1. Fiscal Year....................................................................... 33
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Section 10.2. Certain Accounting Matters........................................................ 34
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Section 10.3. Banking........................................................................... 34
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Section 10.4. Withholding....................................................................... 34
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ARTICLE XI AMENDMENTS AND MEETINGS..................................................................... 35
Section 11.1. Amendments........................................................................ 35
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Section 11.2. Meetings of the Holders of Securities; Action by Written Consent.................. 36
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ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE................................................... 37
Section 12.1. Representations and Warranties of Institutional Trustee........................... 37
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ARTICLE XIII MISCELLANEOUS............................................................................. 38
Section 13.1. Notices........................................................................... 38
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Section 13.2. Governing Law..................................................................... 39
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Section 13.3. Intention of the Parties.......................................................... 39
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Section 13.4. Headings.......................................................................... 39
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Section 13.5. Successors and Assigns............................................................ 39
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Section 13.6. Partial Enforceability............................................................ 39
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Section 13.7. Counterparts...................................................................... 39
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Annex I..............Terms of Securities
Exhibit A-I..........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
PROSPERITY STATUTORY TRUST II
JULY 31, 2001
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
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effective as of July 31, 2001, by the Institutional Trustee (as defined herein),
the Administrators (as defined herein), the Sponsor (as defined herein) and by
the holders, from time to time, of undivided beneficial interests in the Trust
(as defined herein) to be issued pursuant to this Declaration;
WHEREAS, the Institutional Trustee, the Administrators and the Sponsor
established Prosperity Statutory Trust II (the "Trust"), a statutory trust under
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the Connecticut Statutory Trust Act pursuant to a Declaration of Trust dated as
of July 19, 2001 (the "Original Declaration"), and a Certificate of Trust filed
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with the Secretary of State of the State of Connecticut on July 19, 2001, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain debentures of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
and
WHEREAS, the Institutional Trustee, 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 (as defined herein)
and that this Declaration constitutes the governing instrument of such statutory
trust, the Institutional Trustee declares that all assets contributed to the
Trust will be held in trust for the benefit of the holders, from time to time,
of the securities representing undivided beneficial interests in the assets of
the Trust issued hereunder, subject to the provisions of this Declaration. The
parties hereto hereby agree as follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires:
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(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice versa.
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"Additional Interest" has the meaning set forth in the Indenture.
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"Administrative Action" has the meaning set forth in paragraph 4(a) of
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Annex I.
"Administrators" means each of H.E. "Xxx" Xxxxxxx, Jr. Xxxxx Xxxxxxxx and
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Xxxxx Xxxxxx, 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
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Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
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bind such Person.
"Bankruptcy Event" means, with respect to any Person:
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(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.
"Business Day" means any day other than Saturday, Sunday or any other day
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on which banking institutions in New York City or Hartford, Connecticut are
permitted or required by any applicable law to close.
"Capital Securities" has the meaning set forth in paragraph 1(a) of
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Annex I.
"Capital Security Certificate" means a definitive Certificate in fully
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registered form representing a Capital Security substantially in the form of
Exhibit A-1.
"Capital Treatment Event" has the meaning set forth in paragraph 4(a) of
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Annex I.
"Certificate" means any certificate evidencing Securities.
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"Closing Date" has the meaning set forth in the Placement Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
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time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
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"Common Securities" has the meaning set forth in paragraph 1(b) of Annex I.
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"Common Security Certificate" means a definitive Certificate in fully
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registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Company Indemnified Person" means (a) any Administrator; (b) any Affiliate
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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.
"Corporate Trust Office" means the office of the Institutional Trustee at
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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 000 Xxxxxx Xxxxxx, Xxxxxxx Square,
Hartford, Connecticut.
"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
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"Covered Person" means: (a) any Administrator, officer, director,
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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 3.3.
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"Debenture Issuer" means Prosperity Bancshares, Inc., a Texas corporation,
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in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means State Street Bank and Trust Company of
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Connecticut, National Association, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the Floating Rate Junior Subordinated Deferrable
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Interest Debentures due 2031 to be issued by the Debenture Issuer under the
Indenture.
"Defaulted Interest" has the meaning set forth in the Indenture.
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"Determination Date" has the meaning set forth in paragraph 4(a) of Annex
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I.
"Direct Action" has the meaning set forth in Section 2.8(d).
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"Distribution" means a distribution payable to Holders of Securities in
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accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(b) of
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Annex I.
"Distribution Period" has the meaning set forth in paragraph 2(a) of Annex
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I.
"Distribution Rate" means, for the period beginning on (and including) the
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date of original issuance and ending on (but excluding) October 31, 2001, 7.29%
and for the period beginning on (and including) October 31, 2001 and thereafter,
the Coupon Rate.
"Event of Default" means any one of the following events (whatever the
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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
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(b) default by the Trust in the payment of any 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, as amended from
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time to time, or any successor legislation.
"Extension Period" has the meaning set forth in paragraph 2(b) of Annex I.
