EXHIBIT 4.4
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AMENDED AND RESTATED DECLARATION
OF TRUST
PROGRESS CAPITAL TRUST I
Dated as of June 3, 1997
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TABLE OF CONTENTS
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.............................................. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 9
SECTION 2.2 Lists of Holders of Securities........................... 10
SECTION 2.3 Reports by the Property Trustee.......................... 10
SECTION 2.4 Periodic Reports to Property Trustee..................... 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 11
SECTION 2.6 Events of Default; Waiver................................ 11
SECTION 2.7 Event of Default; Notice................................. 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name..................................................... 13
SECTION 3.2 Office................................................... 14
SECTION 3.3 Purpose.................................................. 14
SECTION 3.4 Authority................................................ 14
SECTION 3.5 Title to Property of the Trust........................... 14
SECTION 3.6 Powers and Duties of the Administrative Trustees......... 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..... 18
SECTION 3.8 Powers and Duties of the Property Trustee................ 19
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.................................................. 21
SECTION 3.10 Certain Rights of Property Trustee....................... 23
SECTION 3.11 Delaware Trustee......................................... 25
SECTION 3.12 Execution of Documents................................... 25
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities... 26
SECTION 3.14 Duration of Trust........................................ 26
SECTION 3.15 Mergers.................................................. 26
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.................. 28
SECTION 4.2 Responsibilities of the Sponsor.......................... 28
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SECTION 4.3 Right to Proceed......................................... 29
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee............ 29
SECTION 5.2 Delaware Trustee......................................... 30
SECTION 5.3 Property Trustee; Eligibility............................ 30
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally............................... 31
SECTION 5.5 Administrative Trustees.................................. 31
SECTION 5.6 Delaware Trustee......................................... 31
SECTION 5.7 Appointment, Removal and Resignation of Trustees......... 32
SECTION 5.8 Vacancies among Trustees................................. 33
SECTION 5.9 Effect of Vacancies...................................... 34
SECTION 5.10 Meetings................................................. 34
SECTION 5.11 Delegation of Power...................................... 35
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
Business................................................. 35
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................ 35
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.................. 36
SECTION 7.2 Execution and Authentication............................. 36
SECTION 7.3 Form and Dating.......................................... 37
SECTION 7.4 Registrar, Paying Agent and Exchange Agent............... 39
SECTION 7.5 Paying Agent to Hold Money in Trust...................... 39
SECTION 7.6 Replacement Securities................................... 40
SECTION 7.7 Outstanding Capital Securities........................... 40
SECTION 7.8 Capital Securities in Treasury........................... 40
SECTION 7.9 Temporary Securities..................................... 41
SECTION 7.10 Cancellation............................................. 42
SECTION 7.11 CUSIP Numbers............................................ 42
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ARTICLE VIII
TERMINATION OF TRUST
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SECTION 8.1 Termination of Trust..................................... 42
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities................................... 43
SECTION 9.2 Transfer Procedures and Restrictions..................... 44
SECTION 9.3 Deemed Security Holders.................................. 53
SECTION 9.4 Book Entry Interests..................................... 53
SECTION 9.5 Notices to Clearing Agency............................... 54
SECTION 9.6 Appointment of Successor Clearing Agency................. 54
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................ 54
SECTION 10.2 Exculpation.............................................. 55
SECTION 10.3 Fiduciary Duty........................................... 55
SECTION 10.4 Indemnification.......................................... 56
SECTION 10.5 Outside Businesses....................................... 59
SECTION 10.6 Compensation; Fees....................................... 60
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.............................................. 60
SECTION 11.3 Banking.................................................. 61
SECTION 11.4 Withholding.............................................. 61
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments............................................... 62
SECTION 12.2 Meetings of the Holders; Action by Written Consent....... 64
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ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
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SECTION 13.1 Representations and Warranties of Property Trustee....... 65
SECTION 13.2 Representations and Warranties of Delaware Trustee....... 66
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement............................ 67
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.................................................. 67
SECTION 15.2 Governing Law............................................ 68
SECTION 15.3 Intention of the Parties................................. 68
SECTION 15.4 Headings................................................. 69
SECTION 15.5 Successors and Assigns................................... 69
SECTION 15.6 Partial Enforceability................................... 69
SECTION 15.7 Counterparts............................................. 69
ANNEX I TERMS OF SECURITIES......................................... I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE........................ X0-0
XXXXXXX X-0 XXXX XX XXXXXX SECURITY CERTIFICATE......................... A2-4
EXHIBIT B SPECIMEN OF DEBENTURE....................................... B-1
EXHIBIT C PURCHASE AGREEMENT ......................................... C-1
EXHIBIT D REGISTRATION RIGHTS AGREEMENT............................... D-1
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
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310(a).......................................... 5.3
310(b).......................................... 5.3(c), 5.3(d)
311(a).......................................... 2.2(b)
311(b).......................................... 2.2(b)
312(a).......................................... 2.2(a)
312(b).......................................... 2.2(b)
313............................................. 2.3
314(a).......................................... 2.4; 3.6(j)
314(c).......................................... 2.5
315(a).......................................... 3.9
315(b).......................................... 2.7(a)
315(c).......................................... 3.9(a)
315(d).......................................... 3.9(b)
316(a).......................................... 2.6
316(c).......................................... 3.6(e)
317(a).......................................... 3.8(e); 3.8(h)
317(b).......................................... 3.8(i); 7.5
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* This Cross-Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of
its terms or provisions.
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PROGRESS CAPITAL TRUST I
June 3, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of June 3, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees (other than the Property Trustee (as defined
herein)) and the Sponsor established Progress Capital Trust I (the "Trust"),
a trust formed under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of May 29, 1997 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on May 29, 1997, 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 (each as hereinafter defined), and engaging in only those
other activities necessary, advisable or incidental thereto; and
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees 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 business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such
business trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of
the securities representing undivided beneficial interests in the assets of
the Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration 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;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" has the meaning set forth in Section 5.1(b).
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a
day on which banking institutions in the City of New York or the City of Blue
Xxxx, Pennsylvania are authorized or required by law or executive order to
close.
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"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the
execution of this Declaration such Commission is not existing and performing
the duties now assigned to it under applicable Federal securities laws, then
the body performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as
of June 3, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members,
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partners, employees, representatives or agents of any Administrative Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii)
the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Progress Financial Corporation, a Delaware
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer
of the Debentures under the Indenture.
"Debenture Trustee" means The Bank of New York, a New York banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the
Series B Debentures.
"Default" means an event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
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"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer
to exchange Series B Debentures for Series A Debentures and the Series B
Capital Securities Guarantee for the Series A Capital Securities Guarantee.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Capital Security" has the meaning set forth in Section
7.3(a).
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of June 3, 1997, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning set forth in Section 2.2(a).
"Liquidated Damages" has the meaning set forth in the Registration
Rights Agreement.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common
5
Securities voting separately as a class, who are the record owners of more
than 50% of the aggregate liquidation amount of all outstanding Securities of
the relevant class.
"Offering Memorandum" has the meaning set forth in Section 3.6(b)(i).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of such Person. Any Officers'
Certificate delivered by the Trust shall be signed by at least one
Administrative Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for 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.
"Opinion of Counsel" means a written opinion of counsel, who may be
an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(b)(iii).
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section
3.8(c)(i).
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"Purchase Agreement" means the Purchase Agreement for the initial
offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule
144A.
"Quorum" means a majority of the Administrative Trustees or, if
there are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 3, 1997, by and among the Trust, the Debenture
Issuer and the initial purchaser named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of
the Sponsor.
"Responsible Officer" means any officer within the Corporate Trust
Office of the Property Trustee with direct responsibility for the
administration of this Declaration 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 Definitive Capital Securities" has the meaning set forth
in Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
9.2(i).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
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"Rule 144A" means Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and
the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
the Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section
7.1(a) and may be alternatively referred to as the 10.50% Capital Securities.
"Series A Capital Securities Guarantee" means the guarantee
agreement dated as of June 3, 1997, by the Sponsor in respect of the Series A
Capital Securities.
"Series A Debentures" means the Series A 10.50% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in Section
7.1(a).
"Series B Capital Securities Guarantee" means the guarantee
agreement to be entered in connection with the Exchange Offer by the Sponsor
in respect of the Series B Capital Securities.
"Series B Debentures" means the Series B 10.50% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"Sponsor" means Progress Financial Corporation, a Delaware
corporation, or any successor entity resulting from any merger,
consolidation, amalgamation or other business combination, in its capacity as
sponsor of the Trust.
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
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"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust 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 of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee
in accordance with the terms hereof, and all other Persons who may from time
to time be duly appointed, qualified and serving as trustees in accordance
with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set forth in
Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for
this Declaration to be qualified under the Trust Indenture Act and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall control.
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(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide the Property Trustee, unless the Property Trustee
is Registrar for the Securities, (i) within 14 days after each record date
for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the
capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15, 1998,
the Property Trustee shall provide to the Holders of the Capital Securities
such reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements
of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314(a)(4) of the Trust
Indenture Act, such compliance certificate to be delivered annually on or
before 120 days after the end of each fiscal year of the Sponsor. Delivery
of such documents, reports and information to the Property Trustee is for
informational purposes only and the Property Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the
10
Sponsor's compliance with any of its covenants hereunder (as to which the
Property Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent provided for in this Declaration that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in aggregate principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of
the Holders of at least the proportion in aggregate liquidation
amount of the Capital Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Event of Default with respect
to the Capital Securities 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 an Event of Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the
Holders of the Capital Securities of an Event of Default with respect to the
Capital Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy
11
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee, including the right to direct the
Property Trustee to exercise the remedies available to it as holder of the
Debentures, provided however, that (subject to the provisions of Section 3.9)
the Property Trustee shall have the right to decline to follow any such
direction if the Property Trustee shall determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction or if the Property Trustee, being advised by counsel, determines
that the action of proceeding so directed may not lawfully be taken or if the
Property Trustee, in good faith, by its board of directors or trustees,
executive committe, or a trust committee of directors or trustees and/or
Responsible Officers, shall determine that the action or proceedings so
directed would involve the Property Trustee in personal liability.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall
also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration
as provided below in this Section 2.6(b), the Event of Default
under the Declaration may only be waived by the vote of the
Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding;
provided further, the Holders of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to
the Common Securities and their consequences if all Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Capital Securities and only the Holders of
the Capital Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such
waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Declaration, but no such waiver shall
extend
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to any subsequent or other default or Event of Default with respect to the
Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence
of a default actually known to a Responsible Officer, transmit by mail, first
class postage prepaid, to the Holders, notices of all defaults with respect
to the Securities actually known to a Responsible Officer, unless such
defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be
an Event of Default as defined in the Indenture, not including any periods of
grace provided for therein and irrespective of the giving of any notice
provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest (including Compounded Interest
and Additional Sums (as such terms are defined in the Indenture), if any) or
Liquidated Damages (as defined in the Registration Rights Agreement) on any
of the Debentures, the Property Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.01(a) (other than the
payment of Compounded Interest, Additional Sums and Liquidated
Damages) and 5.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged
with the administration of the Declaration shall have actual
knowledge.
