Exhibit 4.1
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PROSPERITY BANCSHARES, INC.,
as Issuer
INDENTURE
Dated as of July 31, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Bank and Trust Company OF CONNECTICUT, NATIONAL ASSOCIATION,
as Trustee
FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
DUE 2031
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TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS........................................................................................... 1
Section 1.1. Definitions........................................................................... 1
ARTICLE II. DEBENTURES........................................................................................... 7
Section 2.1. Authentication and Dating............................................................. 7
Section 2.2. Form of Trustee's Certificate of Authentication....................................... 8
Section 2.3. Form and Denomination of Debentures................................................... 8
Section 2.4. Execution of Debentures............................................................... 8
Section 2.5. Exchange and Registration of Transfer of Debentures................................... 9
Section 2.6. Mutilated, Destroyed, Lost or Stolen Debentures....................................... 11
Section 2.7. Temporary Debentures.................................................................. 11
Section 2.8. Payment of Interest and Additional Interest........................................... 12
Section 2.9. Cancellation of Debentures Paid, etc.................................................. 13
Section 2.10. Computation of Interest Rate.......................................................... 13
Section 2.11. Extension of Interest Payment Period.................................................. 15
Section 2.12. CUSIP Numbers......................................................................... 16
ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY................................................................. 16
Section 3.1. Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures........ 16
Section 3.2. Offices for Notices and Payments, etc................................................. 16
Section 3.3. Appointments to Fill Vacancies in Trustee's Office.................................... 17
Section 3.4. Provision as to Paying Agent.......................................................... 17
Section 3.5. Certificate to Trustee................................................................ 18
Section 3.6. Additional Sums....................................................................... 18
Section 3.7. Compliance with Consolidation Provisions.............................................. 18
Section 3.8. Limitation on Dividends............................................................... 18
Section 3.9. Covenants as to the Trust............................................................. 19
Section 3.10. Additional Junior Indebtedness........................................................ 19
ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.................................... 19
Section 4.1. Securityholders' Lists................................................................ 19
Section 4.2. Preservation and Disclosure of Lists.................................................. 20
ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT.................................. 21
Section 5.1. Events of Default..................................................................... 21
Section 5.2. Payment of Debentures on Default; Suit Therefor....................................... 22
Section 5.3. Application of Moneys Collected by Trustee............................................ 23
Section 5.4. Proceedings by Securityholders........................................................ 24
Section 5.5. Proceedings by Trustee................................................................ 24
Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a Waiver.................... 24
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Section 5.7. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders........ 25
Section 5.8. Notice of Defaults.................................................................... 25
Section 5.9. Undertaking to Pay Costs.............................................................. 26
ARTICLE VI. CONCERNING THE TRUSTEE............................................................................... 26
Section 6.1. Duties and Responsibilities of Trustee................................................ 26
Section 6.2. Reliance on Documents, Opinions, etc.................................................. 27
Section 6.3. No Responsibility for Recitals, etc................................................... 28
Section 6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May
Own Debentures........................................................................ 28
Section 6.5. Moneys to be Held in Trust............................................................ 28
Section 6.6. Compensation and Expenses of Trustee.................................................. 28
Section 6.7. Officers' Certificate as Evidence..................................................... 29
Section 6.8. Eligibility of Trustee................................................................ 29
Section 6.9. Resignation or Removal of Trustee..................................................... 29
Section 6.10. Acceptance by Successor Trustee....................................................... 30
Section 6.11. Succession by Merger, etc............................................................. 31
Section 6.12. Authenticating Agents................................................................. 31
ARTICLE VII. CONCERNING THE SECURITYHOLDERS...................................................................... 32
Section 7.1. Action by Securityholders............................................................. 32
Section 7.2. Proof of Execution by Securityholders................................................. 33
Section 7.3. Who Are Deemed Absolute Owners........................................................ 33
Section 7.4. Debentures Owned by Company Deemed Not Outstanding.................................... 33
Section 7.5. Revocation of Consents; Future Holders Bound.......................................... 34
ARTICLE VIII. SECURITYHOLDERS' MEETINGS.......................................................................... 34
Section 8.1. Purposes of Meetings.................................................................. 34
Section 8.2. Call of Meetings by Trustee........................................................... 34
Section 8.3. Call of Meetings by Company or Securityholders........................................ 34
Section 8.4. Qualifications for Voting............................................................. 35
Section 8.5. Regulations........................................................................... 35
Section 8.6. Voting................................................................................ 35
Section 8.7. Quorum; Actions....................................................................... 36
ARTICLE IX. SUPPLEMENTAL INDENTURES.............................................................................. 36
Section 9.1. Supplemental Indentures without Consent of Securityholders............................ 36
Section 9.2. Supplemental Indentures with Consent of Securityholders............................... 37
Section 9.3. Effect of Supplemental Indentures..................................................... 38
Section 9.4. Notation on Debentures................................................................ 38
Section 9.5. Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee........... 38
ARTICLE X. REDEMPTION OF SECURITIES.............................................................................. 39
Section 10.1. Optional Redemption................................................................... 39
Section 10.2. Special Event Redemption.............................................................. 39
Section 10.3. Notice of Redemption; Selection of Debentures......................................... 39
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Section 10.4. Payment of Debentures Called for Redemption........................................... 40
ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE.................................................... 40
Section 11.1. Company May Consolidate, etc., on Certain Terms....................................... 40
Section 11.2. Successor Entity to be Substituted.................................................... 40
Section 11.3. Opinion of Counsel to be Given to Trustee............................................. 41
ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE............................................................. 41
Section 12.1. Discharge of Indenture................................................................ 41
Section 12.2. Deposited Moneys to be Held in Trust by Trustee....................................... 41
Section 12.3. Paying Agent to Repay Moneys Held..................................................... 42
Section 12.4. Return of Unclaimed Moneys............................................................ 42
ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.................................... 42
Section 13.1. Indenture and Debentures Solely Corporate Obligations................................. 42
ARTICLE XIV. MISCELLANEOUS PROVISIONS............................................................................ 42
Section 14.1. Successors............................................................................ 42
Section 14.2. Official Acts by Successor Entity..................................................... 42
Section 14.3. Surrender of Company Powers........................................................... 42
Section 14.4. Addresses for Notices, etc............................................................ 42
Section 14.5. Governing Law......................................................................... 43
Section 14.6. Evidence of Compliance with Conditions Precedent...................................... 43
Section 14.7. Non-Business Days..................................................................... 43
Section 14.8. Table of Contents, Headings, etc...................................................... 43
Section 14.9. Execution in Counterparts............................................................. 43
Section 14.10. Separability.......................................................................... 44
Section 14.11. Assignment............................................................................ 44
Section 14.12. Acknowledgment of Rights.............................................................. 44
ARTICLE XV. SUBORDINATION OF DEBENTURES.......................................................................... 44
Section 15.1. Agreement to Subordinate.............................................................. 44
Section 15.2. Default on Senior Indebtedness........................................................ 44
Section 15.3. Liquidation, Dissolution, Bankruptcy.................................................. 45
Section 15.4. Subrogation........................................................................... 46
Section 15.5. Trustee to Effectuate Subordination................................................... 46
Section 15.6. Notice by the Company................................................................. 47
Section 15.7. Rights of the Trustee; Holders of Senior Indebtedness................................. 47
Section 15.8. Subordination May Not Be Impaired..................................................... 47
Exhibit A Form of Junior Subordinated Deferrable Interest Debenture
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THIS INDENTURE, dated as of July 31, 2001, between Prosperity
Bancshares, Inc., a Texas corporation (the "Company"), and State Street Bank and
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Trust Company of Connecticut, National Association, a national banking
association organized under the laws of the United States of America, as
debenture trustee (the "Trustee"),
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WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2031 (the "Debentures") under this Indenture to provide,
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among other things, for the execution and authentication, delivery and
administration thereof, the Company has duly authorized the execution of this
Indenture; and
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;
NOW, THEREFORE, This Indenture Witnesseth:
In consideration of the premises, and the purchase of the Debentures by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Debentures as follows:
ARTICLE I.
DEFINITIONS
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Section 1.1. Definitions. The terms defined in this Section 1.1
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(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted in the United States at the time
of any computation. The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Additional Interest" means interest, if any, that shall accrue on any
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interest on the Debentures the payment of which has not been made on the
applicable Interest Payment Date and which shall accrue at the Interest Rate,
compounded quarterly (to the extent permitted by law).
"Additional Junior Indebtedness" means, without duplication and other
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than the Debentures, any indebtedness, liabilities or obligations of the
Company, or any Affiliate of the Company, under debt securities (or guarantees
in respect of debt securities) initially issued to any trust, or a trustee of a
trust, partnership or other entity affiliated with the Company that is, directly
or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under
the Investment Company Act of 1940) or other financing vehicle of the Company or
any Affiliate of the Company in connection with the issuance by that entity of
preferred securities or other securities that are eligible to qualify for Tier 1
capital treatment (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company (or, if the Company is not a bank holding company, such guidelines
applied to the Company as if the Company were subject to such guidelines);
provided, however, that the inability of the Company to treat all or any portion
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of the Additional Junior Indebtedness as Tier 1 capital shall not disqualify it
as Additional Junior Indebtedness if such inability results from the Company
having cumulative preferred stock, minority interests in consolidated
subsidiaries, or any other class of security or interest which the Federal
Reserve now or may hereafter accord Tier 1 capital treatment (including the
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Debentures) in excess of the amount which may qualify for treatment as Tier 1
capital under applicable capital adequacy guidelines.
"Additional Sums" has the meaning set forth in Section 3.6.
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"Affiliate" has the same meaning as given to that term in Rule 405 of
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the Securities Act or any successor rule thereunder.
"Authenticating Agent" means any agent or agents of the Trustee which
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at the time shall be appointed and acting pursuant to Section 6.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
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state law for the relief of debtors.
"Board of Directors" means the board of directors or the executive
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committee or any other duly authorized designated officers of the Company.
"Board Resolution" means a copy of a resolution certified by the
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Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means any day other than a Saturday, Sunday or any other
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day on which banking institutions in New York City or Hartford, Connecticut are
permitted or required by any applicable law to close.
"Capital Securities" means undivided beneficial interests in the assets
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of Prosperity Statutory Trust II which rank pari passu with Common Securities
issued by the Trust; provided, however, that upon the occurrence of an Event of
Default (as defined in the Declaration), the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of holders of such
Capital Securities.
"Capital Securities Guarantee" means the guarantee agreement that the
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Company enters into with State Street Bank and Trust Company of Connecticut,
National Association, as guarantee trustee, or other Persons that operates
directly or indirectly for the benefit of holders of Capital Securities of the
Trust.
"Capital Treatment Event" means the receipt by the Company of an
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opinion of counsel experienced in such matters that, as a result of the
occurrence of any amendment to, or change (including any announced prospective
change) in, the laws of the United States or any political subdivision thereof
or therein, or as the result of any official or administrative pronouncement or
action or decision interpreting or applying such laws, rules or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of issuance of the Debentures, there
is more than an insubstantial risk that the Company will not be entitled to
treat an amount equal to the aggregate Liquidation Amount of the Debentures as
"Tier 1 Capital" (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company (or if the Company is not a bank holding company, such guidelines
applied to the Company as if the Company were subject to such guidelines);
provided, however, that the inability of the Company to treat all or any portion
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of the Liquidation Amount of the Debentures as Tier 1 Capital shall not
constitute the basis for a Capital Treatment Event if such inability results
from the Company having cumulative preferred stock, minority interests in
consolidated subsidiaries, or any other class of security or interest which the
Federal Reserve or OTS, as applicable, now or may hereafter accord Tier 1
Capital treatment in excess of the amount which may qualify for treatment as
Tier 1 Capital under applicable capital adequacy guidelines; provided further,
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however, that the distribution of Debentures in connection with the
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dissolution of the Trust shall not in and of itself constitute a Capital
Treatment Event unless such dissolution shall have occurred in connection with a
Tax Event or an Investment Company Event.
"Certificate" means a certificate signed by any one of the principal
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executive officer, the principal financial officer or the principal accounting
officer of the Company.
"Common Securities" means undivided beneficial interests in the assets
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of the Trust which rank pari passu with Capital Securities issued by the Trust;
provided, however, that upon the occurrence of an Event of Default (as defined
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in the Declaration), the rights of holders of such Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise are subordinated to the rights of holders of such Capital Securities.
"Company" means Prosperity Bancshares, Inc., a Texas corporation, and,
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subject to the provisions of Article XI, shall include its successors and
assigns.
"Coupon Rate" has the meaning set forth in Section 2.8.
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"Debenture" or "Debentures" has the meaning stated in the first recital
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of this Indenture.
"Debenture Register" has the meaning specified in Section 2.5.
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"Declaration" means the Amended and Restated Declaration of Trust of
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the Trust, as amended or supplemented from time to time.
"Default" means any event, act or condition that with notice or lapse
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of time, or both, would constitute an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 2.8.
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"Distribution Period" has the meaning set forth in Section 2.8.
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"Determination Date" has the meaning set forth in Section 2.10.
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"Event of Default" means any event specified in Section 5.1, continued
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for the period of time, if any, and after the giving of the notice, if any,
therein designated.
