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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
Dated as of July 30, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I Interpretation and Definitions................................. 2
SECTION 1.1. Definitions.................................................... 2
ARTICLE II Trust Indenture Act............................................ 9
SECTION 2.1. Trust Indenture Act; Application............................... 9
SECTION 2.2. Lists of Holders of Securities................................. 9
SECTION 2.3. Reports by the Property Trustee................................ 10
SECTION 2.4. Periodic Reports to Property Trustee........................... 10
SECTION 2.5. Evidence of Compliance with Conditions Precedent............... 10
SECTION 2.6. Events of Default; Waiver...................................... 10
SECTION 2.7. Event of Default; Notice....................................... 12
ARTICLE III Organization................................................... 13
SECTION 3.1. Name........................................................... 13
SECTION 3.2. Office......................................................... 13
SECTION 3.3. Purpose........................................................ 13
SECTION 3.4. Authority...................................................... 13
SECTION 3.5. Title to Property of the Trust................................. 14
SECTION 3.6. Powers and Duties of the Regular Trustees...................... 14
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees........... 17
SECTION 3.8. Powers and Duties of the Property Trustee...................... 18
SECTION 3.9. Certain Duties and Responsibilities of the Property Trustee.... 20
SECTION 3.10. Certain Rights of Property Trustee............................. 22
SECTION 3.11. Delaware Trustee............................................... 24
SECTION 3.12. Execution of Documents......................................... 24
SECTION 3.13. Not Responsible for Recitals or Issuance of Securities......... 24
SECTION 3.14. Duration of Trust.............................................. 25
SECTION 3.15. Mergers........................................................ 25
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ARTICLE IV Sponsor........................................................ 27
SECTION 4.1. Sponsor's Purchase of Common Securities........................ 27
SECTION 4.2. Responsibilities of the Sponsor................................ 27
ARTICLE V Trustees....................................................... 27
SECTION 5.1. Number of Trustees............................................. 27
SECTION 5.2. Delaware Trustee............................................... 28
SECTION 5.3. Property Trustee; Eligibility.................................. 28
SECTION 5.4. Qualifications of Regular Trustees............................. 29
SECTION 5.5. Initial Trustees............................................... 29
SECTION 5.6. Appointment, Removal and Resignation of Trustees............... 30
SECTION 5.7. Vacancies Among Trustees....................................... 31
SECTION 5.8. Effect of Vacancies............................................ 32
SECTION 5.9. Meetings....................................................... 32
SECTION 5.10. Delegation of Power............................................ 32
SECTION 5.11. Merger, Conversion, Consolidation or Succession to Business.... 33
ARTICLE VI Distributions.................................................. 33
SECTION 6.1. Distributions.................................................. 33
ARTICLE VII Issuance of Securities......................................... 34
SECTION 7.1. General Provisions Regarding Securities........................ 34
SECTION 7.2. Execution and Authentication................................... 34
SECTION 7.3. Book-Entry Capital Securities Certificates; Definitive
Capital Securities Certificates; Common Securities
Certificate.................................................... 35
SECTION 7.4. Registrar and Paying Agent..................................... 38
SECTION 7.5. Paying Agent to Hold Money in Trust............................ 38
SECTION 7.6. Replacement Securities......................................... 39
SECTION 7.7. Outstanding Capital Securities................................. 39
SECTION 7.8. Capital Securities in Treasury................................. 39
SECTION 7.9. Temporary Certificates......................................... 40
SECTION 7.10. Cancellation................................................... 41
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SECTION 7.11. CUSIP Numbers.................................................. 41
ARTICLE VIII Termination of Trust........................................... 41
SECTION 8.1. Termination of Trust........................................... 41
ARTICLE IX Transfer of Interests.......................................... 43
SECTION 9.1. Transfer of Securities......................................... 43
SECTION 9.2. Transfer Procedures and Restrictions........................... 43
SECTION 9.3. Deemed Security Holders........................................ 51
SECTION 9.4. Book Entry Interests........................................... 52
SECTION 9.5. Notices to Depositary.......................................... 52
SECTION 9.6. Appointment of Successor Depositary............................ 52
ARTICLE X Limitation of Liability ofHolders of Securities, Trustees
or Others...................................................... 53
SECTION 10.1. Liability...................................................... 53
SECTION 10.2. Exculpation.................................................... 53
SECTION 10.3. Fiduciary Duty................................................. 54
SECTION 10.4. Indemnification................................................ 55
SECTION 10.5. Outside Businesses............................................. 55
ARTICLE XI Accounting..................................................... 56
SECTION 11.1. Fiscal Year.................................................... 56
SECTION 11.2. Certain Accounting Matters..................................... 56
SECTION 11.3. Banking........................................................ 56
SECTION 11.4. Withholding.................................................... 57
ARTICLE XII Amendments and Meetings........................................ 57
SECTION 12.1. Amendments..................................................... 57
SECTION 12.2. Meetings of the Holders of Securities; Action by
Written Consent................................................ 59
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ARTICLE XIII Representations of Delaware Trustee............................ 61
SECTION 13.1. Representations and Warranties of Delaware Trustee............. 61
ARTICLE XIV Representations of Property Trustee............................ 62
SECTION 14.1. Representations and Warranties of Property Trustee............. 62
ARTICLE XV Miscellaneous.................................................. 63
SECTION 15.1. Notices........................................................ 63
SECTION 15.2. Governing Law.................................................. 65
SECTION 15.3. Intention of the Parties....................................... 65
SECTION 15.4. Headings....................................................... 65
SECTION 15.5. Successors and Assigns......................................... 65
SECTION 15.6. Partial Enforceability......................................... 65
SECTION 15.7. Counterparts................................................... 65
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ANNEX I TERMS OF 8.55% CAPITAL SECURITIES 8.55% COMMON SECURITIES
EXHIBIT A - FORM OF 144A GLOBAL SECURITY
EXHIBIT B - FORM OF REGULATION S GLOBAL SECURITY
EXHIBIT C - FORM OF DEFINITIVE CAPITAL SECURITY
EXHIBIT D - FORM OF CERTIFICATE EVIDENCING COMMON SECURITIES
EXHIBIT E - FORM OF LETTER TO BE DELIVERED BY INSTITUTIONAL ACCREDITED
INVESTORS
EXHIBIT F - FORM OF TRANSFER CERTIFICATE-- REGULATION S GLOBAL SECURITY
OR INSTITUTIONAL ACCREDITED INVESTORS DEFINITIVE TO 144A
GLOBAL SECURITY
EXHIBIT G - FORM OF TRANSFER CERTIFICATE--144A GLOBAL SECURITY OR
INSTITUTIONAL ACCREDITED INVESTORS DEFINITIVE TO REGULATION S
GLOBAL SECURITY
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
July 30, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of July 30, 1998, by the undersigned trustees (together with all
other persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Zenith
National Insurance Corp., a Delaware corporation, as trust sponsor (the
"Sponsor"), and by the holders, from time to time, of undivided beneficial
interests in the Trust issued pursuant to the Declaration;
WHEREAS, the Trustees and the Sponsor established a trust (the
"Trust") under the Business Trust Act (as hereinafter defined) pursuant to a
Declaration of Trust dated as of June 30, 1998 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on June 30, 1998, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets
of the Trust, investing the proceeds thereof in certain Debentures of the
Debenture Issuer (as hereinafter defined) and making Distributions (as
hereinafter defined);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original
Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Exhibits are to Articles and Sections of and Exhibits to this Declaration
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"AUTHORIZED OFFICER" of a Person means any Person that is
authorized to bind such Person.
"BENEFICIARIES" has the meaning set forth in Section 4.3(a).
"BOOK ENTRY INTEREST" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Depositary as described in Section 7.3.
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"BUSINESS DAY" means any day other than a day on which banking
institutions in Los Angeles, California, New York, New York or Minneapolis,
Minnesota are authorized or required by law to close.
"BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 ET SEQ., as it may be amended from time to
time.
"CAPITAL SECURITIES" has the meaning specified in Section 7.1(a).
"CAPITAL SECURITIES GUARANTEE" means the guarantee agreement to be
dated as of July 30, 1998, between the Sponsor and Norwest Bank Minnesota,
National Association, as Guarantee Trustee, in respect to the Capital
Securities.
"CAPITAL SECURITY BENEFICIAL OWNER" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a Participant
or as an indirect participant, in each case in accordance with the rules of
such Depositary).
"CEDEL" means Cedel Bank, societe anonyme.
"CERTIFICATE" means a certificate in global or definitive form
representing a Common Security or a Capital Security.
"CLOSING DATE" means the Closing Date as defined in the Purchase
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange
Commission or any successor thereto.
"COMMON SECURITIES" has the meaning specified in Section 7.1(a).
"COVERED PERSON" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii)
the Trust's Affiliates; and (b) any Holder of Securities.
"DEBENTURE ISSUER" means Zenith National Insurance Corp., as issuer
of the Debentures.
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"DEBENTURES" means the series of 8.55% Subordinated Deferrable
Interest Debentures due 2028 to be issued by the Debenture Issuer under the
Indenture to be held by the Property Trustee.
"DEFINITIVE CAPITAL SECURITIES" means the Capital Securities in
definitive form issued by the Trust, a specimen certificate for such Capital
Securities being attached hereto as Exhibit C.
"DELAWARE TRUSTEE" has the meaning set forth in Section 5.2.
"DEPOSITARY" means The Depository Trust Company, the initial
depositary, or any replacement depositary or successor to any of the
foregoing.
"DISTRIBUTION" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"EUROCLEAR" means the Euroclear System.
"EVENT OF DEFAULT" in respect of the Securities means an Event of
Default (as defined in the Indenture) in respect of the Debentures or a
default by the Sponsor under the Capital Securities Guarantee, which has
occurred and is continuing.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"GLOBAL CAPITAL SECURITY" has the meaning set forth in Section
7.3(b).
"HOLDER" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"INDEMNIFIED PERSON" means (a) any Trustee; (b) any Affiliate of
any Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"INDENTURE" means the Indenture dated as of July 30, 1998, between
the Debenture Issuer and Norwest Bank Minnesota, National Association, as
trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued.
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"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National
Association, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institutional investor
that is an "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act.
"INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"LEGAL ACTION" has the meaning set forth in Section 3.6(g).
"LIST OF HOLDERS" has the meaning set forth in Section 2.2(a).
"MAJORITY IN LIQUIDATION AMOUNT" means, except as otherwise
provided in the terms of the Capital Securities, Holder(s) of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Capital Securities or Holders of outstanding Common
Securities voting separately as a class, who are the record owners of more
than 50% of the aggregate liquidation amount of all outstanding Securities,
Capital Securities and/or Common Securities, as the case may be.
"OBLIGATIONS" means any costs, expenses or liabilities of the
Trust, other than obligations of the Trust to pay to Holders of any
Securities or other similar interests in the Trust the amounts due such
Holders pursuant to the terms of the Securities or such other similar
interests, as the case may be.
"OFFERING CIRCULAR" has the meaning set forth in Section 3.6(b)(i).
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition relating
thereto;
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(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"PARTICIPANT" means a member of, or participant in, the Depositary.
"PAYING AGENT" has the meaning specified in Section 7.4.
"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock,
limited liability company, trust, unincorporated association, or government
or any agency or political subdivision thereof, or any other entity of
whatever nature.
"PROPERTY TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"PROPERTY ACCOUNT" has the meaning set forth in Section 3.8(c).
"PURCHASE AGREEMENT" means the Purchase Agreement, dated July 27,
1998, among the Sponsor, the Trust and Credit Suisse First Boston
Corporation, BancAmerica Xxxxxxxxx Xxxxxxxx and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation.
"QIB" means a qualified institutional buyer as defined in Rule 144A.
"QUORUM" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"REGISTRAR" has the meaning set forth in Section 7.4.
"REGULAR TRUSTEE" means any Trustee other than the Property Trustee
and the Delaware Trustee.
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"REGULATION S" means Regulation S under the Securities Act or any
successor provision thereto, as the same may be amended from time to time.
"REGULATION S CAPITAL SECURITIES" has the meaning set forth in
Section 7.3(b).
"RESPONSIBLE OFFICER" means, with respect to the Property Trustee,
any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any
other officer in Corporate Trust Administration of the Property Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"RESTRICTED DEFINITIVE CAPITAL SECURITIES" has the meaning set
forth in Section 7.3(c).
"RESTRICTED CAPITAL SECURITY" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"RESTRICTED PERIOD" means the period of 40 consecutive days
beginning on and including the later of (x) the day on which the offering of
the Capital Securities commences or (y) the Closing Date.
"RESTRICTED SECURITIES LEGEND" has the meaning set forth in Section
9.2(h).
"RULE 144" means Rule 144 under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"RULE 144A" means Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"RULE 144A CAPITAL SECURITIES" has the meaning set forth in Section
7.3(a).
"RULE 144(k)" means Rule 144(k) as promulgated under the Securities
Act, or any successor provision thereto, as the same may be amended from time
to time.
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"RULE 3a-5" means Rule 3a-5 under the Investment Company Act, or
any successor rule or regulation.
"SECURITIES" means the Common Securities and the Capital Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"66-2/3% IN LIQUIDATION AMOUNT" means, except as otherwise provided
in the terms of the Capital Securities, Holders of outstanding Securities
voting as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holder(s) of outstanding Common Securities
voting separately as a class, representing at least 66-2/3% of the aggregate
liquidation amount of all outstanding Securities, Capital Securities and/or
Common Securities, as the case may be.
"SPECIAL EVENT" has the meaning set forth in the Indenture.
"SPONSOR" means Zenith National Insurance Corp., a Delaware
corporation, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"SUPER MAJORITY" has the meaning set forth in Section 2.6(a)(ii).
"10% IN LIQUIDATION AMOUNT" means, except as otherwise provided in
the terms of the Capital Securities, Holders of outstanding Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities,
voting separately as a class, representing 10% of the aggregate liquidation
amount of all outstanding Securities, Capital Securities and/or Common
Securities, as the case may be.
"TERMS" has the meaning set forth in Section 7.1(a).
"TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions to succeeding regulations).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended from time to time.