(c) Within ten Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
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ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Progress Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Delaware Trustee, the Property Trustee and the Holders. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Progress
Financial Corporation, Four Xxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxx,
Xxxxxxxxxxxx 00000-0000. On ten Business Days written notice to the Delaware
Trustee, the Property Trustee and the Holders of Securities, the
Administrative Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage
in only those other activities necessary, advisable or incidental thereto.
The Trust shall not borrow money, issue debt or reinvest proceeds derived
from investments, mortgage or 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 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee on behalf of the Trust in accordance with its
powers shall constitute the act of and serve to bind the Trust. In dealing
with the Trustees acting on behalf of the Trust, no Person shall be required
to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and
authority of the Trustees as set forth in this Declaration.
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SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee 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 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except as contemplated in Section
7.1(a), (i) the Trust may issue no more than one series of Capital Securities
and no more than one series of Common Securities, (ii) there shall be no
interests in the Trust other than the Securities, and (iii) the issuance of
Securities shall be limited to a simultaneous issuance of both Capital
Securities and Common Securities at the Closing Time;
(b) in connection with the issue and sale of the Capital Securities
and the consummation of the Exchange Offer to:
(i) prepare and execute, if necessary, an offering
memorandum (the "Offering Memorandum") in preliminary and final
form prepared by the Sponsor, in relation to the offering and
sale of Series A Capital Securities to qualified institutional
buyers in reliance on Rule 144A under the Securities Act and to
institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act), and to
execute and file with the Commission, at such time as determined
by the Sponsor, any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights
Agreement;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary, in
order to qualify or register all or part of the Capital
Securities in any State in which the Sponsor has determined to
qualify or register such Capital Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to permit the Capital Securities to trade or be quoted
or listed in or on the Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market or any other
securities exchange, quotation system or the Nasdaq Stock
Market's National Market;
(iv) execute and deliver letters, documents or instruments
with DTC and other Clearing Agencies relating to the Capital
Securities;
15
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration of
the Capital Securities under Section 12(g) of the Exchange Act;
and
(vi) execute and enter into the Purchase Agreement, the
Common Securities Guarantee and the Debenture Subscription
Agreement dated as of June 3, 1997 between the Sponsor and the
Trust and the Registration Rights Agreement providing for the
sale and registration of the Capital Securities;
(c) to acquire the Series A Debentures with the proceeds of the
sale of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be held
of record in the name of the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
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;
(f) to take all actions and perform such duties as may be required
of the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
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(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the
Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax purposes;
(p) to take all action necessary to consummate the Exchange Offer
or otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement;
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrative
Trustees, on behalf of the Trust; and
(r) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
17
The Administrative Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative
Trustees shall not take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
The Administrative Trustees shall take all actions on behalf of the
Trust that are not specifically required by this Declaration to be taken by
any other Trustee.
Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall not, engage in any activity other
than as required or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders
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, except as otherwise 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) other than as provided in this Declaration or
Annex I, (A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture
Trustee, or 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 or (C) exercise
any right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable; or
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(viii) 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
independent tax counsel experienced in such matters to the effect
that such amendment, modification or termination will not cause
more than an insubstantial risk that for United States federal
income tax purposes the Trust will not be classified as a grantor
trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. Such vesting
and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the
name of and under the exclusive control of the Property Trustee
on behalf of the Holders and, upon the receipt of payments of
funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and
make payments or cause the Paying Agent to make payments to the
Holders from the Property Trustee Account in accordance with
Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration.
The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose
long-term unsecured indebtedness by a "nationally recognized
statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least
investment grade;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Trust
Securities to the extent the Debentures are redeemed or mature;
and
(iii) upon written notice of distribution issued by the
Administrative Trustees 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 upon the occurrence of certain events.
19
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to
the terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act. If
an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of
or premium, if any, or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on the Debentures on the date
such principal, premium, if any, or interest (including Compounded Interest
and Additional Sums, if any) or Liquidated Damages, if any, is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder
of Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, 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
Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Capital Securities in such Direct Action. Except as
provided in the preceding sentence, the Holders of Capital Securities will
not be able to exercise directly any other remedy available to the holders of
the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders pursuant
to the terms of the Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a
"Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of Default actually
known to a Responsible Officer occurs and is continuing, the Property
Trustee shall, for the benefit of Holders, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant
to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake
any actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying
Agent, the Property Trustee may authorize one or more Persons to act
as additional Paying Agents and
20
to pay Distributions, redemption payments or liquidation payments on behalf
of the Trust with respect to all Securities and any such Paying Agent shall
comply with Section 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by
the Property Trustee while the Property Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary in
this Declaration or any Annex or Exhibit hereto, (i) the Property Trustee
must exercise the powers set forth in this Section 3.8 in a manner that is
consistent with the purposes and functions of the Trust set out in Section
3.3 and (ii) the Property Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6) of which a Responsible Officer has actual knowledge, the Property
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) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and in the Securities and the Property Trustee
shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants
or obligations shall be read into this Declaration or the
Securities against the Property Trustee; and
21
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; provided, however,
that in the case of any such certificates or opinions that
by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Securities relating
to the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this
Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under
the terms of this Declaration or indemnity reasonably
satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures
and the Property Trustee Account shall be to deal with such
property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections
and limitations on liability afforded to the Property Trustee
under this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property 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. Money held by the Property
Trustee need not be segregated from other funds held by it except
in relation to the Property Trustee Account maintained by the
Property
22
Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law;
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor
shall the Property Trustee be liable for any default or
misconduct of the Administrative Trustees or the Sponsor; and
(ix) the Trustee shall not be deemed to have notice of any
Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event
which is in fact such a default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references
the Securities and this Indenture.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, 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;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Administrative
Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax
or securities laws) or any rerecording, refiling or registration
thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such
counsel and experts with respect to legal
23
matters or advice within the scope of such experts' area of
expertise 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 accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction;
(vi) the Property 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 Holder, unless
such Holder shall have provided to the Property Trustee security
and indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including reasonable attorneys' fees
and expenses and the expenses of the Property Trustee's agents,
nominees or custodians) and liabilities that might be incurred by
it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee
provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document,
but the Property Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by
agent or attorney at the sole cost of the Company and shall incur
no liability or additional liability of any kind by reason of
such inquiry or investigation;
(viii) the Property Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or
attorneys and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature
of the Property 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 Property
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 Property Trustee's or its agent's
taking such action;
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(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request
instructions from the Holders which instructions may only be
given by the Holders of the same proportion in liquidation amount
of the Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such
instructions are received and (iii) shall be protected in
conclusively relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good
faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property 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 Property 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 Property Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Administrative Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act. In
the event the Delaware Trustee shall at any time be required to take any
action or perform any duty hereunder, the Delaware Trustee shall be entitled
to the benefits of Section 3.9(b)(ii)-(viii) and Section 3.10. No implied
covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Administrative Trustees, and
except as otherwise required by the Business Trust Act or this Declaration,
any Administrative Trustee
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is authorized to execute on behalf of the Trust any documents that the
Administrative Trustees have the power and authority to execute pursuant to
Section 3.6; provided that any Registration Statements contemplated by the
Registration Rights Agreement and referred to in Section 3.6(b)(i), including
any amendments thereto, shall be signed by all of the Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration, the Debentures or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence up to May 29, 2028.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate, amalgamate
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the consent
of the Administrative Trustees or, if there are more than two, a majority of
the Administrative Trustees and without the consent of the Holders, the
Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized
as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so long as the Successor Securities
rank the same as the Securities rank with respect to
Distributions and payments upon liquidation, redemption and
otherwise;
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(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the holder of the Debentures;
(iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another
organization on which the Capital Securities are then listed or
quoted, if any;
(iv) if the Capital Securities (including any Successor
Securities) are rated by any nationally recognized statistical
rating organization prior to such transaction, such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any
Successor Securities), or if the Debentures are so rated, the
Debentures, to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including the
holders of any Successor Securities) in any material respect
(other than with respect to any dilution of such Holders'
interests in the new entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has
received an opinion of an independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of
the Holders (including the holders of any Successor
Securities) in any material respect (other than with respect
to any dilution of the Holders' interest in the new entity);
and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity will be required
to register as an Investment Company;
(viii) the Sponsor or any permitted successor or assignee
owns all of the common securities of such Successor Entity and
guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the
Capital Securities Guarantee and the Common Securities Guarantee;
and
27
(ix) there shall have been furnished to the Property Trustee
an Officer's Certificate and an Opinion of Counsel, each to the
effect that all conditions precedent in this Declaration to such
transaction have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of
the Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to, any other Person or
permit any other Person to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or
the Successor Entity not to be classified as a grantor trust for
United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount equal to at least 3% of the
total capital of the Trust, at the same time as the Series A Capital
Securities are issued and sold.
