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[Draft of November 6, 1995]
[FORM OF SUPPLEMENTAL INDENTURE FOR DEBENTURES]
_______________________________________________________________________________
SOURCE ONE MORTGAGE SERVICES CORPORATION
AND
IBJ XXXXXXXX BANK & TRUST COMPANY,
AS TRUSTEE
_______________
First Supplemental Indenture
Dated as of , 1995
_______________
Supplementing the Trust Indenture
Dated as of ______________, 1995
to Provide for a
Series of Subordinated Debt Securities
_______________________________________________________________________________
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THIS FIRST SUPPLEMENTAL INDENTURE, dated as of the _____ day of _____, 1995
(the "First Supplemental Indenture") between SOURCE ONE MORTGAGE
SERVICES CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Issuer"), and IBJ XXXXXXXX BANK & TRUST COMPANY, a
New York banking corporation, having its principal office in The City of New
York, New York, as trustee (the "Trustee");
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an
indenture dated as of ________________, 1995 (the "Original Indenture"),
providing for the issuance by the Issuer from time to time of its subordinated
debt securities; and
WHEREAS, Sections 2.3 and 8.1 of the Original Indenture provide, among other
things, that the Issuer and the Trustee may enter into indentures supplemental
to the Original Indenture for, among other things, the purpose of setting forth
the terms of any series of Securities; and
WHEREAS, all action on the part of the Issuer necessary to authorize the
creation and issuance of, and to establish the form and terms of, a
series of Securities under the Original Indenture consisting of $_______
principal amount of _____% Subordinated Interest Deferrable Debentures, Due
2025 (referred to herein as the "Debentures") under the Original Indenture and
this First Supplemental Indenture (said Original Indenture as supplemented by
this First Supplemental Indenture being hereinafter called the "Indenture") has
been duly taken; and
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: That in order to
authorize the authentication and delivery of and to set forth the terms of
the Debentures and in consideration of the premises, of the purchase and
acceptance of the Debentures by the holders thereof, and of the sum of one
dollar to it duly paid by the Trustee at the execution of these presents, the
receipt whereof is hereby acknowledge, the Issuer covenants and agrees with the
Trustee, for the equal and proportionate benefit of the respective Holders from
time to time of such Debentures as follows:
ARTICLE ONE
Definitions and Other
Provisions of General Application
SECTION 1.1 Original Definitions. Each capitalized term that is used herein
and is defined in the Original Indenture shall have the meaning specified in
the Original Indenture unless such term is otherwise defined herein.
SECTION 1.2 Additional Definitions. The following capitalized term when
used herein shall have the respective meaning hereinafter set forth.
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"Business Day" means a day on which banking institutions located in the State
of New York or in the state in which the principal corporate trust office of
the Trustee is located are not authorized or obligated by or pursuant to law or
executive order to close.
"Capital Stock" means any and all shares of the Issuer's preferred stock or
common stock or any other equity securities of the Issuer.
SECTION 1.3 Section References. Each reference to a particular section set
forth in this First Supplemental Indenture shall, unless the context otherwise
requires, refers to this First Supplemental Indenture.
ARTICLE TWO
Title and Terms of the Debentures
SECTION 2.1 Title of the QUICS. This First Supplemental Indenture hereby
establishes a series of Securities under the Original Indenture which
shall be known as the Issuer's ___% Subordinated Interest Deferrable
Debentures, Due 2025 (referred to herein as the Debentures). For purposes of the
Original Indenture, the Debentures shall constitute a single series of
Securities, shall be subordinated as provided in the Indenture, and shall be
unsecured. The stated maturity of the Debentures will be __________, 2025.
SECTION 2.2 Amount and Denominations; DTC. The aggregate principal amount
of Debentures that may be issued under this First Supplemental Indenture is
limited to [to be determined on the Exchange Date]. The Debentures shall be
issuable only in fully registered form and, as permitted by Sections 2.3, 2.7
and 8.1 of the Original Indenture, in denominations of $25 and integral
multiples thereof. The Debentures shall be issued in certificated form.
