EXHIBIT (2)
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of April 24, 1998 (this "First
Supplemental Indenture"), among The St. Xxxx Companies, Inc., a Minnesota
corporation, having its principal office at 000 Xxxxxxxxxx Xxxxxx, Xx. Xxxx,
Xxxxxxxxx 00000 ("St. Xxxx"), USF&G Corporation, a Maryland corporation (the
"Company"), and The Chase Manhattan Bank (formerly known as Chemical Bank),
as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture, dated as of January 28, 1994 (the "Indenture"), pursuant to which
the Company has issued Zero Coupon Convertible Subordinated Notes due 2009
(the "Securities");
WHEREAS, on the date hereof, pursuant to an Agreement and Plan of
Merger, dated as of January 19, 1998, as amended through February 26, 1998,
among the Company, St. Xxxx and SP Merger Corporation, a Maryland
corporation and a wholly owned subsidiary of St. Xxxx ("Merger Sub"), (i)
Merger Sub is being merged with and into the Company, with the Company
continuing as the surviving corporation and a wholly owned subsidiary of St.
Xxxx (the "Merger") and (ii) each outstanding share of common stock, par
value $2.50 per share ("USF&G Common Stock"), of the Company (other than
shares of USF&G Common Stock owned by St. Xxxx or any direct or indirect
subsidiary of St. Xxxx, or shares of USF&G Common Stock owned by the Company
or any direct or indirect subsidiary of the Company (in each case not held
on behalf of third parties)) is being converted into 0.2821 of a share of
common stock, without par value, of St. Xxxx ("St. Xxxx Common Stock");
WHEREAS, the Company has delivered to the Trustee, pursuant to Section
801(3) of the Indenture, an Officers' Certificate and an Opinion of Counsel,
each stating that the Merger and this First Supplemental Indenture comply
with Section 801 of the Indenture and that all conditions precedent in the
Indenture relating to the Merger have been complied with;
WHEREAS, Section 1209 of the Indenture provides, among other things,
that in case of any merger of the Company with another Person, the Company
shall execute and deliver to the Trustee a supplemental indenture providing
that the Holder of each Security then outstanding of any series that is
convertible into Company Common Stock shall have the right to convert such
Security into the kind and amount of shares of stock or other securities or
property receivable upon such merger by a Holder of the number of shares of
Company Common Stock into which such Security might have been converted
immediately prior to such merger, subject to compliance with the other
provisions of the Indenture, such Security and such supplemental indenture,
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in such Security;
WHEREAS, Section 901(10) of the Indenture permits the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time
to time, without the consent of any Holders of Securities, to enter into one
or more supplemental indentures for the purpose of making provision with
respect to the conversion rights of Holders of Securities pursuant to
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Article Twelve of the Indenture, including providing for the conversion of
the Securities into any security (other than common stock of the Company);
WHEREAS, in connection with the foregoing, the Company is required by
Section 1204 of the Indenture to prepare and mail to each Holder of
Securities a notice setting forth the adjusted conversion price and to
prepare and file with the Trustee an Officers' Certificate showing in
reasonable detail the facts upon which the adjustment is based and the
manner of computing such adjustment;
WHEREAS, St. Xxxx desires to assume, jointly and severally, with the
Company, the due and punctual payment of the principal of, and premium,
if any, and interest on, the Securities when due;
WHEREAS, Section 901(9) of the Indenture permits the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time
to time, without the consent of any Holders of Securities, to enter into one
or more supplemental indentures for the purpose of making provisions with
respect to matters arising under the Indenture, provided that such action
does not adversely affect the interests of the Holders of the Securities in
any material respect; and
WHEREAS, St. Xxxx and the Company have requested that the Trustee execute
and deliver this First Supplemental Indenture pursuant to Section 901 of
the Indenture, and all requirements necessary to make this First
Supplemental Indenture a valid instrument in accordance with its terms
have been performed and the execution and delivery of this First
Supplemental Indenture have been duly authorized in all respects by each of
St. Xxxx and the Company.
NOW, THEREFORE, St. Xxxx, the Company and the Trustee covenant and agree as
follows:
ARTICLE I
AUTHORIZATION; DEFINITIONS
Section 101. First Supplemental Indenture. This First Supplemental
Indenture is supplemental to, and is entered into in accordance with
Sections 801, 901 and 1209 of, the Indenture, and except as modified,
amended and supplemented by this First Supplemental Indenture, the
provisions of the Indenture are in all respects ratified and confirmed and
shall remain in full force and effect.
Section 102. Definitions. Except as expressly provided in Section 201
of this First Supplemental Indenture below and unless the context shall
otherwise require, all terms which are defined in Section 101 of the
Indenture shall have the same meanings, respectively, in this First
Supplemental Indenture as such terms are given in said Section 101 of the
Indenture.