SECTION 4.2 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 the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by
the Trust with the Commission any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights Agreement;
(b) 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;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to permit the Capital Securities to trade
or be quoted or listed in or on the PORTAL market, or any other securities
exchange, quotation system or the Nasdaq Stock Market's National Market;
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(d) to prepare for filing by the Trust with the Commission
a registration statement on Form 8-A, including any amendments
thereto, relating to the registration of the Capital Securities under
Section 12(g) of the Exchange Act, if required; and
(e) to negotiate the terms of the Purchase Agreement and
the Registration Rights Agreement providing for the sale and
registration of the Capital Securities.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of
Capital Securities, in the event that a failure of the Trust to pay
Distributions on the Capital Securities is attributable to the failure
of the Company to pay interest or principal on the Debentures, to
institute a proceeding directly against the Debenture Issuer for
enforcement of its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event be
less than two (2); provided further that (1) one Trustee shall satisfy
the requirements of the Delaware Trustee pursuant to Section 5.2; (2)
there shall be at least one Trustee who is an officer of the Sponsor
(an "Administrative Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to
qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements. Notwithstanding the above, unless an Event of Default
shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act
or of any jurisdiction in which any part of the Trust's property may
at the time be located, the Holders of a Majority in liquidation
amount of the Common Securities acting as a class at a meeting of the
Holders of the Common Securities, and the Administrative Trustees
shall have power to appoint one or more Persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of
the Trust's property, or
29
to act as separate trustee of any such property, in either case with
such powers as may be provided in the instrument of appointment, and
to vest in such Person or Persons in such capacity any property,
title, right or power deemed necessary or desirable, subject to the
provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have
power to make any such appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of
business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Property Trustee shall also be the
Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or
Person permitted by the Commission to act as an institutional
trustee under the Trust Indenture Act, 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), and
subject to supervision or examination by Federal, State,
Territorial 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 5.3(a)(ii), 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 Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in
Section 5.7(c).
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(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Property Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of
the Trust Indenture Act) shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee and the Indenture
shall be deemed to be specifically described in this Declaration for
purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Trustee Administration
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as the Delaware Trustee) shall be
either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
SECTION 5 Administrative Trustees.
The initial Administrative Trustees shall be:
W. Xxxx Xxxxxx
Xxxxxxxxx X. Xxxxx
Xxxx X. Xxxxxx
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with
respect to any matter over which the Administrative Trustees have
power to act, any power of the Administrative Trustees may be
exercised by, or with the consent of, any one such Administrative
Trustee.
(b) An Administrative Trustee shall have the authority set
forth in Section 3.12 to execute on behalf of the Trust any documents
which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6.
(c) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person
over the age of 21 his or her power for
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the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Department
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b) of this Declaration and to
Section 6(b) of Annex I hereto, Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the
Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to
the Property Trustee or the Delaware Trustee, by vote of Holders
of a Majority in liquidation amount of the Capital Securities
voting as a class at a meeting of Holders of the Capital
Securities.
(b)(i) The Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.7(a) until a Successor
Property Trustee ("Successor Property Trustee") has been appointed and
has accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the Administrative
Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee
under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has
been appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and
delivered to the Administrative Trustees and the Sponsor.
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(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later
date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee;
or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware
Trustee has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities or, if an Event of
Default shall have occurred and be continuing after the issuance of
the Securities, the Holders of the Capital Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee, as the case may be, if the Property
Trustee or the Delaware Trustee delivers an instrument of resignation
in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided
in this Section 5.7 within 60 days after delivery of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee
resigning or being removed, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and prescribe,
appoint a Successor Property Trustee or Successor Delaware Trustee, as
the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
33
(g) At the time of resignation or removal of the Property
Trustee or the Delaware Trustee, the Debenture Issuer shall pay to
such Trustee any amounts that may be owed to such Trustee pursuant to
Section 10.4.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the
number of Trustees is increased pursuant to Section 5.1, a vacancy
shall occur. A resolution certifying the existence of such vacancy by
the Administrative Trustees or, if there are more than two, a majority
of the Administrative Trustees shall be conclusive evidence of the
existence of such vacancy. The vacancy shall be filled with a Trustee
appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the
duties of a Trustee shall not operate to dissolve, terminate or annul
the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment
of an Administrative Trustee in accordance with Section 5.7, the
Administrative Trustees in office, regardless of their number, shall
have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by
this Declaration.
SECTION 5.10 Meetings.
If there is more than one Administrative Trustee, meetings
of the Administrative Trustees shall be held from time to time upon
the call of any Administrative Trustee. Regular meetings of the
Administrative Trustees may be held at a time and place fixed by
resolution of the Administrative Trustees. Notice of any in-person
meetings of the Administrative Trustees 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 such meeting.
Notice of any telephonic meetings of the Administrative Trustees 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
an Administrative Trustee at a meeting shall constitute a waiver of
notice of such meeting except where an Administrative Trustee attends
a meeting for the express purpose of objecting to the transaction of
any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration,
any action of the Administrative Trustees may be taken at a meeting by
vote of a majority of the Administrative Trustees 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 Administrative
34
Trustees. In the event there is only one Administrative Trustee, any
and all action of such Administrative Trustee shall be evidenced by a
written consent of such Administrative Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person
over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration
statement or amendment thereto filed with the Commission, or making
any other governmental filing; and
(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers of
the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the
Administrative Trustees or otherwise as the Administrative Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set
forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as
the case may be, 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 Property Trustee or the Delaware Trustee,
as the case may be, shall be a party, or any Person succeeding to all
or substantially all the corporate trust business of the Property
Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case
may be, 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 VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. If and to the
extent that the Debenture Issuer makes a payment of interest
(including Compounded Interest and Additional Sums), premium and/or
principal on the Debentures held by the Property Trustee or Liquidated
Damages or any other payments pursuant to the Registration Rights
Agreement with respect to the Debentures held by the Property Trustee
(the amount of any such payment being a
35
"Payment Amount"), the Property 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 VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the
Trust issue one class of capital securities representing undivided
beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Series A Capital Securities") and one
class of common securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Annex
I (the "Common Securities"). The Administrative Trustees shall on
behalf of the Trust issue one class of capital securities representing
undivided beneficial interests in the Trust having such terms as set
forth in Annex I (the "Series B Capital Securities") in exchange for
the Series A Capital Securities accepted for exchange in the Exchange
Offer, which Series B Capital Securities shall not bear the legends
required by Section 9.2(i) unless the Holder of such Series A Capital
Securities is either (A) a broker-dealer who purchased such Series A
Capital Securities directly from the Trust for resale pursuant to Rule
144A or any other available exemption under the Securities Act, (B) a
Person participating in the distribution of the Series A Capital
Securities or (C) a Person who is an affiliate (as defined in Rule
144A) of the Trust. The Trust shall issue no securities or other
interests in the assets of the Trust other than the Trust Securities.
(b) 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.
(c) 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 undivided beneficial interests
in the assets of the Trust.
(d) Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner 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.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust
by an Administrative Trustee by manual or facsimile signature. In
case any Administrative
36
Trustee of the Trust who shall have signed any of the Securities shall
cease to be such Administrative Trustee before the Securities so
signed shall be delivered by the Trust, such Securities nevertheless
may be delivered as though the person who signed such Securities had
not ceased to be such Administrative Trustee; and any Securities may
be signed on behalf of the Trust by such persons who, at the actual
date of execution of such Security, shall be the Administrative
Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such an
Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital
Securities for the Trust by manual or facsimile signature. Unless
otherwise determined by the Trust, such signature shall, in the case
of Common Securities, be a manual signature.
A Capital Security shall not be valid until authenticated by
the manual or facsimile signature of an authorized signatory of the
Property Trustee. The signature shall be conclusive evidence that the
Capital Security has been authenticated under this Declaration.
Upon a written order of the Trust signed by one
Administrative Trustee, the Property Trustee shall authenticate the
Capital Securities for original issue. The aggregate number of
Capital Securities outstanding at any time shall not exceed the number
set forth in the Terms in Annex I hereto except as provided in Section
7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Capital Securities. An
authenticating agent may authenticate Capital Securities whenever the
Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such
agent. An authenticating agent has the same rights as the Property
Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Capital Securities and the Property Trustee's
certificate of authentication 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 representing
the Securities may be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other 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 Trust).
The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in
writing. Each Capital Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth
in Annex I and the forms of
37
Securities set forth in Exhibits A-1 and A-2 are part of the terms of
this Declaration and to the extent applicable, the Property Trustee
and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs
in reliance on Rule 144A, as provided in the Purchase Agreement,
shall be issued in the form of one or more permanent global Securities
in definitive, fully registered form without distribution coupons with
the appropriate global legends and Restricted Securities Legend set
forth in Exhibit A-1 hereto (a "Global Capital Security"), which shall
be deposited on behalf of the purchasers of the Capital Securities
represented thereby with the Property Trustee, as custodian for the
Clearing Agency, and registered in the name of the Clearing Agency or
a nominee of the Clearing Agency, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided. The
number of Capital Securities represented by a Global Capital Security
may from time to time be increased or decreased by adjustments made on
the records of the Property Trustee and the Clearing Agency or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Global Capital Securities and such other Capital
Securities in global form as may be authorized by the Trust to be
deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for
delivery initially one or more Global Capital Securities that (i)
shall be registered in the name of Cede & Co. or other nominee of such
Clearing Agency and (ii) shall be delivered by the Trustee to such
Clearing Agency or pursuant to such Clearing Agency's written
instructions or held by the Property Trustee as custodian for the
Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with
respect to any Global Capital Security held on their behalf by the
Clearing Agency or by the Property Trustee as the custodian of the
Clearing Agency or under such Global Capital Security, and the
Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner
of such Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust,
the Property Trustee or any agent of the Trust or the Property Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the Clearing Agency or impair, as between
the Clearing Agency and its Participants, the operation of customary
practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in
Section 7.9 or 9.2(f)(i), owners of beneficial interests in a Global
Capital Security will not be entitled to receive physical delivery of
certificated Capital Securities ("Definitive Capital Securities").