"Extension Period" has the meaning set forth in Section 2.11.
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"Federal Reserve" means the Board of Governors of the Federal Reserve
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System and any successor federal agency that is primarily responsible for
regulating the activities of bank holding companies.
"Indenture" means this instrument as originally executed or, if amended
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or supplemented as herein provided, as so amended or supplemented, or both.
"Institutional Trustee" has the meaning set forth in the Declaration.
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"Interest Payment Date," means each October 31, January 31, April 30
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and July 31 during the term of this Indenture.
"Interest Rate" means for the period beginning on (and including) the
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date of original issuance and ending on (but excluding) October 31, 2001 the
rate per annum of 7.29% and for each Distribution Period thereafter, the Coupon
Rate.
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"Investment Company Event" means the receipt by the Company and the
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Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act of 1940, as amended which change or prospective
change becomes effective or would become effective, as the case may be, on or
after the date of the issuance of the Debentures.
"Liquidation Amount" means the stated amount of $ 1,000.00 per Trust
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Security.
"Maturity Date" means July 31, 2031.
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"Officers' Certificate" means a certificate signed by the Chairman of
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the Board, the Vice Chairman, the President, any Managing Director or any Vice
President, and by the Treasurer, an Assistant Treasurer, the Comptroller, an
Assistant Comptroller, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 14.6 if and to the extent required by the provisions of
such Section.
"Opinion of Counsel" means an opinion in writing signed by legal
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counsel, who may be an employee of or counsel to the Company, or may be other
counsel reasonably satisfactory to the Trustee. Each such opinion shall include
the statements provided for in Section 14.6 if and to the extent required by the
provisions of such Section.
"OTS" means the Office of Thrift Supervision and any successor federal
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agency that is primarily responsible for regulating the activities of savings
and loan holding companies.
The term "outstanding," when used with reference to Debentures, means,
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subject to the provisions of Section 7.4, as of any particular time, all
Debentures authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except:
(a) Debentures theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Debentures, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that, if such Debentures, or portions
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thereof, are to be redeemed prior to maturity thereof, notice of such redemption
shall have been given as provided in Section 10.3 or provision satisfactory to
the Trustee shall have been made for giving such notice;
(c) Debentures paid pursuant to Section 2.6 or in lieu of or in
substitution for which other Debentures shall have been authenticated and
delivered pursuant to the terms of Section 2.6 unless proof satisfactory to the
Company and the Trustee is presented that any such Debentures are held by bona
fide holders in due course; and (d) Debentures held in accordance with Section
7.4 hereof.
"Person" means any individual, corporation, limited liability company,
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partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"Predecessor Security" of any particular Debenture means every
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previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 2.6 in lieu
of a lost, destroyed or stolen Debenture shall be deemed to evidence the same
debt as the lost, destroyed or stolen Debenture.
"Principal Office of the Trustee," or other similar term, means the
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office of the Trustee, at which at any particular time its corporate trust
business shall be principally administered, which at the time of the execution
of this Indenture shall be ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Redemption Date" has the meaning set forth in Section 10.1.
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"Redemption Price" means the price set forth in the following table
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for any Redemption Date that occurs within the twelve-month period beginning in
the relevant year indicated below, expressed as the percentage of the principal
amount of the Debentures being redeemed:
Year Beginning Percentage
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July 31, 2006 107.5%
July 31, 2007 106.0%
July 31, 2008 104.5%
July 31, 2009 103.0%
July 31, 2010 101.5%
July 31, 2011 and after 100.0%
plus accrued and unpaid interest on such Debentures to the Redemption
Date.
"Responsible Officer" means, with respect to the Trustee, any officer
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within the Principal Office of the Trustee, including any vice-president, any
assistant vice-president, any secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or other officer of the Principal
Trust Office of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Securities Act" means the Securities Act of 1933, as amended from time
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to time or any successor legislation.
"Securityholder," "holder of Debentures," or other similar terms, means
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any Person in whose name at the time a particular Debenture is registered on the
register kept by the Company or the Trustee for that purpose in accordance with
the terms hereof.
"Senior Indebtedness" means, with respect to the Company, (i) the
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principal, premium, if any, and interest in respect of (A) indebtedness of the
Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company;
(ii) all capital lease obligations of the Company; (iii) all obligations of the
Company issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all
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obligations of the Company under any title retention agreement; (iv) all
obligations of the Company for the reimbursement of any letter of credit, any
banker's acceptance, any security purchase facility, any repurchase agreement or
similar arrangement, any interest rate swap, any other hedging arrangement, any
obligation under options or any similar credit or other transaction; (v) all
obligations of the type referred to in clauses (i) through (iv) above of other
Persons for the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) above of other Persons secured by any lien on any
property or asset of the Company (whether or not such obligation is assumed by
the Company), whether incurred on or prior to the date of this Indenture or
thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall
not include (1) any Additional Junior Indebtedness, (2) Debentures issued
pursuant to this Indenture and guarantees in respect of such Debentures, (3)
trade accounts payable of the Company arising in the ordinary course of business
(such trade accounts payable being pari passu in right of payment to the
Debentures), or (4) obligations with respect to which (a) in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are pari passu, junior or otherwise not
superior in right of payment to the Debentures and (b) the Company, prior to the
issuance thereof, has notified (and, if then required under the applicable
guidelines of the regulating entity, has received approval from) the Federal
Reserve (if the Company is a bank holding company) or the OTS (if the Company is
a savings and loan holding company). Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the subordination provisions irrespective
of any amendment, modification or waiver of any term of such Senior
Indebtedness.
"Special Event" means any of a Capital Treatment Event, an Investment
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Company Event or a Tax Event.
"Special Redemption Date" has the meaning set forth in Section 10.2.
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"Special Redemption Price" means (i) if the Special Redemption Date is
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before July 31, 2006, an amount in cash equal to 107.5% of the principal amount
of the Debentures to be prepaid, plus accrued and unpaid interest on such
Debentures to such Special Redemption Date, or (ii) if the Special Redemption
Date is on or after July 31, 2006, the price for the Debentures set forth in the
table under the definition of "Redemption Price" for such Special Redemption
Date, plus accrued and unpaid interest on such Debentures to such Special
Redemption Date.
"Subsidiary" means with respect to any Person, (i) any corporation at
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least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner. For the purposes of this definition,
"voting stock" means shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a contingency.
"Tax Event" means the receipt by the Company and the Trust of an
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opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or change (including any announced prospective change) in
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action")) or judicial decision
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interpreting or applying
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such laws or regulations, regardless of whether such Administrative Action or
judicial decision is issued to or in connection with a proceeding involving the
Company or the Trust and whether or not subject to review or appeal, which
amendment, clarification, change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of issuance of the
Debentures, there is more than an insubstantial risk that: (i) the Trust is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Debentures;
(ii) interest payable by the Company on the Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Company, 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.
"3-Month LIBOR" has the meaning set forth in Section 2.10.
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"Telerate Page 3750" has the meaning set forth in Section 2.10.
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"Trust" shall mean Prosperity Statutory Trust II, a Connecticut
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statutory trust, or any other similar trust created for the purpose of issuing
Capital Securities in connection with the issuance of Debentures under this
Indenture, of which the Company is the sponsor.
"Trust Securities" means Common Securities and Capital Securities of
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the Trust.
"Trustee" means State Street Bank and Trust Company of Connecticut,
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National Association, and, subject to the provisions of Article VI hereof, shall
also include its successors and assigns as Trustee hereunder.
ARTICLE II.
DEBENTURES
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Section 2.1. Authentication and Dating. Upon the execution and delivery
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of this Indenture, or from time to time thereafter, Debentures in an aggregate
principal amount not in excess of $15,464,000 may be executed and delivered by
the Company to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Debentures to or upon the
written order of the Company, signed by its Chairman of the Board of Directors,
Vice Chairman, the President, one of its Managing Directors or one of its Vice
Presidents without any further action by the Company hereunder. In
authenticating such Debentures, and accepting the additional responsibilities
under this Indenture in relation to such Debentures, the Trustee shall be
entitled to receive, and (subject to Section 6.1) shall be fully protected in
relying upon:
(a) a copy of any Board Resolution or Board Resolutions relating
thereto and, if applicable, an appropriate record of any action taken pursuant
to such resolution, in each case certified by the Secretary or an Assistant
Secretary of the Company, as the case may be; and
(b) an Opinion of Counsel prepared in accordance with Section 14.6
which shall also state:
(1) that such Debentures, when authenticated and delivered by the
Trustee and issued by the Company in each case in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
subject to or limited by applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium and other
statutory or decisional laws relating to or affecting creditors' rights
or the reorganization of financial institutions (including, without
limitation, preference and fraudulent conveyance or transfer laws),
heretofore or hereafter enacted or in effect, affecting the rights of
creditors generally; and
7
(2) that all laws and requirements in respect of the execution
and delivery by the Company of the Debentures have been complied with
and that authentication and delivery of the Debentures by the Trustee
will not violate the terms of this Indenture.
The Trustee shall have the right to decline to authenticate and deliver
any Debentures under this Section if the Trustee, being advised in writing by
counsel, determines that such action may not lawfully be taken or if a
Responsible Officer of the Trustee in good faith shall determine that such
action would expose the Trustee to personal liability to existing holders.
The definitive Debentures shall be typed, printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.
Section 2.2. Form of Trustee's Certificate of Authentication. The
-----------------------------------------------
Trustee's certificate of authentication on all Debentures shall be in
substantially the following form:
This is one of the Debentures referred to in the within-mentioned
Indenture.
State Street Bank and Trust Company of Connecticut, National
Association, as Trustee
By________________________________________
Authorized Signer
Section 2.3. Form and Denomination of Debentures. The Debentures shall
-----------------------------------
be in registered, certificated form without coupons and in minimum denominations
of $500,000.00 and any multiple of $1,000.00 in excess thereof. Any attempted
transfer of the Debentures in a block having an aggregate principal amount of
less than $500,000.00 shall be deemed to be voided and of no legal effect
whatsoever. Any such purported transferee shall be deemed not to be a holder of
such Debentures for any purpose, including, but not limited to the receipt of
payments on such Debentures, and such purported transferee shall be deemed to
have no interest whatsoever in such Debentures. The Debentures shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.
Section 2.4. Execution of Debentures. The Debentures shall be signed in
-----------------------
the name and on behalf of the Company by the manual or facsimile signature of
its Chairman of the Board of Directors, Vice Chairman, President, one of its
Managing Directors or one of its Executive Vice Presidents, Senior Vice
Presidents or Vice Presidents. Only such Debentures as shall bear thereon a
certificate of authentication substantially in the form herein before recited,
executed by the Trustee or the Authenticating Agent by the manual signature of
an authorized signer, shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate by the Trustee or the
Authenticating Agent upon any Debenture executed by the Company shall be
conclusive evidence that the Debenture so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
In case any officer of the Company who shall have signed any of the
Debentures shall cease to be such officer before the Debentures so signed shall
have been authenticated and delivered by the Trustee or the Authenticating
Agent, or disposed of by the Company, such Debentures nevertheless may be
authenticated and delivered or disposed of as though the Person who signed such
Debentures had not ceased to be such officer of the Company; and any Debenture
may be signed on behalf of the Company by such Persons as, at the actual date of
the execution of such Debenture, shall be the proper officers of
8
the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Every Debenture shall be dated the date of its authentication.
Section 2.5. Exchange and Registration of Transfer of Debentures. The
---------------------------------------------------
Company shall cause to be kept, at the office or agency maintained for the
purpose of registration of transfer and for exchange as provided in Section 3.2,
a register (the "Debenture Register") for the Debentures issued hereunder in
------------------
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration and transfer of all Debentures as in this
Article II provided. The Debenture Register shall be in written form or in any
other form capable of being converted into written form within a reasonable
time.
Debentures to be exchanged may be surrendered at the principal
corporate trust office of the Trustee or at any office or agency to be
maintained by the Company for such purpose as provided in Section 3.2, and the
Company shall execute, the Company or the Trustee shall register and the Trustee
or the Authenticating Agent shall authenticate and make available for delivery
in exchange therefor the Debenture or Debentures which the Securityholder making
the exchange shall be entitled to receive. Upon due presentment for registration
of transfer of any Debenture at the principal corporate trust office of the
Trustee or at any office or agency of the Company maintained for such purpose as
provided in Section 3.2, the Company shall execute, the Company or the Trustee
shall register and the Trustee or the Authenticating Agent shall authenticate
and make available for delivery in the name of the transferee or transferees a
new Debenture for a like aggregate principal amount. Registration or
registration of transfer of any Debenture by the Trustee or by any agent of the
Company appointed pursuant to Section 3.2, and delivery of such Debenture, shall
be deemed to complete the registration or registration of transfer of such
Debenture.
All Debentures presented for registration of transfer or for exchange
or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Debentures, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax, fee or other governmental charge that may be
imposed in connection therewith.
The Company or the Trustee shall not be required to exchange or
register a transfer of any Debenture for a period of 15 days next preceding the
date of selection of Debentures for redemption.