ARTICLE II
AMENDMENTS TO THE INDENTURE
Section 201. Amendments to Section 101 of the Indenture. (a) Section 101
of the Indenture is hereby amended by inserting the following definitions:
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"First Supplemental Indenture" means the First Supplemental
Indenture, dated as of April , 1998, among the Company, St. Xxxx and
the Trustee, to the Indenture.
"St. Xxxx" means The St. Xxxx Companies, Inc., a Minnesota corporation.
"Successor Issuer" has the meaning specified in Section 1212
of the Indenture, as amended by the First Supplemental Indenture.
"Successor Securities" has the meaning specified in Section 1212
of the Indenture, as amended by the First Supplemental Indenture.
(b) The terms "Board of Directors," "Board Resolution,"
"Company Request," "Company Order," "Officers' Certificate," "Opinion of
Counsel," "Outstanding," "Paying Agent," "Senior Debt," "Subsidiary" and
"Vice President" are hereby amended by adding the words "or any Successor
Issuer, as applicable" after the words "the Company" in each place they
appear in the Indenture.
Section 202. Amendments to Section 105 of the Indenture. (a) The title of
Section 105 is hereby amended to read as follows: "Notices, Etc., to
Trustee, Company and any Successor Issuer."
(b) Subsection (1) of Section 105 of the Indenture is hereby
amended by inserting the phrase ", any Successor Issuer" after the word
"Holder" in the first line of such subsection.
(c) Subsection (2) of Section 105 of the Indenture is hereby
amended by inserting the phrase ", any Successor Issuer" after the word
"Trustee" in the first line of such subsection and by deleting the period at
the end of the last line of such subsection and inserting ", or" in its
stead.
(d) Section 105 of the Indenture is hereby further amended by
inserting the following after subsection (2) of Section 105:
(3) any Successor Issuer, by the Trustee, the Company
or any Holder shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with any
Successor Issuer at the address of such Successor Issuer set
forth in the supplemental indenture executed by such Successor
Issuer pursuant to Section 1209 of this Indenture.
Section 203. Amendment to Section 704 of the Indenture. (a) The title of
Section 704 of the Indenture is hereby amended to read as follows: "Reports
by Company and Any Successor Issuer."
(b) Section 704 of the Indenture is hereby amended by adding
the words "and any Successor Issuer" after the words "The Company" at the
beginning of such section.
Section 204. Amendments to Article Nine. (a) The first paragraph of
Section 901 of the Indenture is hereby amended by adding the words "any
Successor Issuer, when authorized by a Board Resolution," after
the words "the Company, when authorized by a Board Resolution,".
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(b) Section 901 of the Indenture is hereby further amended by
adding the words "or any Successor Issuer" after the words "the Company" in
each place it occurs in Section 901 of the Indenture other than in the first
paragraph of Section 901 of the Indenture.
(c) Section 901 of the Indenture is hereby further amended by adding
the words "or, if the Securities shall be convertible into Successor
Securities, Successor Securities" after the words "Common Stock of the
Company" in the penultimate line of subsection (10) of Section 901 of the
Indenture.
(d) The first paragraph of Section 902 of the Indenture is hereby
amended by adding the words ", any Successor Issuer," after the first
reference to "the Company" in the third line of such paragraph.
(e) The first paragraph of Section 902 of the Indenture is hereby
further amended by adding the words "any Successor Issuer, when
authorized by a Board Resolution," after "Resolution" in the fourth line of
such paragraph.
(f) Section 907 of the Indenture is hereby amended by adding the words
"or any Successor Issuer" after the words "the Company" in each place it
occurs in Section 907 of the Indenture.
Section 205. Amendment to Article Ten. (a) Section 1002 of the Indenture
is hereby amended by adding the words "and any Successor Issuer" after the
words "the Company" in each place it occurs in Section 1002.
(b) Section 1003 of the Indenture is hereby amended by: (i) adding the
words "or any Successor Issuer" after the words "the Company" in each place
such words appear in Section 1003, except that the words "and any
Successor Issuer" shall be added after the words "the Company" in the sixth
line of the fifth paragraph of Section 1003 and (ii) by substituting the
words "one or the other" for the word "it" in the second line of the second
paragraph of Section 1003.
Section 206. Amendment to Article Twelve. (a) Article Twelve of the
Indenture is hereby amended by adding the following after Section 1211:
Section 1212. Additional Conversion Adjustments.
From and after the time the Holder of any Security then outstanding
of any series that is convertible into Common Stock of the Company
shall have the right in accordance with Section 1209 of this Indenture
to convert such Security into securities (the "Successor Securities")
of any Person other than the Company (a "Successor Issuer"), all
references in this Article Twelve to the words "the Company" shall for
all purposes of this Indenture and such series of Security be deemed to
be references to the Successor Issuer and all references in this
Article Twelve to the words "Common Stock" or "shares of Common Stock"
shall for all purposes of this Indenture and such series of Security
be deemed to be references to the Successor Securities; provided,
however, that the foregoing shall not apply (i) to the reference to
"the Company" in the phrase "Defaulted Interest by the Company" at the
end of the second sentence of the first paragraph of Section 1202 of
this Indenture, (ii) in any place the words "the Company" appear in
the second paragraph of Section 1202 of the Indenture, (iii) to the
second reference to the Company in the fourth line of Section 1209 of
the Indenture or (iv) in any place the words "the Company" or "the
Company's" appear in Section 1211 of the Indenture.