Purchasers of Securities (other than QIBs) who are "accredited
investors" (as defined
38
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) will
receive Capital Securities in the form of individual certificates in
definitive, fully registered form without distribution coupons and
with the Restricted Securities Legend set forth in Exhibit A-1 hereto
("Restricted Definitive Capital Securities"); provided, however, that
upon transfer of such Restricted Definitive Capital Securities to a
QIB, such Restricted Definitive Capital Securities will, unless the
Global Capital Security has previously been exchanged, be exchanged
for an interest in a Global Capital Security pursuant to the
provisions of Section 9.2. Restricted Definitive Capital Securities
will bear the Restricted Securities Legend set forth on Exhibit A-1
unless removed in accordance with this Section 7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities are
issuable only in denominations of $1,000 and any integral multiple
thereof.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the Borough of Manhattan, The
City of New York, (i) an office or agency where Capital Securities may
be presented for registration of transfer ("Registrar"), (ii) an
office or agency where Capital Securities may be presented for payment
("Paying Agent") and (iii) an office or agency where Securities may be
presented for exchange ("Exchange Agent"). The Registrar shall keep a
register of the Capital Securities and of their transfer. The Trust
may appoint the Registrar, the Paying Agent and the Exchange Agent and
may appoint one or more co-registrars, one or more additional paying
agents and one or more additional exchange agents in such other
locations as it shall determine. The term "Registrar" includes any
additional registrar, "Paying Agent" includes any additional paying
agent and the term "Exchange Agent" includes any additional exchange
agent. The Trust may change any Paying Agent, Registrar, co-registrar
or Exchange Agent without prior notice to any Holder. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees. The Trust shall notify
the Property Trustee of the name and address of any Agent not a party
to this Declaration. If the Trust fails to appoint or maintain
another entity as Registrar, Paying Agent or Exchange Agent, the
Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent. The
Trust shall act as Paying Agent, Registrar, and Exchange Agent for the
Common Securities.
The Trust initially appoints the Property Trustee as
Registrar and Paying Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold
in trust for the benefit of Holders or the Property Trustee all money
held by the Paying Agent for the payment of liquidation amounts or
Distributions, and will notify the Property Trustee if there are
insufficient funds for such purpose. While any such insufficiency
continues, the Property Trustee may require
39
a Paying Agent to pay all money held by it to the Property Trustee.
The Trust at any time may require a Paying Agent to pay all money held
by it to the Property Trustee and to account for any money disbursed
by it. Upon payment over to the Property Trustee, the Paying Agent
(if other than the Trust or an Affiliate of the Trust) shall have no
further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If a Holder claims that a Security owned by it has been
lost, destroyed or wrongfully taken or if such Security is mutilated
and is surrendered to the Trust or in the case of the Capital
Securities to the Property Trustee, the Trust shall issue and the
Property Trustee shall, upon written order of the Trust, authenticate
a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. An indemnity bond must be
provided by the Holder which, in the judgment of the Property Trustee,
is sufficient to protect the Trustees, the Sponsor, the Trust or any
authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its
expenses in replacing a Security.
Every replacement Security is an additional beneficial
interest in the Trust.
SECTION 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all the
Capital Securities authenticated by the Property Trustee except for
those cancelled by it, those delivered to it for cancellation and
those described in this Section as not outstanding.
If a Capital Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding unless the
Property Trustee receives proof satisfactory to it that the replaced,
paid or purchased Capital Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and
Distributions on them shall cease to accumulate.
A Capital Security does not cease to be outstanding because
one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the
Security.
SECTION 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the
Sponsor, as the case may be, shall be disregarded and deemed
40
not to be outstanding, except that for the purposes of determining
whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which a
Responsible Officer of the Property Trustee actually knows are so
owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Capital Securities are ready for
delivery, the Trust may prepare and, in the case of the Capital
Securities, the Property Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form
of Definitive Capital Securities but may have variations that the
Trust considers appropriate for temporary Securities. Without
unreasonable delay, the Trust shall prepare and, in the case of the
Capital Securities, the Property Trustee shall authenticate Definitive
Capital Securities in exchange for temporary Securities.
(b) A Global Capital Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing
Agency pursuant to Section 7.3 shall be transferred to the beneficial
owners thereof in the form of Definitive Capital Securities only if
such transfer complies with Section 9.2 and (i) the Clearing Agency
notifies the Sponsor that it is unwilling or unable to continue as
Clearing Agency for such Global Capital Security or if at any time
such Clearing Agency ceases to be a "clearing agency" registered under
the Exchange Act and a clearing agency is not appointed by the Sponsor
within 90 days of such notice, (ii) a Default or an Event of Default
has occurred and is continuing or (iii) the Trust at its sole
discretion elects to cause the issuance of Definitive Capital
Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of Definitive Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing
Agency to the Property Trustee located in the Borough of Manhattan,
The City of New York, to be so transferred, in whole or from time to
time in part, without charge, and the Property Trustee shall
authenticate and make available for delivery, upon such transfer of
each portion of such Global Capital Security, an equal aggregate
liquidation amount of Securities of authorized denominations in the
form of certificated Capital Securities. Any portion of a Global
Capital Security in transferred pursuant to this Section shall be
registered in such names as the Clearing Agency shall direct. Any
Capital Security in the form of Definitive Capital Securities
delivered in exchange for an interest in the Global Capital Security
shall, except as otherwise provided by Sections 7.3 and 9.2, bear the
Restricted Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder
of a Global Capital Security may grant proxies and otherwise authorize
any Person, including Participants and Persons that may hold interests
through Participants, to take any action which such Holder is entitled
to take under this Declaration or the Securities.
41
(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to
the Property Trustee a reasonable supply of certificated Capital
Securities in fully registered form without distribution coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and
Exchange Agent shall forward to the Property Trustee any Capital
Securities surrendered to them for registration of transfer,
redemption, exchange or payment. The Property Trustee shall promptly
cancel all Capital Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation
and shall dispose of cancelled Capital Securities in accordance with
its customary procedures unless the Trust otherwise directs. The
Trust may not issue new Capital Securities to replace Capital
Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any Holder has exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders of Capital Securities; provided that any such notice may state
that no representation is made as to the correctness of such numbers
either as printed on the Capital Securities or as contained in any
notice of a redemption and that reliance may be placed only on the
other identification numbers printed on the Capital Securities, and
any such redemption shall not be affected by any defect in or omission
of such numbers. The Sponsor will promptly notify the Property
Trustee of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee
has received written notice from the
42
Sponsor directing the Property Trustee to terminate the Trust (which
direction is optional, and except as otherwise expressly provided
below, within the discretion of the Sponsor) and provided, further,
that such direction and such distribution is conditioned on (a) the
receipt of any required regulatory approval and (b) the Administrative
Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters, which opinion may rely on published
rulings of the Internal Revenue Service, to the effect that the
Holders will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and
the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of
the Trust by a court of competent jurisdiction;
(v) 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
(vi) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a), the Administrative Trustees shall
file a certificate of cancellation with the Secretary of State of the
State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) 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. Any transfer or
purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) The Administrative Trustees shall provide for the
registration of Capital Securities and of the transfer of Capital
Securities, which will be effected without charge but only upon
payment (with such indemnity as the Administrative Trustees 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 Capital Securities, the Administrative Trustees shall
cause one or more new Capital Securities to be issued in the name of
the designated transferee or transferees. Every Capital Security
surrendered for
43
registration of transfer shall be accompanied by a written instrument
of transfer in form satisfactory to the Administrative Trustees and
the Registrant duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Capital Security surrendered for
registration of transfer shall be canceled by the Property Trustee. A
transferee of a Capital Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Capital Security. By acceptance of a Capital
Security, each transferee shall be deemed to have agreed to be bound
by this Declaration.
(c) For so long as the Trust Securities remain outstanding,
the Sponsor will covenant (i) to directly or indirectly maintain 100%
direct or indirect ownership of the Common Securities of the Trust;
provided, however, that any permitted successor of the Sponsor under
the Indenture may succeed to the Sponsor's ownership of such Common
Securities, (ii) to use its reasonable efforts to cause the Trust (a)
to remain a business trust, except in connection with the distribution
of Debentures to the Holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities, or certain
mergers, consolidations or amalgamations, each as permitted by this
Declaration, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes and (iii)
to use its reasonable efforts to cause each holder of Trust Securities
to be treated as owning an undivided beneficial interest in the
Debentures.
SECTION 9.2 Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section
9.2(b), if Capital Securities are issued upon the registration of
transfer, exchange or replacement of Capital Securities bearing the
Restricted Securities Legend set forth in Exhibit A-1 hereto, or if a
request is made to remove such Restricted Securities Legend on Capital
Securities, the Capital Securities so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust
and the Property Trustee such evidence satisfactory to the Sponsor,
which shall include an Opinion of Counsel as may be reasonably
required by the Sponsor, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers
thereof are made pursuant to an exception from the registration
requirements of the Securities Act or, with respect to Restricted
Definitive Capital Securities, that such Securities are not
"restricted" within the meaning of Rule 144. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction
of the Trust, shall authenticate and deliver Capital Securities that
do not bear the legend.
(b) Transfers After Effectiveness of a Registration
Statement. After the effectiveness of a Registration Statement with
respect to any Capital Securities, all requirements pertaining to
legends on such Capital Securities will cease to apply (other than the
legend requiring that transfers of Capital Securities be made in
blocks having an aggregate liquidation amount of not less than
$100,000), and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring Holder's Restricted
Definitive Capital Security
44
or directions to transfer such Holder's beneficial interest in the
Global Capital Security as the case may be. No such transfer or
exchange of a Restricted Definitive Capital Security or of an interest
in the Global Capital Security shall be effective unless the
transferor delivers to the Trust a certificate in a form substantially
similar to that attached hereto as the form of "Assignment" in Exhibit
A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and
the Property Trustee, upon a written order of the Trust signed by one
Administrative Trustee, shall authenticate a Capital Security in
global form without the Restricted Securities Legend (the
"Unrestricted Global Capital Security") for deposit with the Clearing
Agency or its custodian to evidence transfers of beneficial interests
from the (i) Global Capital Security and (ii) Restricted Definitive
Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities.
When Definitive Capital Securities are presented to the Registrar or
co-Registrar
(x) to register the transfer of such Definitive Capital
Securities; or
(y) to exchange such Definitive Capital Securities which
became mutilated, destroyed, defaced, stolen or lost, for an
equal number of Definitive Capital Securities,
the Registrar or co-registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive Capital
Securities surrendered for registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Administrative Trustees and the Registrar or co-registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a
form substantially similar to that attached hereto as the
form of "Assignment" in Exhibit A-1, and (ii) if the Trust
or Registrar so requests, evidence reasonably satisfactory
to it as to the compliance with the restrictions set forth
in the Restricted Securities Legend.