The Debentures will initially be issued under a book-entry system, registered
in the name of The Depository Trust Company, as depositary ("DTC"), or
its nominee, who is hereby designated as "Depository" pursuant to Section 2.3
of the Original Indenture. Principal and interest on the Debentures issued in
certificated form will be payable, the transfer of such Debentures will be
registrable, and such Debentures will be exchangeable for Debentures bearing
identical terms and provisions, at the office or agency of the Issuer in the
Borough of Manhattan, The City and State of New York; provided, however, that
payment of interest may be made at the option of the Issuer by check mailed to
the registered holder at such address as shall appear in the security register
and that the payment of principal with respect to the Debentures will only be
made upon surrender of the Debentures to the Trustee.
SECTION 2.3 Interest Rate and Interest Payment Dates.
(a) The Debentures will bear interest at the rate of ____% per annum
from November 1, 1995 until the principal thereof becomes due and payable, and
on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum during such overdue period, compounded quarterly[. ;
provided, however, that the Debentures will bear interest at the rate of
_____% per annum from and including _______________, 1995 to but excluding
[first day after Expiration Time] and from and after [first day after
Expiration Time] at the rate of ___% per annum.] Interest on the Debentures
will be payable quarterly (subject to deferral as set forth herein) in arrears
on March 31, June 30, September 30 and December 31 of each year (each an
"Interest Payment Date"), commencing December 31, 1995 to the persons in whose
names the Debentures are registered at the close of business on the relevant
record date for such interest installment, which will be the fifteenth day of
the calendar month immediately preceding the relevant Interest Payment Date or,
in the case of a Deferral Period (as described herein), the fifteenth day
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of the calendar month immediately preceding the Interest Payment Date at the
end of such Deferral Period (each a "Record Date"); provided, however, that, in
the event that any Interest Payment Date shall not be a Business Day, then
interest shall be payable on the next day that is a Business Day (but without
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 (except that a valid extension
of an interest payment period by the Issuer in accordance with the terms of any
indenture supplemental hereto, shall not constitute an extension of interest
for this purpose), in each case with the same force and effect as if made
on such Interest Payment Date, subject to certain rights of deferral described
in Section 2.3(b) hereof. The amount of interest payable any period will be
computed on the basis of twelve 30-day months and a 360-day year and, for any
period shorter than a full quarterly interest period, will be computed on the
basis of the actual number of days elapsed in such period.
(b) The provisions of Section 2.3(a) notwithstanding, the Issuer shall have
the right at any time, on one or more occasions so long as an Event of
Default with respect to the Debentures has not occurred and is not continuing
under the Indenture with respect to the Debentures to extend any interest
payment period on the Debentures for a period (a "Deferral Period") not to
exceed 20 consecutive quarterly interest payment periods; provided that the date
on which such Deferral Period ends must be an Interest Payment Date and must be
no later than ______________, 2025 or any date on which any Debentures are fixed
for redemption. On the Interest Payment Date at the end of the Deferral Period,
the Issuer shall pay all interest then accrued and unpaid, which shall be
compounded quarterly at the rate of interest on the Debentures (except to the
extent payment of such interest is prohibited by law) to the date of payment, to
the persons in whose names the Debentures are registered on the Record Date
immediately preceding the Interest Payment Date at the end of such Deferral
Period. The Issuer shall give the Trustee and Holders of the
Debentures (with the Trustee to be notified at least three days prior to notice
to such Holders) written notice of its election to defer interest payments or
to extend the Deferral Period ten Business Days prior to the earlier of (1) the
next scheduled quarterly Interest Payment Date and (2) the date the Issuer
is required to give notice of the record date of such related interest
payment to the New York Stock Exchange or other applicable self regulatory
organization or to the Holders of the Debentures but in any event not less
than two Business Days prior to such record date. During the Deferral Period,
the Issuer shall not declare or pay any dividend on or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its Capital Stock
or make any guaranty payment with respect to the foregoing, other than
redemptions of any series of Capital Stock of the Issuer pursuant to the terms
of any sinking fund provisions with respect thereto. During any Deferral
Period, the Issuer may not (i) make any distributions, loans or guarantees for
the benefit of, (ii) purchase, defease, redeem or otherwise acquire or retire
for value any securities of or (iii) make any other investment in, any person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer for the purpose of, or to enable the
payment of, directly or indirectly, dividends on any equity securities of Fund
American Enterprises, Inc. and its successors or assigns. During any Deferral
Period, the Company may continue to extend the interest payment period by
extending the Deferral Period, on one or more occasions, by notice given as
aforesaid in this paragraph (b), provided that such Deferral
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Period, as extended, must end on an Interest Payment Date and in no event shall
the aggregate Deferral Period, as extended, exceed 20 consecutive quarterly
interest payment periods or extend beyond _______________, 2025 or any date on
which Debentures are fixed for redemption. No interest shall be due and payable
during a Deferral Period except at the end thereof.
