UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 22, 2006
Financial
Security Assurance Holdings Ltd.
(Exact name of
registrant as specified in its charter)
New York |
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1-12644 |
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13-3261323 |
(State or other
jurisdiction
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(Commission File Number) |
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(IRS Employer
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31 West 52nd Street, New York, NY |
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10019 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (212) 826-0100
Not
applicable.
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 420.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
(a) On November 22, 2006, Financial Security Assurance Holdings Ltd. (the Company) completed the sale of $300,000,000 aggregate principal amount of its Junior Subordinated Debentures, Series 2006-1 (the Debentures), pursuant to a Purchase Agreement dated November 17, 2006 (the Purchase Agreement), among Goldman, Sachs & Co., Lehman Brothers Inc., JPMorgan Securities Inc., UBS Securities LLC and Wachovia Capital Markets, LLC, as Initial Purchasers, and the Company. A copy of the Purchase Agreement is attached as Exhibit 10.1 herewith and incorporated by reference herein. The Debentures are intended to qualify for certain levels of equity credit from the rating agencies. As a result, the Debentures are expected to be excluded, in whole or in part, by the rating agencies in applying limitations on indebtedness permitted to be issued by the Company without rating consequences. The Company intends to use the net proceeds from the issuance of the Debentures to pay a dividend to its shareholders.
The Debentures were issued under an Indenture dated as of November 22, 2006 (the Indenture), between the Company and The Bank of New York, as Trustee. The Indenture, the Officers Certificate provided pursuant to Sections 1.02 an 3.01 of the Indenture (the Officers Certificate), and the Debentures provide, among other things, that the Debentures will bear interest on their principal amount from and including November 22, 2006 to but excluding December 15, 2036 (the scheduled maturity date) at the annual rate of 6.40%, payable semi-annually in arrears on each June 15 and December 15, beginning June 15, 2007.
The Company has the right, on one or more occasions, to defer the payment of interest on the Debentures for one or more consecutive interest periods that do not exceed five years without being subject to its obligations under the alternative payment mechanism described below and for one or more consecutive interest periods that do not exceed a total of 10 years without giving rise to an event of default. In the event of the Companys bankruptcy, holders will have a limited claim for deferred interest.
If the Company defers the payment of interest on the Debentures and is required to pay deferred interest pursuant to the alternative payment mechanism, then it will be required to issue common stock and qualifying non-cumulative perpetual preferred stock until it has raised an amount of eligible proceeds at least equal to the aggregate amount of accrued and unpaid deferred interest. The amounts of common stock and qualifying non-cumulative perpetual preferred stock that the Company is required or permitted to issue pursuant to the alternative payment mechanism are subject to certain caps. The Company will be excused from its obligations under the alternative payment mechanism in respect of any interest payment date in the event certain company market disruption events occur and are continuing after the immediately preceding interest payment date.
The principal amount of the Debentures will become due on the scheduled maturity date only to the extent that the Company has received sufficient net proceeds from the sale of certain qualifying capital securities during a 180-day period ending on a notice date not more than 30 or less than five business days prior to such date. The Company will use commercially reasonable efforts, subject to certain market disruption events, to sell enough qualifying capital securities to permit repayment of the Debentures in full on the scheduled maturity date. If any amount is not paid on the scheduled maturity date, it will remain outstanding and bear interest at a floating rate of one month LIBOR plus 2.215%, payable monthly in arrears, and the Company will continue to use commercially reasonable efforts to sell enough qualifying capital securities to permit repayment of the Debentures in full.
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The final repayment date of the Debentures is initially December 15, 2066, and will be automatically extended up to four times in five-year increments to December 15, 2071, 2076, 2081, and 2086, subject to the satisfaction of certain conditions. On the final repayment date, the Company must pay any remaining principal and interest on the Debentures in full, whether or not the Company has sold qualifying capital securities.
The Company may redeem the Debentures (a) in whole or in part, at any time prior to December 15, 2036 at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater, the make-whole redemption price as set forth in the Debentures, provided that in the case of a redemption in part that the principal amount outstanding after such redemption is at least $50,000,000, or (b) in whole, but not in part, prior to December 15, 2036, within 90 days after certain events involving taxation or changes in the rating agency equity credit criteria applicable to the Debentures at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater, the make-whole redemption price.
The Debentures will (a) be subordinated to the Companys existing and future senior, subordinated and junior subordinated debt, except for any future debt that by its terms is not superior in right of payment, (b) rank pari passu with the Companys trade accounts payable and accrued liabilities arising in the ordinary course of business and (c) be effectively subordinated to all liabilities of the Companys subsidiaries.