45
(d) Restrictions on Transfer of a Definitive Capital
Security for a Beneficial Interest in a Global Capital Security. A
Definitive Capital Security may not be exchanged for a beneficial
interest in a Global Capital Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Property Trustee of
a Definitive Capital Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the
Property Trustee and the Administrative Trustees, together with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification (in a form substantially similar
to that attached hereto as the form of "Assignment" in Exhibit
A-1); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the
Property Trustee to make, or to direct the Clearing Agency to
make, an adjustment on its books and records with respect to the
appropriate Global Capital Security to reflect an increase in the
number of the Capital Securities represented by such Global
Capital Security,
then the Property Trustee shall cancel such Definitive Capital
Security and cause, or direct the Clearing Agency to cause, the
aggregate number of Capital Securities represented by the appropriate
Global Capital Security to be increased accordingly. If no Global
Capital Securities are then outstanding, the Trust shall issue and the
Property Trustee shall authenticate, upon written order of any
Administrative Trustee, an appropriate number of Capital Securities in
global form.
(e) Transfer and Exchange of Global Capital Securities.
Subject to Section 9.2(f), the transfer and exchange of Global Capital
Securities or beneficial interests therein shall be effected through
the Clearing Agency, in accordance with this Declaration (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital
Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global
Capital Security may upon request, but only upon 20 days prior
notice to the Property Trustee, and if accompanied by the
information specified below, exchange such beneficial interest
for a Definitive Capital Security representing the same number of
Capital Securities. Upon receipt by the Property Trustee from
the Clearing Agency or its nominee on behalf of any Person having
a beneficial interest in a Global Capital Security of written
instructions or such other form of instructions as is customary
for the Clearing Agency or the Person designated by the Clearing
Agency as having such a beneficial interest in a Restricted
Capital Security and a certification from the transferor (in a
form substantially similar to that attached hereto as the form of
"Assignment" in Exhibit A-1), which may be submitted by
facsimile, then the Property Trustee will
46
cause the aggregate number of Capital Securities represented by
Global Capital Securities to be reduced on its books and records
and, following such reduction, the Trust will execute and the
Property Trustee will authenticate and make available for
delivery to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this
Section 9.2(f) shall be registered in such names and in such
authorized denominations as the Clearing Agency, pursuant to
instructions from its Clearing Agency Participants or otherwise,
shall instruct the Property Trustee in writing. The Property
Trustee shall deliver such Capital Securities to the Persons in
whose names such Capital Securities are so registered in
accordance with such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (h) of this Section
9.2 and subsection (b) of Section 7.9), a Global Capital Security may
not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or another nominee of the Clearing
Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at
any time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, in its sole discretion, notifies the
Property Trustee in writing that it elects to cause the issuance
of Definitive Capital Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of
a written order of the Trust signed by one Administrative Trustee
requesting the authentication and delivery of Definitive Capital
Securities to the Persons designated by the Trust, will authenticate
and make available for delivery Definitive Capital Securities, equal
in number to the number of Capital Securities represented by the
Global Capital Securities, in exchange for such Global Capital
Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii),
each Capital Security certificate evidencing the Global Capital
Securities and the Definitive Capital Securities (and all Capital
Securities issued in exchange therefor or substitution thereof)
shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
47
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR
ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS
CAPITAL 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, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS
CAPITAL SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE
LAST DATE ON WHICH PROGRESS FINANCIAL CORPORATION (THE
"COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE
OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF
THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) 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
48
VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND
THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE
(D) TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST.
SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT
OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES).
ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK
HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
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 OF SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH CAPITAL SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER
(i) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING
OF THIS CAPITAL SECURITY BY IT IS NOT PROHIBITED BY
EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE
49
OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented
by a Global Capital Security) pursuant to an effective
registration statement under the Securities Act or pursuant to
Rule 144 under the Securities Act after such registration
statement ceases to be effective:
(A) in the case of any Restricted Capital Security
that is a Definitive Capital Security, the Registrar shall
permit the Holder thereof to exchange such Restricted
Capital Security for a Definitive Capital Security that does
not bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Restricted Capital
Security; and
(B) in the case of any Restricted Capital Security
that is represented by a Global Capital Security, the
Registrar shall permit the Holder of such Global Capital
Security to exchange such Global Capital Security for
another Global Capital Security that does not bear the
Restricted Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security.
At such time as all beneficial interests in a Global Capital Security
have either been exchanged for Definitive Capital Securities to the
extent permitted by this Declaration or redeemed, repurchased or
canceled in accordance with the terms of this Declaration, such Global
Capital Security shall be canceled by the Property Trustee. At any
time prior to such cancellation, if any beneficial interest in a
Global Capital Security is exchanged for Definitive Capital
Securities, Capital Securities represented by such Global Capital
Security shall be reduced and an adjustment shall be made on the books
and records of the Clearing Agency and the Registrar, to reflect such
reduction.
(k) Obligations with Respect to Transfers and Exchanges of
Capital Securities.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at
the Registrar's or co-registrar's request in accordance with the
terms of this Declaration.
(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such
indemnity as the Trust or the Sponsor may require) in respect of
any tax or other governmental charge that may be imposed in
relation to it.
50
(iii) The Registrar or co-registrar shall not be
required to register the transfer of or exchange of (a) Capital
Securities during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption or
any notice of selection of Capital Securities for redemption and
ending at the close of business on the day of such mailing; or
(b) any Capital Security so selected for redemption in whole or
in part, except the unredeemed portion of any Capital Security
being redeemed in part.
(iv) Prior to the due presentation for registration of
transfer of any Capital Security, the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar may
deem and treat the Person in whose name a Capital Security is
registered as the absolute owner of such Capital Security for the
purpose of receiving Distributions on such Capital Security
(subject to Section 2(c) of Annex I) and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected
by notice to the contrary.
(v) 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.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security,
a Clearing Agency Participant in the Clearing Agency or other
Person with respect to the accuracy of the records of the
Clearing Agency or its nominee or of any Clearing Agency
Participant thereof, with respect to any ownership interest in
the Capital Securities or with respect to the delivery to any
Clearing Agency Participant, beneficial owner or other Person
(other than the Clearing Agency) of any notice (including any
notice of redemption) or the payment of any amount, under or with
respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or
made only to or upon the order of the registered Holders (which
shall be the Clearing Agency or its nominee in the case of a
Global Capital Security). The rights of beneficial owners in any
Global Capital Security shall be exercised only through the
Clearing Agency subject to the applicable rules and procedures of
the Clearing Agency. The Property Trustee may conclusively rely
and shall be fully protected in relying upon information
furnished by the Clearing Agency or any agent thereof with
respect to its Clearing Agency Participants and any beneficial
owners.
(ii) The Property Trustee and the Registrar shall have no
obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on
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transfer imposed under this Declaration or under applicable law with
respect to any transfer of any interest in any Capital Security
(including any transfers between or among Clearing Agency Participants
or beneficial owners in any Global Capital Security) other than to
require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine
the same to determine substantial compliance as to form with the
express requirements hereof.
(m) Exchange of Series A Capital Securities for Series B
Capital Securities. The Series A Capital Securities may be exchanged
for Series B Securities pursuant to the terms of the Exchange Offer.
The Property Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities,
the transactions contemplated by the Exchange
Offer have been consummated; and
(B) the number of Series A Capital Securities properly
tendered in the Exchange Offer that are
represented by a Global Capital Security and the
number of Series A Capital Securities properly
tendered in the Exchange Offer that are
represented by Definitive Capital Securities, the
name of each Holder of such Definitive Capital
Securities, the liquidation amount of Capital
Securities properly tendered in the Exchange Offer
by each such Holder and the name and address to
which Definitive Capital Securities for Series B
Capital Securities shall be registered and sent
for each such Holder.
The Property Trustee, upon receipt of (i) such Officers'
Certificate and (ii) an Opinion of Counsel (x) to the effect that the
Series B Capital Securities have been registered under Section 5 of
the Securities Act and the Indenture has been qualified under the
Trust Indenture Act and (y) with respect to the matters set forth in
Section 3(p) of the Registration Rights Agreement, shall authenticate
(A) a Global Capital Security representing Series B Capital Securities
in aggregate liquidation amount equal to the aggregate liquidation
amount of Series A Capital Securities represented by a Global Capital
Security indicated in such Officers' Certificate as having been
properly tendered and (B) Definitive Capital Securities representing
Series B Capital Securities registered in the names of, and in the
liquidation amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all
the outstanding Series A Capital Securities shall have been properly
tendered and not withdrawn, the Property Trustee shall make an
endorsement on the Global Capital Security representing
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Series A Capital Securities indicating the reduction in the number and
aggregate liquidation amount represented thereby as a result of the
Exchange Offer.
The Trust shall deliver such Definitive Capital Securities
representing Series B Capital Securities to the Holders thereof as
indicated in such Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities and,
when issued, Series B Capital Securities may only be transferred in
minimum blocks of $100,000 aggregate liquidation amount. Any transfer
of Series A Capital Securities or Series B Capital Securities in a
block having an aggregate liquidation amount of less than $100,000
shall be deemed to be voided and of no legal effect whatsoever. Any
such transferee shall be deemed not to be a Holder of such Series A or
Series B 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.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security
shall be registered on the books and records of the Trust as the sole
owner of such Security 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 Security
on the part of any Person, whether or not the Trust shall have actual
or other notice thereof.
SECTION 9.4 Book Entry Interests.
Global Capital Securities shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the
nominee of the Clearing Agency, and no Capital Security Beneficial
Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owner's interests in
such Global Capital Securities, except as provided in Section 9.2 and
Section 7.9. Unless and until definitive, fully registered Capital
Securities certificates have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 and Section 7.9:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Capital
Securities and receiving approvals, votes or consents hereunder)
as the Holder of the Capital Securities and the sole holder of
the Global Certificates and shall have no obligation to the
Capital Security Beneficial Owners;
53
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and the Clearing Agency shall
receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital
Security Holders is required under this Declaration, the Trustees
shall give all such notices and communications specified herein to be
given to the Holders of Global Capital Securities to the Clearing
Agency, and shall have no notice obligations to the Capital Security
Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the
Administrative Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees 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
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any
deficit upon dissolution or termination of the Trust or
otherwise.