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"TRUSTEE" or "TRUSTEES" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees
shall refer to such Person or Persons solely in their capacity as trustees
hereunder.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. (a) This
Declaration is not required to and will not be qualified under the Trust
Indenture Act. However, this Declaration is intended to comply with the
requirements of Sections 310 through 317, inclusive, of the Trust Indenture
Act and such provisions are specifically incorporated herein. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act specifically incorporated herein, then the provisions of this
Declaration shall control; provided that any penalties under the Trust
Indenture Act relating to noncompliance shall not be applicable to this
Declaration.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES. (a) Each of the
Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Property Trustee (i) within 14 days after each record date for payment of
Distributions, a list, in such form as the Property Trustee may reasonably
require, of the names and addresses of the Holders of the Securities ("List
of Holders") as of such record date; PROVIDED THAT neither the Sponsor nor
the Regular Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and
the Regular Trustees on behalf of the Trust, and (ii) a List of Holders at
any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in
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Lists of Holders given to it or which it receives in its capacity as Paying
Agent (if acting in such capacity); PROVIDED THAT the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 312(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE. Within 60 days
after May 15 of each year, the Property Trustee shall provide to the Holders
of the Capital Securities such reports as are required by Section 313 of the
Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE. Each of the
Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by
Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER. (a) The Holders of a
Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of
Default in respect of the Capital Securities and its consequences; PROVIDED
THAT, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority") to
be waived under the Indenture, the Event of Default under the Declaration
may only be waived by the vote of the Holders of at least the proportion in
liquidation amount of the
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Capital Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Capital Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or an Event of Default
with respect to the Capital Securities or impair any right consequent
thereon. Any waiver by the Holders of the Capital Securities of an Event of
Default with respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Event
of Default with respect to the Common Securities for all purpose of this
Declaration without any further act, vote, or consent of the Holders of the
Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences; PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in liquidation
preference of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding;
PROVIDED, FURTHER, that each Holder of Common Securities will be deemed to
have waived any such Event of Default and all Events of Default with respect
to the Common Securities and its consequences until the effects of all Events
of Default with respect to the Capital Securities have been cured, waived or
otherwise eliminated, and until such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the Holders of the Capital Securities and only the
Holders of the Capital Securities will have the right to direct the Property
Trustee in accordance with the terms of the Securities, this Declaration and
the Indenture. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver,
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any such default shall cease to exist and any Event of Default with respect
to the Common Securities arising therefrom shall be deemed to have been cured
for every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Securities.
SECTION 2.7. EVENT OF DEFAULT; NOTICE. (a) The Property Trustee
shall, within 90 days after the occurrence of an Event of Default, transmit
by certified mail, return receipt requested, or by overnight courier, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to the Property Trustee, unless such defaults have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 2.7(a) being hereby defined to be an Event of
Default as defined in the Indenture not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); PROVIDED THAT, except for a default in the payment of principal of
(or premium, if any) or interest on any of the Debentures, the Property
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default unless a Responsible Officer has actual knowledge of or has
received written notice of such default.
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ARTICLE III
ORGANIZATION
SECTION 3.1. NAME. The Trust is named Zenith National Insurance
Capital Trust I, as such name may be modified from time to time by the
Regular Trustees following written notice to the Holders of Securities. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
SECTION 3.2. OFFICE. The address of the principal office of the
Trust is c/o Zenith National Insurance Corp., 00000 Xxxxxx Xxxxxx, Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000 Attention: Chief Financial Officer. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3. PURPOSE. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities and use the proceeds from such
sale to acquire the Debentures, (b) make Distributions to the Holders of the
Capital Securities and Common Securities and (c) except as otherwise limited
herein, to engage in only those other activities necessary or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest profits
derived from investments, pledge any of its assets, or otherwise undertake
(or permit to be undertaken) any activity that would cause the Trust not to
be classified for United States federal income tax purposes as a grantor
trust.
The Trust will be classified as a grantor trust for United States
federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Capital Securities and the Common
Securities will be the owners of the Trust for United States federal income
tax purposes, and such owners will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist.
The Trustees, the Sponsor and the Capital Security Beneficial Owners of the
Capital Securities and Common Securities (by their acceptance of such
Securities) agree not to take any position for United States federal income
tax purposes which is contrary to the classification of the Trust as a
grantor trust.
SECTION 3.4. AUTHORITY. Subject to the limitations provided in
this Declaration and to the specific duties of the Property Trustee, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust and
an action taken by the Property Trustee in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
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Trustees acting on behalf of the Trust, no person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and
authority of the Trustees as set forth in this Declaration.
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST. Except as provided
in Section 3.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the
Trust shall be vested in the Trust. The Holders shall not have legal title
to any part of the assets of the Trust, but shall have an undivided
beneficial interest in the assets of the Trust.
SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES. The
Regular Trustees shall have the exclusive power, duty and authority to cause
the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and Common Securities
in accordance with this Declaration; PROVIDED, HOWEVER, that the Trust may
issue no more than one series of Capital Securities and no more than one
series of Common Securities; and PROVIDED, FURTHER, that there shall be no
interests in the Trust other than the Securities, and the issuance of
Securities shall be limited to the one-time simultaneous issuance of both
Capital Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Capital
Securities, at the direction of the Sponsor, to:
(i) execute, if necessary, a confidential offering circular (the
"Offering Circular") in preliminary and final form, and any supplements
thereto, prepared by the Sponsor, in relation to the offering and sale of
Capital Securities to QIBs in reliance on Rule 144A under the Securities
Act and to Institutional Accredited Investors);
(ii) execute and file any documents prepared by the Sponsor, or take
any acts determined by the Sponsor to be necessary in order to qualify or
register all or part of the Capital Securities in any state or foreign
jurisdiction in which the Sponsor has determined to qualify or register
such Capital Securities for sale;
(iii) to execute and deliver letters, documents, or instruments
with the Depositary relating to the Capital Securities; and
14
(iv) execute and enter into agreements related to the Purchase
Agreement providing for the sale of the Capital Securities and consummate
the transactions contemplated thereby;
(c) to acquire the Debentures with the proceeds of the sale of the
Capital Securities and the Common Securities; PROVIDED, HOWEVER, that the
Regular Trustees shall cause title to the Debentures to be held of record in the
name of the Property Trustee for the benefit of the Holders of the Capital
Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all action, and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities (set forth in Annex
I hereto and made a part hereof);
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (as may be
designated as officers with titles) and managers, contractors, advisors and
consultants, and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
this Declaration;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;
15
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Sponsor of its election to defer payments of
interest on the Debentures by deferring the interest payments under the
Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the confirmation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
PROVIDED THAT such action does not adversely affect the interests of Holders;
and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust, or delivered
16
to the Holders of the Securities, as the case may be, to be duly prepared,
filed or delivered by the Regular Trustees, as the case may be, on behalf of
the Trust.
The Regular Trustees shall exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Trustees (including the Property Trustee)
shall not, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall not cause the Trust to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I hereto,
(A) direct the time, method and place of exercising any trust or power
conferred upon the Indenture Trustee with respect to the Debentures, (B)
waive any past default that is not waivable under Section 5.13 of the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination
17
of the Indenture or the Debentures where such consent shall be required
unless the Trust shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters to the
effect that such modification will not cause more than an insubstantial
risk that for United States federal income tax purposes the Trust will be
classified as other than a grantor trust.
SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a)
The legal title to the Debentures shall be owned by and held of record in
the name of the Property Trustee in trust for the benefit of the Holders
of the Securities. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section
5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been
executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the Securities
and, upon the receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds into the
Property Account and make payments to the Holders of the Capital Securities
and Holders of the Common Securities from the Property Account in
accordance with Section 6.1. Funds in the Property Account shall be held
uninvested until disbursed in accordance with this Declaration.
(ii) engage in such ministerial activities as so directed and as
shall be necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as so directed as shall be necessary or appropriate
to effect the distribution of the Debentures to Holders of Securities
pursuant to the terms of the Securities.
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(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities (set forth in Annex I hereto and made a part hereof).
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default or the Property Trustee's duties
and obligations under this Declaration.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the Securities, enforce its rights
as holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities.
(h) The Property Trustee will act as Paying Agent and Registrar to
pay Distributions, redemption payments or liquidation payments on behalf of the
Trust with respect to all Securities and any such Paying Agent and Registrar
shall comply with Section 317(b) of the Trust Indenture Act. Any Paying Agent
or Registrar may be removed by the Property Trustee at any time and a successor
Paying Agent or Registrar or additional Paying Agents or Registrars may be
appointed at any time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purpose and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
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SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY
TRUSTEE. (a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that any have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property Trustee
shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and
the Property Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be read
into this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration;
provided that in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
20
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the Securities or a Super Majority, as applicable, relating to
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any power conferred upon
the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or adequate
indemnity against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Property Account shall be to deal with such property in a similar manner as
the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the Sponsor.
Money held by the Property Trustee need not be segregated from other funds
held by it except in relation to the Property Account maintained by the
Property Trustee pursuant to Section 3.6(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Delaware Trustee, the Regular Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the Property
Trustee be liable for the default or misconduct of the Delaware Trustee,
the Regular Trustees or the Sponsor.
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SECTION 3.10. CERTAIN RIGHTS OF PROPERTY TRUSTEE. (a) Subject to
the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its choice or
other experts and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Sponsor or any of its Affiliates, and such counsel may be an
employee of the Sponsor or its Affiliates. The Property Trustee shall have
the right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to the
Property Trustee adequate security and indemnity, which would satisfy a
reasonable person in the
22
position of the Property Trustee, against the costs, expenses (including
its reasonable attorneys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or direction, including
such reasonable advances as may be requested in writing by the Property
Trustee; provided that nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, security, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be
required to inquire as to the authority of the Property Trustee to so act
or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the Property
Trustee or its agent taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Securities which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be entitled to
direct the Property Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy,
right or taking such other action until such instructions are received, and
(iii) shall be protected in acting in accordance with such instructions;
23
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. DELAWARE TRUSTEE. (a) Notwithstanding any other
provision of this Declaration other than Section 5.2 and except as provided
below in this Section 3.11, the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of the duties
and responsibilities of the Regular Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act and is
entitled only to such powers as are necessary to fulfill such requirements,
including the power to sign the Certificate of Trust.
(b) The Delaware Trustee shall not be responsible for monitoring the
compliance by the Property Trustee, the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Delaware Trustee
be liable for any default or misconduct of the Property Trustee, the Regular
Trustees, or the Sponsor.
SECTION 3.12. EXECUTION OF DOCUMENTS. Unless otherwise determined
by the Regular Trustees, and except as otherwise required by the Business
Trust Act, any Regular Trustee is authorized to execute on behalf of the
Trust any documents that the Regular Trustees have the power and authority to
execute pursuant to Section 3.6.
SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not
assume any responsibility for their
24
correctness. The Trustees make no representations as to the value or condition
of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
SECTION 3.14. DURATION OF TRUST. The Trust, unless terminated
pursuant to the provisions of Article VIII hereof, shall exist until June 30,
2038.
SECTION 3.15. MERGERS. (a) The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or
lease its properties and assets substantially as an entirety to any
corporation or other entity or person, except as described in Section 3.15(b)
and (c).
(b) The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the Holders of Securities or the Delaware
Trustee or the Property Trustee, consolidate, amalgamate, merge with or into or
be replaced by a trust organized as such under the laws of any state or the
District of Columbia; PROVIDED THAT:
(i) if the Trust is not the surviving entity, the entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Capital Securities or the Common
Securities, as the case may be (the "Successor Securities"), as long
as the Successor Securities rank, with respect to participation in the
profits and distributions or in the assets of the Successor Entity at
least as high as the Capital Securities or the Common Securities, as
the case may be, rank with respect to participation in the profits and
dividends or in the assets of the Trust;
(ii) the Debenture Issuer expressly acknowledges such Successor
Entity as the Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with any other
organization on which the Capital Securities (including any Successor
Securities) are then listed or quoted;
25
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other special rights of
the Holders of the Capital Securities (including any Successor Securities)
in any material respect;
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally recognized
independent counsel (reasonably acceptable to the Property Trustee) to the
Trust experienced in such matters to the effect that:
(A) the Successor Entity will be treated as a grantor trust for
United States federal income tax purposes;
(B) following such merger, consolidation, amalgamation or
replacement, neither the Sponsor nor the Successor Entity will be
required to register as an Investment Company; and
(C) such merger, consolidation, amalgamation or replacement will
not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect; and
(viii) the Sponsor provides a guarantee to the Holders of the
Successor Securities with respect to the Successor Entity having
substantially the same terms as the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Common Securities,
merge with or into, consolidate, amalgamate, or be replaced by any other entity
or permit any other entity to merge with or into, consolidate, amalgamate, or
replace it, if such merger, consolidation, amalgamation or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
26
ARTICLE IV
SPONSOR
SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES. On the
Closing Date the Sponsor will purchase an amount of Common Securities issued
by the Trust such that the aggregate liquidation amount of such Common
Securities purchased by the Sponsor shall at such date equal at least 3% of
the total capital of the Trust.
SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR. In connection with the
issuance and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare the Offering Circular including any amendments or
supplements thereto;
(b) to determine the states and foreign jurisdictions in which to
take appropriate action to qualify or register for sale all or part of the
Capital Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable law of any such states and foreign jurisdictions; and
(c) to negotiate the terms of and to execute and deliver a Purchase
Agreement and other related agreements providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1. NUMBER OF TRUSTEES. The number of Trustees shall
initially be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in liquidation
amount of the
27
Common Securities voting as a class at a meeting of the Holders of the Common
Securities;
PROVIDED THAT, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least four (4).
SECTION 5.2. DELAWARE TRUSTEE. As required by the Business Trust
Act, one Trustee (the "Delaware Trustee") shall be a natural person who is a
resident of the State of Delaware or an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
Section 3807 of the Business Trust Act; PROVIDED THAT, if the Property
Trustee has its principal place of business in the State of Delaware and
otherwise meets the requirements of Section 3807 of the Business Trust Act,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY. (a) There shall at
all times be one Trustee which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 Million U.S. Dollars
($50,000,000), and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation
publishes reports of conditions at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect as set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interests" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obliger referred to in Section 310(b)
28
of the Trust Indenture Act) shall in all respects comply with the provisions
of Section 320(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4. QUALIFICATIONS OF REGULAR TRUSTEES. Each Regular
Trustee shall be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized Officers.