The Debentures have not been registered under the Securities Act of 1933, as amended (the Act) or any state securities laws and are not transferable except as permitted under the Act and applicable state securities laws pursuant to registration or exemption therefrom.
A copy of the Indenture is attached herewith as Exhibit 4.1, a copy of the Officers Certificate is attached herewith as Exhibit 10.2 and the form of the Debentures is attached herewith as Exhibit 10.3. Such exhibits are incorporated by reference herein and this description of the material terms of the Debentures is qualified in its entirely by reference to such exhibits.
Contribution Agreement
The Company has entered into a Contribution Agreement, dated as of November 22, 2006 (the Contribution Agreement), with Dexia S.A. (Dexia), a publicly held Belgian corporation. The Company is an indirect subsidiary of Dexia.
Pursuant to the Contribution Agreement, if the Company elects to defer interest payments, then to the extent it is required to issue common stock and qualifying non-cumulative perpetual preferred stock pursuant to the alternative payment mechanism but is unable to raise sufficient eligible proceeds from the sale of qualifying non-cumulative perpetual preferred stock, Dexia has agreed to promptly use its commercially reasonable efforts to raise common equity providing Dexia with net proceeds equal to the shortfall amount. If Dexia is successful in raising any such common equity, then Dexia will promptly subscribe for additional shares of the Companys common stock with the net proceeds of such common equity.
Dexias obligations under the Contribution Agreement to subscribe for additional shares of the Companys common stock and to raise common equity are subject to a number of exceptions and limitations, including a maximum contribution amount of $300,000,000 and the occurrence of a parent market disruption event. In addition, the Contribution Agreement may be amended or terminated in certain circumstances. The Contribution Agreement is not, and nothing contained therein shall be
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deemed to constitute, a guaranty by Dexia or any other party of the payment of any obligation or liability of the Company under the Debentures.
A copy of the Contribution Agreement is attached herewith as Exhibit 10.4 and is incorporated by reference herein. This description of the material terms of the Contribution Agreement is qualified in its entirely by reference to such exhibit.
Replacement Capital Covenant
The Company has agreed in a Replacement Capital Covenant, dated as of November 22, 2006 (the Replacement Capital Covenant), for the benefit of persons that buy, hold or sell a specified series of its long-term indebtedness ranking senior to the Debentures, that the Debentures will not be repaid, redeemed, repurchased or defeased by the Company or its subsidiaries on or before the date that is 20 years prior to the final repayment date, unless the principal amount repaid or defeased or the applicable redemption or repurchase price does not exceed a maximum amount determined by reference to the aggregate amount of net cash proceeds the Company and its subsidiaries have received from the sale of common stock, rights to acquire common stock, securities convertible into common stock and qualifying capital securities.
The initial series of indebtedness benefiting from the Replacement Capital Covenant is the Companys 5.60% Notes due July 15, 2103. The Replacement Capital Covenant includes provisions requiring the Company to redesignate a new series of indebtedness if the covered series of indebtedness approaches maturity, becomes subject to a redemption notice or is reduced to less than $100,000,000 in outstanding principal amount, subject to additional procedures.
A copy of the Replacement Capital Covenant is attached herewith as Exhibit 10.5 and is incorporated by reference herein. This description of the material terms of the Replacement Capital Covenant is qualified in its entirely by reference to such exhibit.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of the Registrant.
(a)
The disclosures under Item 1.01(a) of this Current Report on Form 8-K
are incorporated by reference into this
Item 2.03(a).