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(b) The Debenture Issuer shall be liable for all of the
debts and obligations of the Trust (other than in respect of the
payment of principal, interest and premium, if any, on the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act,
the Holders shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 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 gross 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 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 might properly be paid.
SECTION 10.3 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 (other than the duties imposed on the Property Trustee under
the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
55
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that are,
fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take
such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the
Indemnified Person shall not constitute a breach of this Declaration
or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) 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.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company 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) by reason of the
fact that he is or was a Company Indemnified Person against
expenses (including 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 Company Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in
or
56
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.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company 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 by reason
of the fact that he is or was a Company Indemnified Person
against expenses (including 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 and except that no
such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have
been adjudged to be liable to the Trust unless and only to the
extent that the Court of Chancery of Delaware or 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 of Chancery or such other court shall deem proper.
(iii) To the extent that a Company 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 (i) and (ii) of this
Section 10.4(a), 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) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon
a determination that indemnification of the Company Indemnified
Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Administrative
Trustees by a majority vote of a Quorum consisting of such
Administrative Trustees who were not parties to such action, suit
or proceeding, (2) if such a Quorum is not obtainable, or, even
if obtainable, if a Quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (i) and (ii) of this Section
10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or
57
on behalf of such Company Indemnified Person to repay such amount
if it shall ultimately be determined that he is not entitled to
be indemnified by the Debenture Issuer as authorized in this
Section 10.4(a). Notwithstanding the foregoing, no advance shall
be made by the Debenture Issuer if a determination is reasonably
and promptly made (i) by the Administrative Trustees by a
majority vote of a quorum of disinterested Administrative
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Administrative Trustees
so directs, by independent legal counsel in a written opinion or
(iii) the Common Security Holder of the Trust, that, based upon
the facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal
proceeding, that such Company 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
Administrative Trustees, independent legal counsel or Common
Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or
Capital Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) 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 Debenture Issuer
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 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each
Company Indemnified Person who serves in such capacity at any
time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights
or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a
Company 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 Debenture Issuer would
have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), 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
58
position under the provisions of this Section 10.4(a) with
respect to the resulting or surviving entity as he would have
with respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a Company Indemnified Person
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of
the Property Trustee or the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property
Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and
to hold each Fiduciary Indemnified Person harmless against, any and
all loss, liability, damage, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person)
incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall
survive the resignation or removal of the Property Trustee or the
Delaware Trustee and the satisfaction and discharge of this
Declaration.
(c) The Debenture Trustee agrees to pay the Property
Trustee and the Delaware Trustee, from time to time, such compensation
for all services rendered by the Property Trustee and the Delaware
Trustee hereunder as may be mutually agreed upon in writing by the
Sponsor and the Property Trustee or the Delaware Trustee, as the case
may be, and, except as otherwise expressly provided herein, to
reimburse the Property Trustee and the Delaware Trustee upon its or
their request for all reasonable expenses, disbursements and advances
incurred or made by the Property Trustee or the Delaware Trustee, as
the case may be, in accordance with the provisions of this
Declaration, except any such expense, disbursement or advance as may
be attributable to its or their negligence or bad faith.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and
the Property Trustee (subject to Section 5.3(c)) 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 shall have no
rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived
59
therefrom, and the pursuit of any such venture, even if competitive
with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or
the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by
the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property 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 10.6 Compensation; Fees.
The Debenture Issuer agrees:
(a) to pay to the Trustees from time to time such
compensation for all services rendered by them hereunder as the
parties shall agree in writing from time to time (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust); and
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in
accordance with any provision of this Declaration (including the
reasonable compensation and the expenses and disbursements of their
respective agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith.
The provisions of this Section 10.6 shall survive the
dissolution of the Trust and the termination of this Declaration and
the removal or resignation of any Trustee.
No Trustee may claim any lien or charge on any property of
the Trust as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 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.
60
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, 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 on the accrual method of accounting, 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 Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any 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 Administrative Trustees shall endeavor to deliver
all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, 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 Administrative
Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust may maintain 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 Property
Trustee shall be made directly to the Property Trustee Account and no
other funds of the Trust shall be deposited in the Property Trustee
Account. The sole signatories for such accounts shall be designated
by the Administrative Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States federal, state and
local law. The Trust shall request, and the Holders shall provide to
the Trust, such forms or certificates as are necessary to establish an
exemption from withholding with respect to each Holder, and any
representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling,
its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption
from withholding
61
is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that
the Trust 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 over
withholding, 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 Trust may reduce
subsequent Distributions by the amount of such withholding.
62
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration
(including Section 7 of the Annex I hereto) or by any applicable terms
of the Securities, this Declaration may only be amended by a written
instrument approved and executed by:
(i) the Administrative Trustees (or if there are more than
two Administrative Trustees a majority of the Administrative
Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless the Property 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 that all conditions
precedent, if any, in this Declaration to the execution and
delivery of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be required to
sign any such amendment which affects the rights, powers, duties,
obligations or immunities of the Property Trustee; and
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture
Act; or
63
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(c) At such time after the Trust has issued any Securities
that remain outstanding, any amendment that would adversely affect the
rights, privileges or preferences of any Holder may be effected only
with such additional requirements as may be set forth in the terms of
such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders;
(e) Article Four shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common
Securities and;
(f) The rights of the holders of the Common Securities
under Article Five to increase or decrease the number of, and appoint
and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
and
(g) Notwithstanding Section 12.1(c), this Declaration may
be amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any provision
in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions
with respect to matters or questions arising under this
Declaration which shall not be inconsistent with the other
provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that
the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Securities are
outstanding or to ensure that the Trust will not be required to
register as an Investment Company under the Investment Company
Act; and
(iii) to modify, eliminate or add any provisions of the
Declaration to such extent as shall be necessary to enable the
Trust and the Sponsor to conduct an Exchange Offer in the manner
contemplated by the Registration Rights Agreement;
provided, however, that in each case such action shall not adversely
affect in any material respect the interests of the Holders, and any
amendments of this Declaration shall become effective when notice
thereof is given to the Holders.
64
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may
be called at any time by the Administrative Trustees (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, the terms of the Securities or the
rules of any stock exchange on which the Capital Securities are listed
or admitted for trading. The Administrative Trustees 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
Administrative Trustees one or more notices in writing stating that
the signing Holders wish to call a meeting and indicating the general
or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security
Certificates held by the Holders exercising the right to call a
meeting and only those Securities specified 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:
(i) notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least seven days and
not more than 60 days before the date of such meeting. Whenever
a vote, consent or approval of the Holders is permitted or
required under this Declaration or the rules of any stock
exchange on which the Capital Securities are listed or admitted
for trading, such vote, consent or approval may be given at a
meeting of the Holders. Any action that may be taken at a
meeting of the Holders may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by
the Holders 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 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
entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the Trust within
the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder 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 executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation;
65
(iii) each meeting of the Holders shall be conducted by
the Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are
then listed or trading, otherwise provides, the Administrative
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders, including notice of
the time, place or purpose of any meeting at which any matter is
to be voted on by any Holders, 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.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Property Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor
Property Trustee's acceptance of its appointment as Property Trustee
that:
(a) The Property Trustee is a New York banking corporation,
a national banking association or a bank or trust company organized
under the laws of any State of the United States or the District of
Columbia, in any case with trust powers 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 Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. This
Declaration has been duly executed and delivered by the Property
Trustee and constitutes a legal, valid and binding obligation of the
Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
66
(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or
constitute a breach of the charter or by-laws of the Property Trustee;
and
(d) No consent, approval or authorization of, or
registration with or notice to, any New York State or federal banking
authority is required for the execution, delivery or performance by
the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor
Delaware Trustee's acceptance of its appointment as Delaware Trustee
that:
(a) The Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of Delaware
or the United States, 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 Delaware
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This
Declaration has been duly executed and delivered by the Delaware
Trustee and constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the Delaware
Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
67
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement.
The Holders of the Capital Securities, the Debentures and the
Capital Securities Guarantee are entitled to the benefits of a Registration
Rights Agreement. In certain limited circumstances set forth in the
Registration Rights Agreement, the Debenture Issuer shall be required to pay
Liquidated Damages with respect to the Debentures. Unless otherwise stated,
the term "Distribution", as used in this Declaration, includes such
Liquidated Damages.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 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 or mailed by first class mail, overnight courier service or
confirmed telecopy, as follows:
(a) if given to the Trust, in care of the Administrative Trustees
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Property Trustee, the Delaware Trustee and
the Holders):
Progress Capital Trust I
c/o Progress Financial Corporation
Four Xxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxx
Administrative Trustee
Telecopy: (000) 000-0000
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to
the Holders):
The Bank of New York (Delaware)
Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Department
Telecopy: (000) 000-0000
68
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders):
The Bank of New York
000 Xxxxxxx Xxxxxx
00xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Trustee Administration
Telecopy: (000) 000-0000
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder
of the Common Securities may give notice to the Property Trustee and the
Trust):
Progress Financial Corporation
Four Xxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxx
Senior Vice President and
Chief Fiancial Officer
Telecopy: (000) 000-0000
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 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.
69
SECTION 15.4 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 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 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 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one 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.