SECTION 5.5. INITIAL TRUSTEES. The initial Regular Trustees shall
be:
Xxxxxxx X. Xxx
c/o Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Xxxxxxxxx Xxxxxxx
c/o Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
The initial Delaware Trustee shall be:
WILMINGTON TRUST COMPANY
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration,
Zenith National Insurance Capital Trust I
The initial Property Trustee shall be:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Xxxxx & Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Administration,
Zenith National Insurance Capital Trust I
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SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a class
at a meeting of the Holders of the Common Securities; PROVIDED, HOWEVER,
that if an Event of Default shall have occurred and be continuing, the
Property Trustee and Delaware Trustee may be removed only by the vote of
Holders of a Majority in liquidation amount of the Capital Securities
voting as a class at a meeting of Holders of Capital Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Property Trustee (the
"Successor Property Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Property Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees, the Sponsor and to the Delaware Trustee
being removed.
(d) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death (or dissolution or
liquidation or other similar event in the case of a Trustee who is other than a
natural person), removal or resignation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; PROVIDED, HOWEVER, that:
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(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of the
Securities; and
(ii) No such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(e) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(f) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be. No Successor Property Trustee or Successor
Delaware Trustee shall be liable for the acts or omissions of a predecessor
Property Trustee or Delaware Trustee, as the case may be.
SECTION 5.7. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1,
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or if the number of Trustees is increased pursuant to Section 5.1, a vacancy
shall occur. A resolution certifying the existence of such vacancy by a
majority of the Regular Trustees (or, so long as there are only two Regular
Trustees, by both of the Regular Trustees) shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee
appointed in accordance with Section 5.6.
SECTION 5.8. EFFECT OF VACANCIES. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Regular Trustees shall occur,
until such vacancy in filled by the appointment of a Regular Trustee in
accordance with Section 5.6, the Regular Trustees in office, regardless of
their number, shall have all the powers granted to the Regular Trustees and
shall discharge all the duties imposed upon the Regular Trustees by this
Declaration.
SECTION 5.9. MEETINGS. Meetings of the Regular Trustees shall be
held from time to time upon the call of any Regular Trustee. Regular
meetings of the Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. Notice of any telephonic meetings of the
Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular
Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting
has not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present or, so long as there are
only two Regular Trustees, by both of the Regular Trustees (whether in person
or by telephone) and eligible to vote with respect to such matter, provided
that a Quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees.
SECTION 5.10. DELEGATION OF POWER. (a) Any Regular Trustee may,
by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of
executing any documents contemplated in Section 3.6, including any
registration statement or amendment thereto filed with the Commission, or
making any other governmental filing; and
32
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Property Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. DISTRIBUTIONS. Holders shall receive Distributions
(as defined below) in accordance with the applicable terms of the relevant
Holder's Securities (set forth in Annex I and Exhibits A, B, C and D hereto
and incorporated herein by reference). Distributions shall be made on the
Capital Securities and the Common Securities in accordance with the
preferences set forth in their respective terms. If and to the extent that
the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in
the Indenture)), premium and principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the
Property Trustee shall and is directed, to the extent funds are available
legally for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES. (a) The
Regular Trustees shall on behalf of the Trust issue one class of preferred
securities, representing undivided beneficial interests in the assets of the
Trust (the "Capital Securities"), having such terms (the "Terms") as are set
forth in Annex I, and one class of common securities, representing undivided
beneficial interests in the assets of the Trust (the "Common Securities"),
having such terms as are set forth in Annex I. The Trust shall issue no
securities or interests in the assets of the Trust other than the Capital
Securities and the Common Securities. The Trust shall issue no Securities in
bearer form.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable, subject to Section 10.1 with respect to the Common Securities.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2. EXECUTION AND AUTHENTICATION. (a) The Securities shall
be signed on behalf of the Trust by one Regular Trustee. In case any Regular
Trustee of the Trust who shall have signed any of the Securities shall cease
to be such Regular Trustee before the Securities so signed shall be delivered
by the Trust, such Securities nevertheless may be delivered as though the
person who signed such Securities had not ceased to be such Regular Trustee;
and any Securities may be signed on behalf of the Trust by such persons who,
at the actual date of execution of such Security, shall be the Regular
Trustees of the Trust, although at the date of the execution and delivery of
the Declaration any such person was not such a Regular Trustee.
(b) One Regular Trustee shall sign the Capital Securities for the
Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
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A Capital Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Capital Securities for original
issuance. The aggregate number of Capital Securities outstanding at any time
shall not exceed the number set forth in the Terms in Annex I hereto except as
provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as
the Property Trustee to deal with the Company or an Affiliate.
SECTION 7.3. BOOK-ENTRY CAPITAL SECURITIES CERTIFICATES;
DEFINITIVE CAPITAL SECURITIES CERTIFICATES; COMMON SECURITIES CERTIFICATE.
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the forms of Exhibits A, B and C, as
applicable, and the Common Securities shall be substantially in the form of
Exhibit D, each of which is hereby incorporated in and expressly made a part
of this Declaration. Certificates representing the Securities may be
printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof. The Securities may have letters, CUSIP or other numbers,
notations, or other marks of identification or designation and such legends
or endorsements required by law, stock exchange rule, agreements to which the
Trust is subject, if any, or usage (provided that any such notation, legend
or endorsement is in a form acceptable to the Trust). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in the
forms thereof attached as Exhibits A, B, C and D to the Property Trustee in
writing. Each Capital Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A, B, C and D are
part of the terms of this Declaration and to the extent applicable, the
Property Trustee and the Sponsor, by their execution and delivery of this
Declaration, expressly agree to such terms and provisions and to be bound
thereby.
(a) Capital Securities offered and sold in reliance on Rule 144A
shall be issued initially in the form of one or more permanent global Capital
Securities, substantially in the form of Exhibit A hereto ("Rule 144A Capital
Securities"), deposited
35
with the Depositary or the Property Trustee as custodian for the Depositary.
Transfers of beneficial interests in Rule 144A Capital Securities will be
subject to the restrictions on transfer contained in the Restricted
Securities Legend set forth in Exhibit A hereto. Transfers of beneficial
interests in Rule 144A Capital Securities will be made in accordance with the
standing instructions and procedures of the Depositary.
(b) Capital Securities offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of one or
more permanent global Capital Securities, substantially in the form of
Exhibit B hereto ("Regulation S Capital Securities" and, together with the
Rule 144A Capital Securities, the "Global Capital Securities"), deposited
with the Depositary or the Property Trustee as custodian for the Depositary.
Prior to the expiration of the Restricted Period, interests in Regulation S
Capital Securities may only be held by Depositary Participants in the name of
a nominee of Euroclear and Cedel and transfers of beneficial interests will
be subject to the restrictions on transfer contained in the Restricted
Securities Legend set forth in Exhibit B hereto. After the expiration of the
Restricted Period, transfers of beneficial interests in Regulation S Capital
Securities will not be subject to any restrictions other than the
restrictions contained in Section 9.2(l). After the expiration of the
Restricted Period, beneficial interests in Regulation S Capital Securities
may be held by Depositary Participants other than in the name of a nominee of
Euroclear and Cedel. Transfers of beneficial interests in Regulation S
Capital Securities will be made in accordance with the standing instructions
and procedures of the Depositary and, prior to the expiration of the
Restricted Period, Euroclear and Cedel.
(c) Capital Securities offered and sold to Institutional
Accredited Investors in reliance on Regulation D under the Securities Act
shall be issued initially in the form of one or more Definitive Capital
Securities, substantially in the form of Exhibit C hereto, upon receipt by
the Property Trustee of a written letter in the form of Exhibit E (and/or
such other certificates, legal opinions or other information as the Sponsor
may reasonably request to confirm that such transfer is exempt from the
registration of the Securities Act). Transfers of Definitive Capital
Securities will be subject to the restrictions on transfer contained in the
Restricted Securities Legend set forth in Exhibit C hereto and the
requirements contained in Section 9.2(d) ("Restricted Definitive Capital
Securities").
(d) If (i) the Sponsor advises the Regular Trustees in writing
that the Depositary is no longer willing or able to properly discharge its
responsibilities with respect to the Capital Securities Certificates, and the
Sponsor is unable to locate a qualified successor, (ii) the Sponsor at its
option advises the Regular Trustees in writing that it elects to terminate
the book-entry system through the Depositary or (iii) after the
36
occurrence of an Event of Default, Capital Security Beneficial Owners
representing beneficial interests aggregating at least a Majority in
liquidation amount of the Securities advise the Depositary in writing that
the continuation of a book-entry system through the Depositary is no longer
in the best interest of the Capital Security Beneficial Owners, then the
Depositary shall notify all Capital Security Beneficial Owners and the
Regular Trustees of the occurrence of any such event and of the availability
of the Definitive Capital Securities Certificates to Capital Security
Beneficial Owners requesting the same. If the Depositary elects to
discontinue its services as securities depositary with respect to the Capital
Securities, the Regular Trustees may, in their sole discretion, appoint a
successor Depositary with respect to such Capital Securities. Upon surrender
to the Regular Trustees of the Global Capital Security or Certificates by the
Depositary, accompanied by registration instructions, the Regular Trustees,
or any one of them, shall execute the Definitive Capital Securities
Certificates in accordance with the instructions of the Depositary. Neither
the Registrar nor the Trustees shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Capital
Securities Certificates, the Trustees shall recognize the Holders of the
Definitive Capital Securities Certificates as Holders. The Definitive
Capital Securities Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by the execution thereof by the Regular
Trustees or any one of them.
(e) The Restricted Securities Legend shall be removed upon the
request of any Holder after the expiration of (i) with respect to Capital
Securities initially resold in reliance on Regulation S, the Restricted
Period or (ii) with respect to Capital Securities initially resold to
Institutional Accredited Investors or QIBs, the holding period applicable to
sales of the Capital Securities under Rule 144(k) under the Securities Act
or, in any case, such earlier time as a transfer of such Capital Securities
is made pursuant to an effective registration statement under the Securities
Act.
(f) Members of, or Participants in, the Depositary shall have no
rights under this Declaration with respect to any Global Capital Security
held on their behalf by the Depositary or by the Property Trustee as the
custodian of the Depositary or under such Global Capital Security, and the
Depositary may be treated by the Trust, the Property Trustee, the Regular
Trustees and the Delaware Trustee and any agent of the Trust, the Property
Trustee, the Regular Trustees and the Delaware Trustee as the absolute owner
of such Global Capital Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trust, the Property Trustee
or any agent of the Trust or the Property Trustee from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or impair,
37
as between the Depositary and its Participants, the operation of customary
practices of such Depositary governing the exercise of the rights of a
Capital Security Beneficial Owner in any Global Capital Security.
(g) So long as is required for an offer or sale of the Capital
Securities to qualify for an exemption under Rule 144A under the Securities
Act, the Sponsor shall, upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each Capital Security
Beneficial Owner and prospective purchaser of Capital Securities identified
by any holder of Restricted Capital Securities, unless such information is
furnished to the Commission pursuant to Section 13 or 15(d) of the Exchange
Act.
SECTION 7.4. REGISTRAR AND PAYING AGENT. The Trust shall
maintain, either directly or through an agent, in the Borough of Manhattan,
the City of New York (i) an office or agency where Capital Securities may be
presented for registration of transfer or for exchange ("Registrar"), and
(ii) an office or agency where Capital Securities may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Capital
Securities and of their transfer and exchange. The Trust may appoint the
Registrar and the Paying Agent and may appoint one or more co-registrars and
one or more additional paying agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent.
The Trust may change any Paying Agent, Registrar or co-registrar without
prior notice to any Holder. The Trust shall notify the Property Trustee of
the name and address of any Agent not a party to this Declaration. If the
Trust fails to appoint or maintain another entity as Registrar or Paying
Agent, the Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent or Registrar. The Trust shall act as
Paying Agent, Registrar and co-registrar for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar and
Paying Agent for the Capital Securities.
SECTION 7.5. PAYING AGENT TO HOLD MONEY IN TRUST. The Trust shall
require each Paying Agent other than the Property Trustee to agree in writing
that the Paying Agent will hold in trust for the benefit of Holders or the
Property Trustee all money held by the Paying Agent for the payment of the
liquidation amount or Distributions on Securities, and will notify the
Property Trustee if there are insufficient funds. While any such
insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee
and to account for any money disbursed by it. Upon payment over to the
Property Trustee, the
38
Paying Agent (if other than the Trust or an Affiliate of the Trust) shall
have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent.
SECTION 7.6. REPLACEMENT SECURITIES. If the Holder of a Security
claims that the Security has been mutilated, lost, destroyed or wrongfully
taken or if such Security is mutilated and is surrendered to the Trust or in
the case of the Capital Securities to the Property Trustee, the Trust shall
issue and the Property Trustee shall authenticate a replacement Security if
the Property Trustee's and the Trust's reasonable requirements, as the case
may be, are met. If required by the Property Trustee or the Trust, such
Holder shall provide an indemnity bond sufficient in the judgment of the
Property Trustee and the Trust to protect the Trustees, the Property Trustee,
the Sponsor or any authenticating agent from any loss which any of them may
suffer if a Security is replaced. The Trust may charge such Holder for its
expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Sponsor in its discretion
may, instead of issuing a new Security, pay such Security.
SECTION 7.7. OUTSTANDING CAPITAL SECURITIES. The Capital
Securities outstanding at any time are all the Capital Securities
authenticated by the Property Trustee except for those canceled by it, those
delivered to it for cancellation, and those described in this Section as not
outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased
Capital Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.
A Capital Security does not cease to be outstanding because one of
the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8. CAPITAL SECURITIES IN TREASURY. In determining
whether the Holders of the required amount of Securities have concurred in
any direction, waiver or consent, Capital Securities owned by the Trust, the
Sponsor or an Affiliate of the Sponsor, as the case may be, shall be
disregarded and deemed not to be outstanding,
39
except that for the purposes of determining whether the Property Trustee
shall be fully protected in relying on any such direction, waiver or consent,
only Securities which the Property Trustee knows are so owned shall be so
disregarded.
SECTION 7.9. TEMPORARY CERTIFICATES. (a) Until definitive
Certificates are ready for delivery, the Trust may prepare and, in the case
of the Capital Securities, the Property Trustee shall authenticate temporary
Certificates. Temporary Certificate shall be substantially in the form of
definitive Certificates but may have variations that the Trust considers
appropriate for temporary Certificates. Without unreasonable delay, the
Trust shall prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate definitive Certificates in exchange for temporary
Certificates.