Notwithstanding anything herein to the contrary, Debentures may not be
transferred except in compliance with the restricted securities legend set forth
below, unless otherwise determined by the Company, upon the advice of counsel
expert in securities law, in accordance with applicable law:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
9
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE)
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE INDENTURE, A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OR ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $500,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $500,000.00 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
10
Section 2.6. Mutilated, Destroyed, Lost or Stolen Debentures. In case
-----------------------------------------------
any Debenture shall become mutilated or be destroyed, lost or stolen, the
Company shall execute, and upon its written request the Trustee shall
authenticate and deliver, a new Debenture bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Debenture, or in
lieu of and in substitution for the Debenture so destroyed, lost or stolen. In
every case the applicant for a substituted Debenture shall furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, and, in every case of destruction, loss or theft,
the applicant shall also furnish to the Company and the Trustee evidence to
their satisfaction of the destruction, loss or theft of such Debenture and of
the ownership thereof.
The Trustee may authenticate any such substituted Debenture and deliver
the same upon the written request or authorization of any officer of the
Company. Upon the issuance of any substituted Debenture, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. In case any Debenture which has matured or is about to mature or has
been called for redemption in full shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute Debenture, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Debenture) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless and, in case of destruction, loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or theft
of such Debenture and of the ownership thereof.
Every substituted Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any such Debenture is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debenture shall be found at any
time, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures duly issued hereunder. All
Debentures shall be held and owned upon the express condition that, to the
extent permitted by applicable law, the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.7. Temporary Debentures. Pending the preparation of
--------------------
definitive Debentures, the Company may execute and the Trustee shall
authenticate and make available for delivery temporary Debentures that are
typed, printed or lithographed. Temporary Debentures shall be issuable in any
authorized denomination, and substantially in the form of the definitive
Debentures in lieu of which they are issued but with such omissions, insertions
and variations as may be appropriate for temporary Debentures, all as may be
determined by the Company. Every such temporary Debenture shall be executed by
the Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Debentures. Without unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive Debentures and thereupon any
or all temporary Debentures may be surrendered in exchange therefor, at the
principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.2, and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in exchange for such temporary Debentures a like aggregate principal
amount of such definitive Debentures. Such exchange shall be made by the Company
at its own expense and without any charge therefor except that in case of any
such exchange involving a registration of transfer the Company may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in relation thereto. Until so exchanged, the temporary
Debentures shall in all respects be entitled to the same benefits under this
Indenture as definitive Debentures authenticated and delivered hereunder.
11
Section 2.8. Payment of Interest and Additional Interest. Interest at
-------------------------------------------
the Interest Rate and any Additional Interest on any Debenture that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date for
Debentures shall be paid to the Person in whose name said Debenture (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment except that interest and any
Additional Interest payable on the Maturity Date shall be paid to the Person to
whom principal is paid. In the event that any Debenture or portion thereof is
called for redemption and the redemption date is subsequent to a regular record
date with respect to any Interest Payment Date and prior to such Interest
Payment Date, interest on such Debenture will be paid upon presentation and
surrender of such Debenture.
Each Debenture shall bear interest for the period beginning on (and
including) the date of original issuance and ending on (but excluding) October
31, 2001 at a rate per annum of 7.29%, and shall bear interest for each
successive period beginning on (and including) October 31, 2001, and each
succeeding Interest Payment Date, and ending on (but excluding) the next
succeeding Interest Payment Date (each, a "Distribution Period") at a rate per
-------------------
annum equal to the 3-Month LIBOR, determined as described in Section 2.10, plus
3.58%; provided, however, that prior to July 31, 2011, such annual rate shall
-------- -------
not exceed 12.50% (the "Coupon Rate") applied to the principal amount thereof,
-----------
until the principal thereof becomes due and payable, and on any overdue
principal and to the extent that payment of such interest is enforceable under
applicable law (without duplication) on any overdue installment of interest at
the Interest Rate compounded quarterly. Interest shall be payable (subject to
any relevant Extension Period) quarterly in arrears on each Interest Payment
Date with the first installment of interest to be paid on October 31, 2001.
Any interest on any Debenture, other than Additional Interest, that is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company to the Persons in whose names such Debentures (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: the Company shall notify the Trustee in writing at least
25 days prior to the date of the proposed payment of the amount of Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such Defaulted Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first class postage prepaid, to each Securityholder
at its address as it appears in the Debenture Register, not less than 10 days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
such Debentures (or their respective Predecessor Securities) are registered on
such special record date and shall be no longer payable.
The Company may make payment of any Defaulted Interest on any
Debentures in any other lawful manner after notice given by the Company to the
Trustee of the proposed payment method; provided, however, the Trustee in its
-------- -------
sole discretion deems such payment method to be practical.
12
Any interest scheduled to become payable on an Interest Payment Date
occurring during an Extension Period shall not be Defaulted Interest and shall
be payable on such other date as may be specified in the terms of such
Debentures.
The term "regular record date" as used in this Section shall mean the
close of business on the 15th day next preceding the applicable Interest Payment
Date.
Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid, and to accrue, that were carried by such other Debenture.
Section 2.9. Cancellation of Debentures Paid, etc. All Debentures
------------------------------------
surrendered for the purpose of payment, redemption, exchange or registration of
transfer, shall, if surrendered to the Company or any paying agent, be
surrendered to the Trustee and promptly canceled by it, or, if surrendered to
the Trustee or any Authenticating Agent, shall be promptly canceled by it, and
no Debentures shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. All Debentures canceled by any
Authenticating Agent shall be delivered to the Trustee. The Trustee shall
destroy all canceled Debentures unless the Company otherwise directs the Trustee
in writing. If the Company shall acquire any of the Debentures, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Debentures unless and until the same are
surrendered to the Trustee for cancellation.
Section 2.10. Computation of Interest Rate. The amount of interest
----------------------------
payable for any period shall be computed on the basis of actual number of days
in the Distribution Period concerned divided by 360. In the event that any date
on which interest is payable on the Debentures is not a Business Day, then
payment of interest payable on such date shall be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable. The amount of interest payable
for the Distribution Period commencing on October 31, 2001 and each succeeding
Distribution Period will be calculated by applying the Interest Rate to the
principal amount outstanding at the commencement of the Distribution Period and
multiplying each such amount by the actual number of days in the Distribution
Period concerned divided by 360. All percentages resulting from any calculations
on the Debentures will be rounded, if necessary, to the nearest one hundred-
thousandth of a percentage point, with five one-millionths of a percentage point
rounded upward (e.g., 9.876545% or .09876545) being rounded to 9.87655% (or
.0987655), and all dollar amounts used in or resulting from such calculation
will be rounded to the nearest cent (with one-half cent being rounded upward).
(a) "3-Month LIBOR" means the London interbank offered rate for three-
-------------
month, Eurodollar deposits determined by the Trustee in the following order of
priority:
(1) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the particular Determination
Date (as defined below). "Telerate Page 3750" means the display
------------------
designated as "Page 3750" on the Dow ▇▇▇▇▇ Telerate Service or such
other page as may replace Page 3750 on that service or such other
service or services as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollars deposits;
(2) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the Determination Date, 3-Month LIBOR will be the
arithmetic mean of the rates
13
(expressed as percentages per annum) for Eurodollar deposits having a
three-month maturity that appear on Reuters Monitor Money Rates Page
LIBO ("Reuters Page LIBO") as of 11:00 a.m. (London time) on such
-----------------
Determination Date;
(3) if such rate does not appear on Reuters Page LIBO as of 11:00
a.m. (London time) on the related Determination Date, the Trustee will
request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations
(expressed as percentages per annum) to prime banks in the London
interbank market for Eurodollar deposits having a three-month maturity
as of 11:00 a.m. (London time) on such Determination Date. If at least
two quotations are provided, 3-Month LIBOR will be the arithmetic mean
of such quotations;
(4) if fewer than two such quotations are provided as requested in
clause (3) above, the Trustee will request four major New York City
banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in
Eurodollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and
(5) if fewer than two such quotations are provided as requested in
clause (4) above, 3-Month LIBOR will be a 3-Month LIBOR determined with
respect to the Distribution Period immediately preceding such current
Distribution Period. If the rate for Eurodollar deposits having a
three-month maturity that initially appears on telerate Page 3750 or
Reuters Page LIBO, as the case may be, as of 11:00 a.m. (London time)
on the related Determination Date is superseded on the Telerate page
3750 or Reuters Page LIBO, as the case may be, by a corrected rate by
12:00 noon (London time) on such Determination Date, then the corrected
rate as so substituted on the applicable page will be the applicable 3-
Month LIBOR for such Determination Date.
(6) The Coupon Rate for any Distribution Period will at no time be
higher than the maximum rate then permitted by New York law as the same
may be modified by United States law.
(7) "Determination Date" means the date that is two London Banking
------------------
Days (i.e., a day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the particular
Distribution Period for which a Coupon Rate is being determined.
(b) The Trustee shall notify the Company, the Institutional Trustee and
any securities exchange or interdealer quotation system on which the Capital
Securities are listed, of the Coupon Rate and the Determination Date for each
Distribution Period, in each case as soon as practicable after the determination
thereof but in no event later than the seventh (7th) Business Day of the
relevant Distribution Period. Failure to notify the Company, the Institutional
Trustee or any securities exchange or interdealer quotation system, or any
defect in said notice, shall not affect the obligation of the Company to make
payment on the Debentures at the applicable Coupon Rate. Any error in the
calculation of the Coupon Rate by the Institutional Trustee may be corrected at
any time by notice delivered as above provided. Upon the request of a holder of
a Debenture, the Trustee shall provide the Coupon Rate then in effect and, if
determined, the Coupon Rate for the next Distribution Period.
(c) Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given, expressed, made or obtained for the purposes of the provisions relating
to the payment and calculation of interest on the Debentures and distributions
on the Capital Securities by the Trustee or the Institutional Trustee will (in
the absence of willful default, bad faith and manifest error) be final,
conclusive and binding on the Trust, the Company
14
and all of the holders of the Debentures and the Capital Securities, and no
liability shall (in the absence of willful default, bad faith or manifest error)
attach to the Trustee or the Institutional Trustee in connection with the
exercise or non-exercise by either of them or their respective powers, duties
and discretion.
Section 2.11. Extension of Interest Payment Period. So long as no Event of
------------------------------------
Default has occurred and is continuing, the Company shall have the right, from
time to time, and without causing an Event of Default, to defer payments of
interest on the Debentures by extending the interest payment period on the
Debentures at any time and from time to time during the term of the Debentures,
for up to 20 consecutive quarterly periods (each such extended interest payment
period, an "Extension Period"), during which Extension Period no interest shall
----------------
be due and payable. No Extension Period may end on a date other than an Interest
Payment Date. At the end of any such Extension Period the Company shall pay all
interest then accrued and unpaid on the Debentures (together with Additional
Interest thereon); provided, however, that no Extension Period may extend beyond
-------- -------
the Maturity Date; provided further, however, that during any such Extension
-------- ------- -------
Period, the Company shall not and shall not permit any Affiliate to (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Company's or such Affiliate's
capital stock (other than payments of dividends or distributions to the Company)
or make any guarantee payments with respect to the foregoing or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company or any Affiliate that rank pari
passu in all respects with or junior in interest to the Debentures (other than,
with respect to clauses (i) or (ii) above, (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of any exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, or (f) payments under the Capital Securities
Guarantee). Prior to the termination of any Extension Period, the Company may
further extend such period, provided that such period together with all such
previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Company may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional Interest
to the extent permitted by applicable law. The Company must give the Trustee
notice of its election to begin such Extension Period at least 5 Business Days
prior to the earlier of (i) the date interest on the Debentures would have been
payable except for the election to begin such Extension Period or (ii) the date
such interest is payable, but in any event not less than 5 Business Days prior
to such record date. The Trustee shall give notice of the Company's election to
begin a new Extension Period to the Securityholders.
15
Section 2.12. CUSIP Numbers. The Company in issuing the Debentures may use
-------------
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as a convenience to Securityholders;
provided, however, that any such notice may state that no representation is made
-------- -------
as to the correctness of such numbers either as printed on the Debentures or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debentures, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee in writing of any change in the
CUSIP numbers.
ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY
-----------------------------------
Section 3.1. Payment of Principal, Premium and Interest; Agreed Treatment
------------------------------------------------------------
of the Debentures.
-----------------
(a) The Company covenants and agrees that it will duly and punctually pay
or cause to be paid the principal of and premium, if any, and interest and any
Additional Interest on the Debentures at the place, at the respective times and
in the manner provided in this Indenture and the Debentures. Each installment of
interest on the Debentures may be paid (i) by mailing checks for such interest
payable to the order of the holder of Debentures entitled thereto as they appear
on the registry books of the Company if a request for a wire transfer has not
been received by the Company or (ii) by wire transfer to any account with a
banking institution located in the United States designated in writing by such
Person to the paying agent no later than the related record date.
Notwithstanding the foregoing, so long as the holder of this Debenture is the
Institutional Trustee, the payment of the principal of and interest on this
Debenture will be made in immediately available funds at such place and to such
account as may be designated by the Institutional Trustee.