70
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/W. Xxxx Xxxxxx
----------------------------------------
W. Xxxx Xxxxxx, as Administrative Trustee
/s/Xxxxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxxxx X. Xxxxx, as Administrative Trustee
/s/Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx, as Administrative Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/Xxxx Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxx Xxxxxxxxx
Title: Authorized Signatory
THE BANK OF NEW YORK,
as Property Trustee
By: /s/Xxxx Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxx Xxxxxxxxx
Title: Vice President
PROGRESS FINANCIAL CORPORATION,
as Sponsor and Debenture Issuer
By: /s/Xxxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
71
ANNEX I
TERMS OF
SERIES A/SERIES B 10.50% CAPITAL SECURITIES
10.50% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of June 3, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined
in the Offering Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 15,000 Series A Capital Securities of the
Trust and 15,000 Series B Capital Securities of the Trust, both series
together with an aggregate liquidation amount with respect to the assets of
the Trust of fifteen million dollars ($15,000,000), and each with a
liquidation amount with respect to the assets of the Trust of $1,000 per
security, are hereby designated for the purposes of identification only as
"Series A 10.50% Capital Securities" and "Series B 10.50% Capital
Securities", respectively (collectively, the "Capital Securities"). The
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 or to conform to the rules of any exchange or quotation system on
or in which the Capital Securities are listed, traded or quoted.
(b) Common Securities. 464 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of three
hundred eighty seven thousand dollars ($464,000) and a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "10.50% Common
Securities" (collectively, the "Common Securities"). The certificates
evidencing the Common Securities shall be 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 payable on each Security will be fixed at a rate
per annum of 10.50% (the "Coupon Rate") of the liquidation amount of $1,000
per Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions
in arrears for more than one semi-annual
I-1
period will bear additional distributions thereon compounded semi-annually at
the Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes distributions of any such
Liquidated Damages payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the
Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided
for, from June 3, 1997, and will be payable semi-annually in arrears on June
1 and December 1 of each year, commencing on December 1, 1997 (each, a
"Distribution Date"), except as otherwise described below. Distributions
will be computed on the basis of a 360-day year consisting of twelve 30-day
months and for any period less than a full calendar month on the basis of the
actual number of days elapsed in such month. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has
the right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures
for a period not exceeding 10 consecutive semi-annual periods, including the
first such semi-annual period during such period (each an "Extension
Period"), during which Extension Period no interest shall be due and payable
on the Debentures, provided that no Extension Period shall end on a date
other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions
will continue to accumulate with additional Distributions thereon (to the
extent permitted by applicable law but not at a rate greater than the rate at
which interest is then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and
further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
(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 close of
business on the 15th day of the month immediately preceding the month in
which the relevant Distribution Date occurs, which Distribution Dates
correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Global Capital Securities will be made as
described under the heading "Description of Capital Securities -- Form,
Denomination, Book-
I-2
Entry Procedures and Transfer" in the Offering Memorandum dated May 30, 1997,
of the Debenture Issuer and the Trust relating to the Securities and the
Debentures. Payments in respect of Capital Securities held in certificated
form will be made by check mailed to the Holder entitled thereto. The
relevant record dates for the Common Securities shall be the same as the
record dates for the Capital Securities. Distributions payable on any
Securities that are not punctually paid on any Distribution Date, as a result
of the Debenture Issuer having failed to make a payment under the Debentures,
will cease to be payable to the Holder 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 next succeeding
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day with the same force and effect
as if made on such 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.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust or the Sponsor
otherwise gives notice of its election to liquidate the Trust pursuant to
Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, to the Holders a
Like Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the aggregate of the liquidation amount of $1,000 per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal
amount of Debentures to be paid in accordance with their terms and (ii) with
respect to a distribution of Debentures upon the liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Securities of the Holder to whom such Debentures are distributed.
I-3
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event, as described below), the proceeds from
such repayment shall be simultaneously applied by the Property Trustee
(subject to the Property Trustee having received written notice no later than
45 days prior to such repayment) to redeem a Like Amount of the Securities at
a redemption price equal to (i) in the case of the repayment of the
Debentures at maturity, the Maturity Redemption Price (as defined below),
(ii) in the case of the optional redemption of the Debentures upon the
occurrence and continuation of a Special Event, the Special Event Redemption
Price (as defined below) and (iii) in the case of the optional redemption of
the Debentures on or after June 1, 2007, the Optional Redemption Price (as
defined below). The Maturity Redemption Price, the Special Event Redemption
Price and the Optional Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Securities to be redeemed
will be determined as described in Section 4(f)(ii) below. Upon the entry of
an order for the dissolution of the Trust by a court of competent
jurisdiction, the Debentures thereafter will be subject to optional
repayment, in whole, but not in part, on or after June 1, 2007 (the "Initial
Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the conditions
in the Indenture) to elect to redeem the Debentures in whole or in part at
any time on or after the Initial Optional Redemption Date, upon not less than
30 days and not more than 60 days notice, at the Optional Redemption Price
and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Optional Redemption Price on a
Pro Rata basis. "Optional Redemption Price" shall mean a price equal to the
percentage of the liquidation amount of Securities to be redeemed plus
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning June 1 of the
years indicated below:
I-4
Year Percentage
---- ----------
2007 105.250%
2008 104.725%
2009 104.200%
2010 103.675%
2011 103.150%
2012 102.625%
2013 102.100%
2014 101.575%
2015 101.050%
2016 100.525%
2017 and thereafter 100.000%
(c) If at any time a Tax Event or a Regulatory Capital Event (each
as defined below, and each a "Special Event") occurs, the Debenture Issuer
shall have the right (subject to the conditions set forth in the Indenture)
at any time prior to the Initial Optional Redemption Date, upon not less than
30 nor more than 60 days notice, to redeem the Debentures in whole, but not
in part, within the 90 days following the occurrence of such Special Event
(the "90 Day Period"), and, simultaneous with such redemption, to cause a
Like Amount of the Securities to be redeemed by the Trust at the Special
Event Redemption Price on a Pro Rata basis.
"Make-Whole Amount" shall be equal to the greater of (i) 100% of the
principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as
determined by a Quotation Agent (as defined in the Indenture), of the present
values of remaining scheduled payments of principal amount and interest on
the Debentures, discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined in the Indenture), plus, in the case of each of
clauses (i) and (ii), accrued and unpaid Distributions thereon, if any, to
the date of such redemption.
"Tax Event" shall occur upon receipt by the Sponsor and the Trust of
an Opinion of Counsel from 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 or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which pronouncement or decision is announced on or
after June 3,
I-5
1997, 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.
A "Regulatory Capital Event" means that the Sponsor shall have
become, or pursuant to law or regulation will become within 180 days, subject
to capital requirements under which, in the written opinion of independent
bank regulatory counsel experienced in such matters, the Capital Securities
would not constitute Tier 1 Capital (as that concept is used in the
guidelines or regulations issued by the Federal Reserve Board as of the date
of the Offering Memorandum) applied as if the Sponsor (or its successor) were
a bank holding company, or the then-equivalent of such Tier 1 Capital.
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the Make-Whole Amount.
(d) On and from the date fixed by the Administrative Trustees for
any distribution of Debentures and liquidation of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee), as
the Holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Debentures to be delivered upon
such distribution and any certificates representing Securities not held by
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) will be deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on
all Securities for all semi-annual Distribution periods terminating on or
before the date of redemption.
(f) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder 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 Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed
I-6
by first-class mail, postage prepaid, to Holders. Each
Redemption/Distribution Notice shall be addressed to the Holders at the
address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of
the redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the particular Securities to be redeemed shall be
selected on a Pro Rata basis (based upon Liquidation Amounts) not more
than 60 days prior to the date fixed for redemption from the outstanding
Capital Securities not previously called for redemption, provided,
however, that with respect to Holders that would be required to hold less
than 100 but more than zero Securities as a result of such pro rata
redemption, the Trust shall redeem Securities of each such Holder so that
after such redemption such Holder shall hold either 100 Securities or
such Holder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Trust shall deem fair and
appropriate, provided, further, that any such proration may be made on
the basis of the aggregate Liquidation Amount of Securities held by each
Holder thereof and may be made by making such adjustments as the Trust
deems fair and appropriate in order that only Securities in denominations
of $1,000 or integral multiples thereof shall be redeemed. In respect of
Capital Securities registered in the name of and held of record by the
Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to the Clearing Agency and disbursed by such
Clearing Agency in accordance with the procedures applied by such agency
or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then
(A) with respect to Capital Securities issued in book-entry form, by
12:00 noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the
Debentures by 10:00 a.m., New York City time, on the maturity date or the
date of redemption, as the case requires, the Property Trustee will
deposit irrevocably with the Clearing Agency or its nominee (or successor
Clearing Agency or its nominee) funds sufficient to pay the applicable
Redemption Price with respect to such Capital Securities and will give
the Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the relevant Clearing Agency Participants, and (B)
with respect to Capital Securities issued in certificated form and Common
Securities, provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders by check mailed to the
address of the relevant Holder appearing on the books and records of the
Trust on the redemption date. If a Redemp-
I-7
tion/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business
on the date of such deposit, or on the redemption date, as applicable,
Distributions will cease to accumulate on the Securities so called for
redemption and all rights of Holders so called for redemption will cease,
except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of
Holders on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required
to register or cause to be registered the transfer of (i) any Securities
beginning on the opening of business 15 days before the day of mailing of
a notice of redemption and ending at the close of business on the day of
such mailing or (ii) any Securities selected for redemption except the
unredeemed portion of any Security being redeemed. If any date fixed for
redemption of Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such next succeeding Business
Day falls in the next calendar year, such payment shall be made on the
immediately preceding Business Day, with the same force and effect as if
made on such date fixed for redemption. If payment of the Redemption
Price in respect of any Securities is improperly withheld or refused and
not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accumulate 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.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital
Securities, the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder
thereof, and (B) in respect of the Common Securities to the Holder
thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws),
provided the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its subsidiaries may
at any time and from time to time purchase outstanding Capital Securities
by tender, in the open market or by private agreement.