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"Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.
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"Fiduciary Indemnified Person" shall mean the Institutional Trustee, any
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Affiliate of the Institutional Trustee and any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1.
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"Guarantee" means the guarantee agreement to be dated as of the Closing
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Date, of the Sponsor in respect of the Capital Securities.
"Holder" means a Person in whose name a Certificate representing a Security
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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
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Indemnified Person.
"Indenture" means the Indenture dated as of the Closing Date, between the
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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
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Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
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requirements set forth in Section 4.1.
"Interest" means any interest due on the Debentures including any
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Additional Interest and Defaulted Interest.
"Investment Company" means an investment company as defined in the
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Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
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amended from time to time, or any successor legislation.
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"Investment Company Event" has the meaning set forth in paragraph 4(a) of
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Annex I.
"Legal Action" has the meaning set forth in Section 2.8(d).
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"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
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"Liquidation Distribution" has the meaning set forth in paragraph 3 of
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Annex I.
"Majority in liquidation amount of the Securities" means Holder(s) of
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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 4(a) of Annex I.
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"Officers' Certificates" means, with respect to any Person, a certificate
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signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant providing for
it in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"OTS" has the meaning set forth in paragraph 3 of Annex I.
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"Paying Agent" has the meaning specified in Section 6.2.
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"Payment Amount" has the meaning set forth in Section 5.1.
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"Person" means a legal person, including any individual, corporation,
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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
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offering and sale of Capital Securities in the form of Exhibit C.
"Property Account" has the meaning set forth in Section 2.8(c).
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"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
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"Quorum" means a majority of the Administrators or, if there are only two
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Administrators, both of them.
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"Redemption Date" has the meaning set forth in paragraph 4(a) of Annex I.
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"Redemption/Distribution Notice" has the meaning set forth in paragraph
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4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.
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"Registrar" has the meaning set forth in Section 6.2.
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"Responsible Officer" means, with respect to the Institutional Trustee, any
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officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, 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).
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"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
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"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
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"Securities" means the Common Securities and the Capital Securities.
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"Securities Act" means the Securities Act of 1933, as amended from time to
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time, or any successor legislation.
"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
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"Special Redemption Date" has the meaning set forth in paragraph 4(a) of
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Annex I.
"Special Redemption Price" has the meaning set forth in paragraph 4(a) of
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Annex I.
"Sponsor" means Prosperity Bancshares, Inc., a Texas corporation, or any
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successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Statutory Trust Act" means Chapter 615 of Title 34 of the Connecticut
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General Statutes, Sections 500, et seq. as may be amended from time to time.
"Successor Entity" has the meaning set forth in Section 2.14(b).
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"Successor Institutional Trustee" has the meaning set forth in Section
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4.3(a).
"Successor Securities" has the meaning set forth in Section 2.14(b).
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"Super Majority" has the meaning set forth in paragraph 5(b) of Annex I.
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"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
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"10% in liquidation amount of the Securities" means Holder(s) of
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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
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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 4(a) of Annex I.
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"Transfer Agent" has the meaning set forth in Section 6.2.
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"Treasury Regulations" means the income tax regulations, including
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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
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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.
"U.S. Person" means a United States Person as defined in Section
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7701(a)(30) of the Code.
ARTICLE II
ORGANIZATION
Section 2.1. Name. The Trust is named "Prosperity Statutory Trust II," as
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such name may be modified from time to time by the Administrators following
written notice to 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
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c/o State Street Bank and Trust Company of Connecticut, National Association,
000 Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000. On at least 10
Business Days written notice to 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
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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 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
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Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by the
Institutional Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Institutional Trustee acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Institutional Trustee to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the
Institutional Trustee 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.
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Section 2.5. Title to Property of the Trust. Except as provided in Section
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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.
Section 2.6. Powers and Duties of the Institutional Trustee and the
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Administrators.
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(a) The Institutional Trustee 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 Institutional Trustee 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
Institutional Trustee 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 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 and deliver
on behalf of the Trust, such agreements as may be necessary or desirable in
connection with the purposes and function of the Trust, including
agreements with the Paying Agent;
(C) ensuring compliance with the Securities Act, applicable
state securities or blue sky laws;
(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;
(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 Declaratio n;
(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;
(I) the taking of any action incidental to the foregoing as the
Institutional Trustee may from time to time determine is necessary or
advisable 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);
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(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; and
(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.
(ii) As among the Institutional Trustee and the Administrators, the
Institutional Trustee shall have the power, duty and authority 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;
(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 Connecticut;
(I) after any Event of Default (provided that such Event of
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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 or advisable 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 Connecticut and of each other jurisdiction 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.
(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
9
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
Institutional Trustee 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 Institutional Trustee
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 (x) to
cause the Trust to fail or cease to qualify as a "grantor trust" for United
States federal income tax purposes or (y) 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.
(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 States 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
10
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 Institutional
Trustee pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the
Institutional Trustee shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(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 for the benefit of the Trust in
accordance with this Declaration.