SECTION 2.4 Redemption of Debentures. The Debentures shall not be
redeemable prior to April 30, 1999. Subject to the terms of Article 12
of the Original Indenture, on or after May 1, 1999, upon notice given by
mailing the same, first class mail, postage prepaid, at least 30 days and not
more than 60 days prior to the date fixed for redemption, any or all of the
Debentures may be redeemed by the Issuer, at its option, at any time and from
time to time, at a redemption price equal to 100% of the principal amount of
the Debentures to be redeemed plus accrued and unpaid interest thereon to the
date fixed for redemption. With respect to any such redemption, the Trustee
shall be given notice as provided in Article Twelve of the Original Indenture.
SECTION 2.5 Form of Debentures. Attached hereto as Exhibit A is a form of
the definitive Debentures and the Trustee's Certificate of Authentication to
be endorsed thereon.
ARTICLE THREE
Additional Events of Default and Covenants
SECTION 3.1 Inapplicability of Certain Events of Default. The omission by
the Issuer to pay interest on the Debentures during a Deferral Period
as permitted by Section 2.1 hereof shall not constitute an Event of Default
hereunder or under Section 5.1 of the Original Indenture.
ARTICLE FOUR
Subordination of Debentures
SECTION 4.1 Debentures Subordinate to Senior Indebtedness. The Issuer for
itself, its successors and assigns, covenants and agrees, and each Holder of
Debentures issued, whether upon original issue or upon transfer or assignment
thereof, by its acceptance thereof, likewise covenants and agrees, that the
indebtedness represented by the Debentures and the payment of principal of and
interest on each and all of the Debentures is hereby expressly subordinated,
to the extent and in the manner set forth in this Article and in Article
Thirteen of the Original Indenture, in right of payment to the prior payment in
full of all Senior Indebtedness.
SECTION 4.2 Rights of Holders of Senior Indebtedness Not Impaired. No
rights of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Trustee or any Holder
of the Debentures then Outstanding, or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by any such holder,
with the terms, provisions or covenants of this First Supplemental
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Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Holders of the Debentures, without
incurring responsibility to the Holders of the Debentures and without impairing
or releasing the subordination provided in this Article or in the Original
Indenture or the obligations of the Holders of the Debentures to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment of, or increase the amount of, or interest
rate(s) applicable to, renew or alter, or waiver any provision of, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Issuer and any other Person.
SECTION 4.3 Trustee Not Fiduciary for Holders of Senior Indebtedness. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of the Debentures of
any series or to the Issuer or to any other Person cash, property or securities
to which any holders of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
ARTICLE FIVE
Miscellaneous Provisions
SECTION 5.1 Execution as Supplemental Indenture. This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this First
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture. Except as expressly amended hereby, the Original Indenture shall
continue in full force and effect in accordance with the provisions thereof and
the Original Indenture is in all respects hereby ratified and confirmed.