I-8
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing
any trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation
amount of all outstanding Capital Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by
a vote of the Holders of the Capital Securities except by subsequent vote of
such Holders. Subject to Section 2.7 of the Declaration, the Property Trustee
shall notify each Holder of Capital Securities of any notice of default with
respect to the Debentures. In addition to obtaining the foregoing approvals
of such Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or premium, if any,
or interest on a Like Amount of Debentures (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Common Securities Holder will be subrogated
to the rights of such Holder of Capital Securities to the extent of any
payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the second preceding sentence,
the Holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Administrative Trustees will cause a
notice of any meeting at which Holders of Capital
I-9
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 Capital 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 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 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 be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the
Common Securities. If an Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the holders of a Majority in liquidation amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace, or increase or decrease the
number of, the Administrative Trustees, which voting rights are vested
exclusively in the Sponsor as the holder of the Common Securities. No
resignation or removal of a Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing
any trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation
amount of all outstanding Common Securities; provided, however, that where a
consent under the Indenture would require the consent of
I-10
each holder of Debentures affected thereby, no such consent shall be given by
the Property Trustee without the prior approval of each Holder of the Common
Securities. The Trustees shall not revoke any action previously authorized
or approved by a vote of the Holders of the Common Securities except by
subsequent vote of such Holders. Subject to Section 2.7 of the Declaration,
the Property Trustee shall notify each Holder of Common Securities of any
notice of default with respect to the Debentures. In addition to obtaining
the foregoing approvals of such Holders of the Common Securities, prior to
taking any of the foregoing actions, the Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Common Securities may institute a Direct Action for enforcement
of payment to such Holder of the principal of or premium, if any, or interest
on a Like Amount of Debentures on or after the respective due date specified
in the Debentures. In connection with Direct Action, the rights of the
Common Securities Holder will be subordinated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Common Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Common Securities
will not be able to exercise directly any other remedy available to the
holders of the Debentures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which Holders of 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 record of 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.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of
the Holders (i) to cure any ambiguity,
I-11
correct or supplement any provisions in the Declaration that may be
inconsistent with any other provisions, or to make any other provisions with
respect to matters or questions arising under the Declaration which shall not
be inconsistent with the other provisions of the Declaration, (ii) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall
be necessary to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that any
Securities are outstanding or to ensure that the Trust will not be required
to register as an "Investment Company" under the Investment Company Act or
(iii) to modify, eliminate or add any provisions of the Declaration to such
extent as shall be necessary to enable the Trust and the Sponsor to conduct
an Exchange Offer in the manner contemplated by the Registration Rights
Agreement; provided, however, that in each case such action shall not
adversely affect in any material respect the interests of any Holder. Any
amendments of the Declaration shall become effective when notice thereof is
given to the Holders. Under the circumstances referred to in Section 12.1(c)
of the Declaration, the Declaration also may be amended by the Trustees and
the Sponsor with (i) the consent of Holders representing a Majority in
liquidation amount of all outstanding Securities, and (ii) receipt by the
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such
amendment will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status as an
Investment Company under the Investment Company Act, provided that, without
the consent of each Holder of Trust Securities, the Declaration may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date
or (ii) restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date.
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 according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration 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
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 Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding. In
any such proration, the Trust may make such adjustments as may be appropriate
in order that only securities in authorized denominations shall be redeemed
(subject to the minimum block requirements of Section 9.2(n) of the
Declaration).
I-12
9. Ranking.
The Capital Securities rank pari passu with the Common Securities
and payment thereon shall be made Pro Rata with the Common Securities, except
that, if an Event of Default under the Declaration occurs and is continuing,
no payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments
to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders shall have no preemptive 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 Capital
Securities Guarantee, the Common Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge upon written request to the Sponsor at its principal place of business.
I-13
EXHIBIT A-1
FORM OF SERIES A CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING
AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR
ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.]
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 XXXXX XXXXXX, XXX XXXX,
XXX XXXX) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[IF THIS CAPITAL SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT:]
THESE CAPITAL SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL 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, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL
A1-1
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE
LAST DATE ON WHICH PROGRESS FINANCIAL CORPORATION (THE "COMPANY") OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) 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 (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE
OF THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE
TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.]
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. 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 OF SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
A1-2
THE HOLDER OF THIS CAPITAL SECURITY BY ITS THE ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION
4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM
ANY SUCH PROHIBITION.
A1-3
Number of Series A Aggregate Liquidation
Capital Securities Amount: $15,000,000
15,000 CUSIP NO. ___________
Certificate Evidencing Series A Capital Securities
of
Progress Capital Trust I
Series A _____% Capital Securities
(liquidation amount $1,000 per Capital Security)
Progress Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of $15,000,000 in
aggregate liquidation amount of Capital Securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the
Series A _____% Capital Securities (liquidation amount $1,000 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 and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of June 3, 1997, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given
them in the Declaration. The Sponsor will provide a copy of the Declaration,
the Capital Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
A1-4
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated:
PROGRESS CAPITAL TRUST I
By:
----------------------------
Name: Xxxxxxxxx X. Xxxxx
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK,
as Property Trustee
Dated: By:
----------------------------
Authorized Signatory
A1-5
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of ______% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears
for more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions," as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds on hand legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for, if no Distributions have been paid or duly provided for,
from June __, 1997 and will be payable semi-annually in arrears, on _______
and ________ of each year, commencing on _________ , 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than
a full calendar month, the number of days elapsed in such month. As long as
no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions also will be deferred. Despite
such deferral, semi-annual Distributions will continue to accumulate with
interest thereon (to the extent permitted by applicable law, but not at a
rate exceeding the rate of interest then accruing on the Debentures) at the
Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension
Period; provided that such Extension Period, together with all such previous
and further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the Debentures.
Payments of accumulated Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
A1-6
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any redemption
of the Debentures, cause a Like Amount of the Securities to be redeemed by
the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
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(Insert assignee's social security or tax identification number)
-------------------------------------------------------------------------------
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(Insert address and zip code of assignee)
and irrevocably appoints
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----------------------------------------------- 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*:
--------------------------------------
-----------------------
* 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 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 Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
A1-8
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer; or
(2) / / transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) / / transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act of 1933 that is acquiring the Capital
Securities 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 of 1933; or
(4) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) / / transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Capital Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if
box (3) or (4) is checked, the Registrar may require, prior to registering
any such transfer of the Capital Securities, such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that (i) if box (2) is checked, the transferee must also
certify in the form attached hereto that it is a "qualified institutional
buyer" as defined in Rule 144A or (ii) if box (3) is checked, the transferee
must also provide to the Registrar a Transferee Letter of Representation in
the form attached to the Offering Memorandum of the Trust dated May 30, 1997;
provided, further, that after the date that a Registration Statement has been
filed and so long as such Registration Statement continues to be effective,
the Registrar may only permit transfers for which box (5) has been checked.
--------------------------------------------
Signature
A1-9
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Capital Securities hereby certifies that
(i) the undersigned is a "qualified institutional buyer" (a "QIB") as defined
in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, (ii)
the undersigned is aware that the transfer of the Capital Securities to the
undersigned is being made in reliance on Rule 144A and (iii) the undersigned
is acquiring the Capital Securities for its own account or for the account of
another QIB over which the undersigned exercises its sole investment
discretion.
The undersigned also understands and acknowledges that the Capital
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto
and, in each case, in compliance with the terms of the Capital Securities and
the terms of the Amended and Restated Declaration of Trust of Progress
Capital Trust I, dated as of June __, 1997, as the same may be amended from
time to time.
---------------------------------
Signature
X0-00
XXXXXXX X-0
XXXX XX XXXXXX SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON 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, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
PROGRESS BANCORP, INC. (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS
THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL
SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS
THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS COMMON 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 (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH
HOLDER
A2-1
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS COMMON SECURITY IS NOT TRANSFERABLE EXCEPT AS SET FORTH IN
SECTION 9.1(c) OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE
PROGRESS CAPITAL TRUST I, DATED AS OF ________, 1997, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME.
A2-2
Certificate Evidencing Common Securities
of
Progress Capital Trust I
_______% Common Securities
(liquidation amount $1,000 per Common Security)
Progress Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
_____________________ (the "Holder") is the registered owner of 464 common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the _____% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). Subject to the
limitations in Section 9.1(c) of the Declaration (as defined below), the
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of June 3, 1997, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Common Securities as set forth in Annex I to the Declaration. Capitalized
terms used but not defined herein shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration, the Common
Securities Guarantee, the Capital Securities Guarantee (as may be
appropriate) and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Sponsor at its principal
place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities
as evidence of indirect beneficial ownership in the Debentures.
A2-3
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of June __, 1997.
Progress Capital Trust I
By:
__________________________________
Name: Xxxxxxxxx X. Xxxxx
Administrative Trustee
A2-4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of _____% (the "Coupon Rate") of the liquidation amount of
$1,000 per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears
for more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will
accrue from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided
for, from June __, 1997 and will be payable semi-annually in arrears, on
_______ and ________ of each year, commencing on _________, 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than
a full calendar month, the number of days elapsed in such month. As long as
no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions also will be deferred. Despite
such deferral, Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate
exceeding the rate of interest then accruing on the Debentures) at the Coupon
Rate compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and
further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear
on the books and records of the Trust on the first record date after the end
of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
A2-5
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders to the
Securities in liquidation of the Trust or, simultaneous with any redemption
of the Debentures, cause a Like Amount of the Securities to be redeemed by
the Trust.
Under certain circumstances, the right of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities (as defined in the Declaration), as provided in the Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-6
-----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
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-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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(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 Capital Security
Certificate)
A2-7
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer; or
(2) / / transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) / / transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act of 1933 that is acquiring the Common Securities
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 of 1933; or
(4) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) / / transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Common Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if
box (3) or (4) is checked, the Registrar may require, prior to registering
any such transfer of the Capital Securities, such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that (i) if box (2) is checked, the transferee must also
certify in the form attached that it is a "qualified institutional buyer" as
defined in Rule 144A or (ii) if box (3) is checked, the transferee must also
provide to the Registrar a Transferee Letter of Representation in the form
attached to the Offering Memorandum of the Trust, dated May 30, 1997 (as
modified to reflect the transfer of Common Securities).
___________________________________
Signature
A2-8
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Common Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, (ii)
the undersigned is aware that the transfer of the Common Securities to the
undersigned is being made in reliance on Rule 144A and (iii) the undersigned
is acquiring the Common Securities for its own account or for the account of
another QIB over which the undersigned exercises its sole investment
discretion.
The undersigned also understands and acknowledges that the Common
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto
and, in each case, in compliance with the terms of the Common Securities and
the terms of the Amended and Restated Declaration of Trust of Progress
Capital Trust I, dated as of June __, 1997, as the same may be amended from
time to time.
___________________________
Signature
A2-9