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 an 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.
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 4.3. Such vesting and cessation
11
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.
(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, and 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 ("Legal Action") which arises
------------
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
principal on the Debentures on the date such interest 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 interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
-------------
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of 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 4.3.
12
(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 6.7), 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 it shall have reasonable
grounds to believe that repayment of such funds or adequate protection against
such risk of liability is not reasonably assured to it. 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. Nothing in this Declaration shall be construed to relieve an
Administrator or the Institutional Trustee from liability for its own negligent
failure to act, or its 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 Institutional Trustee 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 Institutional Trustee
expressly set forth elsewhere in this Declaration.
13
(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;
(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;
14
(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;
(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, 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;
15
(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;
(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. 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 on behalf of the
Trust any documents that the Institutional Trustee or the Administrators, as the
case may be, have the power and authority to execute pursuant to Section 2.6.
Section 2.12. Not Responsible for Recitals or Issuance of Securities. The
------------------------------------------------------
recitals contained in this Declaration and the Securities shall be taken as the
statements of the Sponsor, and the Institutional Trustee does not assume any
responsibility for their correctness. The Institutional Trustee makes no
representations as to the value or condition of the property of the Trust or any
part thereof. The Institutional Trustee makes no representations as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.
Section 2.13. 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 2.14. 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 this Section 2.14(b) and (c).
(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:
----------------
16
(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 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 (other than with respect to any dilution of such Holders' interests
in the Successor Entity as a result of such merger, consolidation,
amalgamation or replacement);
(iv) the Institutional Trustee receives written confirmation from
Xxxxx'x Investor Services, Inc. or any other 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 (other than with respect to any dilution of the
Holders' interest in the Successor Entity);
(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 2.14(b) to such
transaction have been satisfied.
17
(c) Notwithstanding Section 2.14(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 States in which to take appropriate action to qualify
or register for sale all or part of the Capital Securities and to do any and all
such acts, other than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States; and
(b) to negotiate the terms of and/or execute on behalf of the Trust, the
Placement Agreement and other related agreements providing for the sale of the
Capital Securities.
Section 3.3. Expenses. In connection with the offering, sale and issuance
--------
of the Debentures to the Institutional Trustee 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) to 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.
18
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.
Section 3.4. 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. 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 trust company organized and doing
business under the laws of the United States of America or any state
thereof or the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000.00), and subject to supervision or
examination by Federal, state, or District of Columbia authority. If such
corporation 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 4.1(a)(iii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(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) The initial Institutional Trustee shall be State Street Bank and Trust
Company of Connecticut, National Association.
Section 4.2. 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 H.E. "Xxx" Xxxxxxx, Jr. Xxxxx Xxxxxxxx and Xxxxx Xxxxxx.
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.
19
Section 4.3. Appointment, Removal and Resignation of Institutional Trustee
-------------------------------------------------------------
and Administrators.
------------------
(a) Notwithstanding anything to the contrary in this Declaration, no
resignation or removal of the Institutional Trustee and no appointment of a
Successor Institutional Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Institutional Trustee in
accordance with the applicable requirements of this Section 4.3.
Subject to the immediately preceding paragraph, the Institutional Trustee
may resign at any time by giving written notice thereof to the Holders of the
Securities and by appointing a Successor Institutional 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, its 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"). If the instrument of acceptance by the Successor
---------------------
Institutional Trustee required by this Section 4.3 shall not have been delivered
to the Institutional Trustee within 60 days after the giving of such notice of
resignation or delivery of the instrument of removal, the Institutional 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
Institutional Trustee. Such court may thereupon, after prescribing such notice,
if any, as it may deem proper, appoint a Successor Institutional Trustee. The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.3.
The Institutional Trustee may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Institutional Trustee (in its individual capacity and on behalf of the Trust) if
an Event of Default shall have occurred and be continuing. If the Institutional
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 Institutional Trustee, shall promptly appoint a
Successor Institutional Trustee, and such Successor Institutional Trustee shall
comply with the applicable requirements of this Section 4.3. If no Successor
Institutional 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 4.3, within 30 days after delivery of an
instrument of removal, 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 Institutional Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Institutional Trustee.
The Institutional Trustee shall give notice of its resignation and removal
and each appointment of a Successor Institutional 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 Institutional Trustee and the
address of its Corporate Trust Office.
(b) In case of the appointment hereunder of a Successor Institutional
Trustee, the retiring Institutional Trustee and the Successor Institutional
Trustee shall execute and deliver an amendment hereto wherein the Successor
Institutional 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, the Successor Institutional Trustee all the rights, powers,
trusts and duties of the retiring Institutional 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 Institutional Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Institutional Trustees co-trustees and upon the execution and delivery of such
amendment the
20
resignation or removal of the retiring Institutional Trustee shall become
effective to the extent provided therein and each Successor Institutional
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Institutional Trustee;
but, on request of the Trust of any Successor Institutional Trustee such
retiring Institutional Trustee shall duly assign, transfer and deliver to such
Successor Institutional Trustee all Trust Property, all proceeds thereof and
money held by such retiring Institutional Trustee hereunder with respect to the
Securities and the Trust.