SECTION 5.2 Responsibility for Recitals, etc. The recitals herein and in
the Debentures (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Issuer and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture or of the
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Debentures. The Trustee makes no undertaking or representations in
respect of, and shall not be responsible in any manner whatsoever for and in
respect of, the validity or sufficiency of this First Supplemental Indenture or
the proper authorization or the due execution hereof by the Issuer or for or in
respect of the recitals and statements contained herein, all of which recitals
and statements are made solely by the Issuer. The Trustee shall not be
accountable for the use or application by the Issuer of the Debentures or of
the proceeds thereof.
SECTION 5.3 Provisions Binding on Issuer's Successors. All of the
covenants, stipulations, promises and agreements made in this First
Supplemental Indenture by the Issuer shall bind its successors and assigns
whether so expressed or not.
SECTION 5.4 New York Contract. This First Supplemental Indenture and each
of the Debentures shall be deemed to be a contract made under the laws
of the State of New York, and for all purposes shall be construed in accordance
with the laws of said State.
SECTION 5.5 Execution and Counterparts. This First Supplemental Indenture
may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
SOURCE ONE MORTGAGE
SERVICES CORPORATION
By:
----------------------------------
Name:
Title:
ATTEST:
By:
---------------------------
(Corporate Seal)
IBJ XXXXXXXX BANK & TRUST COMPANY,
as Trustee
By:
----------------------------------
Name:
Title:
ATTEST:
By:
---------------------------
(Corporate Seal)
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STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ of ________, 1995 before me personally came _______________, to
me personally known, who, being by me duly sworn, did depose and say that he
resides in Oakland County, Michigan; that he is the ___________ of Source One
Mortgage Services Corporation, one of the corporations described in and which
executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
[NOTARIAL SEAL]
___________________________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ of _________, 1995 before me personally came _______________, to
me personally known, who, being by me duly sworn, did depose and say that he
resides at _______________; that he is a ________________________ of
________________, one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
[NOTARIAL SEAL]
___________________________________
Notary Public
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EXHIBIT A
DEFINITIVE FORM OF DEBENTURE
[FORM OF FACE OF DEBENTURE]
THIS DEBENTURE IS A REGISTERED GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR DEBENTURES IN CERTIFICATED FORM, THIS DEBENTURE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO A NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF
DTC OR A NOMINEE OF SUCH SUCCESSOR. UNLESS THIS DEBENTURE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEBENTURE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON
IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN. THIS DEBENTURE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT
("OID") FOR U.S. FEDERAL INCOME TAX PURPOSES. THE FOLLOWING INFORMATION IS
PROVIDED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX OID RULES TO
THIS DEBENTURE.
No. _____ $__________.00
SOURCE ONE MORTGAGE SERVICES CORPORATION
_____% SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE 2025
Issue Price
Per Debenture Issue Date CUSIP No.
------------- ---------- ---------
$25.00 ___________, 1995
SOURCE ONE MORTGAGE SERVICES CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________, or registered assigns, the principal sum of
______________________________________________________ and 00/100 Dollars
($________.00) on ____________, 2025 and to pay interest on said principal sum
from ____________, 1995 until the principal hereof becomes due and payable, and
on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum during such overdue period, compounded quarterly, to the
registered holder of this Debenture ("Debenture"). [; provided however that
registered holder of this Debenture ("Debenture") will receive interest at a
rate of ______% per annum from and including __________, 1995 to but excluding
__________, 1995 and from and after __________, 1995 at the rate of ______% per
annum.] Interest on this Debenture will be payable quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year (each such date, an "Interest Payment Date"),
commencing December 31, 1995.
The amount of interest payable for any period shall be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full quarterly interest period, will be computed on the basis of the actual
number of days elapsed in such period. In the event that any date on which
interest is payable on this Debenture is not a Business Day, then payment of
the amount payable on such date will 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
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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 date, subject to certain rights of deferral described below.