(b) The Company will treat the Debentures as indebtedness, and the amounts
payable in respect of the principal amount of such Debentures as interest, for
all United States federal income tax purposes. All payments in respect of such
Debentures will be made free and clear of United States withholding tax to any
beneficial owner thereof that has provided an Internal Revenue Service Form W8
BEN (or any substitute or successor form) establishing its non-United States
status for United States federal income tax purposes.
(c) The Company has no present intention to exercise its right under
Section 2.11 to defer payments of interest on the Debentures by commencing an
Extension Period.
(d) The Company believes that the likelihood that it would exercise its
right under Section 2.11 to defer payments of interest on the Debentures by
commencing an Extension Period at any time during which the Debentures are
outstanding is remote because of the restrictions that would be imposed on the
Company's ability to declare or pay dividends or distributions on, or to redeem,
purchase or make a liquidation payment with respect to, any of its outstanding
equity and on the Company's ability to make any payments of principal of or
interest on, or repurchase or redeem, any of its debt securities that rank pari
passu in all respects with (or junior in interest to) the Debentures.
Section 3.2. Offices for Notices and Payments, etc. So long as any of the
-------------------------------------
Debentures remain outstanding, the Company will maintain in Hartford,
Connecticut, an office or agency where the Debentures may be presented for
payment, an office or agency where the Debentures may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect of
the Debentures or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a
16
notice to the Trustee, or specified as contemplated by Section 2.5, such office
or agency for all of the above purposes shall be the office or agency of the
Trustee. In case the Company shall fail to maintain any such office or agency in
Hartford, Connecticut, or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the principal corporate trust office of the Trustee.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside Hartford, Connecticut, where
the Debentures may be presented for registration of transfer and for exchange in
the manner provided in this Indenture, and the Company may from time to time
rescind such designation, as the Company may deem desirable or expedient;
provided, however, that no such designation or rescission shall in any manner
-------- -------
relieve the Company of its obligation to maintain any such office or agency in
Hartford, Connecticut, for the purposes above mentioned. The Company will give
to the Trustee prompt written notice of any such designation or rescission
thereof.
Section 3.3. Appointments to Fill Vacancies in Trustee's Office. The
--------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.9, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 3.4. Provision as to Paying Agent.
----------------------------
(a) If the Company shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provision of this Section 3.4,
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest, if any, on
the Debentures (whether such sums have been paid to it by the Company or by
any other obligor on the Debentures) in trust for the benefit of the
holders of the Debentures;
(2) that it will give the Trustee prompt written notice of any
failure by the Company (or by any other obligor on the Debentures) to make
any payment of the principal of and premium, if any, or interest, if any,
on the Debentures when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any Event
of Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or interest, if
any, on the Debentures, set aside, segregate and hold in trust for the benefit
of the holders of the Debentures a sum sufficient to pay such principal, premium
or interest so becoming due and will notify the Trustee in writing of any
failure to take such action and of any failure by the Company (or by any other
obligor under the Debentures) to make any payment of the principal of and
premium, if any, or interest, if any, on the Debentures when the same shall
become due and payable.
Whenever the Company shall have one or more paying agents for the
Debentures, it will, on or prior to each due date of the principal of and
premium, if any, or interest, if any, on the Debentures, deposit with a paying
agent a sum sufficient to pay the principal, premium or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled
thereto and (unless such paying agent is the Trustee) the Company shall promptly
notify the Trustee in writing of its action or failure to act.
17
(c) Anything in this Section 3.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Debentures, or for any other reason, pay, or
direct any paying agent to pay to the Trustee all sums held in trust by the
Company or any such paying agent, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
Sections 12.3 and 12.4.
Section 3.5. Certificate to Trustee. The Company will deliver to the
----------------------
Trustee on or before 120 days after the end of each fiscal year, so long as
Debentures are outstanding hereunder, a Certificate stating that in the course
of the performance by the signers of their duties as officers of the Company
they would normally have knowledge of any default during such fiscal year by the
Company in the performance of any covenants contained herein, stating whether or
not they have knowledge of any such default and, if so, specifying each such
default of which the signers have knowledge and the nature and states thereof.
Section 3.6. Additional Sums. If and for so long as the Trust is the holder
---------------
of all Debentures and the Trust is required to pay any additional taxes, duties,
assessments or other governmental charges as a result of a Tax Event, the
Company will pay such additional amounts ("Additional Sums") on the Debentures
---------------
as shall be required so that the net amounts received and retained by the Trust
after paying taxes, duties, assessments or other governmental charges will be
equal to the amounts the Trust would have received if no such taxes, duties,
assessments or other governmental charges had been imposed. Whenever in this
Indenture or the Debentures there is a reference in any context to the payment
of principal of or interest on the Debentures, such mention shall be deemed to
include mention of payments of the Additional Sums provided for in this
paragraph to the extent that, in such context, Additional Sums are, were or
would be payable in respect thereof pursuant to the provisions of this paragraph
and express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in those
provisions hereof where such express mention is not made; provided, however,
-------- -------
that the deferral of the payment of interest during an Extension Period pursuant
to Section 2.11 shall not defer the payment of any Additional Sums that may be
due and payable.
Section 3.7. Compliance with Consolidation Provisions. The Company will
----------------------------------------
not, while any of the Debentures remain outstanding, consolidate with, or merge
into, or merge into itself, or sell or convey all or substantially all of its
property to any other Person unless the provisions of Article XI hereof are
complied with.
Section 3.8. Limitation on Dividends. If Debentures are initially issued to
-----------------------
the Trust or a trustee of such trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such Trust) and (i) there shall have occurred and be continuing any event that
would constitute an Event of Default, (ii) the Company shall be in default with
respect to its payment of any obligations under the Capital Securities
Guarantee, or (iii) the Company shall have given notice of its election to defer
payments of interest on the Debentures by extending the interest payment period
as provided herein and such period, or any extension thereof, shall be
continuing, then the Company shall not, and shall not allow any Affiliate of the
Company to, (x) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or its Affiliates' capital stock (other than payments of
dividends or distributions to the Company) or make any guarantee payments with
respect to the foregoing or (y) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company or any Affiliate that rank pari passu in all respects with or junior in
interest to the Debentures (other than, with respect to clauses (x) and (y)
above, (1) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers,
18
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (4) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, (5) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(6) payments under the Capital Securities Guarantee).
Section 3.9. Covenants as to the Trust. For so long as the Trust Securities
-------------------------
remain outstanding, the Company shall maintain 100% ownership of the Common
Securities; provided, however, that any permitted successor of the Company under
this Indenture may succeed to the Company's ownership of such Common Securities.
The Company, as owner of the Common Securities, shall cause the Trust (a) to
remain a statutory trust, except in connection with a 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 the Declaration, (b) to otherwise continue
to be classified as a grantor trust for United States federal income tax
purposes and (c) to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Debentures.
Section 3.10. Additional Junior Indebtedness. The Company shall not, and it
------------------------------
shall not cause or permit any Affiliate of the Company to incur, issue or be
obligated on any Additional Junior Indebtedness, either directly or indirectly,
by way of guarantee, suretyship or otherwise, other than: (i) Additional Junior
Indebtedness that, by its terms, is expressly stated to be either junior and
subordinate or pari passu in all respects to the Debentures, and (ii) Additional
Junior Indebtedness of which the Company has notified (and, if then required
under the applicable guidelines of the regulating entity, has received approval
from) the Federal Reserve, if the Company is a bank holding company, or the OTS,
if the Company is a savings and loan holding company.
ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS
----------------------------------
BY THE COMPANY AND THE TRUSTEE
------------------------------
Section 4.1. Securityholders' Lists. The Company covenants and agrees that
----------------------
it will furnish or caused to be furnished to the Trustee:
(a) on each regular record date for the Debentures, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Securityholders of the Debentures as of such record date; and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
except that no such lists need be furnished under this Section 4.1 so long as
the Trustee is in possession thereof by reason of its acting as Debenture
registrar.
19
Section 4.2. Preservation and Disclosure of Lists.
------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debentures (1) contained in the most recent list furnished to it as provided in
Section 4.1 or (2) received by it in the capacity of Debentures registrar (if so
acting) hereunder. The Trustee may destroy any list furnished to it as provided
in Section 4.1 upon receipt of a new list so furnished.
(b) In case three or more holders of Debentures (hereinafter referred to as
"applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Debenture for a period of
at least 6 months preceding the date of such application, and such application
states that the applicants desire to communicate with other holders of
Debentures with respect to their rights under this Indenture or under such
Debentures and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within 5 Business Days after the receipt of such application, at its election,
either:
(1) afford such applicants access to the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a) of
this Section 4.2, or
(2) inform such applicants as to the approximate number of holders of
Debentures whose names and addresses appear in the information preserved at
the time by the Trustee in accordance with the provisions of subsection (a)
of this Section 4.2, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any, specified
in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Securityholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.2 a copy of the form of proxy or other
communication which is specified in such request with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall mail to such applicants and file
with the Securities and Exchange Commission, if permitted or required by
applicable law, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the holders of all Debentures, as the case
may be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If said Commission, as permitted or required
by applicable law, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, said Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every holder of Debentures, by receiving and holding the same,
agrees with Company and the Trustee that neither the Company nor the Trustee nor
any paying agent shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the holders of Debentures in
accordance with the provisions of subsection (b) of this Section 4.2, regardless
of the source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material pursuant to a
request made under said subsection (b).
20
ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
-------------------------------------------
UPON AN EVENT OF DEFAULT
------------------------
Section 5.1. Events of Default. "Event of Default," wherever used herein,
----------------- ----------------
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) the Company defaults in the payment of any interest upon any Debenture
when it becomes due and payable, and fails to cure such default for a period of
30 days; provided, however, that a valid extension of an interest payment period
-------- -------
by the Company in accordance with the terms of this Indenture shall not
constitute a default in the payment of interest for this purpose; or
(b) the Company defaults in the payment of all or any part of the principal
of (or premium, if any, on) any Debentures as and when the same shall become due
and payable either at maturity, upon redemption, by declaration of acceleration
or otherwise; or
(c) the Company defaults in the performance of, or breaches, any of its
covenants or agreements in this Indenture or in the terms of the Debentures
established as contemplated in this Indenture (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the outstanding Debentures, a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(d) a court of competent jurisdiction shall enter a decree or order for
relief in respect of the Company in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part of
its property, or ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or
(f) the Trust shall have voluntarily or involuntarily liquidated,
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of the Debentures to holders of such Trust
Securities in liquidation of their interests in the Trust, (ii) the redemption
of all of the outstanding Trust Securities or (iii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration.
If an Event of Default occurs and is continuing with respect to the
Debentures, then, and in each and every such case, unless the principal of the
Debentures shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debentures
then outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by Securityholders), may declare the entire principal of the
Debentures and the interest accrued thereon, if
21
any, to be due and payable immediately, and upon any such declaration the same
shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal of the Debentures shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Debentures and the principal of and
premium, if any, on the Debentures which shall have become due otherwise than by
acceleration (with interest upon such principal and premium, if any, and
Additional Interest) and such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other amounts due to the Trustee pursuant
to Section 6.6, and if any and all Events of Default under this Indenture, other
than the non-payment of the principal of or premium, if any, on Debentures which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein -- then and in every such case the holders
of a majority in aggregate principal amount of the Debentures then outstanding,
by written notice to the Company and to the Trustee, may waive all defaults and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Trustee and the holders of the Debentures shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the Trustee and the holders of the Debentures shall
continue as though no such proceeding had been taken.
Section 5.2. Payment of Debentures on Default; Suit Therefor. The Company
-----------------------------------------------
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Debentures as and when the same shall
become due and payable, and such default shall have continued for a period of 30
days, or (b) in case default shall be made in the payment of the principal of or
premium, if any, on any of the Debentures as and when the same shall have become
due and payable, whether at maturity of the Debentures or upon redemption or by
declaration of acceleration or otherwise -- then, upon demand of the Trustee,
the Company will pay to the Trustee, for the benefit of the holders of the
Debentures the whole amount that then shall have become due and payable on all
Debentures for principal and premium, if any, or interest, or both, as the case
may be, with Additional Interest accrued on the Debentures (to the extent that
payment of such interest is enforceable under applicable law and, if the
Debentures are held by the Trust or a trustee of such Trust, without duplication
of any other amounts paid by the Trust or a trustee in respect thereof); and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including a reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any other amounts due to the Trustee
under Section 6.6. In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Debentures and collect in the manner provided by law out of the
property of the Company or any other obligor on such Debentures wherever
situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Debentures under
Bankruptcy Law, or in case a receiver or trustee shall have been appointed for
the property of the Company or such other obligor, or in the case of any
22
other similar judicial proceedings relative to the Company or other obligor upon
the Debentures, or to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal of the Debentures
shall then be due and payable as therein expressed or by declaration of
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 5.2, shall be
entitled and empowered, by intervention in such proceedings or otherwise,
(i) to file and prove a claim or claims for the whole amount of principal
and interest owing and unpaid in respect of the Debentures and, in
case of any judicial proceedings,
(ii) to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all other amounts due to the
Trustee under Section 6.6), and of the Securityholders allowed in
such judicial proceedings relative to the Company or any other
obligor on the Debentures, or to the creditors or property of the
Company or such other obligor, unless prohibited by applicable law
and regulations, to vote on behalf of the holders of the Debentures
in any election of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency
proceedings or Person performing similar functions in comparable
proceedings,
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims, and
(iv) to distribute the same after the deduction of its charges and
expenses.