(c) No Institutional Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee.
(d) 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.
Section 4.4. Institutional Trustee Vacancies. If the Institutional Trustee
-------------------------------
ceases to hold office for any reason a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Institutional Trustee shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a trustee appointed in accordance with Section 4.3.
Section 4.5. Effect of Vacancies. The death, resignation, retirement,
-------------------
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of the Institutional Trustee shall not operate to dissolve,
terminate or annul the Trust or terminate this Declaration.
Section 4.6. Meetings of the Institutional Trustee 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
Institutional Trustee with the Administrators or meetings of the Administrators
shall be hand delivered or otherwise delivered in writing (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 Institutional Trustee
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 the Institutional Trustee or an Administrator, as the case may be,
at a meeting shall constitute a waiver of notice of such meeting except where
the Institutional 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 Institutional Trustee
or the Administrators, as the case may be, may be taken at a meeting by vote of
the Institutional Trustee or a majority vote of the Administrators present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Institutional Trustee or the Administrators. Meetings of
the Institutional Trustee and the Administrators together shall be held from
time to time upon the call of the Institutional Trustee or an Administrator.
Section 4.7. 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
21
(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 4.8. Conversion, Consolidation or Succession to Business. Any
---------------------------------------------------
Person into which the Institutional 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 shall be a party,
or any Person succeeding to all or substantially all the corporate trust
business of the Institutional Trustee shall be the successor of the
Institutional Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
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 amount of
any such payment being a "Payment Amount"), the Institutional Trustee shall and
--------------
is directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
------------
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 substantially in the form of Exhibit A-1 representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I and one series of common securities 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
22
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.
(c) 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.
(d) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and non-
assessable.
(e) 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 Hartford, Connecticut, an office or agency where the Capital
Securities may be presented for payment ("Paying Agent"), and an office or
------------
agency where Securities may be presented for registration of transfer (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, such register to be held by a registrar (the
"Registrar"). The Administrators may appoint the Paying Agent, the Registrar,
---------
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 it 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 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 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 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 a stated
liquidation amount of not less than $500,000.00 and any multiple of $1,000.00 in
excess thereof.
The Capital Securities are being offered and sold by the Trust pursuant to
the Placement Agreement in definitive, registered form without coupons with the
Restricted Securities Legend.
23
Section 6.4. 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 6.4, 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 6.5. 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 6.6. 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.
Section 6.7. 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
24
provided in the Indenture, if the Institutional Trustee 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
(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 or Event of Default under the Indenture, except a default or
Event of Default in the payment of principal or interest (unless such default or
Event of Default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default or Event of Default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the 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 6.7.
(c) Except as otherwise provided in paragraphs (a) and (b) of this Section
6.7, 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,
25
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.
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 July 31, 2036, 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 the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor, 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 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;
(v) upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as provided in Annex I
hereto;
(vi) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor, the Trust or the Debenture
Issuer;
(vii) 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
(viii) before the issuance of any Securities, with the consent of the
Institutional Trustee 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 Connecticut.
(c) The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.
26
ARTICLE VIII
TRANSFER OF INTERESTS
Section 8.1. General.
-------
(a) Subject to Section 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 number 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 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. 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 6.6. 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.
(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 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 the unredeemed
portion of any Security being redeemed in part.
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 licensed to
practice law in the State of Connecticut, 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
27
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:
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. 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 OF TRUST, 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
28
"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 THE
SECURITIES 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
THE SECURITIES 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 $500,000.00 (500 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 $500,000.00
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.
(c) To permit registrations of transfers and exchanges, the Trust 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
-----------------------
Institutional Trustee, 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 Institutional
Trustee, the Paying Agent, the Transfer Agent or the Registrar shall have actual
or other notice thereof
29
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 Connecticut.
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.
30
(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 (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
31
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.
(e) To the fullest extent permitted by law, 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 Institutional Trustee, at the sole cost and expense of the
Sponsor, retains the right to representation by counsel of its 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 its right to
indemnification hereunder or waiving any rights afforded to it 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
32
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.
(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 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 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 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 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 Institutional Trustee from time to time such
compensation for all services rendered by it 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
Institutional Trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by the Institutional Trustee 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
the Institutional 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.
ARTICLE X
ACCOUNTING
Section 10.1. Fiscal Year. The fiscal year ("Fiscal Year") of the Trust
----------- -----------
shall be the calendar year, or such other year as is required by the Code.
33
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 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 Form 1099 or such other annual United States
federal income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such 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 Trust in the United States, as defined
for purposes of Treasury regulations section 301.7701-7, 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, 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. 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.
34
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.