(b) A Global Capital Security deposited with the Depositary or
with the Property Trustee as custodian for the Depositary pursuant to Section
7.3 shall be transferred to the beneficial owners thereof in the form of
certificated Capital Securities only if such transfer complies with Section
9.2 and (i) the Depositary notifies the Sponsor that it is unwilling or
unable to continue as Depositary for such Global Capital Security or if at
any time such Depositary ceases to be a "clearing agency" registered under
the Exchange Act and a successor depositary is not appointed by the Sponsor
within 90 days of such notice, (ii) an Event of Default has occurred and is
continuing, or (iii) any of the events set forth in Section 7.3(d) occurs and
is continuing.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of certificated Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Depositary to the
Property Trustee to be so transferred, in whole or from time to time in part,
without charge, and the Property Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Capital Security, an equal
aggregate liquidation amount of Securities of authorized denominations in the
form of certificated Securities. Any portion of a Global Capital Security
transferred pursuant to this Section shall be registered in such names as the
Depositary shall direct.
Any Capital Security in the form of certificated Capital Securities
delivered in exchange for an interest in the Restricted Capital Security
shall, except as otherwise provided by Section 7.3 and 9.1, bear the
Restricted Securities Legend set forth in Exhibit C hereto.
(d) Subject to the provisions of Sections 7.9(c) and 12.2(b)(ii),
the registered holder of a Global Capital Security may grant proxies and
otherwise authorize any person, including Participants and persons that may
hold interests through
40
Participants, to take any action which a holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events specified
in Section 7.9(b), the Trust will promptly make available to the Property
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
SECTION 7.10. CANCELLATION. The Trust at any time may deliver
Capital Securities to the Property Trustee for cancellation. The Registrar
and Paying Agent shall forward to the Property Trustee any Capital Securities
surrendered to them for registration of transfer, redemption, exchange or
payment. The Property Trustee shall promptly cancel all Capital Securities,
surrendered for registration of transfer, redemption, payment, replacement or
cancellation and shall dispose of canceled Capital Securities as the Trust
directs. The Trust may not issue new Capital Securities to replace Capital
Securities that it has paid or that have been delivered to the Property
Trustee for cancellation.
SECTION 7.11. CUSIP NUMBERS. The Trust in issuing the Capital
Securities may use "CUSIP" numbers (if then generally in use), and, if so,
the Property Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders of Capital Securities; PROVIDED that any such notice
may state that no representation is made as to the correctness of such
numbers either as printed on the Capital Securities or as contained in any
notice of a redemption and that reliance may be placed only on the
identification numbers printed on the Capital Securities, and any such
redemption shall not be affected by any defect in or omission of such
numbers. The Sponsor will promptly notify the Property Trustee of any change
in the "CUSIP" numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1. TERMINATION OF TRUST.
(a) The Trust shall terminate upon the earliest to occur of the
following:
(i) the bankruptcy of the Holder of the Common Securities or the
Sponsor;
41
(ii) the filing of a certificate of dissolution or its equivalent
with respect to the Holder of the Common Securities or the Sponsor;
the filing of a certificate of cancellation with respect to the Trust or
the revocation of the charter of the Holder of the Common Securities or
the Sponsor and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the Holder
of the Common Securities or the Sponsor;
(iv) the distribution, upon the terms and subject to the
conditions set forth in Annex I, of an aggregate principal amount of
Debentures with an aggregate principal amount equal to the aggregate
liquidation amount of, with an interest rate identical to the
Distribution rate of, and accrued and unpaid interest equal to accrued
and unpaid Distributions on, the Securities; PROVIDED, HOWEVER, that
such distribution is conditioned on the receipt of an opinion of
independent tax counsel experienced in such matters to the effect that
the Holders of the Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of the dissolution
of the Trust and such distribution of Debentures;
(v) the redemption of the Securities upon the final maturity of
the Debentures (or earlier redemption of all outstanding Debentures) and
the amounts necessary for redemption thereof having been paid to the
Holders in accordance with the terms of the Securities;
(vi) the expiration of the term of the Trust as provided in
Section 3.14; and
(vii) the entry of an order for the dissolution of the Trust by a
court of competent jurisdiction.
(b) In addition to the termination events set forth in Section
8.1(a), the Trust may be voluntarily terminated by the Sponsor at any time,
upon payment of the amount of cash, or distribution of the Debentures, as set
forth in Annex I.
(c) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), (1) the Regular Trustees and/or the Property
Trustee, as liquidator of the Trust, shall comply with the provisions in
Section 3808(e) of the Business Trust Act, and (2) the Regular Trustees shall
file a certificate of cancellation with the Secretary of State of the State
of Delaware.
42
(d) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. TRANSFER OF SECURITIES. (a) Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration and in the terms of the Securities. Any
transfer or purported transfer of any Security not made in accordance with
this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. To the fullest extent permitted by law, any
transfer or purported transfer of any security not made in accordance with
this Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Securities; provided,
however, that any permitted successor of the Sponsor under the Indenture may
succeed to the Sponsor's ownership of the Common Securities.
(d) The Registrar shall provide for the registration of Securities
and of the transfer of Securities, which will be effected without charge, but
only upon payment (with such indemnity as the Registrar may require) in
respect of any tax or other governmental charges that may be imposed in
relation to it. Upon surrender for registration of transfer of any
Securities, the Registrar shall cause one or more new Securities to be issued
in the name of the designated transferee or transferees. Every Security
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Holder or such Holder's attorney, duly authorized in writing. Each
Security surrendered for registration of transfer shall be canceled by the
Property Trustee. A transferee of a Security shall be entitled to the rights
and subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall
be deemed to have agreed to be bound by this Declaration.
SECTION 9.2. TRANSFER PROCEDURES AND RESTRICTIONS. (a) Except as
provided in Section 7.3(c), so long as the Capital Securities are eligible
for book-entry settlement in the Depositary or unless otherwise required by
law, all Capital Securities
43
that are so eligible will be represented by one or more Global Capital
Securities Certificates deposited with the Depositary or the Property Trustee
as custodian for the Depositary, by, or on behalf of, the Trust. No Capital
Security Beneficial Owner of a Certificate evidencing a Global Capital
Security will receive a Certificate evidencing a Definitive Capital Security
representing such Capital Security Beneficial Owner's interest in the Capital
Securities, except as provided in Section 7.9(b)(ii) above and Section 9.2(f)
below; provided, however, that, with respect to any Capital Security in
global form, the Sponsor shall request and the Trust shall issue a Definitive
Capital Securities Certificate upon any transfer of a beneficial interest in
such Capital Security to the Company or an Affiliate of the Company and no
Definitive Capital Securities Certificate, or portion thereof, in respect of
which the Company or an Affiliate of the Company held any beneficial interest
shall be resold, retransferred or included in any Global Capital Security
until such Capital Security is freely tradeable in accordance with Rule
144(k) or pursuant to an effective registration statement under the
Securities Act.
(b) Rule 144A Capital Securities shall initially be registered in
the name of a nominee of the Depositary and Regulation S Capital Securities
shall initially be registered in the name of a nominee of the Depositary for
the direct or indirect accounts of Euroclear and Cedel.
(c) Transfers of interests in Capital Securities between any Rule
144A Capital Security and any Regulation S Capital Security will be made in
accordance with this Declaration (including Section 9.2 (d) (iii) and (iv) ,
as applicable) and in accordance with the standing instructions and
procedures of the Depositary. The Property Trustee shall make appropriate
endorsements to reflect increases or decreases in the amount of such Global
Capital Securities.
(d) With respect to all or part of the Capital Securities, unless
and until the first day on which such Capital Securities (other than Capital
Securities acquired by the Trust or the Sponsor or any Affiliates thereof)
may be sold pursuant to Rule 144(k):
(i) DEFINITIVE TO DEFINITIVE TRANSFERS. Any transfer of a
Definitive Capital Security shall be registered on the securities
register only upon receipt by the Property Trustee of the Certificate
evidencing such Definitive Capital Security accompanied by a duly
completed and executed assignment in the form attached to Exhibit C and,
in the case of a transfer to an Institutional Accredited Investor, upon
receipt by the Property Trustee of a written certificate in the form of
Exhibit E (and/or such other certificates, legal opinions or other
information as
44
the Sponsor may reasonably request to confirm that such transfer is
exempt from registration under the Securities Act);
(ii) DEFINITIVE INTO A GLOBAL CAPITAL SECURITY. So long as
Capital Securities are eligible for book-entry settlement with the
Depositary or unless otherwise required by law, upon any transfer of
such Definitive Capital Securities to a QIB in accordance with Rule 144A
or to a non-U.S. Person in accordance with Regulation S, and upon
receipt of the Certificate evidencing such Definitive Capital Securities
being so transferred accompanied by (i) a duly completed and executed
assignment in the form attached to Exhibit C and (ii) (x) in the case of
a transferee taking delivery in the form of a beneficial interest in a
Rule 144A Capital Security, a written certificate in the form of Exhibit
F or (y) in the case of a transferee taking delivery in the form of a
beneficial interest in a Regulation S Capital Security, a written
certificate in the form of Exhibit G, the Property Trustee on behalf of
the Trust shall make an endorsement on any Rule 144A Capital Security or
any Regulation S Capital Security, as the case may be, to reflect an
increase in such Global Capital Security and the Property Trustee, on
behalf of the Trust, shall cancel such Definitive Capital Securities
Certificate.
(iii) RULE 144A CAPITAL SECURITY INTO REGULATION S CAPITAL
SECURITY. Any transfer in accordance with Rule 903 or 904 of Regulation
S of a beneficial interest in a Rule 144A Capital Security shall be
reflected by an increase in the Regulation S Capital Security and a
corresponding decrease in the Rule 144A Capital Security only upon
receipt by the Property Trustee of a written certificate in the form of
Exhibit G (or such other certifications, legal opinions or other
information as the Sponsor may reasonably require to confirm that such
transfer is being made pursuant to Rule 903 or 904); and
(iv) REGULATION S CAPITAL SECURITY INTO RULE 144A CAPITAL
SECURITY. Any transfer of a beneficial interest in a Regulation S
Capital Security to a transferee that takes delivery in the form of a
beneficial interest in the Rule 144A Capital Security shall be reflected
by an increase in the Rule 144A Capital Security and a corresponding
decrease in the Regulation S Capital Security and, prior to the
expiration of the Restricted Period, only upon receipt by the Property
Trustee of a written certificate in the form of Exhibit F (or such other
certifications, legal opinions or other information as the Sponsor may
reasonably require).
(e) Any Global Capital Security may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with
45
the provisions of this Declaration as may be required by the Depositary, by
any national securities exchange or by the National Association of Securities
Dealers, Inc. in order for the Capital Securities to be tradeable on any
market developed for trading of securities pursuant to Rule 144A or required
to comply with any applicable law or any regulation thereunder or with the
rules and regulations of any securities exchange upon which the Capital
Securities may be listed or traded (subject to applicable principles of
federal securities laws) or to conform with any usage with respect thereto,
or to indicate any special limitations or restrictions to which any
particular Capital Securities are subject.
(f) Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in this Section 9.2(f)), a Global
Capital Security may not be exchanged in whole or in part for Definitive
Capital Securities Certificates, and no transfer of a Global Capital Security
may be registered, in the name of any Person other than the Depositary or a
nominee thereof unless (i) such Depositary (A) has notified the Property
Trustee and the Sponsor that it is unwilling or unable to continue as
Depositary for such Global Capital Security or (B) has ceased to be a
clearing agency registered as such under the Exchange Act and no successor
Depositary has been appointed by the Sponsor within 90 days after its receipt
of such notice or its becoming aware of such cessation of registration, (ii)
there shall have occurred and be continuing an Event of Default, or any event
which after notice or lapse of time or both would be an Event of Default
under the Declaration, with respect to such Capital Security or (iii) the
Sponsor in its sole discretion instructs the Property Trustee to exchange
such Global Capital Security for Definitive Capital Securities Certificates.
(g) [intentionally omitted]
(h) LEGEND.
(i) Except as permitted by the following paragraph (ii), each
Capital Security certificate evidencing the Global Capital Securities
and the Definitive Capital Securities (and all Capital Securities issued
in exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER
THIS CAPITAL SECURITY NOR ANY INTEREST OR
46
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, SUCH REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS
THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF APPLICABLE) OR (F) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE
COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM AND (ii) IN EACH OF CASES (B) THROUGH (F) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
SUCH HOLDER FURTHER AGREES THAT IT WILL
47
DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE "PROHIBITED TRANSACTIONS"
PROVISIONS OF SECTION 406 OF THE EMPLOYMENT RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED ("THE CODE") AND IS
NOT USING THE ASSETS OF ANY SUCH PLAN TO ACQUIRE THIS CAPITAL
SECURITY OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE, OR IS EXEMPT FROM ANY SUCH PROHIBITION BY
APPLICATION OF A STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global Capital
Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder
thereof to exchange such Restricted Capital Security for a Definitive
Capital Security that does not bear the Restricted Securities Legend
and rescind any restriction on the transfer of such Restricted Capital
Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Capital Security, the Registrar shall permit
the Holder of such Global Capital Security to exchange such Global
Capital Security for another Global Capital Security that does not
bear the Restricted Securities Legend.
(i) CANCELLATION OR ADJUSTMENT OF GLOBAL CAPITAL SECURITY. At
such time as all beneficial interests in a Global Capital Security have
either been exchanged
48
for Definitive Capital Securities to the extent permitted by this Declaration
or redeemed, repurchased or canceled in accordance with the terms of this
Declaration, such Global Capital Security shall be returned by the Depositary
to the Property Trustee for cancellation or retained and canceled by the
Property Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Capital Security is exchanged for Definitive Capital
Securities, Capital Securities represented by such Global Capital Security
shall be reduced and an adjustment shall be made on the books and records of
the Property Trustee (if it is then the Registrar for such Global Capital
Security) with respect to such Global Capital Security, by the Property
Trustee or the Registrar, to reflect such reduction.
(j) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF CAPITAL
SECURITIES.
(i) To permit registrations of transfers and exchanges, a
Regular Trustee on behalf of the Trust shall execute and the Property
Trustee shall authenticate Definitive Capital Securities and Global
Capital Securities at the Registrar's or co-Registrar's request in
accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it.
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) Capital Securities during a
period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of business on the day
of such mailing; or (b) any Capital Security so selected for redemption
in whole or in part, except the unredeemed portion of any Capital
Security being redeemed in part.