Any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee under Section 6.6.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any holder thereof or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Debentures, may be enforced by the Trustee without the possession of
any of the Debentures, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall be for the ratable benefit of the holders of the
Debentures.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
holders of the Debentures, and it shall not be necessary to make any holders of
the Debentures parties to any such proceedings.
Section 5.3. Application of Moneys Collected by Trustee. Any moneys
------------------------------------------
collected by the Trustee pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Debentures in respect of
23
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses incurred by, and reasonable
fees of, the Trustee, its agents, attorneys and counsel, and of all other
amounts due to the Trustee under Section 6.6;
Second: To the payment of all Senior Indebtedness of the Company if and to
the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon Debentures
for principal (and premium, if any), and interest on the Debentures, in respect
of which or for the benefit of which money has been collected, ratably, without
preference or priority of any kind, according to the amounts due on such
Debentures for principal (and premium, if any) and interest, respectively; and
Fourth: The balance, if any, to the Company.
Section 5.4. Proceedings by Securityholders. No holder of any Debenture
------------------------------
shall have any right to institute any suit, action or proceeding for any remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default with respect to the Debentures and unless the
holders of not less than 25% in aggregate principal amount of the Debentures
then outstanding shall have given the Trustee a written request to institute
such action, suit or proceeding and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred thereby, and the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity shall have failed to
institute any such action, suit or proceeding; provided, however, that no holder
-------- -------
of Debentures shall have any right to prejudice the rights of any other holder
of Debentures, obtain priority or preference over any other such holder or
enforce any right under this Indenture except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Debentures.
Notwithstanding any other provisions in this Indenture, however, the right
of any holder of any Debenture to receive payment of the principal of, premium,
if any, and interest, on such Debenture when due, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder and by accepting a Debenture hereunder it is expressly
understood, intended and covenanted by the taker and holder of every Debenture
with every other such taker and holder and the Trustee, that no one or more
holders of Debentures shall have any right in any manner whatsoever by virtue or
by availing itself of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other Debentures, or to obtain or
seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Debentures. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Section 5.5. Proceedings by Trustee. In case of an Event of Default
----------------------
hereunder the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a
-----------------------------------------------------------
Waiver. Except as otherwise provided in Section 2.6, all powers and remedies
------
given by this Article V to
24
the Trustee or to the Securityholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any other powers and remedies available
to the Trustee or the holders of the Debentures, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect to
the Debentures, and no delay or omission of the Trustee or of any holder of any
of the Debentures to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.4, every power
and remedy given by this Article V or by law to the Trustee or to the
Securityholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Securityholders.
No delay or omission of the Trustee or any Securityholder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to any Securityholder may be exercised from time to time, and as often as may
be deemed expedient, by the Trustee (in accordance with its duties under Section
6.1 hereof) or by such holder, as the case may be.
Section 5.7. Direction of Proceedings and Waiver of Defaults by Majority of
--------------------------------------------------------------
Securityholders. The holders of a majority in aggregate principal amount of the
---------------
Debentures affected (voting as one class) at the time outstanding shall have the
right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to such Debentures; provided, however, that (subject to
-------- -------
the provisions of Section 6.1) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall determine that the action so
directed would be unjustly prejudicial to the holders not taking part in such
direction or if the Trustee being advised by counsel determines that the action
or proceeding so directed may not lawfully be taken or if a Responsible Officer
of the Trustee shall determine that the action or proceedings so directed would
involve the Trustee in personal liability.
The holders of a majority in aggregate principal amount of the Debentures
at the time outstanding may on behalf of the holders of all of the Debentures
waive (or modify any previously granted waiver of) any past default or Event of
Default, and its consequences, except a default (a) in the payment of principal
of, premium, if any, or interest on any of the Debentures, (b) in respect of
covenants or provisions hereof which cannot be modified or amended without the
consent of the holder of each Debenture affected, or (c) in respect of the
covenants contained in Section 3.9; provided, however, that if the Debentures
-------- -------
are held by the Trust or a trustee of such trust, such waiver or modification to
such waiver shall not be effective until the holders of a majority in
Liquidation Amount of Trust Securities of the Trust shall have consented to such
waiver or modification to such waiver, provided, further, that if the consent of
-------- -------
the holder of each outstanding Debenture is required, such waiver shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the Company,
the Trustee and the holders of the Debentures shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section, said default or Event of Default
shall for all purposes of the Debentures and this Indenture be deemed to have
been cured and to be not continuing.
Section 5.8. Notice of Defaults. The Trustee shall, within 90 days after
------------------
the actual knowledge by a Responsible Officer of the Trustee of the occurrence
of a default with respect to the Debentures, mail to all Securityholders, as the
names and addresses of such holders appear upon the Debenture Register, notice
of all defaults with respect to the Debentures known to the Trustee, unless such
defaults shall have been cured before the giving of such notice (the term
"defaults" for the purpose of this Section 5.8 being
25
hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section 5.1, not including periods of grace, if any, provided for
therein); provided, however, that, except in the case of default in the payment
-------- -------
of the principal of, premium, if any, or interest on any of the Debentures, the
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders.
Section 5.9. Undertaking to Pay Costs. All parties to this Indenture agree,
------------------------
and each holder of any Debenture by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, however, that the provisions of this
-------- -------
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Debentures outstanding, or to
any suit instituted by any Securityholder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Debenture against the
Company on or after the same shall have become due and payable.
ARTICLE VI.
CONCERNING THE TRUSTEE
----------------------
Section 6.1. Duties and Responsibilities of Trustee. With respect to the
---------------------------------------
holders of Debentures issued hereunder, the Trustee, prior to the occurrence of
an Event of Default with respect to the Debentures and after the curing or
waiving of all Events of Default which may have occurred, with respect to the
Debentures, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants shall be read
into this Indenture against the Trustee. In case an Event of Default with
respect to the Debentures has occurred (which has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect to
Debentures and after the curing or waiving of all Events of Default which may
have occurred
(1) the duties and obligations of the Trustee with respect to
Debentures shall be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for the performance
of such duties and obligations with respect to the Debentures as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee, and
(2) in the absence of bad faith on the part of the Trustee, the
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 Trustee and conforming to the requirements of
this Indenture; but, in the case of any such certificates or opinions which
by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
26
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts; and
(c) the 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
Securityholders pursuant to Section 5.7, relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
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 there is ground for believing that the repayment of
such funds or liability is not assured to it under the terms of this Indenture
or indemnity satisfactory to the Trustee against such risk is not reasonably
assured to it.
Section 6.2. Reliance on Documents, Opinions, etc. Except as otherwise
------------------------------------
provided in Section 6.1:
(a) the 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, consent, order, bond, note,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any Board
Resolution may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Securityholders, pursuant to the provisions of this Indenture, unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the occurrence of an
Event of Default with respect to the Debentures (that has not been cured or
waived) to exercise with respect to Debentures such of the rights and powers
vested in it by this Indenture, and to use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
coupon or other paper or document, unless requested in writing to do so by the
holders of not less than a majority in aggregate principal amount of the
outstanding Debentures affected thereby; provided, however, that if the payment
-------- -------
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the
27
Trustee may require reasonable indemnity against such expense or liability as a
condition to so proceeding;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed by it with due care; and
(h) with the exceptions of defaults under Sections 5.1(a) or 5.1(b), the
Trustee shall not be charged with knowledge of any Default or Event of Default
with respect to the Debentures unless a written notice of such Default or Event
of Default shall have been given to the Trustee by the Company or any other
obligor on the Debentures or by any holder of the Debentures.
Section 6.3. No Responsibility for Recitals, etc. The recitals contained
-----------------------------------
herein and in the Debentures (except in the certificate of authentication of the
Trustee or the Authenticating Agent) shall be taken as the statements of the
Company, and the Trustee and the Authenticating Agent assume no responsibility
for the correctness of the same. The Trustee and the Authenticating Agent make
no representations as to the validity or sufficiency of this Indenture or of the
Debentures. The Trustee and the Authenticating Agent shall not be accountable
for the use or application by the Company of any Debentures or the proceeds of
any Debentures authenticated and delivered by the Trustee or the Authenticating
Agent in conformity with the provisions of this Indenture.
Section 6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents
-------------------------------------------------------------
or Registrar May Own Debentures. The Trustee or any Authenticating Agent or any
-------------------------------
paying agent or any transfer agent or any Debenture registrar, in its individual
or any other capacity, may become the owner or pledgee of Debentures with the
same rights it would have if it were not Trustee, Authenticating Agent, paying
agent, transfer agent or Debenture registrar.
Section 6.5. Moneys to be Held in Trust. Subject to the provisions of
--------------------------
Section 12.4, all moneys received by the Trustee or any paying agent shall,
until used or applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company. So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such moneys shall be
paid from time to time upon the written order of the Company, signed by the
Chairman of the Board of Directors, the President, a Managing Director, a Vice
President the Treasurer or an Assistant Treasurer of the Company.
Section 6.6. Compensation and Expenses of Trustee. The Company covenants
------------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation as shall be agreed to in writing between the
Company and the Trustee (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or willful misconduct. The Company also covenants to
indemnify each of the Trustee or any predecessor Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or willful
misconduct on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim of liability. The obligations of the
Company under this Section 6.6 to
28
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to that
of the Debentures upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the holders of particular
Debentures.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(d), Section 5.1(e)
or Section 5.1(f), the expenses (including the reasonable charges and expenses
of its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or removal of
the Trustee and the defeasance or other termination of this Indenture.
Notwithstanding anything in this Indenture or any Debenture to the
contrary, the Trustee shall have no obligation whatsoever to advance funds to
pay any principal of or interest on or other amounts with respect to the
Debentures or otherwise advance funds to or on behalf of the Company.
Section 6.7. Officers' Certificate as Evidence. Except as otherwise
---------------------------------
provided in Sections 6.1 and 6.2, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or willful misconduct
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or willful misconduct on the part of the Trustee,
shall be full warrant to the Trustee for any action taken or omitted by it under
the provisions of this Indenture upon the faith thereof.
Section 6.8. Eligibility of Trustee. The Trustee hereunder shall at all
----------------------
times 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 other Person authorized under such laws to exercise
corporate trust powers, having (or whose obligations under this Indenture are
guaranteed by an affiliate having) a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000.00) and subject to supervision or examination
by federal, state, 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 aforesaid supervising or examining authority, then
for the purposes of this Section 6.8 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 records of condition so published.
The Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee.
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.8, the Trustee shall resign immediately in
the manner and with the effect specified in Section 6.9.
Section 6.9. Resignation or Removal of Trustee
---------------------------------
(a) The Trustee, or any trustee or trustees hereafter appointed, may at any
time resign by giving written notice of such resignation to the Company and by
mailing notice thereof, at the Company's expense, to the holders of the
Debentures at their addresses as they shall appear on the Debenture Register.
Upon receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, executed by
order of its Board of Directors, one
29
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the mailing of such
notice of resignation to the affected Securityholders, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee, or any Securityholder who has been a bona fide holder of a Debenture or
Debentures for at least six months may, subject to the provisions of Section
5.9, on behalf of himself and all others similarly situated, petition any such
court for the appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, appoint a
successor Trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions of Section
6.8 after written request therefor by the Company or by any Securityholder
who has been a bona fide holder of a Debenture or Debentures for at least 6
months, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.8 and shall fail to resign after written request
therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint
a successor Trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor
Trustee, or, subject to the provisions of Section 5.9, any
Securityholder who has been a bona fide holder of a Debenture or
Debentures for at least 6 months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, remove the Trustee and
appoint successor Trustee.
(c) Upon prior written notice to the Company and the Trustee, the holders
of a majority in aggregate principal amount of the Debentures at the time
outstanding may at any time remove the Trustee and nominate a successor Trustee,
which shall be deemed appointed as successor Trustee unless within 10 Business
Days after such nomination the Company objects thereto, in which case, or in the
case of a failure by such holders to nominate a successor Trustee, the Trustee
so removed or any Securityholder, upon the terms and conditions and otherwise as
in subsection (a) of this Section 6.9 provided, may petition any court of
competent jurisdiction for an appointment of a successor.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor Trustee as provided in
Section 6.10.
Section 6.10. Acceptance by Successor Trustee. Any successor Trustee
-------------------------------
appointed as provided in Section 6.9 shall execute, acknowledge and deliver to
the Company and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, duties
and obligations with respect to the Debentures of its predecessor hereunder,
with like effect as if originally named as Trustee herein; but,
30
nevertheless, on the written request of the Company or of the successor Trustee,
the Trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 6.6, execute and deliver an instrument
transferring to such successor Trustee all the rights and powers of the Trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee thereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor Trustee all such rights and powers. Any Trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such Trustee to secure any amounts then due it pursuant to the provisions of
Section 6.6.