(b) Notwithstanding any other provision of this Article XI, no amendment
shall be made, and any such purported amendment shall be void and ineffective:
(i) unless 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
(ii) if the result of such amendment would be to
(A) cause the Trust to cease to be classified for purposes
of United States federal income taxation as a grantor trust; or
(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 otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or change any
conversion or exchange provisions or (ii) restrict the right of a Holder to
institute suit for the enforcement of any such payment on or after such date.
(e) Section 8.1 (b) and 8.1(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 under Article IV
to appoint and remove the Institutional Trustee shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Capital
Securities.
35
(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;
provided, however, that no such modification, elimination or addition
-------- -------
referred to in clauses (i), (ii) or (iii) 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 Securities; Action by Written
--------------------------------------------------------
Consent.
-------
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrators (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration 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 class of Securities. Such direction shall be given by delivering to the
Administrators one or more calls in a writing stating that the signing Holders
of the 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 amount of
Securities in liquidation amount 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
36
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 Connecticut relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Connecticut corporation and the Holders of the Securities were stockholders
of a Connecticut 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
(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
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 national banking association with trust
powers, duly organized and validly existing under the laws of the United States
of America 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 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);
(c) 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
37
(d) 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.
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):
Prosperity Statutory Trust II
c/o Prosperity Bancshares, Inc.
0000 Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000)000-0000
(b) 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):
State Street Bank and Trust Company of Connecticut, National
Association
000 Xxxxxx Xxxxxx, Xxxxxxx Square
Hartford, Connecticut 06103
Attention: Vice President, Corporate Trust Department
Telecopy: 000-000-0000
With a copy to:
State Street Bank and Trust Company
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Corporate Trust Department
Telecopy: (000) 000-0000
(c) 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):
Prosperity Bancshares, Inc.
0000 Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000)000-0000
(d) if given to any other Holder, at the address set forth on the books
and records of the Trust.
38
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 13.2. Governing Law. This Declaration and the rights of the
-------------
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Connecticut and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of
Connecticut or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Connecticut; provided, however,
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that there shall not be applicable to the Trust, the Institutional Trustee or
this Declaration any provision of the laws (statutory or common) of the State of
Connecticut 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 Institutional Trustee 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 Institutional Trustee 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
39
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Institutional Trustee
By: /s/ XXXX X. XXXXX
__________________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
PROSPERITY BANCSHARES, INC., as Sponsor
By: /s/ XXXXX XXXXXX
__________________________________________
Name: Xxxxx Xxxxxx
Title: President/Chief Executive Officer
PROSPERITY STATUTORY TRUST II
By: /s/ H. E. XXXXXXX, JR.
__________________________________________
Administrator - H. E. Xxxxxxx, Jr.
By: /s/ XXXXX X. XXXXXXXX
__________________________________________
Administrator - Xxxxx X. Xxxxxxxx
By: /s/ XXXXX XXXXXX
__________________________________________
Administrator - Xxxxx Xxxxxx
40
ANNEX I
TERMS OF SECURITIES
Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of July 31, 2001 (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) 15,000 Floating Rate Capital Securities of Prosperity Statutory
Trust II (the "Trust"), with an aggregate stated liquidation amount with respect
to the assets of the Trust of Fifteen Million Dollars ($15,000,000) 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) 464 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) October 31, 2001 at a rate per annum of 7.29% and shall bear interest
for each successive period beginning on (and including) October 31, 2001, 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
3.58%; provided, however, that prior to July 31, 2011, such annual rate shall
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not exceed 12.50% (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). 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. The amount of Distributions payable for
any period will be computed for any full quarterly period on the basis of the
actual number of days in the Distribution Period concerned divided by 360. In
the event that any date on which a Distribution is payable on the Securities is
not a Business Day, then payment of interest payable on such date shall be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable. The amount of
interest payable for the Distribution Period commencing on October 31, 2001 and
each succeeding Distribution Period will be calculated by applying the Coupon
Rate to the principal 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
I-1
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).
(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
October 31, January 31, April 30 and July 31, of each year, commencing on
October 31, 2001 (each a "Distribution Payment Date") 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, although such interest would continue to accrue on the Debentures at the
Distribution Rate compounded quarterly (to the extent permitted by law) 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
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no Extension Period may extend beyond the Maturity Date and provided further,
-------- -------
however, during any such Extension Period, the Debenture Issuer and its
-------
Affiliates shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Debenture Issuer's or its Affiliates' capital stock (other than payments of
dividends or distributions to the Debenture Issuer) or make any guarantee
payments with respect to the foregoing, or (ii) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Debenture Issuer or any Affiliate that rank pari passu in all
respects with or junior in interest to the Debentures (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 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
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 of any class or series of the Debenture Issuer's
indebtedness for any class or series of the Debenture Issuer's capital stock,
(c) the purchase of fractional interests in shares of the Debenture Issuer's
capital stock 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 stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's 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. 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
I-2
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.
(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. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such payment date.