"Business Day" shall mean a day on which banking institutions located in the
State of New York or in the state in which the principal corporate trust office
of the Trustee is located are not authorized or obligated by or pursuant to law
or executive order to close. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date (other than
interest payable on redemption or maturity) will, as provided in the Indenture
(as defined herein), be paid to the person in whose name this Debenture (or one
or more Predecessor Debentures, as defined in said Indenture) is registered at
the close of business on the relevant record date for such interest
installment, which shall be the fifteenth day of the calendar month immediately
preceding the relevant Interest Payment Date or, in the case of a Deferral
Period (as defined in the Indenture), the fifteenth day of the calendar month
immediately preceding the relevant Interest Payment Date at the end of such
Deferral Period (each a "Record Date"). Interest payable on redemption or
maturity shall be payable to the person to whom the principal is paid. Any
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered holders on such Record Date,
and may be paid to the person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of this
series of Debentures not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and the interest on this Debenture
shall be payable at the office or agency of the Issuer maintained for that
purpose in the Borough of Manhattan, The City of New York, in any coin or
currency of the United States of America which at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Issuer by check mailed to the
registered holder at the close of business on the Record Date at such address
as shall appear in the Security Register.
Payment of the principal of and interest on this Debenture is, to the extent
provided in the Indenture, subordinated and subject in right of payment to the
prior payment in full of all existing and future Senior Indebtedness, as
defined in the Indenture, of the Issuer and this Debenture is issued subject to
the provisions of the Indenture with respect thereto. Each registered holder
of this Debenture, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his or her behalf to
take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee as his or
her attorney-in-
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fact for any and all such purposes. Each registered holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until
the Certificate of Authentication hereon shall have been signed by or on behalf
of the Trustee.
Unless the Certificate of Authentication hereon has been executed by the
Trustee or a duly appointed Authentication Agent referred to herein, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Instrument to be executed.
SOURCE ONE MORTGAGE SERVICES CORPORATION
By _____________________________________
Attest:
By _______________________
[Corporate Seal]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.
IBJ XXXXXXXX BANK & TRUST COMPANY
as Trustee
By ________________________________
Authorized Signatory
Date:
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[FORM OF REVERSE OF DEBENTURE]
This Debenture is one of a duly authorized series of Debentures of the Issuer
(herein sometimes referred to as the "Debentures"), specified in the Indenture,
all issued or to be issued in one or more series under and pursuant to an
Indenture dated as of ___________, 1995 (the "Original Indenture") duly
executed and delivered between the Issuer and IBJ Xxxxxxxx Bank & Trust
Company, a New York banking corporation, as Trustee (herein referred to as the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of
__________, 1995 (together with the Original Indenture, the "Indenture")
between the Issuer and the Trustee, to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Issuer and the registered holders of the
Debentures and of the terms upon which the Debentures are, and are to be,
authenticated and delivered. By the terms of the Indenture, the Debentures are
issuable in series which may vary as to amount, date of maturity, rate of
interest and in other respects as in the Indenture provided. This series of
Debentures is limited in aggregate principal amount as specified in said First
Supplemental Indenture.
This Debenture shall be without benefit of any security and shall be
subordinated to Senior Indebtedness (as defined in the Indenture) as and to the
extent provided in Article Thirteen of the Original Indenture and Article Four
of said First Supplemental Indenture. The omission by the Issuer to pay
interest on this Debenture during a Deferral Period as permitted by Section
2.3(b) of said First Supplemental Indenture shall not constitute an Event of
Default under Section 5.1 of the Original Indenture.
The Debenture shall not be redeemed by the Issuer prior to April 30, 1999.
Subject to Article Twelve of the Original Indenture, on or after May 1,
1999, the Issuer shall have the right to redeem this Debenture at the option of
the Issuer, without premium or penalty, in whole or in part, at a redemption
price equal to 100% of the principal amount redeemed plus the accrued and
unpaid interest thereon to the date fixed for redemption. Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days notice to the Trustee and Holders of the Debentures (with the Trustee to
be notified at least five days prior to notice to such Holders). If the
Debentures are only partially redeemed by the Issuer, the Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee;
provided that if at the time of redemption, the Debentures are registered as a
Global Debenture, the Depositary shall determine by lot the principal amount of
such Debentures held by each Debentureholder to be redeemed.