If a successor Trustee is appointed, the Company, the retiring Trustee
and the successor Trustee shall execute and deliver an indenture supplemental
hereto which shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Debentures as to which the predecessor
Trustee is not retiring shall continue to be vested in the predecessor Trustee,
and shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the Trust hereunder
by more than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be Trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 6.8.
In no event shall a retiring Trustee be liable for the acts or
omissions of any successor Trustee hereunder.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 6.10, the Company shall mail notice of the succession of such
Trustee hereunder to the holders of Debentures at their addresses as they shall
appear on the Debenture Register. If the Company fails to mail such notice
within 10 Business Days after the acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Company.
Section 6.11. Succession by Merger, etc. Any corporation into which the
-------------------------
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided such corporation
--------
shall be otherwise eligible and qualified under this Article.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Debentures shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee, and deliver such
Debentures so authenticated; and in case at that time any of the Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debentures or in this Indenture provided
that the certificate of the Trustee shall have; provided, however, that the
-------- -------
right to adopt the certificate of authentication of any predecessor Trustee or
authenticate Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
Section 6.12. Authenticating Agents. There may be one or more
---------------------
Authenticating Agents appointed by the Trustee upon the request of the Company
with power to act on its behalf and subject to
31
its direction in the authentication and delivery of Debentures issued upon
exchange or registration of transfer thereof as fully to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Debentures; provided, however, that the Trustee
-------- -------
shall have no liability to the Company for any acts or omissions of the
Authenticating Agent with respect to the authentication and delivery of
Debentures. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any state
or territory thereof or of the District of Columbia authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of at
least $50,000,000.00 and being 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 the
requirements of such authority, then for the purposes of this Section 6.12 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. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section 6.12 without the execution or filing of
any paper or any further act on the part of the parties hereto or such
Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent with respect to the
Debentures by giving written notice of termination to such Authenticating Agent
and to the Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.12, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent eligible under
this Section 6.12, shall give written notice of such appointment to the Company
and shall mail notice of such appointment to all holders of Debentures as the
names and addresses of such holders appear on the Debenture Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers, duties and responsibilities with
respect to the Debentures of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent herein.
The Company agrees to pay to any Authenticating Agent from time to time
reasonable compensation for its services. Any Authenticating Agent shall have no
responsibility or liability for any action taken by it as such in accordance
with the directions of the Trustee.
ARTICLE VII.
CONCERNING THE SECURITYHOLDERS
------------------------------
Section 7.1. Action by Securityholders. Whenever in this Indenture it
-------------------------
is provided that the holders of a specified percentage in aggregate principal
amount of the Debentures may take any action (including the making of any demand
or request, the giving of any notice, consent or waiver or the taking of any
other action) the fact that at the time of taking any such action the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by such
Securityholders in person or by agent or proxy appointed in writing, or (b) by
the record of such holders of Debentures voting in favor thereof at any meeting
of such Securityholders duly called and held in accordance with the provisions
of Article VIII, or (c) by a
32
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders or (d) by any other method the Trustee deems
satisfactory.
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action or
revocation of the same, the Company may, at its option, as evidenced by an
Officers' Certificate, fix in advance a record date for such Debentures for the
determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same may be given before or after
the record date, but only the Securityholders of record at the close of business
on the record date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion of outstanding
Debentures have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, and for that purpose the outstanding Debentures shall be computed
as of the record date; provided, however, that no such authorization, agreement
-----------------
or consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than 6 months after the record date.
Section 7.2. Proof of Execution by Securityholders. Subject to the
-------------------------------------
provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument
by a Securityholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
ownership of Debentures shall be proved by the Debenture Register or by a
certificate of the Debenture registrar. The Trustee may require such additional
proof of any matter referred to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.6.
Section 7.3. Who Are Deemed Absolute Owners. Prior to due presentment
------------------------------
for registration of transfer of any Debenture, the Company, the Trustee, any
Authenticating Agent, any paying agent, any transfer agent and any Debenture
registrar may deem the Person in whose name such Debenture shall be registered
upon the Debenture Register to be, and may treat him as, the absolute owner of
such Debenture (whether or not such Debenture shall be overdue) for the purpose
of receiving payment of or on account of the principal of, premium, if any, and
interest on such Debenture and for all other purposes; and neither the Company
nor the Trustee nor any Authenticating Agent nor any paying agent nor any
transfer agent nor any Debenture registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or upon
his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debenture.
Section 7.4. Debentures Owned by Company Deemed Not Outstanding. In
--------------------------------------------------
determining whether the holders of the requisite aggregate principal amount of
Debentures have concurred in any direction, consent or waiver under this
Indenture, Debentures which are owned by the Company or any other obligor on the
Debentures or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Debentures shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided, however, that for the purposes of
-----------------
determining whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Debentures which a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. Debentures so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 7.4 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Debentures and that the pledgee
is not the Company or any such other obligor or Person directly or indirectly
controlling or controlled by or under
33
direct or indirect common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee.
Section 7.5. Revocation of Consents; Future Holders Bound. At any time
--------------------------------------------
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Debentures specified in this Indenture in connection
with such action, any holder (in cases where no record date has been set
pursuant to Section 7.1) or any holder as of an applicable record date (in cases
where a record date has been set pursuant to Section 7.1) of a Debenture (or any
Debenture issued in whole or in part in exchange or substitution therefor) the
serial number of which is shown by the evidence to be included in the Debentures
the holders of which have consented to such action may, by filing written notice
with the Trustee at the Principal Office of the Trustee and upon proof of
holding as provided in Section 7.2, revoke such action so far as concerns such
Debenture (or so far as concerns the principal amount represented by any
exchanged or substituted Debenture). Except as aforesaid any such action taken
by the holder of any Debenture shall be conclusive and binding upon such holder
and upon all future holders and owners of such Debenture, and of any Debenture
issued in exchange or substitution therefor or on registration of transfer
thereof, irrespective of whether or not any notation in regard thereto is made
upon such Debenture or any Debenture issued in exchange or substitution
therefor.
ARTICLE VIII.
SECURITYHOLDERS' MEETINGS
-------------------------
Section 8.1. Purposes of Meetings. A meeting of Securityholders may be
--------------------
called at any time and from time to time pursuant to the provisions of this
Article VIII for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to consent to the waiving of any default hereunder
and its consequences, or to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.2; or
(d) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of such Debentures under
any other provision of this Indenture or under applicable law.
Section 8.2. Call of Meetings by Trustee. The Trustee may at any time
---------------------------
call a meeting of Securityholders to take any action specified in Section 8.1,
to be held at such time and at such place as the Trustee shall determine. Notice
of every meeting of the Securityholders, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed to holders of Debentures affected at their addresses as
they shall appear on the Debentures Register and, if the Company is not a holder
of Debentures, to the Company. Such notice shall be mailed not less than 20 nor
more than 180 days prior to the date fixed for the meeting.
Section 8.3. Call of Meetings by Company or Securityholders. In case at
----------------------------------------------
any time the Company pursuant to a Board Resolution, or the holders of at least
10% in aggregate principal amount of the Debentures, as the case may be, then
outstanding, shall have requested the Trustee to call a meeting of
Securityholders, by written request setting forth in reasonable detail the
action proposed to be taken at the
34
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or such Securityholders
may determine the time and the place for such meeting and may call such meeting
to take any action authorized in Section 8.1, by mailing notice thereof as
provided in Section 8.2.
Section 8.4. Qualifications for Voting. To be entitled to vote at any
-------------------------
meeting of Securityholders a Person shall (a) be a holder of one or more
Debentures with respect to which the meeting is being held or (b) a Person
appointed by an instrument in writing as proxy by a holder of one or more such
Debentures. The only Persons who shall be entitled to be present or to speak at
any meeting of Securityholders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.
Section 8.5. Regulations. Notwithstanding any other provisions of this
-----------
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Debentures and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 7.4, at any meeting each holder of
Debentures with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000.00 principal amount of Debentures
held or represented by him; provided, however, that no vote shall be cast or
-------- -------
counted at any meeting in respect of any Debenture challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Debentures held
by him or instruments in writing as aforesaid duly designating him as the Person
to vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from
time to time by a majority of those present, whether or not constituting a
quorum, and the meeting may be held as so adjourned without further notice.
Section 8.6. Voting. The vote upon any resolution submitted to any
------
meeting of holders of Debentures with respect to which such meeting is being
held shall be by written ballots on which shall be subscribed the signatures of
such holders or of their representatives by proxy and the serial number or
numbers of the Debentures held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 8.2. The record
shall show the serial numbers of the Debentures voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
35
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 8.7. Quorum; Actions. The Persons entitled to vote a majority
---------------
in principal amount of the Debentures shall constitute a quorum for a meeting of
Securityholders; provided, however, that if any action is to be taken at such
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the Debentures, the
Persons holding or representing such specified percentage in principal amount of
the Debentures will constitute a quorum. In the absence of a quorum within 30
minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of Securityholders, be dissolved. In any other case the
meeting may be adjourned for a period of not less than 10 days as determined by
the permanent chairman of the meeting prior to the adjournment of such meeting.
In the absence of a quorum at any such adjourned meeting, such adjourned meeting
may be further adjourned for a period of not less than 10 days as determined by
the permanent chairman of the meeting prior to the adjournment of such adjourned
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 8.2, except that such notice need be given only once not
less than 5 days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Debentures which shall constitute a quorum.
Except as limited by the proviso in the first paragraph of Section 9.2,
any resolution presented to a meeting or adjourned meeting duly reconvened at
which a quorum is present as aforesaid may be adopted by the affirmative vote of
the holders of a majority in principal amount of the Debentures; provided,
--------
however, that, except as limited by the proviso in the first paragraph of
-------
Section 9.2, any resolution with respect to any consent, waiver, request,
demand, notice, authorization, direction or other action which this Indenture
expressly provides may be given by the holders of not less than a specified
percentage in principal amount of the Debentures may be adopted at a meeting or
an adjourned meeting duly reconvened and at which a quorum is present as
aforesaid only by the affirmative vote of the holders of a not less than such
specified percentage in principal amount of the Debentures.
Any resolution passed or decision taken at any meeting of holders of
Debentures duly held in accordance with this Section shall be binding on all the
Securityholders, whether or not present or represented at the meeting.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
-----------------------
Section 9.1. Supplemental Indentures without Consent of
------------------------------------------
Securityholders. The Company, when authorized by a Board Resolution, and the
---------------
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company, pursuant to Article XI
hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the holders of Debentures as
the Board of Directors shall consider to be for the protection of the holders of
such Debentures, and to make the occurrence, or the occurrence and continuance,
of a default in any of such additional covenants, restrictions or conditions a
default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
--------
however, that in respect of any such additional covenant restriction or
-------
condition such supplemental indenture may provide for a particular period of
grace after
36
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture; provided that any such action shall not materially
adversely affect the interests of the holders of the Debentures;
(d) to add to, delete from, or revise the terms of Debentures,
including, without limitation, any terms relating to the issuance, exchange,
registration or transfer of Debentures, including to provide for transfer
procedures and restrictions substantially similar to those applicable to the
Capital Securities as required by Section 2.5 (for purposes of assuring that no
registration of Debentures is required under the Securities Act of 1933, as
amended); provided, however, that any such action shall not adversely affect the
-------- -------
interests of the holders of the Debentures then outstanding (it being
understood, for purposes of this proviso, that transfer restrictions on
Debentures substantially similar to those that were applicable to Capital
Securities shall not be deemed to materially adversely affect the holders of the
Debentures);
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debentures and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11;
(f) to make any change (other than as elsewhere provided in this
paragraph) that does not adversely affect the rights of any Securityholder in
any material respect; or
(g) to provide for the issuance of and establish the form and terms
and conditions of the Debentures, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or the
Debentures, or to add to the rights of the holders of Debentures.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
9.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Debentures at the time outstanding, notwithstanding any of
the provisions of Section 9.2.
Section 9.2. Supplemental Indentures with Consent of Securityholders.
-------------------------------------------------------
With the consent (evidenced as provided in Section 7.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
outstanding affected by such supplemental indenture (voting as a class), the
Company, when authorized by a Board Resolution, and the Trustee may from time to
time and at any time enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the
Debentures; provided, however, that no such supplemental indenture shall without
-------- -------
the consent of the holders of each Debenture then outstanding and affected
thereby (i) change the fixed maturity of any Debenture, or reduce the principal
amount thereof or any premium thereon, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption thereof
or make the principal
37
thereof or any interest or premium thereon payable in any coin or currency other
than that provided in the Debentures, or impair or affect the right of any
Securityholder to institute suit for payment thereof or impair the right of
repayment, if any, at the option of the holder, or (ii) reduce the aforesaid
percentage of Debentures the holders of which are required to consent to any
such supplemental indenture; provided further, however, that if the Debentures
-------- ------- -------
are held by a trust or a trustee of such trust, such supplemental indenture
shall not be effective until the holders of a majority in Liquidation Amount of
Trust Securities shall have consented to such supplemental indenture; provided
--------
further, however, that if the consent of the Securityholder of each outstanding
------- -------
Debenture is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities shall have consented to such supplemental
indenture.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders as their names and addresses appear upon the
Debenture Register. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 9.3. Effect of Supplemental Indentures. Upon the execution of
----------------------------------
any supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Debentures shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 9.4. Notation on Debentures. Debentures authenticated and
----------------------
delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article IX may bear a notation as to any matter provided for
in such supplemental indenture. If the Company or the Trustee shall so
determine, new Debentures so modified as to conform, in the opinion of the Board
of Directors of the Company, to any modification of this Indenture contained in
any such supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debentures then outstanding.