(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 distribution to Holders in liquidation of the
Trust (such amount being, in either case, the "Liquidation Distribution"),
------------------------
unless in connection with such Liquidation, the Debentures in 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), subject to the receipt by the Debenture Issuer
of prior approval from the Board of Governors of the Federal Reserve System and
any successor federal agency that is primarily responsible for regulating the
activities of Company (the "Federal Reserve"), if the Company is a bank holding
---------------
company, or from the Office of Thrift Supervision and any successor federal
agency that is primarily responsible for regulating the activities of Company,
(the "OTS") if the company is a savings and loan holding company, in either case
---
if then required under applicable capital guidelines or policies of the Federal
Reserve or OTS, as applicable, and, after
I-3
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 Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.
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 Trust
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) the Holders of the Capital Securities will receive
certificates representing the Debentures to be delivered upon such distribution,
and (iii) any certificates representing the Capital 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.
4. Redemption and Distribution.
---------------------------
(a) The Debentures will mature on July 31, 2031. The Debentures may
be redeemed by the Debenture Issuer, in whole or in part at any time and from
time to time on or after July 31, 2006, at the 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. In each case, the right of the Debenture
Issuer to redeem the Debentures is subject to the Debenture Issuer having
received prior approval from the Federal Reserve (if the Debenture Issuer is a
bank holding company) or prior approval from the OTS (if the Debenture Issuer is
a savings and loan holding company), in each case if then required under
applicable capital guidelines or policies of the applicable federal agency.
"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
I-4
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 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, duties or other
governmental charges.
"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 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.
"Capital Treatment Event" means the receipt by the Debenture Issuer and the
-----------------------
Trust of an opinion of counsel that, as a result of the occurrence of any
amendment to, or change (including any announced prospective change) in, the
laws of the United States or any political subdivision thereof or therein, or as
the result of any official or administrative pronouncement or action or decision
interpreting or applying such laws, rules or regulations, which amendment or
change is effective or which pronouncement, action or decision is announced on
or after the date of issuance of the Debentures, there is more than an
insubstantial risk that the Sponsor will not be entitled to treat an amount
equal to the aggregate liquidation amount of the Debentures as "Tier 1 Capital"
(or its then equivalent) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Sponsor (or if the
Sponsor is not a bank holding company, such guidelines applied to the Company as
if the Company were subject to such guidelines); provided, however, that the
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inability of the Sponsor to treat all or any portion of the liquidation amount
of the Debentures as Tier l Capital shall not constitute the basis for a Capital
Treatment Event, if such inability results from the Sponsor having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the Federal Reserve or OTS, as applicable,
may now or hereafter accord Tier 1 Capital treatment in excess of the amount
which may qualify for treatment as Tier 1 Capital under applicable capital
adequacy guidelines; provided further, however, that the distribution of
-------- ------- -------
Debentures in connection with the Liquidation of the Trust shall not in and of
itself constitute a Capital Treatment Event unless such Liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.
"Special Event" means a Tax Event, an Investment Company Event or a Capital
-------------
Treatment Event.
"Redemption Price" means the price set forth in the following table for any
----------------
Redemption Date that occurs within the twelve-month period beginning in the
relevant year indicated below, expressed as the percentage of the principal
amount of the Debentures being redeemed:
Year Beginning on Percentage
----------------- ----------
July 31, 2006 107.5%
July 31, 2007 106.0%
July 31, 2008 104.5%
I-5
July 31, 2009 103.0%
July 31, 2010 101.5%
July 31, 2011 and after 100.0%
plus accrued and unpaid interest on such Debentures to the Redemption Date.
"Special Redemption Date" means a Redemption Date on which a Special Event
-----------------------
redemption occurs.
"Special Redemption Price" means (i) if the Special Redemption Date is
------------------------
before July 31, 2006, an amount in cash equal to 107.5% of the principal amount
of the Debentures to be prepaid, plus accrued and unpaid interest on such
Debentures to such Special Redemption Date, or (ii) if the Special Redemption
Date is on or after July 31, 2006, the price for the Debentures set forth in the
above Redemption Price table for such Special Redemption Date, plus accrued and
unpaid interest on such Debentures to such Special Redemption Date.
"Redemption Date" shall mean the date fixed for the redemption of Capital
---------------
Securities, which shall be October 31, January 31, April 30 or July 31
commencing October 31, 2006.
"3-Month LIBOR" means the London interbank offered rate for three-month,
-------------
Eurodollar deposits determined by the Debenture Trustee in the following order
of priority:
(1) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the particular Determination Date (as
defined below). "Telerate Page 3750" means the display designated as "Page
3750" on the Dow Xxxxx 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. dollars
deposits;
(2) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the Determination Date, 3-Month LIBOR will be the
arithmetic mean of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Determination Date;
(3) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m.
(London time) 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
Eurodollar 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;
(4) if fewer than two such quotations are provided as requested in
clause (3) 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 Eurodollars
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
I-6
(5) if fewer than two such quotations are provided as requested in
clause (4) 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 Eurodollar deposits having a three-
month maturity that initially appears on Telerate Page 3750 or Reuters Page
LIBO, as the case may be, as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate page 3750 or Reuters Page
LIBO, as the case may be, 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.