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
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Description |
4.1 |
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Indenture, dated as of November 22, 2006 (the Indenture), between Financial Security Assurance Holdings Ltd. and The Bank of New York, as Trustee |
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10.1 |
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Purchase Agreement, dated November 17, 2006, among Goldman, Sachs & Co., Lehman Brothers Inc., JPMorgan Securities Inc., UBS Securities LLC and Wachovia Capital Markets, LLC, as Initial Purchasers, and Financial Security Assurance Holdings Ltd. |
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10.2 |
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Financial Security Assurance Holdings Ltd., Officers Certificate Pursuant to Sections 1.02 and 3.01 of the Indenture |
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10.3 |
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Form of Junior Subordinated Debenture, Series 2006-1 |
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10.4 |
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Contribution Agreement, dated as of November 22, 2006, between Dexia S.A. and Financial Security Assurance Holdings Ltd. |
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10.5 |
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Replacement Capital Covenant, dated as of November 22, 2006, by Financial Security Assurance Holdings Ltd. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. |
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Date: November 28, 2006 |
By: |
/s/ BRUCE E. STERN |
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Name: |
Bruce E. Stern |
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Title: |
General Counsel and Managing Director |
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EXHIBIT INDEX
Exhibit
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Description |
4.1 |
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Indenture, dated as of November 22, 2006 (the Indenture), between Financial Security Assurance Holdings Ltd. and The Bank of New York, as Trustee |
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10.1 |
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Purchase Agreement, dated November 17, 2006, among Goldman, Sachs & Co., Lehman Brothers Inc., JPMorgan Securities Inc., UBS Securities LLC and Wachovia Capital Markets, LLC, as Initial Purchasers, and Financial Security Assurance Holdings Ltd. |
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10.2 |
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Financial Security Assurance Holdings Ltd., Officers Certificate Pursuant to Sections 1.02 and 3.01 of the Indenture |
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10.3 |
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Form of Junior Subordinated Debenture, Series 2006-1 |
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10.4 |
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Contribution Agreement, dated as of November 22, 2006, between Dexia S.A. and Financial Security Assurance Holdings Ltd. |
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10.5 |
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Replacement Capital Covenant, dated as of November 22, 2006, by Financial Security Assurance Holdings Ltd. |
Exhibit 4.1
EXECUTION COPY
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
and
THE BANK OF NEW YORK,
as Trustee
INDENTURE
Dated as of November 22, 2006
Subordinated Debt Securities
TABLE OF CONTENTS
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Page |
ARTICLE I |
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Definitions and other Provisions of General Application |
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SECTION 1.01 Definitions |
1 |
SECTION 1.02 Compliance Certificates and Opinions |
8 |
SECTION 1.03 Form of Documents Delivered to Trustee |
9 |
SECTION 1.04 Acts of Holders |
10 |
SECTION 1.05 Notices, Etc., to Trustee and Company |
11 |
SECTION 1.06 Notice to Holders; Waiver |
11 |
SECTION 1.07 Conflict with Trust Indenture Act |
11 |
SECTION 1.08 Effect of Headings and Table of Contents |
12 |
SECTION 1.09 Successors and Assigns |
12 |
SECTION 1.10 Separability Clause |
12 |
SECTION 1.11 Benefits of Indenture |
12 |
SECTION 1.12 Governing Law |
12 |
SECTION 1.13 Legal Holidays |
12 |
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ARTICLE II |
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Security Forms |
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SECTION 2.01 Forms Generally |
12 |
SECTION 2.02 Form of Trustees Certificate of Authentication |
13 |
SECTION 2.03 Securities Issuable in the Form of a Global Security |
13 |
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ARTICLE III |
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The Securities |
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SECTION 3.01 Amount Unlimited; Issuable in Series |
16 |
SECTION 3.02 Denominations |
18 |
SECTION 3.03 Execution, Authentication, Delivery and Dating |
18 |
SECTION 3.04 Temporary Securities |
20 |
SECTION 3.05 Registration, Registration of Transfer and Exchange |
20 |
SECTION 3.06 Mutilated, Destroyed, Lost and Stolen Securities |
21 |
SECTION 3.07 Payment of Interest; Interest Rights Preserved |
22 |
SECTION 3.08 Persons Deemed Owners |
23 |
SECTION 3.09 Cancellation |
23 |
SECTION 3.10 Computation of Interest |
23 |
SECTION 3.11 CUSIP and ISIN Numbers |
23 |
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ARTICLE IV |
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Satisfaction and Discharge |
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SECTION 4.01 Satisfaction and Discharge of Indenture |
24 |
SECTION 4.02 Application of Trust Funds; Indemnification |
25 |
SECTION 4.03 Legal Defeasance and Discharge of Indenture |
26 |