Section 9.5. Evidence of Compliance of Supplemental Indenture to be
------------------------------------------------------
Furnished to Trustee. The Trustee, subject to the provisions of Sections 6.1 and
--------------------
6.2, shall, in addition to the documents required by Section 14.6, receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX. The Trustee shall receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article IX is authorized or permitted by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee under the provisions of this
Article IX to join in the execution thereof.
38
ARTICLE X.
REDEMPTION OF SECURITIES
------------------------
Section 10.1. Optional Redemption. The Company shall have the right
-------------------
(subject to the receipt by the Company of prior approval (i) if the Company is a
bank holding company, from the Federal Reserve, if then required under
applicable capital guidelines or policies or (ii) if the Company is a savings
and loan holding company, from the OTS if then required under applicable capital
guidelines or policies of the OTS), to redeem the Debentures, in whole or in
part, but in all cases in a principal amount with integral multiples of
$1,000.00, on any July 31, October 31, January 31 or April 30 on or after July
31, 2006 (the "Redemption Date"), at the Redemption Price.
---------------
Section 10.2. Special Event Redemption. If a Special Event shall occur
------------------------
and be continuing, the Company shall have the right (subject to the receipt by
the Company of prior approval (i) if the Company is a bank holding company, from
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve or (ii) if the Company is a savings and loan
holding company, from the OTS if then required under applicable capital
guidelines or policies of the OTS) to redeem the Debentures in whole, but not in
part, at any Interest Payment Date, within 120 days following the occurrence of
such Special Event (the "Special Redemption Date") at the Special Redemption
-----------------------
Price.
Section 10.3. Notice of Redemption; Selection of Debentures. In case
---------------------------------------------
the Company shall desire to exercise the right to redeem all, or, as the case
may be, any part of the Debentures, it shall cause to be mailed a notice of such
redemption at least 30 and not more than 60 days prior to the Redemption Date or
the Special Redemption Date to the holders of Debentures so to be redeemed as a
whole or in part at their last addresses as the same appear on the Debenture
Register. Such mailing shall be by first class mail. The notice if mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives such notice. In any case, failure to give
such notice by mail or any defect in the notice to the holder of any Debenture
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Debenture.
Each such notice of redemption shall specify the CUSIP number, if any,
of the Debentures to be redeemed, the Redemption Date or the Special Redemption
Date, as applicable, the Redemption Price or the Special Redemption Price, as
applicable, at which Debentures are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Debentures, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portions thereof to be redeemed will cease to accrue. If less than all
the Debentures are to be redeemed the notice of redemption shall specify the
numbers of the Debentures to be redeemed. In case the Debentures are to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Debenture, a new Debenture or
Debentures in principal amount equal to the unredeemed portion thereof will be
issued.
Prior to 10:00 a.m. New York City time on the Redemption Date or
Special Redemption Date, as applicable, the Company will deposit with the
Trustee or with one or more paying agents an amount of money sufficient to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate Redemption Price or
Special Redemption Price, together with accrued interest to the Redemption Date
or Special Redemption Date, as applicable.
If all, or less than all, the Debentures are to be redeemed, the
Company will give the Trustee notice not less than 45 nor more than 60 days,
respectively, prior to the Redemption Date or Special Redemption Date, as
applicable, as to the aggregate principal amount of Debentures to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Debentures or portions thereof (in integral
multiples of $1,000.00) to be redeemed.
39
Section 10.4. Payment of Debentures Called for Redemption. If notice of
-------------------------------------------
redemption has been given as provided in Section 10.3, the Debentures or
portions of Debentures with respect to which such notice has been given shall
become due and payable on the Redemption Date or Special Redemption Date, as
applicable, and at the place or places stated in such notice at the applicable
Redemption Price or Special Redemption Price, together with interest accrued to
the Redemption Date or Special Redemption Date, as applicable, and on and after
said date (unless the Company shall default in the payment of such Debentures at
the Redemption Price or Special Redemption Price, as applicable, together with
interest accrued to said date) interest on the Debentures or portions of
Debentures so called for redemption shall cease to accrue. On presentation and
surrender of such Debentures at a place of payment specified in said notice,
such Debentures or the specified portions thereof shall be paid and redeemed by
the Company at the applicable Redemption Price or Special Redemption Price,
together with interest accrued thereon to the Redemption Date or Special
Redemption Date, as applicable.
Upon presentation of any Debenture redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the holder thereof, at the expense of the Company, a new Debenture or
Debentures of authorized denominations, in principal amount equal to the
unredeemed portion of the Debenture so presented.
ARTICLE XI.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
-------------------------------------------------
Section 11.1. Company May Consolidate, etc., on Certain Terms. Nothing
-----------------------------------------------
contained in this Indenture or in the Debentures shall prevent any consolidation
or merger of the Company with or into any other Person (whether or not
affiliated with the Company) or successive consolidations or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance, transfer or other disposition of the property of
the Company or its successor or successors as an entirety, or substantially as
an entirety, to any other Person (whether or not affiliated with the Company, or
its successor or successors) authorized to acquire and operate the same;
provided, however, that the Company hereby covenants and agrees that, upon any
-----------------
such consolidation, merger (where the Company is not the surviving corporation),
sale, conveyance, transfer or other disposition, the due and punctual payment of
the principal of (and premium, if any) and interest on all of the Debentures in
accordance with their terms, according to their tenor, and the due and punctual
performance and observance of all the covenants and conditions of this Indenture
to be kept or performed by the Company, shall be expressly assumed by
supplemental indenture satisfactory in form to the Trustee executed and
delivered to the Trustee by the entity formed by such consolidation, or into
which the Company shall have been merged, or by the entity which shall have
acquired such property.
Section 11.2. Successor Entity to be Substituted. In case of any such
----------------------------------
consolidation, merger, sale, conveyance, transfer or other disposition and upon
the assumption by the successor entity, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Debentures and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed or observed by the
Company, such successor entity shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as the Company, and
thereupon the predecessor entity shall be relieved of any further liability or
obligation hereunder or upon the Debentures. Such successor entity thereupon may
cause to be signed, and may issue in its own name, any or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee or the Authenticating Agent; and, upon the order of
such successor entity instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee or the
Authenticating Agent shall authenticate and deliver any Debentures which
previously shall have been signed and delivered by the officers of the Company,
to the Trustee or the Authenticating Agent for authentication, and any
Debentures which such successor entity thereafter shall
40
cause to be signed and delivered to the Trustee or the Authenticating Agent for
that purpose. All the Debentures so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Debentures theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Debentures had been issued at the date of the execution hereof.
Section 11.3. Opinion of Counsel to be Given to Trustee. The Trustee,
-----------------------------------------
subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to
the Opinion of Counsel required by Section 9.5, an Opinion of Counsel as
conclusive evidence that any consolidation, merger, sale, conveyance, transfer
or other disposition, and any assumption, permitted or required by the terms of
this Article XI complies with the provisions of this Article XI.
ARTICLE XII.
SATISFACTION AND DISCHARGE OF INDENTURE
---------------------------------------
Section 12.1. Discharge of Indenture. When
----------------------
(a) the Company shall deliver to the Trustee for cancellation all
Debentures theretofore authenticated (other than any Debentures which
shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.6) and not theretofore
canceled, or
(b) all the Debentures not theretofore canceled or delivered to the
Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within 1 year or are to be
called for redemption within 1 year under arrangements satisfactory
to the Trustee for the giving of notice of redemption, and the
Company shall deposit with the Trustee, in trust, funds, which shall
be immediately due and payable, sufficient to pay at maturity or upon
redemption all of the Debentures (other than any Debentures which
shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.6) not theretofore canceled
or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of
maturity or redemption date, as the case may be, but excluding,
however, the amount of any moneys for the payment of principal of,
and premium, if any, or interest on the Debentures (1) theretofore
repaid to the Company in accordance with the provisions of Section
12.4, or (2) paid to any state or to the District of Columbia
pursuant to its unclaimed property or similar laws,
and if in the case of either clause (a) or clause (b) the Company shall also pay
or cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect except for the provisions of
Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall
survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6
and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with, and at the cost and expense
of the Company, shall execute proper instruments acknowledging satisfaction of
and discharging this Indenture. The Company agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
in connection with this Indenture or the Debentures.
Section 12.2. Deposited Moneys to be Held in Trust by Trustee. Subject to
-----------------------------------------------
the provisions of Section 12.4, all moneys deposited with the Trustee pursuant
to Section 12.1 shall be held in trust in a non-interest bearing account and
applied by it to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of the
particular Debentures for
41
the payment of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal, and premium, if any, and
interest.
Section 12.3. Paying Agent to Repay Moneys Held. Upon the satisfaction and
---------------------------------
discharge of this Indenture all moneys then held by any paying agent of the
Debentures (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such moneys.
Section 12.4. Return of Unclaimed Moneys. Any moneys deposited with or
--------------------------
paid to the Trustee or any paying agent for payment of the principal of, and
premium, if any, or interest on Debentures and not applied but remaining
unclaimed by the holders of Debentures for 2 years after the date upon which the
principal of, and premium, if any, or interest on such Debentures, as the case
may be, shall have become due and payable, shall, subject to applicable
escheatment laws, be repaid to the Company by the Trustee or such paying agent
on written demand; and the holder of any of the Debentures shall thereafter look
only to the Company for any payment which such holder may be entitled to
collect, and all liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
ARTICLE XIII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
----------------------------------------
OFFICERS AND DIRECTORS
----------------------
Section 13.1. Indenture and Debentures Solely Corporate Obligations. No
-----------------------------------------------------
recourse for the payment of the principal of or premium, if any, or interest on
any Debenture, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture or in any supplemental indenture, or in any such
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, officer or
director, as such, past, present or future, of the Company or of any successor
Person of the Company, either directly or through the Company or any successor
Person of the Company, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Debentures.
ARTICLE XIV.
MISCELLANEOUS PROVISIONS
------------------------
Section 14.1. Successors. All the covenants, stipulations, promises and
----------
agreements in this Indenture contained by the Company shall bind its successors
and assigns whether so expressed or not.
Section 14.2. Official Acts by Successor Entity. Any act or proceeding by
---------------------------------
any provision of this Indenture authorized or required to be done or performed
by any board, committee or officer of the Company shall and may be done and
performed with like force and effect by the like board, committee, officer or
other authorized Person of any entity that shall at the time be the lawful
successor of the Company.
Section 14.3. Surrender of Company Powers. The Company by instrument in
---------------------------
writing executed by authority of at least 2/3 (two-thirds) of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company and thereupon such power so surrendered shall terminate both as
to the Company, and as to any permitted successor.
Section 14.4. Addresses for Notices, etc. Any notice, consent, direction,
--------------------------
request, authorization, waiver or demand which by any provision of this
Indenture is required or permitted to be
42
given, made, furnished or served by the Trustee or by the Securityholders on or
to the Company may be given or served in writing by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company, with the Trustee for the
purpose) to the Company, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. Any notice, consent,
direction, request, authorization, waiver or demand by any Securityholder or the
Company to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or made in writing at the office of the
Trustee, addressed to the Trustee, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Square, Hartford,
Connecticut, 06103 Attention: Vice President, Corporate Trust Department, with a
copy to State Street Bank and Trust Company, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Corporate Trust Department. Any notice,
consent, direction, request, authorization, waiver or demand on or to any
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the address set forth in the Debenture
Register.
Section 14.5. Governing Law. This Indenture and each Debenture shall be
-------------
deemed to be a contract made under the law of the State of New York, and for all
purposes shall be governed by and construed in accordance with the law of said
State, without regard to conflict of laws principles thereof.
Section 14.6. Evidence of Compliance with Conditions Precedent. Upon any
------------------------------------------------
application or demand by the Company to the Trustee to take any action under any
of the provisions of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that in the opinion of the signers all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not in the opinion of such
person, such condition or covenant has been complied with.
Section 14.7. Non-Business Days. In any case where the date of payment of
-----------------
interest on or principal of the Debentures will be a day that is not a Business
Day, the payment of such interest on or principal of the Debentures need not be
made on such date but may be made on the next succeeding Business Day, except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the original date of payment, and no
interest shall accrue for the period from and after such date.
Section 14.8. Table of Contents, Headings, etc. The table of contents and
--------------------------------
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 14.9. Execution in Counterparts. This Indenture may be executed in
-------------------------
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
43
Section 14.10. Separability. In case any one or more of the provisions
------------
contained in this Indenture or in the Debentures shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Indenture or
of such Debentures, but this Indenture and such Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
Section 14.11. Assignment. The Company will have the right at all times to
----------
assign any of its rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company will remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties hereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties hereto.