(iv) Prior to the due presentation for registration of transfer
of any Capital Security, the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-Registrar may deem and treat the person
in whose name a Capital Security is registered as the absolute owner of
such Capital Security for the purpose of receiving Distributions on such
Capital Security and for all other purposes whatsoever, and none of the
Trust, the Property Trustee, the Paying
49
Agent, the Registrar or any co-Registrar shall be affected by notice to
the contrary.
(v) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such transfer or
exchange.
(k) NO OBLIGATION OF THE PROPERTY TRUSTEE.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security, a
Participant in the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any
Participant thereof, with respect to any ownership interest in the
Capital Securities or with respect to the delivery to any participant,
beneficial owner or other Person (other than the Depositary) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Capital Securities. All notices
and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made only
to or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Capital Security).
The rights of beneficial owners in any Global Capital Security shall be
exercised only through the Depositary subject to the applicable rules
and procedures of the Depositary. The Property Trustee may conclusively
rely and shall be fully protected in relying upon information furnished
by the Depositary or any agent thereof with respect to its Participants
and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation
or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Declaration or under
applicable law with respect to any transfer of any interest in any
Capital Security (including any transfer between or among Participants
or beneficial owners in any Global Capital Security) other than to
require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
(l) MINIMUM TRANSFERS. The Capital Securities will be issued, and
may be transferred, only in blocks having a liquidation amount (before giving
effect to
50
any partial redemption) of not less than $100,000 (100 Capital Securities).
Any transfer, sale or other disposition of the Capital Securities in a block
having a liquidation amount (before giving effect to any partial redemption)
of less than $100,000 shall be deemed to be void and of no legal effect
whatsoever. Any such transferee shall be deemed not to be the Holder of such
Capital Securities for any purpose, including but not limited to the receipt
of Distributions on such Capital Securities, and such transferee shall be
deemed to have no interest whatsoever in such Capital Securities. All
Capital Securities will bear the following legend:
THIS CAPITAL SECURITY WILL BE ISSUED, AND MAY BE
TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT
(BEFORE GIVING EFFECT TO ANY PARTIAL REDEMPTION) OF NOT LESS
THAN $100,000 (100 CAPITAL SECURITIES). ANY TRANSFER, SALE
OR OTHER DISPOSITION OF THE CAPITAL SECURITIES IN A BLOCK
HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY
PARTIAL REDEMPTION) OF LESS THAN $100,000 SHALL BE DEEMED TO
BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH
CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT
LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL
SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
SECTION 9.3. DEEMED SECURITY HOLDERS. The Trustees may treat the
Person in whose name any Security shall be registered on the books and
records of the Trust as the sole owner of such Security for purposes of
receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such Security on the part of any Person, whether or not the
Trust shall have actual or other notice thereof.
Rule 144A Capital Securities shall initially be registered in the name of a
nominee of the Depositary and Regulation S Capital Securities shall initially
be registered in the name of a nominee of the Depositary for the direct or
indirect accounts of Euroclear and Cedel.
51
SECTION 9.4. BOOK ENTRY INTERESTS. Global Capital Securities
shall initially be registered on the books and records of the Trust in the
name of Cede & Co., the nominee of the Depositary, and no Capital Security
Beneficial Owner will receive a Definitive Capital Security Certificate
representing such Capital Security Beneficial Owner's interests in such
Global Capital Securities, except as provided in Section 9.2. Unless and
until definitive, fully registered Capital Securities certificates have been
issued to the Capital Security Beneficial Owners pursuant to Section 9.2 and
Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Depositary for all purposes of this Declaration (including the payment of
Distributions on the Global Capital Securities and receiving approvals, votes
or consents hereunder) as the holder of the Capital Securities and the sole
Holder of the Global Certificates and shall have no obligation to the Capital
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this Section
9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Depositary and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Depositary and/or the Participants and receive and transmit
payments of Distributions on the Global Certificates to such Participants.
The Depositary will make book entry transfers among the Participants.
SECTION 9.5. NOTICES TO DEPOSITARY. Whenever a notice or other
communication to the Capital Security Holders is required under this
Declaration, the Trustees shall give all such notices and communications
specified herein to be given to the Holders of Global Capital Securities to
the Depositary, and shall have no notice obligations to the Capital Security
Beneficial Owners.
SECTION 9.6. APPOINTMENT OF SUCCESSOR DEPOSITARY. If any
Depositary elects to discontinue its services as securities depositary with
respect to the Capital Securities, the Regular Trustees may, in their sole
discretion, appoint a successor Depositary with respect to such Capital
Securities.
52
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. LIABILITY. (a) Except as expressly set forth in
this Declaration, the Capital Securities Guarantee and the terms of the
Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2. EXCULPATION. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or
any Covered Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such
Indemnified Person by the Declaration or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason
of such Indemnified Person's negligence or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and
53
who has been selected with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3. FIDUCIARY DUTY. (a) To the extent that, at law or
in equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified
Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made,
taken or provided by the Indemnified Person shall not constitute a breach of
this Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it
54
desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4. INDEMNIFICATION. (a) To the fullest extent
permitted by applicable law, the Sponsor shall indemnify and hold harmless
each Indemnified Person from and against any loss, damage, liability, tax,
penalty, expense or claim of any kind or nature whatsoever incurred by such
Indemnified Person by reason of the creation, operation or termination of the
Trust or any act or omission performed or omitted by such Indemnified Person
in good faith on behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Declaration, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of its own negligence or
willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including reasonable legal fees and expenses) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Sponsor prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Sponsor of
an undertaking by or on behalf of the Indemnified Person to repay such amount
if it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 10.4(a). The indemnification shall
survive the termination of this Declaration.
SECTION 10.5. OUTSIDE BUSINESSES. Any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee may engage in or
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the Holders of Securities shall have no rights by
virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the
Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character
that, if presented to the Trust, could be taken by the
55
Trust, and any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any
such particular investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. FISCAL YEAR. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the
Code.
SECTION 11.2. CERTAIN ACCOUNTING MATTERS. (a) At all times
during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which
shall reflect in reasonable detail, each transaction of the Trust. The books
of account shall be maintained on the accrual method of accounting, in
accordance with United States generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting
for United States federal income tax purposes.
(b) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States
federal income tax information statement required by the Code, containing
such information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after
the end of each Fiscal Year of the Trust.
(c) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to
be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3. BANKING. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; PROVIDED,
HOWEVER, that all
56
payments of funds in respect of the Debentures held by the Property Trustee
shall be made directly to the Property Account and no other funds of the
Trust shall be deposited in the Property Account. The sole signatories for
such accounts shall be designated by the Regular Trustees; PROVIDED, HOWEVER,
that the Property Trustee shall designate the signatories for the Property
Account.
SECTION 11.4. WITHHOLDING. The Trust and the Regular Trustees
shall comply with all withholding requirements under United States federal,
state and local law. The Trust shall request, and the Holders shall provide
to the Trust, such forms or certificates as are necessary to establish an
exemption from withholding with respect to each Holder or underlying
beneficial owner, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with the applicable jurisdictions and, unless an exemption
from withholding is properly established by a Holder or underlying beneficial
owner, shall remit amounts withheld with respect to the Holder or underlying
beneficial owner to applicable jurisdictions. To the extent that the Trust
is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder or underlying
beneficial owner, the amount withheld shall be deemed to be a distribution in
the amount of the withholding to the Holder or underlying beneficial owner.
In the event of any claimed over-withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may
reduce subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. AMENDMENTS. (a) Except as otherwise provided in
this Declaration or by any applicable terms of the Securities, this
Declaration may only be amended by a written instrument approved and executed
by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
57
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
58
(d) this Section 12.1 shall not be amended without the consent of
all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) conform to any change in Rule 3a-5 under the Investment
Company Act or written change in interpretation or application of Rule
3a-5 under the Investment Company Act by any legislative body, court,
government agency or regulatory authority which amendment does not have
a material adverse effect on the rights, preferences or privileges of
the Holders; and
(v) to modify, eliminate or add to any provisions to such extent
as shall be necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all
times that any Securities are outstanding which amendment does not have
an adverse effect on the rights, preferences or privileges of the
Holders.
SECTION 12.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT. (a) Meetings of the Holders of any class of Securities may
be called at any time by the Regular Trustees (or as provided in the terms of
the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading. The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
59
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or
more requests in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for
which the meeting is to be called. Any Holders of Securities calling a
meeting shall specify in writing the Certificates held by the Holders of
Securities exercising the right to call a meeting and only those Securities
represented by the Certificates so specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Securities
owning not less than the minimum aggregate liquidation amount of
Securities that would be necessary to authorize or take such action at a
meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of Securities entitled
to vote who have not consented in writing. The Regular Trustees may
specify that any written ballot submitted to the Security Holders for
the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware
60
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms
of the Securities or the listing rules of any stock exchange on which
the Capital Securities are then listed or trading, provide otherwise,
the Regular Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at which
any matter is to be voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF DELAWARE TRUSTEE
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration and
at the Closing Date, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware
Trustee's acceptance of its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This Declaration has
been duly executed and delivered by the Delaware Trustee, and, assuming the
due authorization, execution and delivery of the Declaration by the other
parties hereto, constitutes a legal, valid and binding obligation
61
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or
at law).
(c) The execution, delivery and performance of this Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration with
or notice to, any state or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of this
Declaration.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware and meets the eligibility criteria
set forth in Section 5.2.
(f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration.
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
SECTION 14.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration and
at the Closing Date, and each Successor Property Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Property
Trustee's acceptance of its appointment as Property Trustee that:
(a) The Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part
62
of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee, and, assuming the due authorization,
execution and delivery of the Declaration by the other parties hereto,
constitutes a legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of equity and
the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with
or notice to, any state or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of this
Declaration.
(e) The Property Trustee is an entity which meets the eligibility
criteria under Section 5.3(a) to serve as Property Trustee.
(f) The Property Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. NOTICES. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by certified mail, return
receipt requested, or overnight courier, as follows:
(a) If given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities):
c/o Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Chief Financial Officer
63
(b) If given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of
to the Holders of the Securities):
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Xxxxx & Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Administration,
Zenith National Insurance Capital Trust I
(c) If given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
c/o Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Chief Financial Officer
(d) If given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice to
the Trust):
WILMINGTON TRUST COMPANY
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration,
Zenith National Insurance Capital Trust I
(e) If given to the Regular Trustee, at the mailing address set
forth below (or such other address as the Regular Trustee may give notice to
the Trust):
XXXXXXX X. XXX
Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
XXXXXXXXX XXXXXXX
Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
64
(f) If given to any other Holder, at the address set forth on the
books and records of the Trust or the Registrar, as applicable.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by certified mail,
return receipt requested, or mailed by overnight courier except that, if a
notice or other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or other
document shall be deemed to have been delivered on the date of such refusal
or inability to deliver.
SECTION 15.2. GOVERNING LAW. This Declaration and the rights of
the parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies shall be
governed by such laws, without regard to conflicts of laws principles.
SECTION 15.3. INTENTION OF THE PARTIES. It is the intention of
the parties hereto that the Trust be classified for United States federal
income tax purposes as a grantor trust. The provisions of this Declaration
shall be interpreted to further this intention of the parties.
SECTION 15.4. HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION 15.5. SUCCESSORS AND ASSIGNS. Whenever in this
Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants
and agreements in this Declaration by the Sponsor and the Trustees shall bind
and inure to the benefit of their respective successors and assigns, whether
so expressed.
SECTION 15.6. PARTIAL ENFORCEABILITY. If any provision of this
Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or
the application of such provision to persons or circumstances other than
those to which it is held invalid, shall not be affected thereby.
SECTION 15.7. COUNTERPARTS. This Declaration may contain more
than one counterpart of the signature page and this Declaration may be
executed by the affixing of the signature of each of the Trustees to one of
such counterpart signature pages. All of such counterpart signature pages
shall be read as though one, and they shall
65
have the same force and effect as though all of the signers had signed a
single signature page.
66
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
ZENITH NATIONAL INSURANCE
CORP., as Sponsor
By: /s/ Xxxxxxx X. Xxx
------------------------------------
Name: Xxxxxxx X. Xxx
Title: Chairman and President
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Delaware Trustee
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Financial Services Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Property Trustee
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Corporate Trust Officer
/s/ Xxxxxxx X. Xxx
---------------------------------------
XXXXXXX X. XXX
not in his individual capacity but
solely as Regular Trustee
/s/ Xxxxxxxxx Xxxxxxx
---------------------------------------
XXXXXXXXX XXXXXXX
not in her individual capacity but
solely as Regular Trustee
ANNEX I
TERMS OF
8.55% CAPITAL SECURITIES
8.55% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of July 30, 1998 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER.
(a) "Capital Securities." 75,000 Capital Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust
of $75 Million Dollars ($75,000,000), and a liquidation amount with
respect to the assets of the Trust of $1,000 per Capital Security, are
hereby designated for the purposes of identification only as "8.55%
Capital Securities (Liquidation Amount $1,000 per Capital Security)"
(the "Capital Securities"). The Capital Security Certificates
evidencing the Capital Securities shall be substantially in the forms
attached hereto as EXHIBIT A, EXHIBIT B and EXHIBIT C, as applicable,
with such changes and additions thereto or deletions therefrom as may
be required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange or other organization, if any, on which
the Capital Securities are listed.