In the event of redemption of this Debenture in part only, a new Debenture or
Debentures of this series for the unredeemed portion hereof will be issued in
the name of the registered holder hereof upon the cancellation hereof.
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In case an Event of Default, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Debentures may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Debenture upon compliance by the Issuer with certain
conditions set forth therein.
The Indenture contains provisions permitting the Issuer and the Trustee, with
the consent of the registered holders of not less than a majority in aggregate
principal amount of the outstanding Debentures of all series affected at the
time, as defined in the Indenture, to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the registered holders of the Debentures;
provided, however, that no such supplemental indenture shall (i) extend the
final maturity of any Debentures of any series, or reduce the principal amount
thereof, or reduce the rate of or extend the time of payment of interest
thereon (except that a valid extension of an interest payment period by the
Issuer in accordance with the terms of any indenture supplemental hereto, shall
not constitute an extension of interest for this purpose), or reduce any amount
payable on redemption thereof, or make the principal thereof (including any
amount in respect of original issue discount) or interest thereon payable in
any coin or currency other than that provided herein or in accordance with the
terms hereof, or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof pursuant to Section 5.1 of the Original Indenture or the
amount thereof provable in bankruptcy pursuant to Section 5.2 of the Original
Indenture, or alter the provisions of Section 11.11 or 11.12 of the Original
Indenture or impair or affect the right of any Securityholder to institute suit
for the payment thereof or, if the Securities provide therefor, any right of
repayment at the option of the Securityholder, or modify any provisions of the
Indenture relating to the subordination of each Debenture in a manner adverse
to such Holder, in each case without the consent of the registered holder of
each Debenture so affected or (ii) reduce the aforesaid percentage of
Debentures, the registered holders of which are required to consent to any such
supplemental indenture, without the consent of the registered holders of each
Debenture then outstanding and affected thereby. The Indenture also contains
provisions permitting (i) the registered holders of a majority in aggregate
principal amount of the Debentures of all series at the time outstanding
affected thereby, on behalf of the registered holders of the Debentures of such
series, to waive compliance by the Issuer with certain provisions of the
Indenture and (ii) the registered holders of a majority in aggregate principal
amount of the Debentures of all series at the time outstanding affected
thereby, on behalf of the registered holders of the Debentures of such series,
to waive certain past defaults under the Indenture and
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their consequences. Any such consent or waiver by the registered holder of
this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such registered holder and upon all future
registered holders and owners of this Debenture and of any Debenture issued in
exchange hereof or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this
Debenture at the time and place and at the rate and in the coin or currency
herein prescribed.
The Issuer shall have the right at any time, on one or more occasions, so
long as an Event of Default has not occurred and is not continuing under the
Indenture with respect to the Debentures, to extend any interest payment period
on this Debenture for a period not to exceed 20 consecutive quarterly interest
payment periods and, as a consequence, the quarterly interest payment on the
Debentures would be deferred (but would continue to accrue with interest
thereon compounded quarterly at the rate of interest on the Debentures, except
to the extent payment of such interest is prohibited by law) during any such
Deferral Period (as defined in the Indenture). At the end of each Deferral
Period, the Issuer shall pay all interest then accrued and unpaid (compounded
quarterly, at the rate of interest on the Debentures, except to the extent
payment of such interest is prohibited by law) to the persons in whose name the
Debentures are registered on the Record Date immediately preceding the Interest
Payment Date at the end of such Deferral Period. In the event the Issuer
exercises this right, the Issuer shall not declare or pay any dividends on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its Capital Stock (as defined in the Indenture) or make any guarantee payments
with respect to the foregoing during such Deferral Period, other than
redemptions of any series of Capital Stock of the Issuer pursuant to the terms
of any sinking fund provisions with respect thereto. In addition, during any
Deferral Period, the Issuer may not (i) make any distributions, loans or
guarantees for the benefit of, (ii) purchase, defease, redeem or otherwise
acquire or retire for value any securities of, or (iii) make any other
investment in any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer, for the purpose of, or
to enable the payment of, directly or indirectly, dividends on any equity
securities of Fund American Enterprises, Inc. and its successors or assigns.