(6) The Coupon 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 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.
"Maturity Date" means July 31, 2031.
-------------
(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
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 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.
I-7
(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 pay the relevant
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 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 Redemption Price or Special Redemption Price
specified in paragraph 4(a), but without interest on such Redemption Price
or Special Redemption Price. If any date fixed for redemption of
Securities is not a Business Day, then payment of any such Redemption Price
or Special Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment of the
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 redemption date to the actual date of payment, in which case
the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price 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.
(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.
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
I-8
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 redemption date), 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. 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
I-9
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.
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.
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 6.7 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) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise 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.
I-10
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. 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
Institutional Trustee, 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 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 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 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-11
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 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
Redemption Price the full amount of such 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
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, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities shall have no
--------------------
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-12
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
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 LAW. 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 OF TRUST, 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 THE SECURITIES 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 THE
SECURITIES 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
A-1-1
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 $500,000.00 (500 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 $500,000.00 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.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION AS MAY BE REQUIRED BY
THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
P-1 15,000 Capital Securities
July 31, 2001
Certificate Evidencing Floating Rate Capital Securities
of
Prosperity Statutory Trust II
(liquidation amount $1,000.00 per Capital Security)
Prosperity Statutory Trust II, a statutory trust created under the laws of
the State of Connecticut (the "Trust"), hereby certifies that The Chase
Manhattan Bank, as indenture trustee under the Indenture dated as of July 31,
2001 among Preferred Term Securities III, Ltd., Preferred Term Securities III,
Inc. and The Chase Manhattan Bank (the "Holder") is the registered owner of
securities 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 (as defined below), the
Capital Securities are transferable on the books and records of the Trust in
person or by a duly authorized attorney, upon surrender of this Certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued pursuant to, and shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of July 31, 2001, among H.E. "Xxx" Xxxxxxx, Jr. Xxxxx
Xxxxxxxx and Xxxxx Xxxxxx, as Administrators, State Street Bank and Trust
Company of Connecticut, National Association, as Institutional Trustee,
Prosperity Bancshares, 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 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 Trust at its principal place
of business.
A-1-2
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 construed in accordance with, the
laws of the State of Connecticut, without regard to principles of conflict of
laws.
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
PROSPERITY STATUTORY TRUST II
By:______________________________________
Name:
Title: Administrator
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as the Institutional Trustee
By:______________________________________
Authorized Officer
A-1-3
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be payable at an annual
rate equal to 7.29% beginning on (and including) the date of original issuance
and ending on (but excluding) October 31, 2001 and at an annual rate for each
successive period beginning on (and including) October 31, 2001, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each a "Distribution Period"), equal to 3-
Month LIBOR, determined as described below, plus 3.58%; provided, however, that
-------- -------
prior to July 31, 2011, such annual rate shall not exceed 12.50% (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 for more than a
quarterly period will bear interest thereon compounded quarterly at the
Distribution Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes interest payments (including Additional
Interest and principal on the Debentures held by the Institutional Trustee) and
any such compounded interest payable on the Debentures unless otherwise stated.
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 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 Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of the actual number of days
in the Distribution Period concerned divided by 360. In the event that any date
on which a distribution is payable on this Capital Security is not a Business
Day, then a payment of the distribution payable on such date will be made on the
next succeeding day which is a Business Day (and without any distribution or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date the payment was originally payable. The amount of
interest payable for the Distribution Period commencing October 31, 2001 and
each succeeding Distribution Period will be calculated by applying the Coupon
Rate to the principal 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 rate for
three-month Eurodollar deposits determined by the Debenture Trustee in the
following order of priority: (i) the rate (expressed as a percentage per annum)
for Eurodollar deposits having a three-month maturity that appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the particular Determination Date
("Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Xxxxx 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. dollars deposits); (ii) if such rate
does not appear on Telerate Page 3750 as of 11:00 a.m. (London time) on the
Determination Date, 3-Month LIBOR will be the arithmetic mean of the rates
(expressed as percentages per annum) for Eurodollar deposits having a three-
month maturity that appear on Reuters Monitor Money Rates Page LIBO ("Reuters
Page LIBO") as of 11:00 a.m. (London time) on such Determination Date; (iii) if
such rate does not appear on Reuters Page LIBO as of 11:00 a.m. (London time) 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 Eurodollar 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; (iv) if fewer than two such quotations are provided as
requested in clause (iii) 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 Eurodollars 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 (v) if fewer than two
A-1-4
such quotations are provided as requested in clause (iv) 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
Eurodollar deposits having a three-month maturity that initially appears on
Telerate Page 3750 or Reuters Page LIBO, as the case may be, as of 11:00 a.m.
(London time) on the related Determination Date is superseded on the Telerate
Page 3750 or Reuters Page LIBO, as the case may be, 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.