(b) "Common Securities." 2,320 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust
of Two Million Three Hundred Twenty Thousand Dollars ($2,320,000), and
a liquidation amount with respect to the assets of Trust of $1,000 per
Common Security, are hereby designated for the purposes of
identification only as "8.55% Common Securities (Liquidation Amount
$1,000 per Common Security)" (the "Common Securities"). The Common
Securities Certificates evidencing the Common Securities shall be
substantially in the form attached hereto as EXHIBIT D, with such
changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
1
2. DISTRIBUTIONS.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 8.55% (the "Coupon Rate") of the liquidation amount of $1,000
per Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions not
currently made will bear interest thereon compounded semi-annually at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and
any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the
Debentures held by the Property Trustee and to the extent the Property
Trustee has funds legally available therefor. The amount of
Distributions payable for any period will be computed for any full
semi-annual Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period of less than a full calendar
month the number of days elapsed in such month.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance and will be payable
semi-annually in arrears, on the following dates, which dates
correspond to the interest payment dates on the Debentures:
February 1 and August 1 of each year, commencing on February 1,
1999, except as otherwise described below. So long as no Event of
Default (or an event which would be an Event of Default with the
giving of required notice or the passage of time) has occurred and
is continuing, the Sponsor has the right under the Indenture to
defer payments of interest by deferring the interest payment period
from time to time on the Debentures for a period not exceeding 10
consecutive semi-annual periods (each an "Deferral Period") and, as
a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, semi-annual Distributions will
continue to accrue with interest thereon (to the extent permitted
by applicable law) at the Coupon Rate compounded semi-annually
during any such Deferral Period. Prior to the termination of any
such Deferral Period, the Sponsor may further extend such Deferral
Period so long as no Event of Default (or an event which would be
an Event of Default with the giving of required notice or the
passage of time) has occurred and is continuing; PROVIDED THAT such
Deferral Period together with all such previous and further
deferrals thereof may not exceed 10 consecutive semi-annual periods
or extend beyond the maturity (whether at the stated maturity or by
declaration of acceleration, call for redemption or otherwise) of
the Debentures under the Indenture.
2
Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first
record date after the end of the Deferral Period. Upon the
termination of any Deferral Period and the payment of all amounts
then due, the Sponsor may commence a new Deferral Period, subject
to the above requirements. During any such Deferral Period, the
Debenture Issuer may not (i) declare or pay any dividends on
distributions with respect to, or redeem, purchase acquire, or make
a liquidation payment with respect to, any of the Debenture
Issuer's capital stock (which includes common and preferred stock)
or (ii) make any payment of principal of or premium, if any, or
interest on or repay, repurchase or redeem any debt securities of
the Debenture Issuer that rank PARI PASSU with or junior in right
of payment to the Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Debenture Issuer of any
securities of any subsidiary of the Debenture Issuer if such
guarantee ranks PARI PASSU with or junior in right of payment to
the Debentures (other than (a) dividends or distributions in shares
of, or options, warrants or rights to subscribe for or purchase
shares of, common stock of the Debenture Issuer, (b) any
declaration of a dividend in connection with the implementation of
a stockholders' rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under the Capital
Securities Guarantee, (d) as a result of a reclassification of the
Debenture Issuer's capital stock or the exchange or conversion of
one class or series of the Debenture Issuer's capital stock for
another class or series of the Debenture Issuer's capital stock,
(e) the purchase of fractional interests in shares of the Debenture
Issuer's capital stock, pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged and (f) purchases of common stock of the Debenture Issuer
in connection with the satisfaction by the Debenture Issuer of its
obligations (including purchases related to the issuance of such
common stock or rights) under any of the Debenture Issuer's benefit
plans for its and its subsidiaries' directors, officers or
employees or any of the Debenture Issuer's dividend reinvestment
plans). Despite such deferral, Distributions will continue to
accumulate with additional Distributions thereon (to the extent
permitted by applicable law at a rate no greater than the rate at
which interest is then accruing on the Debentures) at the Coupon
Rate compounded semi-annually during any such Deferral Period.
Prior to the termination of any such Deferral Period, the Debenture
Issuer may further defer payments of interest by further extending
such Deferral Period; PROVIDED THAT such
3
Deferral Period, together with all such previous and further
deferrals within such Deferral Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual
period during such Deferral Period, or extend beyond the Stated
Maturity Date of the Debentures. Upon the termination of any
Deferral Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Deferral Period, subject to the
above requirements.
(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant
record dates. The relevant record dates shall be the fifteenth day of
the month next preceding the month in which the relevant payment date
falls, except as otherwise described in this Annex I to the
Declaration. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect to Capital
Securities being held in book-entry form through The Depository Trust
Company (the "Depositary") will be made by the Trust to the
Depositary. Payment of Distributions to the Depositary is the
responsibility of the Trust, disbursement of such payments to
Depositary Participants is the responsibility of the Depositary, and
disbursement of such payments to the Capital Security Beneficial Owner
is the responsibility of Depositary Participants. The relevant record
dates for the Common Securities shall be the same record dates as for
the Capital Securities. Distributions payable on any Securities that
are not punctually paid on any Distribution payment date, as a result
of the Sponsor having failed to make payment under the Debentures,
will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such distributions on
Securities will instead be payable to the Persons in whose name such
Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a
Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business
Day in each case with the same force and effect as if made on such
date.
(d) In the event that there is any money or other property held by or for
the Trust that is not accounted for in the Declaration, such property
shall be
4
distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust (including without limitation pursuant to Section
8.1(b) of the Declaration), the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust legally available for distribution to
Holders of Securities after satisfaction of liabilities of creditors of the
Trust as provided by applicable law, an amount equal to the aggregate of the
liquidation amount of $1,000 per Security plus any additional amount payable
upon redemption of the Debentures as a result of the Make-Whole Premium or
Special Event Make-Whole Premium (as such terms are defined in the Indenture),
as applicable, and accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, Debentures in an
aggregate principal amount equal to the aggregate liquidation amount of such
Securities, with an interest rate identical to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities as provided in
this Paragraph 3.
If, upon any such dissolution, winding-up or termination, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities
shall be paid on a Pro Rata basis in accordance with paragraph 8.
If a termination of the Trust occurs as described in clause (i), (ii),
(iii), (vi) or (vii) of Section 8.1(a) of the Declaration, the Trust shall be
liquidated by the Regular Trustees as expeditiously as the Regular Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to each holder of the
Capital Securities, Debentures with an aggregate principal amount equal to the
aggregate liquidation amount of, with an interest rate identical to the Coupon
Rate of, and accrued and unpaid
5
interest equal to accrued and unpaid Distributions on, the Capital
Securities. In addition, at any time the Sponsor has the right to terminate
the Trust and, after satisfaction of the liabilities to creditors of the
Trust as provided by applicable law, cause Debentures with an aggregate
principal amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on,
the outstanding Securities, to be distributed to the Holders of the
Securities in liquidation of the Trust.
The distribution of Debentures upon any dissolution of the Trust is
conditioned upon the receipt by the Regular Trustees of an opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that the Holders of the Securities will not recognize any gain or
loss for United States federal income tax purposes as a result of such
dissolution of the Trust and distribution of Debentures.
After the date fixed for any distribution of Debentures (including
pursuant to a Special Event as set forth in paragraph 4(c) below): (i) the
Securities will no longer be deemed to be outstanding, (ii) the Depositary or
its nominee (or any successor Depositary or its nominee), as Holder of
Capital Securities represented by global certificates, will receive a
registered global certificate or certificates representing the Debentures to
be delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Capital Securities held by
the Depositary or its nominee (or any successor Depositary or its nominee),
will be deemed to represent Debentures with an aggregate principal amount
equal to the aggregate liquidation amount of, with an interest rate identical
to the Coupon Rate of, and accrued and unpaid interest equal to accrued and
unpaid Distributions on, such Securities until such certificates are
presented to the Sponsor or its agent for transfer or reissuance.
If, in connection with any dissolution, winding-up or termination of
the Trust, Debentures are distributed to Holders of the Securities as provided
in this paragraph 3, the procedures set forth in paragraph 4(e) will be
applicable thereto.
4. REDEMPTION AND DISTRIBUTION.
(a) Upon the repayment or payment of the Debentures in whole or in part,
whether at maturity or upon redemption or otherwise, the proceeds from
such repayment or redemption shall be simultaneously applied to redeem
Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid or redeemed at
the redemption price per Security of 100% of the liquidation amount of
the Security to be redeemed, plus the Make-Whole Premium (as defined
in the Indenture) or Special Event Make-Whole Premium (as defined in
the Indenture), if any, together with accrued and unpaid Distributions
thereon through the date of the redemption, payable in cash. Holders
will be given not less than 30 nor more than 60 days' notice of such
redemption.
6
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be as described in
Paragraph 4(e)(ii) below.
(c) [intentionally omitted]
(d) The Securities will not be redeemed unless all accrued and unpaid
Distributions have been paid on all Securities for all semi-annual
Distribution periods terminating on or before the date of redemption.
(e) (i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given
pursuant to this paragraph 4(e)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is
first mailed by first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each
such Holder appearing in the books and records of the Trust. No
defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect
to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Capital Securities, it being
understood that, in respect of Capital Securities registered in
the name of and held of record by the Depositary (or any
successor Depositary) or any nominee, the distribution of the
proceeds of such redemption will be made to each Depositary
Participant (or Person on whose behalf such nominee holds such
Securities) in accordance with the procedures applied by such
agency or nominee.
7
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued
if the Debentures are redeemed as set out in this paragraph 4
(which notice will be irrevocable), then (A) with respect to
Capital Securities held in book-entry form, by 1:00 p.m., New
York City time, on the redemption date, provided that the Sponsor
has paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the
Debentures, the Property Trustee will deposit irrevocably with
the Depositary (or successor Depositary) funds sufficient to pay
the amount payable on redemption with respect to such Capital
Securities and will give the Depositary irrevocable instructions
and authority to pay the amount payable on redemption to the
Capital Security Beneficial Owner, and (B) with respect to
Capital Securities issued in certificated form and Common
Securities, provided that the Sponsor has paid the Property
Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property
Trustee will irrevocably deposit with the Paying Agent funds
sufficient to pay the amount payable on redemption to the Holders
of such Securities upon surrender of their certificates. If a
Redemption/Distribution Notice shall have been given and funds
deposited as required, then on the date of such deposit, all
rights of Holders of such Securities so called for redemption
will cease, except the right of the Holders of such Securities to
receive the redemption price, but without interest on such
redemption price. Neither the Regular Trustees nor the Trust
shall be required to register or cause to be registered the
transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is
not a Business Day, then payment of the amount payable on such
date will be made on the next succeeding day that is a Business
Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment
of the redemption price in respect of any Securities is
improperly withheld or refused and not paid either by the Trust
or by the Sponsor as guarantor pursuant to the Capital Securities
Guarantee, Distributions on such Securities will continue to
accrue at the then applicable rate, from the original
8
redemption date to the date of payment, in which case the
actual payment date will be considered the date fixed for
redemption for purposes of calculating the amount payable upon
redemption (other than for purposes of calculating any
premium).
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in the case of Capital
Securities held in book-entry form, the Depositary and, in the
case of Securities held in certificated form, the Holders of such
certificates and (B) in respect of the Common Securities, the
Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor
or any of its subsidiaries may at any time and from time to time
purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
5. VOTING RIGHTS - CAPITAL SECURITIES.
(a) Except as provided in this Annex I, in the Business Trust Act and as
otherwise required by law, the Declaration and the Indenture, the
Holders of the Capital Securities will have no voting rights.
(b) The Holders of the Capital Securities shall have the rights with
respect to the enforcement of payment of principal, premium, if any,
and interest on the Debentures as are set forth herein, in the
Declaration or in the Indenture.
Subject to the requirements set forth in this paragraph, the Holders
of a Majority in liquidation amount of the Capital Securities, voting
separately as a class may direct the time, method, and place of
conducting any proceeding for any remedy available to the Property
Trustee, or direct the exercise of any power conferred upon the
Property Trustee under the Declaration, including the right to direct
the Property Trustee, as holder of the Debentures, to (i) direct the
time, method, place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power
conferred on the Indenture Trustee with respect to the Debentures,
(ii) waive any past default and its consequences that is waivable
under Section 5.13 of the Indenture or otherwise, (iii)
9
exercise any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and payable or (iv)
consent to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required;
PROVIDED, HOWEVER, that, where a consent under the Indenture would
require the consent or act of the Holders of greater than a
majority of the Holders in principal amount of Debentures (a "Super
Majority"), the Property Trustee may only give such consent or take
such action at the direction of the Holders of at least the
proportion in liquidation amount of the Capital Securities which
the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding. The Property Trustee shall
not, and none of the other Trustees shall in any event, revoke any
action previously authorized or approved by a vote of the Holders
of the Capital Securities, except by a subsequent vote of the
Holders of the Capital Securities. Other than with respect to
directing the time, method and place of conducting any remedy
available to the Property Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions
of the Holders of the Capital Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel
to the effect that, as a result of such action, the Trust will not
fail to be classified as a grantor trust for United States federal
income tax purposes.
If the Property Trustee is the sole holder of the Debentures, any
Holder of the Capital Securities shall have the right, to the fullest
extent permitted by applicable law, to institute suit on behalf of the
Trust for the enforcement of the right to receive payment of the
principal of and interest, and premium, if any, on the Debentures when
due. In addition, the Holders of at least 25% in aggregate
liquidation amount of Capital Securities outstanding shall be
entitled, to the fullest extent permitted by applicable law, to
institute any other proceeding in the event the Indenture Trustee or
the Property Trustee fails to do so in accordance with the terms of
the Indenture.
If an Event of Default shall have occurred and be continuing, the
Holders of a Majority in liquidation amount of the Capital Securities,
voting as a class at a meeting of Holders of Capital Securities, shall
have the exclusive right to remove the Property Trustee.
10
In addition to any other rights of the Holders provided herein or in
the Declaration, if the Property Trustee fails to enforce its rights,
as holder of the Debentures, under the Indenture, any Holder of
Capital Securities may, to the fullest extent permitted by applicable
law, institute a legal proceeding directly against the Sponsor, to
enforce the rights of the Property Trustee, as holder of the
Debentures, under the Indenture, without first instituting any legal
proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default in respect of
the Securities has occurred and is continuing and such event is
attributable to the failure of the Sponsor to pay interest or
principal on the Debentures issued to the Trust on the date such
interest or principal is otherwise payable, then a Holder of Capital
Securities may institute a proceeding directly against the Sponsor for
enforcement of payment to the Holder of the Capital Securities of the
principal of or interest on the Debentures on or after the respective
due dates specified in the Debentures (taking into account any
Deferral Period).
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened
for such purpose, at a meeting of all of the Holders of Securities in
the Trust or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which Holders of Capital Securities
are entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of
record of Capital Securities. Each such notice will include a
statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the
terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of
the Capital Securities that are owned by the Sponsor or any Affiliate
of the
11
Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not
outstanding.
6. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided in this Annex I, in the Business Trust Act and as
otherwise required by law and the Declaration, the Holders of the
Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with
and subject to Article V of the Declaration, to vote to appoint,
remove or replace any Trustee.