During any Deferral Period, the Issuer may continue to extend the interest
payment period by extending the Deferral Period, on one or more occasions;
provided that such Deferral Period, as extended, must end on an Interest
Payment Date and in no event shall the aggregate Deferral Period, as extended,
exceed 20 consecutive quarterly interest payment periods or extend beyond the
maturity of the Debentures or any date on which any of the Debentures are fixed
for redemption. No interest shall be due and
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payable on the Debentures during a Deferral Period except at the end thereof.
The Issuer shall give the Trustee and the registered holders of Debentures
notice (with the Trustee to receive notice at least three days prior to such
Holders) of its election to defer interest payments or to extend the Deferral
Period ten Business Days prior to the earlier of (i) the next scheduled
quarterly Interest Payment Date or (ii) the date the Issuer is required to give
notice of the record date of such related interest payment to the New York
Stock Exchange or other applicable self-regulatory organization or to the
holders of the Debentures, but in any event not less than two Business Days
prior to such record date.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Debenture is registrable in the Security Register
of the Issuer, upon surrender of this Debenture for registration of transfer at
the office or agency of the Issuer in any place where the principal of and any
interest on this Debenture are payable or at such other offices or agencies as
the Issuer may designate, duly endorsed by or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Issuer and
the security registrar or any transfer agent duly executed by the registered
holder hereof or his or her attorney duly authorized in writing, and thereupon
one or more new Debentures of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Issuer may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Debenture, the
Issuer, the Trustee, any paying agent and any security registrar may deem and
treat the registered holder hereof as the absolute owner hereof (whether or not
this Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the security registrar) for the
purpose of receiving payment of or on account of the principal hereof and
interest due hereon and for all other purposes, and neither the Issuer nor the
Trustee nor any paying agent nor any security registrar shall be affected by
any notice to the contrary.
The Debentures of this series are issuable only in fully registered form
without coupons in denominations of $25 and any integral multiple thereof.
This Registered Global Security is exchangeable for Debentures in definitive
form only under certain limited circumstances set forth in the Indenture.
Debentures of this series so issued are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Debentures of this series are exchangeable for a like aggregate principal
amount of Debentures of this series of a different authorized denomination, as
requested by the registered holder surrendering the same.
As set forth in, and subject to the provisions of, the Indenture, no
registered owner of any Debenture will have any right
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to institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless (i) such registered owner shall have previously given to the
Trustee written notice of a continuing Event of Default with respect to the
Debentures of this series, (ii) the registered owners of not less than 25% in
principal amount of the outstanding Debentures of all affected series then
Outstanding shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee, (iii) the Trustee shall
have failed to institute such proceeding within 60 days and (iv) the Trustee
shall not have received from the registered owners of a majority in principal
amount of the outstanding Debentures of this series a direction inconsistent
with such request within such 60-day period; provided, however, that such
limitations do not apply to a suit instituted by a registered owner hereof for
the enforcement of payment of the principal of or any interest on this
Debenture on or after the respective due dates expressed herein, subject to
deferral as set forth herein.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
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(Please insert Social Security or other number of assignee)
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(please print or type name and address, including zip code, of assignee)
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(please print or type name and address, including zip code, of assignee)
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing such person attorneys to transfer the within Debenture on the
books of the Issuer, with full power of substitution in the premises.
Dated: _____________________ ___________________________________
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the within Debenture in every particular, without
alteration or enlargement or any change whatever. When assignment is made by a
guardian, trustee, executor or administrator, an officer of a corporation, or
anyone in a representative capacity, proof of his or her authority to act must
accompany this Debenture.
Signature Guaranteed
By: ____________________________
NOTICE: Signature(s) must be guaranteed by a financial institution that is a
member of the Securities Transfer Agents Medallion Program ("STAMP"), the Stock
Exchange, Inc. Medallion Signature Program ("MSP").
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