Section 14.12. Acknowledgment of Rights. The Company agrees that, with
------------------------
respect to any Debentures held by the Trust or the Institutional Trustee of the
Trust, if the Institutional Trustee of the Trust fails to enforce its rights
under this Indenture as the holder of Debentures held as the assets of such
Trust after the holders of a majority in Liquidation Amount of the Capital
Securities of such Trust have so directed such Institutional Trustee, a holder
of record of such Capital Securities may, to the fullest extent permitted by
law, institute legal proceedings directly against the Company to enforce such
Institutional Trustee's rights under this Indenture without first instituting
any legal proceedings against such trustee or any other Person. Notwithstanding
the foregoing, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest (or premium,
if any) or principal on the Debentures on the date such interest (or premium, if
any) or principal is otherwise payable (or in the case of redemption, on the
redemption date), the Company agrees that a holder of record of Capital
Securities of the Trust may directly institute a proceeding against the Company
for enforcement of payment to such holder directly of the principal of (or
premium, if any) or interest on the Debentures having an aggregate principal
amount equal to the aggregate Liquidation Amount of the Capital Securities of
such holder on or after the respective due date specified in the Debentures.
ARTICLE XV.
SUBORDINATION OF DEBENTURES
---------------------------
Section 15.1. Agreement to Subordinate. The Company covenants and agrees,
------------------------
and each holder of Debentures by such Securityholder's acceptance thereof
likewise covenants and agrees, that all Debentures shall be issued subject to
the provisions of this Article XV; and each holder of a Debenture, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment by the Company of the principal of, and premium, if any, and
interest on all Debentures shall, to the extent and in the manner hereinafter
set forth, be subordinated and junior in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, whether outstanding at the
date of this Indenture or thereafter incurred; provided, however, that the Debt
-------- -------
Securities shall rank pari passu in right of payment with the Company's 9.60%
Junior Subordinated Debentures due November 17, 2029 issued pursuant to an
Indenture dated as of November 17, 1999 by and between the Company and the First
Union Trust Company, N.A.
No provision of this Article XV shall prevent the occurrence of any default
or Event of Default hereunder.
Section 15.2. Default on Senior Indebtedness. In the event and during the
------------------------------
continuation of any default by the Company in the payment of principal, premium,
interest or any other payment due on any Senior Indebtedness of the Company
following any grace period, or in the event that the maturity of
44
any Senior Indebtedness of the Company has been accelerated because of a
default, then, in either case, no payment shall be made by the Company with
respect to the principal (including redemption) of, or premium, if any, or
interest on the Debentures.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 15.2, such payment shall, subject to Section 15.7, be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
Section 15.3. Liquidation, Dissolution, Bankruptcy. Upon any payment by
------------------------------------
the Company or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due upon all Senior Indebtedness of the Company shall first be paid in
full, or payment thereof provided for in money in accordance with its terms,
before any payment is made by the Company, on account of the principal (and
premium, if any) or interest on the Debentures. Upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, which the Securityholders or the Trustee would be
entitled to receive from the Company, except for the provisions of this Article
XV, shall be paid by the Company, or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Securityholders or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders of such Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness, remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article XV with respect to
the Debentures to the payment of all Senior Indebtedness, that may at the time
be outstanding, provided that (i) such Senior
45
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XI of this Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article XI of this Indenture. Nothing in Section 15.2 or in this Section
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.6 of this Indenture.
Section 15.4. Subrogation. Subject to the payment in full of all Senior
-----------
Indebtedness, the Securityholders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Debentures shall be paid in full. For the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Securityholders or the Trustee would
be entitled except for the provisions of this Article XV, and no payment over
pursuant to the provisions of this Article XV to or for the benefit of the
holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as
between the Company, its creditors other than holders of Senior Indebtedness of
the Company, and the holders of the Debentures be deemed to be a payment or
distribution by the Company to or on account of such Senior Indebtedness. It is
understood that the provisions of this Article XV are and are intended solely
for the purposes of defining the relative rights of the holders of the
Securities, on the one hand, and the holders of such Senior Indebtedness, on the
other hand.
Nothing contained in this Article XV or elsewhere in this Indenture or in
the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures the principal of (and premium, if any)
and interest on the Debentures as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company, other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the holder of any Debenture from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article XV of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article XV, the Trustee, subject to the provisions of Article VI of this
Indenture, and the Securityholders shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Securityholders, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
Section 15.5. Trustee to Effectuate Subordination. Each Securityholder by
-----------------------------------
such Securityholder's acceptance thereof authorizes and directs the Trustee on
such Securityholder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article XV and
appoints the Trustee such Securityholder's attorney-in-fact for any and all such
purposes.
46
Section 15.6. Notice by the Company. The Company shall give prompt written
---------------------
notice to a Responsible Officer of the Trustee at the Principal Office of the
Trustee of any fact known to the Company that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Debentures pursuant to
the provisions of this Article XV. Notwithstanding the provisions of this
Article XV or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XV, unless and until a
Responsible Officer of the Trustee at the Principal Office of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
provided for in this Section at least 2 Business Days prior to the date upon
which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Debenture), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within 2 Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness (or a
trustee or representative on behalf of such holder), to establish that such
notice has been given by a holder of such Senior Indebtedness or a trustee or
representative on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Section 15.7. Rights of the Trustee; Holders of Senior Indebtedness. The
-----------------------------------------------------
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article XV in respect of any Senior Indebtedness at any time held by it,
to the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article XV, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior Indebtedness and, subject
to the provisions of Article VI of this Indenture, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior Indebtedness shall be entitled by virtue of this Article
XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.6.
Section 15.8. Subordination May Not Be Impaired. No right of any present
---------------------------------
or future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company, or by any act or failure to
47
act, in good faith, by any such holder, or by any noncompliance by the Company,
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Securityholders, without
incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Article XV or the obligations
hereunder of the holders of the Debentures to the holders of such Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company, and any other Person.
signatures appear on the following page
48
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
PROSPERITY BANCSHARES, INC.
By /s/ H. E. ▇▇▇▇▇▇▇, JR.
__________________________________________
Name: H. E. ▇▇▇▇▇▇▇, JR.
Title: Executive Vice President
Chief Operating Officer
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Trustee
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
49
FORM OF JUNIOR SUBORDINATED DEBENTURE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM
IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY
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EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OR ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $500,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $500,000.00 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
Floating Rate Junior Subordinated Deferrable Interest Debenture
of
Prosperity Bancshares, Inc.
July 31, 2001
Prosperity Bancshares, Inc., a Texas corporation (the "Company" which
term includes any successor Person under the Indenture hereinafter referred to),
for value received promises to pay to State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity but solely as
Institutional Trustee for Prosperity Statutory Trust II (the "Holder") or
registered assigns, the principal sum of Fifteen Million Four Hundred Sixty-Four
Thousand Dollars ($15,464,000) on July 31, 2031, and to pay interest on said
principal sum from July 31, 2001, or from the most recent interest payment date
(each such date, an "Interest Payment Date") to which interest has been paid or
duly provided for, quarterly (subject to deferral as set forth herein) in
arrears on October 31, January 31, April 30 and July 31 of each year commencing
October 31, 2001, at an annual rate equal to 7.29% beginning on (and including)
the date of original issuance and ending on (but excluding) October 31, 2001 and
at an annual rate for each successive period beginning on (and including)
October 31, 2001, and each succeeding Interest Payment Date, and ending on (but
excluding) the next succeeding Interest Payment Date (each a "Distribution
Period"), equal to 3-Month LIBOR, determined as described below, plus 3.58%;
provided, however, that prior to July 31, 2011, such annual rate shall not
-------- -------
exceed 12.50% (the "Coupon Rate") applied to the principal amount hereof, until
the principal hereof is paid or duly provided for or made available for payment,
and on any overdue principal and (without duplication) on any overdue
installment of interest at the same rate per annum, compounded quarterly, from
the dates such amounts are due until they are paid or made available for
payment. As used herein, "Determination Date" means the date that is two London
Banking Days (i.e., a day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period. The amount of interest payable for any period will
be computed on the basis of the actual number of days in the Distribution Period
concerned divided by 360. In the event that any date on which interest is
payable on this Debenture is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding
A-1-2
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Debenture
(or one or more Predecessor Securities) is registered at the close of business
on the regular record date for such interest installment, which shall be fifteen
days prior to the day on which the relevant Interest Payment Date occurs. Any
such interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such regular record date and may
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on a special record date.
"3-Month LIBOR" as used herein, means the London interbank offered rate
for three-month Eurodollar deposits determined by the Trustee in the following
order of priority: (i) the rate (expressed as a percentage per annum) for
Eurodollar deposits having a three-month maturity that appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the particular Determination Date
("Telerate Page 3750" means the display designated as "Page 3750" on the Dow
▇▇▇▇▇ Telerate Service or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollars deposits); (ii) if such rate
does not appear on Telerate Page 3750 as of 11:00 a.m. (London time) on the
Determination Date, 3-Month LIBOR will be the arithmetic mean of the rates
(expressed as percentages per annum) for Eurodollar deposits having a
three-month maturity that appear on Reuters Monitor Money Rates Page LIBO
("Reuters Page LIBO") as of 11:00 a.m. (London time) on such Determination Date;
(iii) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m. (London
time) on the related Determination Date, the Trustee will request the principal
London offices of four leading banks in the London interbank market to provide
such banks' offered quotations (expressed as percentages per annum) to prime
banks in the London interbank market for Eurodollar deposits having a
three-month maturity as of 11:00 a.m. (London time) on such Determination Date.
If at least two quotations are provided, 3-Month LIBOR will be the arithmetic
mean of such quotations; (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, the Trustee will request four major New York
City banks to provide such banks' offered quotations (expressed as percentages
per annum) to leading European banks for loans in Eurodollars as of 11:00 a.m.
(London time) on such Determination Date. If at least two such quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and (v)
if fewer than two such quotations are provided as requested in clause (iv)
above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the
Distribution Period immediately preceding such current Distribution Period. If
the rate for Eurodollar deposits having a three-month maturity that initially
appears on Telerate Page 3750 or Reuters Page LIBO, as the case may be, as of
11:00 a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 or Reuters Page LIBO, as the case may be, by a corrected rate
by 12:00 noon (London time) on such Determination Date, then the corrected rate
as so substituted on the applicable page will be the applicable 3-Month LIBOR
for such Determination Date.
The Coupon Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
All percentages resulting from any calculations on the Debentures will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one-half cent being rounded upward).
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The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made by check
-------- -------
mailed to the registered holder at such address as shall appear in the Debenture
Register if a request for a wire transfer by such holder has not been received
by the Company or by wire transfer to an account appropriately designated by the
holder hereof. Notwithstanding the foregoing, so long as the holder of this
Debenture is the Institutional Trustee, the payment of the principal of and
interest on this Debenture will be made in immediately available funds at such
place and to such account as may be designated by the Trustee.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, from time to time, and without causing an Event of
Default, to defer payments of interest on the Debentures by extending the
interest payment period on the Debentures at any time and from time to time
during the term of the Debentures, for up to 20 consecutive quarterly periods
(each such extended interest payment period, an "Extension Period"), during
which Extension Period no interest shall be due and payable. No Extension Period
may end on a date other than an Interest Payment Date. At the end of any such
Extension Period the Company shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon); provided, however,
-------- -------
that no Extension Period may extend beyond the Maturity Date; provided further,
-------- -------
however, that during any such Extension Period, the Company shall not and shall
-------
not permit any Affiliate to (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's or such Affiliate's capital stock (other than payments of
dividends or distributions to the Company) or make any guarantee payments with
respect to the foregoing or (ii) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company or any Affiliate that rank pari passu in all respects with or junior in
interest to the Debentures (other than, with respect to clauses (i) and (ii)
above, (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the termination
of any Extension Period, the Company may further extend such period, provided
that such period together with all such previous and further consecutive
extensions thereof shall not exceed 20 consecutive quarterly periods, or extend
beyond the Maturity Date. Upon the termination of any Extension Period and upon
the payment of all accrued and unpaid interest and Additional Interest, the
Company may commence a new Extension Period, subject to the foregoing
requirements. No interest or Additional Interest shall be due and payable during
an Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Additional Interest. The Company must give the Trustee notice of its
election to begin such Extension Period at least 5 Business Days prior to the
earlier of (i) the date
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interest on the Debentures would have been payable except for the election to
begin such Extension Period or (ii) the date such interest is payable, but in
any event not less than 5 Business Days prior to such record date.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf of
the Trustee.
Capitalized terms used and not defined in this Debenture shall have the
meanings assigned in the Indenture dated as of the date of this Debenture
between the Trustee and the Company.
IN WITNESS WHEREOF, the Company has duly executed this certificate.
PROSPERITY BANCSHARES, INC.
By_________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Debentures referred to in the within-mentioned
Indenture.
State Street Bank and Trust Company of
Connecticut, National Association, as
Trustee
By:________________________
Authorized Officer
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