(c) Subject to Section 2.6 of the Declaration and only after the Event of
Default with respect to the Capital Securities has been cured, waived,
or otherwise eliminated and subject to the requirements of the second
to last sentence of this paragraph, the Holders of the Majority in
liquidation amount of the Common Securities, voting separately as a
class, may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or
exercising any power conferred upon the Property Trustee under the
Declaration, including (i) directing the time, method, place of
conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any power conferred on the Indenture Trustee
with respect to the Debentures, (ii) waiving any past default and its
consequences that is waivable under Section 5.13 of the Indenture,
(iii) exercising any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and payable; or
(iv) consenting to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required;
PROVIDED THAT, where a consent or action under the Indenture would
require the consent or act of the Holders of greater than a majority
in principal amount of Debentures (a "Super Majority"), the Property
Trustee may only give such consent or take such action at the
direction of the Holders of at least the same proportion in
liquidation amount of the Common Securities which the relevant Super
Majority represents of the aggregate principal amount of the
Debentures outstanding. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of
the Capital Securities, except by a subsequent vote of the Holders of
the Capital Securities. Other than with respect to directing the
time, method and place of conducting any remedy available
12
to the Property Trustee or the Indenture Trustee as set forth
above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under
this paragraph unless the Property Trustee has obtained an opinion
of tax counsel to the effect that, as a result of such action the
Trust will not fail to be classified as a grantor trust for United
States federal income tax purposes. If the Property Trustee fails
to enforce its rights, as holder of the Debentures, under the
Indenture, any Holder of Common Securities may, institute a legal
proceeding directly against the Sponsor, to enforce the Property
Trustee's rights, as holder of the Debentures, under the Indenture,
without first instituting any legal proceeding against the Property
Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the
Trust or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Common Securities are
entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the
terms of the Securities.
7. AMENDMENTS TO DECLARATION AND INDENTURE.
(a) In addition to any requirements under Section 12.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special rights of
the Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolution, winding-up or termination of the
Trust, other than as described in Section 8.1 of the Declaration, then
the Holders of
13
outstanding Securities as a class, will be entitled to vote on such
amendment or proposal (but not on any other amendment or proposal)
and such amendment or proposal shall not be effective except (a)
with the approval of the Holders of at least 66-2/3% in liquidation
amount of the Securities, voting together as a single class and (b)
upon receipt by the Regular Trustees of an opinion of a nationally
recognized independent counsel experienced in such matters to the
effect that such amendment or the exercise of any power granted to
the Regular Trustees in accordance with such amendment will not
affect the Trust's status as a grantor trust for United States
federal income tax purposes or the Trust's exemption from the
status of an "investment company" under the Investment Company Act;
PROVIDED, HOWEVER, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Capital Securities
or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of
66-2/3% in liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of the
Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the
Debentures, the Property Trustee shall request the direction of the
Holders of the Securities with respect to such amendment, modification
or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; PROVIDED,
HOWEVER, that where a consent under the Indenture would require the
consent of the holders of more than a majority of the aggregate
principal amount of the Debentures, the Property Trustee may only give
such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Securities;
PROVIDED, HOWEVER, that the Property Trustee shall not take any action
in accordance with the directions of the Holders of the Securities
under this paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other
than a grantor trust on account of such action.
14
8. PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, on any distribution date or redemption date
an Event of Default under the Declaration has occurred and is continuing, in
which case no payment of any distribution on, or amount payable upon redemption
of, any Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the amount payable upon redemption
of the Capital Securities, the full amount of such amount in respect of all
outstanding Capital Securities shall have been made or provided for, and all
funds available to the Property Trustee shall first be applied to the payment in
full in cash of all Distributions on, or the amount payable upon redemption of
Capital Securities then due and payable.
9. RANKING.
The Capital Securities rank PARI PASSU with, and payment thereon shall
be made Pro Rata with, the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture, the rights of Holders of
the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities.
10. ACCEPTANCE OF CAPITAL SECURITIES GUARANTEE AND INDENTURE.
Each Holder of Capital Securities and Common Securities and each
Capital Security Beneficial Owner, by the acceptance thereof, agrees to the
provisions of the Capital Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture,
including the subordination provisions therein, and which includes, among other
things, provisions relating to certain rights of the Holders of the Capital
Securities all as set forth therein.
11. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional Securities.
15
12. MISCELLANEOUS.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee, and the Indenture to a Capital Security Beneficial Owner
without charge on written request to the Sponsor at its principal place of
business.
16
EXHIBIT A
FORM OF RULE 144A GLOBAL SECURITY
THIS CAPITAL SECURITY IS A RULE 144A GLOBAL SECURITY WITHIN THE
MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS
EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 XXXXX XXXXXX, XXX XXXX, XXX XXXX) TO
THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY ONLY (A) TO ZENITH
NATIONAL INSURANCE CORP. (THE "COMPANY"), (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER
THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF APPLICABLE) OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND (ii) IN EACH OF CASES (B)
THROUGH (F) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE "PROHIBITED TRANSACTIONS" PROVISIONS OF SECTION 406 OF
THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")
OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED ("THE
CODE"), AND IS NOT USING THE ASSETS OF ANY SUCH PLAN TO ACQUIRE THIS CAPITAL
SECURITY OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT
IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE,
OR IS EXEMPT FROM ANY SUCH PROHIBITION BY APPLICATION OF A STATUTORY,
REGULATORY OR ADMINISTRATIVE EXEMPTION.
A-2
THIS CAPITAL SECURITY WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY
IN BLOCKS HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY PARTIAL
REDEMPTION) OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES). ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THE CAPITAL SECURITIES IN A BLOCK
HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY PARTIAL REDEMPTION)
OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH
CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT
OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
A-3
Certificate number Number of Capital Securities
CUSIP NO.
Certificate Evidencing Capital Securities
of
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
8.55% Capital Securities
(Liquidation Amount $1,000 per Capital Security)
ZENITH NATIONAL INSURANCE CAPITAL TRUST I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that ________________ (the "Holder") is the registered owner of preferred
securities of the Trust representing preferred undivided beneficial interests in
the assets of the Trust designated the 8.55% Capital Securities (Liquidation
Amount $1,000 per Security) (the "Capital Securities"). The Capital Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are in all respects subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of July 30, 1998, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Capital
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Capital Security Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder. By its acceptance of
this certificate representing Capital Securities or a beneficial interest in
such Capital Securities, the owner of, and any person that acquires a
beneficial interest in, such Capital Securities agrees to treat the
Debentures described in the Declaration as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in such indebtedness
for tax purposes.
A-4
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _____, 1998.
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
By:________________________________
Xxxxxxx X. Xxx
Regular Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Property Trustee
By:__________________________
Authorized Signatory
A-5
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 8.55% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions not
currently made will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds legally
available therefor. The amount of Distributions payable for any period will
be computed for any full semi-annual Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period of less than a full
calendar month the number of days elapsed in such month.
Distributions on the Capital Securities will be cumulative, will
accrue from the date of original issuance and will be payable semi-annually in
arrears, on the following dates, which dates correspond to the interest payment
dates on the Debentures: February 1 and August 1 of each year, commencing on
February 1, 1999, except as otherwise described below. So long as no Event of
Default (or an event which would be an Event of Default with the giving of
required notice or the passage of time) has occurred and is continuing, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by deferring the interest payment period from time to time on the Debentures for
a period not exceeding 10 consecutive semi-annual periods (each a "Deferral
Period") and, as a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, semi-annual Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded semi-annually during any such Deferral Period. Prior to
the termination of any such Deferral Period, the Debenture Issuer may further
extend such Deferral Period so long as no Event of Default (or an event which
would be an Event of Default with the giving of required notice or the passage
of time) has occurred and is continuing; PROVIDED THAT such Deferral Period
together with all such previous and further deferrals thereof may not exceed 10
consecutive semi-annual periods or extend beyond the maturity (whether at the
stated maturity or by declaration of acceleration, call for redemption or
otherwise) of the Debentures under the Indenture. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Deferral Period.
Upon the termination of any Deferral Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Deferral Period, subject to the
above requirements.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-6
SCHEDULE I
RULE 144A GLOBAL SECURITY
The initial number of Capital Securities evidenced by this 144A Global
Security is _________.
CHANGES TO NUMBER OF CAPITAL SECURITIES EVIDENCED
BY RULE 144A GLOBAL SECURITY
Number of Capital Securities
by which this Rule 144A
Global Security is to be Remaining Capital
Date Reduced or Increased, and Securities Represented Notation Made
Reason for Reduction or by this Rule 144A Global By
Increase Security
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A-7
EXHIBIT B
FORM OF REGULATION S GLOBAL SECURITY
THIS CAPITAL SECURITY IS A REGULATION S GLOBAL SECURITY WITHIN THE
MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS
EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 XXXXX XXXXXX, XXX XXXX, XXX XXXX) TO
THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY ONLY (A) TO ZENITH
NATIONAL INSURANCE CORP. (THE "COMPANY"), (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER
THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF APPLICABLE) OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND (ii) IN EACH OF CASES (B)
THROUGH (F) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE "PROHIBITED TRANSACTIONS" PROVISIONS OF SECTION 406 OF
THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")
OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED ("THE
CODE"), AND IS NOT USING THE ASSETS OF ANY SUCH PLAN TO ACQUIRE THIS CAPITAL
SECURITY OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT
IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE,
OR IS EXEMPT FROM ANY SUCH PROHIBITION BY APPLICATION OF A STATUTORY,
REGULATORY OR ADMINISTRATIVE EXEMPTION.
B-2
THIS CAPITAL SECURITY WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY
IN BLOCKS HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY PARTIAL
REDEMPTION) OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES). ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THE CAPITAL SECURITIES IN A BLOCK
HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY PARTIAL REDEMPTION)
OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH
CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT
OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
B-3
Certificate number Number of Capital Securities
CUSIP NO.
Certificate Evidencing Capital Securities
of
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
8.55% Capital Securities
(Liquidation Amount $1,000 per Capital Security)
ZENITH NATIONAL INSURANCE CAPITAL TRUST I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that ________________ (the "Holder") is the registered owner of preferred
securities of the Trust representing preferred undivided beneficial interests in
the assets of the Trust designated the 8.55% Capital Securities (Liquidation
Amount $1,000 per Security) (the "Capital Securities"). The Capital Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are in all respects subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of July 30, 1998, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Capital
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Capital Security Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder. By its acceptance of
this certificate representing Capital Securities or a beneficial interest in
such Capital Securities, the owner of, and any person that acquires a beneficial
interest in, such Capital Securities agrees to treat the Debentures described in
the Declaration as indebtedness and the Capital Securities as evidence of
indirect beneficial ownership in such indebtedness for tax purposes.
B-4
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _______, 1998.
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
By:________________________________
Xxxxxxx X. Xxx
Regular Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Property Trustee
By:__________________________
Authorized Signatory
B-5
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate per
annum of 8.55% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions not currently
made will bear interest thereon compounded semi-annually at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds legally available therefor.
The amount of Distributions payable for any period will be computed for any
full semi-annual Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period of less than a full calendar month the
number of days elapsed in such month.
Distributions on the Capital Securities will be cumulative, will
accrue from the date of original issuance and will be payable semi-annually
in arrears, on the following dates, which dates correspond to the interest
payment dates on the Debentures: February 1 and August 1 of each year,
commencing on February 1, 1999, except as otherwise described below. So long
as no Event of Default (or an event which would be an Event of Default with
the giving of required notice or the passage of time) has occurred and is
continuing, the Debenture Issuer has the right under the Indenture to defer
payments of interest by deferring the interest payment period from time to
time on the Debentures for a period not exceeding 10 consecutive semi-annual
periods (each a "Deferral Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semi-annually
during any such Deferral Period. Prior to the termination of any such
Deferral Period, the Debenture Issuer may further extend such Deferral Period
so long as no Event of Default (or an event which would be an Event of
Default with the giving of required notice or the passage of time) has
occurred and is continuing; PROVIDED THAT such Deferral Period together with
all such previous and further deferrals thereof may not exceed 10 consecutive
semi-annual periods or extend beyond the maturity (whether at the stated
maturity or by declaration of acceleration, call for redemption or otherwise)
of the Debentures under the Indenture. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the
Trust on the first record date after the end of the Deferral Period. Upon the
termination of any Deferral Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Deferral Period, subject to the above
requirements.
The Capital Securities shall be redeemable as provided in the
Declaration.
B-6
SCHEDULE I
REGULATION S GLOBAL SECURITY
The initial number of Capital Securities evidenced by this
Regulation S Global Security is _________.
CHANGES TO NUMBER OF CAPITAL SECURITIES EVIDENCED
BY REGULATION S GLOBAL SECURITY
Number of Capital Securities
by which this Rule 144A
Global Security is to be Remaining Capital
Date Reduced or Increased, and Securities Represented Notation Made
Reason for Reduction or by this Rule 144A Global By
Increase Security
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B-7
EXHIBIT C
FORM OF DEFINITIVE CAPITAL SECURITY
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY ONLY (A) TO ZENITH
NATIONAL INSURANCE CORP. (THE "COMPANY"), (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER
THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF APPLICABLE) OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND (ii) IN EACH OF CASES (B)
THROUGH (F) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
C-1
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE "PROHIBITED TRANSACTIONS" PROVISIONS OF SECTION 406 OF
THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")
OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED ("THE
CODE"), AND IS NOT USING THE ASSETS OF ANY SUCH PLAN TO ACQUIRE THIS CAPITAL
SECURITY OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT
IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE,
OR IS EXEMPT FROM ANY SUCH PROHIBITION BY APPLICATION OF A STATUTORY,
REGULATORY OR ADMINISTRATIVE EXEMPTION.
THIS CAPITAL SECURITY WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY
IN BLOCKS HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY PARTIAL
REDEMPTION) OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES). ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THE CAPITAL SECURITIES IN A BLOCK
HAVING A LIQUIDATION AMOUNT (BEFORE GIVING EFFECT TO ANY PARTIAL REDEMPTION)
OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH
CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT
OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
C-2
Certificate number Number of Capital Securities
CUSIP NO.