The Coupon 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 October 31, January 31, April 30 and
July 31 of each year, commencing on October 31, 2001. The Debenture Issuer has
the right under the Indenture to defer payments of interest on the Debentures by
extending the interest payment period for up to 20 consecutive quarterly periods
(each an "Extension Period") on the Debentures, subject to the conditions
described below, although such interest would continue to accrue on the
Debentures at an annual rate equal to the Distribution Rate compounded quarterly
to the extent permitted by law during any Extension Period. No Extension Period
may end on a date other than an interest Payment Date. At the end of any such
Extension Period the Sponsor 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 Sponsor 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 Sponsor 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. 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-1-5
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
Trust. The agent may substitute another to act for him or her.
Date:_______________________
Signature:__________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:/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.
X-0-0
XXXXXXX X-0
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.
C-1 248 Common Securities
July 31, 2001
Certificate Evidencing Floating Rate Common Securities
of
Prosperity Statutory Trust II
Prosperity Statutory Trust II, a statutory trust created under the laws of
the State of Connecticut (the "Trust"), hereby certifies that Prosperity
Bancshares, 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"). The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued pursuant to, and shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of July 31, 2001, among H.E. "Xxx" Xxxxxxx, Jr. Xxxxx Xxxxxxxx and Xxxxx
Xxxxxx, as Administrators, State Street Bank and Trust Company of Connecticut,
National Association, as Institutional Trustee, Prosperity Bancshares, 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 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, where 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 Debentures as indebtedness and the
Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in accordance with, the
laws of the State of Connecticut, without regard to principles of conflict of
laws.
A-2-1
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
PROSPERITY STATUTORY TRUST II
By:___________________________________
Name:
Title: Administrator
A-2-2
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical in amount
to the Distributions payable on each Capital Security, which is at an annual
rate equal to 7.29% beginning on (and including) the date of original issuance
and ending on (but excluding) October 31, 2001 and at an annual rate for each
successive period beginning on (and including) October 31, 2001, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each a "Distribution Period"), equal to 3-
Month LIBOR, determined as described below, plus 3.58%; provided, however, that
-------- -------
prior to July 31, 2011, such annual rate shall not exceed 12.50% (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 for more than one
period will bear interest thereon compounded at the Distribution Rate (to the
extent permitted by applicable law). The term "Distributions" as used herein
includes interest payments (including Additional Interest and principal on the
Debentures held by the Institutional Trustee) and any such compounded interest
payable on the Debentures unless otherwise stated. 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 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 Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of the actual number of days in the Distribution Period
concerned divided by 360. In the event that any date on which a distribution is
payable on this Common Security is not a Business Day, then a payment of the
distribution payable on such date will be made on the next succeeding day which
is a Business Day (and without any distribution or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable. The amount of interest payable for the
Distribution Period commencing October 31, 2001 and each succeeding Distribution
Period will be calculated by applying the Coupon Rate to the principal 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 rate for
three-month Eurodollar deposits determined by the Debenture Trustee in the
following order of priority: (i) the rate (expressed as a percentage per annum)
for Eurodollar deposits having a three-month maturity that appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the particular Determination Date
("Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Xxxxx 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. dollars deposits); (ii) if such rate
does not appear on Telerate Page 3750 as of 11:00 a.m. (London time) on the
Determination Date, 3-Month LIBOR will be the arithmetic mean of the rates
(expressed as percentages per annum) for Eurodollar deposits having a three-
month maturity that appear on Reuters Monitor Money Rates Page LIBO ("Reuters
Page LIBO") as of 11:00 a.m. (London time) on such Determination Date; (iii) if
such rate does not appear on Reuters Page LIBO as of 11:00 a.m. (London time) 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 Eurodollar 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; (iv) if fewer than two such quotations are provided as
requested in clause (iii) 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 Eurodollars as of
11:00 a.m. (London time) on such Determination Date. If at least two such
quotations
A-2-3
are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and
(v) if fewer than two such quotations are provided as requested in clause (iv)
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 Eurodollar deposits having a three-month maturity that initially
appears on Telerate Page 3750 or Reuters Page LIBO, as the case may be, as of
11:00 a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 or Reuters Page LIBO, as the case may be, 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.
The Coupon 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 October 31, January 31, April 30 and July 31 of
each year, commencing on October 31, 2001. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest payment period for up to 20 consecutive quarterly periods (each an
"Extension Period") on the Debentures, subject to the conditions described
below, although such interest would continue to accrue on the Debentures at an
annual rate equal to the Distribution Rate compounded quarterly to the extent
permitted by law during any Extension Period. No Extension Period may end on a
date other than an Interest Payment Date. At the end of any such Extension
Period the Sponsor 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 Sponsor 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 Sponsor 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. 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 Common Securities shall be redeemable as provided in the Declaration.
A-2-4
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
Trust. The agent may substitute another to act for him or her.
Date:_________________________________
Signature:____________________________
(Sign exactly as your name appears on the other side of this
Common Security Certificate)
Signature:____________________________
(Sign exactly as your name appears on the other side of this
common Security Certificate)
Signature Guarantee/2/
_____________________________
/2/ 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-2-5