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(b) The first paragraph of Section 1209 of the Indenture is hereby
amended by adding the words "and St. Xxxx" after the words "in such
share exchange, as the case may be" in the sixth line of such section; and
(c) Section 1211 of the Indenture is hereby amended by adding the
words "or St. Xxxx" and "or St. Paul's" after the words "the Company" and
"the Company's," respectively, in each place such words appear in
Section 1211.
ARTICLE III
CONVERSION
Section 301. Conversion of Securities. In accordance with the provisions
of Section 1209 of the Indenture, following the Merger, a Holder of a
Security shall have the right to convert such Security into shares of
St. Xxxx Common Stock at a rate of 8.3217 shares of St. Xxxx Common Stock
per $1,000 principal amount at maturity of the Securities (the "Adjusted
Conversion Rate").
Section 302. Certain Adjustments. In accordance with the provisions of
Section 1204 of the Indenture, following the Merger, upon the occurrence
of an event with respect to St. Xxxx which would have required an
adjustment to the Conversion Price pursuant to Article Twelve of the
Indenture if such event had occurred with respect to the Company prior to
the Merger, the Adjusted Conversion Rate shall be adjusted in a manner as
nearly equivalent as may be practicable to the adjustment to the Conversion
Rate which would have been required pursuant to Article Twelve of the
Indenture if such event had occurred with respect to the Company prior to
the Merger.
ARTICLE IV
ASSUMPTION AND SUBORDINATION
Section 401. Assumption. (a) St. Xxxx hereby irrevocably and
unconditionally assumes, jointly and severally with the Company,
responsibility for the due and punctual payment of the principal of, and
premium, if any, and interest on, the Securities when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under the Indenture and the Securities.
The parties acknowledge and agree that notwithstanding the foregoing, the
Company shall remain fully liable for all of its obligations under the terms
of the Securities and the Indenture, and no rights of the Trustee or any
Holder of the Securities existing under the Securities or Indenture prior to
the execution of the First Supplemental Indenture shall be deemed to be
amended, abridged, reduced or otherwise affected by the First Supplemental
Indenture, except to the extent permitted by Section 901(10) or required by
Section 1209 of the Indenture.
(b) Notwithstanding anything to the contrary in the Indenture
as amended by this First Supplemental Indenture, St. Xxxx does not assume
responsibility for or guarantee the performance by the Company of any of the
Company's covenants, agreements or obligations of the Company under the
Securities or the Indenture. In particular, neither St. Xxxx nor any
Subsidiary of St. Xxxx (other than the Company and its Principal Insurance
Subsidiaries) shall be subject to Section 1005 of the Indenture.
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(c) Payment by either the Company or St. Xxxx of the principal of,
and premium, if any, and interest on, any Security shall discharge the
obligation of both the Company and St. Xxxx to make such payment.
Section 402. Subordination. The obligations of St. Xxxx under Section 401
of this First Supplemental Indenture shall be subordinate and junior in
right of payment to the Senior Debt of St. Xxxx to the same extent and in
the same manner that the Securities are subordinate and junior in right of
payment to the Senior Debt of the Company pursuant to Article Fifteen of
the Indenture.
ARTICLE V
MISCELLANEOUS
Section 501. Confirmation of Indenture. The Indenture, as supplemented
and amended by this First Supplemental Indenture, is in all respects
ratified and confirmed, and the Indenture, this First Supplemental
Indenture and all indentures supplemental thereto shall be read, taken and
construed as one and the same instrument.
Section 502. Concerning the Trustee. The Trustee accepts the Indenture,
as supplemented by this First Supplemental Indenture, and agrees to perform
the same upon the terms and conditions set forth therein as so
supplemented. The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this First Supplemental
Indenture or the due execution hereof by the Company or St. Xxxx or for or
in respect of the recitals contained herein, all of which are made by the
Company and St. Xxxx solely.
Section 503. Governing Law. This First Supplemental Indenture, the
the Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of laws.
Section 504. Separability. In case any one or more of the provisions
contained in this First Supplemental Indenture 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 First Supplemental Indenture, but this First Supplemental
Indenture shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 505. Counterparts. This First Supplemental 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.
Section 506. Effectiveness. This First Supplemental Indenture shall become
effective upon the effectiveness of the Merger.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first
above written.
THE ST. XXXX COMPANIES, INC.
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and
Chief Legal Counsel
USF&G CORPORATION
By: /s/Xxx X. Xxxx
Name: Xxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK, AS TRUSTEE
By: /s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
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