Certificate Evidencing Capital Securities
of
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
8.55% Capital Securities
(Liquidation Amount $1,000 per Capital Security)
ZENITH NATIONAL INSURANCE CAPITAL TRUST I, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that ________________ (the "Holder") is the registered owner of
preferred securities of the Trust representing preferred undivided beneficial
interests in the assets of the Trust designated the 8.55% Capital Securities
(Liquidation Amount $1,000 per Security) (the "Capital Securities"). The
Capital Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Capital Securities represented hereby are in all respects subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of July 30, 1998, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Capital Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Capital Security Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder. By its acceptance of
this certificate representing Capital Securities or a beneficial interest in
such Capital Securities, the owner of, and any person that acquires a
beneficial interest in, such Capital Securities agrees to treat the
Debentures described in the Declaration as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in such indebtedness
for tax purposes.
C-3
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _______, 1998.
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
By:__________________________
Xxxxxxx X. Xxx
Regular Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Property Trustee
By:__________________________
Authorized Signatory
C-4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 8.55% (the "Coupon Rate") of the stated liquidation amount
of $1,000 per Capital Security, such rate being the rate of interest payable
on the Debentures to be held by the Property Trustee. Distributions not
currently made will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds legally
available therefor. The amount of Distributions payable for any period will
be computed for any full semi-annual Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period of less than a full
calendar month the number of days elapsed in such month.
Distributions on the Capital Securities will be cumulative, will
accrue from the date of original issuance and will be payable semi-annually
in arrears, on the following dates, which dates correspond to the interest
payment dates on the Debentures: February 1 and August 1 of each year,
commencing on February 1, 1999, except as otherwise described below. So long
as no Event of Default (or an event which would be an Event of Default with
the giving of required notice or the passage of time) has occurred and is
continuing, the Debenture Issuer has the right under the Indenture to defer
payments of interest by deferring the interest payment period from time to
time on the Debentures for a period not exceeding 10 consecutive semi-annual
periods (each a "Deferral Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semi-annually
during any such Deferral Period. Prior to the termination of any such
Deferral Period, the Debenture Issuer may further extend such Deferral Period
so long as no Event of Default (or an event which would be an Event of
Default with the giving of required notice or the passage of time) has
occurred and is continuing; PROVIDED THAT such Deferral Period together with
all such previous and further deferrals thereof may not exceed 10 consecutive
semi-annual periods or extend beyond the maturity (whether at the stated
maturity or by declaration of acceleration, call for redemption or otherwise)
of the Debentures under the Indenture. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the
Trust on the first record date after the end of the Deferral Period. Upon the
termination of any Deferral period and the payment of all amounts then due,
the Debenture Issuer may commence a new Deferral Period, subject to the above
requirements.
The Capital Securities shall be redeemable as provided in the
Declaration.
C-5
FORM OF ASSIGNMENT
For value received ____________________ hereby sell(s), assign(s) and
transfer(s) unto______________________________________________________________
______________________________________________________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
_______________ attorney to transfer the said security on the books of the
Trust, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior
to such date as restrictions on the transfer of such security imposed by the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder shall be terminated in accordance with the Declaration,
the undersigned confirms that such security is being transferred:
/ / To Zenith National Insurance Corp. or a subsidiary thereof; or
/ / Pursuant to an effective registration statement under the
Securities Act; or
/ / Pursuant to and in compliance with Rule 144A under the Securities
Act;(1) or
/ / To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act;(2)
/ / Pursuant to and in compliance with Regulation S under the
Securities Act;(1) or
/ / Pursuant to and in compliance with Rule 144 under the Securities
Act;
--------------------------
1. If the transferee is an Institutional Accredited Investor taking
delivery in the form of a Definitive Capital Securities Certificate,
the undersigned hereby also delivers the certificate in the form of
Exhibit E to the Declaration. or
2. If the transferee is an Institutional Accredited Investor taking
delivery in the form of a Definitive Capital Securities Certificate,
the undersigned hereby also delivers the certificate in the form of
Exhibit E to the Declaration.
C-6
and unless the box below is checked, the undersigned confirms that such
security is not being transferred to an "affiliate" of the Trust as defined in
Rule 144 under the Securities (an "Affiliate"):
/ / The transferee is an Affiliate of the Trust.
Dated:
-------------------------
--------------------------------------
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Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange.
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Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with
the name as written upon the face of this Security in every particular,
without alteration or enlargement or any change whatever.
C-7
EXHIBIT D
Certificate number Number of Common Securities
Certificate Evidencing Common Securities
of
ZENITH NATIONAL INSURANCE CAPITAL TRUST I
Common Securities
(Liquidation Amount $1,000 per Common Security)
ZENITH NATIONAL INSURANCE CAPITAL TRUST I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that Zenith National Insurance Corp., a Delaware corporation (the "Holder"), is
the registered owner of __________ Common Securities of the Trust representing
an undivided beneficial interest in the assets of the Trust and designated the
Common Securities (Liquidation Amount $1,000 per common security) (the "Common
Securities"). Subject to the limitations in the Declaration, the Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of July 30, 1998, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration and the Indenture (including any
supplemental indenture) to a Holder without charge upon written request to the
Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder. By its acceptance of
this certificate representing Common Securities or a beneficial interest in such
Common Securities, the owner of, and any person that acquires a beneficial
interest in, such Common Securities agrees to treat the Debentures described in
the Declaration as indebtedness and the Common Securities as evidence of
indirect beneficial ownership in such indebtedness for tax purposes.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _______, 1998.
By:___________________________
Xxxxxxx X. Xxx
Regular Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Property Trustee
By:___________________________
Authorized Signatory
D-2
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 8.55% (the "Coupon Rate") of the liquidation amount of $1,000
per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions not currently
made will bear interest thereon compounded semi-annually at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds legally available therefor.
The amount of Distributions payable for any period will be computed for any
full semi-annual Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period of less than a full calendar month the
number of days elapsed in such month.
Distributions on the Common Securities will be cumulative, will
accrue from the date of original issuance and will be payable semi-annually
in arrears, on the following dates, which dates correspond to the interest
payment dates on the Debentures: February 1 and August 1 of each year,
commencing on February 1, 1999, except as otherwise described below. So long
as no Event of Default (or an event which would be an Event of Default with
the giving of required notice or the passage of time) has occurred and is
continuing, the Debenture Issuer has the right under the Indenture to defer
payments of interest by deferring the interest payment period from time to
time on the Debentures for a period not exceeding 10 consecutive periods
(each a "Deferral Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semi-annually
during any such Deferral Period. Prior to the termination of any such
Deferral Period, the Debenture Issuer may further extend such Deferral Period
so long as no Event of Default (or an event which would be an Event of
Default with the giving of required notice or the passage of time) has
occurred and is continuing; PROVIDED THAT such Deferral Period together with
all such previous and further deferrals thereof may not exceed 10 consecutive
semi-annual periods or extend beyond the maturity (whether at the stated
maturity or by declaration of acceleration, call for redemption or otherwise)
of the Debentures under the Indenture. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the
Trust on the first record date after the end of the Deferral Period. Upon
the termination of any Deferral Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Deferral Period, subject to the
above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
D-3
EXHIBIT E
FORM OF LETTER TO BE DELIVERED
BY INSTITUTIONAL ACCREDITED INVESTORS
Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Zenith National Insurance Capital Trust I
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Ladies and Gentlemen:
We understand that the 8.55 % Capital Securities, Liquidation Amount
$1,000 per Capital Security (the "Capital Securities"), of Zenith National
Insurance Capital Trust I, a Delaware business trust (including the guarantee
(the "Guarantee") of Zenith National Insurance Corp. ("Zenith") executed in
connection therewith), and the 8.55% Subordinated Deferrable Interest
Debentures due 2028 of Zenith (the "Debentures" and, together with the
Capital Securities and the Guarantee, the "Securities") are being offered in
a transaction not involving any public offering within the United States
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and that the Securities have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which
we acquire any Capital Securities, that if, prior to the expiration of the
holding period applicable to sales of any Security under Rule 144(k) under
the Securities Act, we decide to offer, resell or otherwise transfer such
Security, such Security may be offered, resold or otherwise transferred only
(i) to Zenith or a subsidiary thereof, (ii) pursuant to an effective
registration statement under the Securities Act, (iii) to a person who is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in compliance with Rule 144A, (iv) outside the United States in
compliance with Rule 904 under the Securities Act or (v) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available) and (vi) in each case, in accordance with any applicable
securities laws of the states of the United States or any other applicable
jurisdiction and in accordance with the legends set forth on the Capital
Securities and the Debentures. We further agree to provide any person
purchasing any of the Capital Securities or Debentures from us a notice
advising such purchaser that resales of such Securities are restricted as
stated herein. We understand that any Capital Securities will bear a legend
reflecting the substance of this paragraph.
We confirm that:
(A) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act or an entity in which all of
the equity owners are accredited investors within the meaning of Rule
501(a)(l), (2) and (3) under the Securities Act (an "Institutional
Accredited Investor");
(B) (A) any purchase of Capital Securities by us will be for our own
account or for the account of one or more other Institutional Accredited
Investors or as fiduciary for the account of one or more trusts, each of
which is an "accredited investor" within the meaning of Rule 501(a)(7)
under the Securities Act and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of Section 3(a)(2) of
the Securities Act, or a "savings and loan association" or other
institution described in Section 3(a)(5)(A) of the Securities Act that is
acquiring Capital Securities as fiduciary for the account of one or more
institutions for which we exercise sole investment discretion;
(C) in the event that we purchase any Capital Securities, we will
acquire Capital Securities having a liquidation amount (before giving
effect to any partial redemption) of not less than $100,000 for our own
account or for any separate account for which we are acting;
(D) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of an
investment in the Capital Securities;
(E) we are not acquiring Capital Securities with a view to resale or
distribution thereof or with any present intention of offering or selling
Capital Securities, except as permitted above; provided that the
disposition of our property and property of any accounts for which we are
acting as fiduciary shall remain at all times within our control; and
(F) we have had access to such financial and other information and
have been afforded the opportunity to ask such questions of representatives
of Zenith and receive answers thereto, as we deem necessary in connection
with our decision to purchase Capital Securities.
We acknowledge that you and others, including without limitation,
Credit Suisse First Boston Corporation, BancAmerica Xxxxxxxxx Xxxxxxxx and
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, will rely upon our
confirmations, acknowledgments and
E-2
agreements set forth herein, and we agree to notify you promptly in writing
if any of our representations or warranties herein ceases to be accurate and
complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
-----------------------------
(Name of Purchaser)
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address:
----------------------------------
Dated:
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E-3
EXHIBIT F
FORM OF TRANSFER CERTIFICATE--
REGULATION S GLOBAL SECURITY OR INSTITUTIONAL
ACCREDITED INVESTORS DEFINITIVE TO 144A GLOBAL SECURITY
Norwest Bank Minnesota, National Association
Xxxxx & Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Administration
ZENITH NATIONAL INSURANCE
CAPITAL TRUST I CAPITAL SECURITIES
Reference is hereby made to the Amended and Restated Declaration of
Trust, dated as of July 30, 1998 (the "Declaration"), among Zenith National
Insurance Corp., Norwest Bank Minnesota, National Association, as Property
Trustee, Wilmington Trust Company, as Delaware Trustee, the Regular Trustees
named therein and the holders, from time to time, of undivided beneficial
interests in the assets of Zenith National Insurance Capital Trust I.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Declaration.
This letter relates to ___________________ Capital Securities which
are evidenced by (I) a Regulation S Global Security (CUSIP No. ___________) and
held with the Depositary indirectly or (II) a Definitive Capital Security
Certificate held directly, in either case in the name of [insert name of
transferor] (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in
such Capital Securities to a Person that will take delivery thereof in a
transaction effected pursuant to and in accordance with Rule 144A under the
United States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor does hereby certify that (i) the Transferor's
interest in such Capital Securities is being transferred in accordance with the
transfer restrictions set forth in the Declaration; and (ii) the transferee is a
person who the Transferor reasonably believes is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act, purchasing for
its own account or the account of a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, in accordance with all
applicable securities laws of the states of the United States and other
jurisdictions.
You, the Trust and each of Credit Suisse First Boston Corporation,
BancAmerica Xxxxxxxxx Xxxxxxxx and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation are entitled
to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Dated:
-----------------------
[Insert Name of Transferor]
By:
------------------------
Name:
Title:
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the
Person signing on behalf of
such registered owner must be
stated.)
F-2
EXHIBIT G
FORM OF TRANSFER CERTIFICATE--
144A GLOBAL SECURITY OR INSTITUTIONAL ACCREDITED
INVESTORS DEFINITIVE TO REGULATION S GLOBAL SECURITY
Norwest Bank Minnesota, National Association
Xxxxx & Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Administration
ZENITH NATIONAL INSURANCE
CAPITAL TRUST I CAPITAL SECURITIES
Reference is hereby made to the Amended and Restated Declaration of
Trust, dated as of July 30, 1998 (the "Declaration"), among Zenith National
Insurance Corp., Norwest Bank Minnesota, National Association, as Property
Trustee, Wilmington Trust Company, as Delaware Trustee, the Regular Trustees
named therein and the holders, from time to time, of undivided beneficial
interests in the assets of Zenith National Insurance Capital Trust I.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Declaration.
This letter relates to _______________________ Capital Securities
which are evidenced by (I) a 144A Global Security (CUSIP No. _______) and held
indirectly with the Depositary or (II) a Definitive Capital Security Certificate
held directly, in either case, in the name of [insert name of transferor] (the
"Transferor").
The Transferor has requested a transfer of such beneficial interest in
such Capital Securities to a Person that will take delivery thereof in a
transaction effected pursuant to and in accordance with Rule 904 under the
United States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor does hereby further certify that the Transferor's
interest in such Capital Securities is being transferred in accordance with the
transfer restrictions set forth in the Declaration and that:
The offer of such Capital Securities was not made to a person in the
United States;
(A) either:
(i) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting on
its behalf reasonably believed that the transferee was outside the
United States, or
(ii) the transaction was executed in, or through the facilities
of a designated offshore securities market and neither the Transferor
nor any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(B) no directed selling efforts have been made in contravention of
the requirements of 904(b) of Regulation S, as applicable;
(C) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(D) we have advised the transferee of the transfer restrictions
applicable to such Capital Securities.
You, the Trust and each of Credit Suisse First Boston Corporation,
BancAmerica Xxxxxxxxx Xxxxxxxx and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby. Terms used in this certificate and not otherwise
defined herein or in the Declaration have the meanings set forth in Regulation S
under the Securities Act.
Dated:
----------------------
[Insert Name of Transferor]
By:
----------------------------
Name:
Title:
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the Person
signing on behalf of such
registered owner must be stated.)
G-2