SECTION 4.04 Defeasance of Certain Obligations |
28 |
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ARTICLE V |
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Remedies |
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SECTION 5.01 Events of Default |
29 |
SECTION 5.02 Acceleration of Maturity: Rescission and Annulment |
30 |
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee |
31 |
SECTION 5.04 Trustee May File Proofs of Claim |
32 |
SECTION 5.05 Trustee May Enforce Claims Without Possession of Securities |
33 |
SECTION 5.06 Application of Money Collected |
33 |
SECTION 5.07 Limitation on Suits |
34 |
SECTION 5.08 Unconditional Right of Holders to Receive Principal, Premium and Interest |
34 |
SECTION 5.09 Restoration of Rights and Remedies |
34 |
SECTION 5.10 Rights and Remedies Cumulative |
35 |
SECTION 5.11 Delay or Omission Not Waiver |
35 |
SECTION 5.12 Control by Holders |
35 |
SECTION 5.13 Waiver of Past Defaults |
35 |
SECTION 5.14 Undertaking for Costs |
36 |
SECTION 5.15 Waiver of Stay or Extension Laws |
36 |
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ARTICLE VI |
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The Trustee |
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SECTION 6.01 Certain Duties and Responsibilities |
36 |
SECTION 6.02 Notice of Defaults |
38 |
SECTION 6.03 Certain Rights of Trustee |
38 |
SECTION 6.04 Not Responsible for Recitals or Issuance of Securities |
40 |
SECTION 6.05 May Hold Securities |
41 |
SECTION 6.06 Money Held in Trust |
41 |
SECTION 6.07 Compensation and Reimbursement |
41 |
SECTION 6.08 Disqualification; Conflicting Interests |
42 |
SECTION 6.09 Corporate Trustee Required; Eligibility |
42 |
SECTION 6.10 Resignation and Removal; Appointment of Successor |
42 |
SECTION 6.11 Acceptance of Appointment by Successor |
44 |
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business |
45 |
SECTION 6.13 Preferential Collection of Claims Against Company |
45 |
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ARTICLE VII |
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Holders Lists and Reports by Trustee and Company |
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SECTION 7.01 Company to Furnish Trustee Names and Addresses of Holders |
45 |
SECTION 7.02 Preservation of Information; Communications to Holders |
46 |
SECTION 7.03 Reports by Trustee |
48 |
SECTION 7.04 Reports by Company |
48 |
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ARTICLE VIII |
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Successor Corporation |
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SECTION 8.01 When Company May Merge or Transfer Assets |
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ARTICLE IX |
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Amendments and Supplemental Indentures |
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SECTION 9.01 Amendments or Supplemental Indentures without Consent of Holders |
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SECTION 9.02 Amendments or Supplemental Indentures with Consent of Holders |
51 |
SECTION 9.03 Execution of Supplemental Indentures |
52 |
SECTION 9.04 Effect of Supplemental Indentures |
52 |
SECTION 9.05 Conformity with Trust Indenture Act |
52 |
SECTION 9.06 Reference in Securities to Supplemental Indentures |
52 |
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ARTICLE X |
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Covenants |
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SECTION 10.01 Payment of Principal, Premium and Interest |
53 |
SECTION 10.02 Maintenance of Office or Agency |
53 |
SECTION 10.03 Money for Securities; Payments to Be Held in Trust |
53 |
SECTION 10.04 Corporate Existence |
55 |
SECTION 10.05 Maintenance of Properties |
55 |
SECTION 10.06 Statement by Officers as to Default |
55 |
SECTION 10.07 Waiver of Certain Covenants |
55 |
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ARTICLE XI |
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Redemption of Securities |
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SECTION 11.01 Applicability of Article |
56 |
SECTION 11.02 Election to Redeem; Notice to Trustee |
56 |
SECTION 11.03 Selection by Trustee of Securities to Be Redeemed |
56 |
SECTION 11.04 Notice of Redemption |
57 |
SECTION 11.05 Deposit of Redemption Price |
57 |
SECTION 11.06 Securities Payable on Redemption Date |
58 |
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SECTION 11.07 Securities Redeemed in Part |
58 |
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ARTICLE XII |
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Sinking Funds |
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SECTION 12.01 Applicability of Article |
59 |
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities |
59 |
SECTION 12.03 Redemption of Securities for Sinking Fund |
59 |
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ARTICLE XIII |
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Subordination |
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SECTION 13.01 Agreement to Subordinate |
60 |
SECTION 13.02 Default on Senior Indebtedness |
61 |
SECTION 13.03 Liquidation; Dissolution; Bankruptcy |
62 |
SECTION 13.04 Subrogation |
63 |
SECTION 13.05 Trustee to Effectuate Subordination |
64 |
SECTION 13.06 Notice by the Company |
64 |
SECTION 13.07 Rights of the Trustee; Holders of Senior Indebtedness |
65 |
SECTION 13.08 Subordination May Not Be Impaired |
65 |
SECTION 13.09 Article Applicable to Paying Agents |
66 |
SECTION 13.10 Defeasance of This Article |
66 |
SECTION 13.11 Subordination Language to Be Included in Securities |
66 |
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INDENTURE, dated as of November 22, 2006, between FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation (herein called the Company ), having its principal office at 31 West 52nd Street, New York, NY 10019, and THE BANK OF NEW YORK, a New York banking corporation, as trustee hereunder (herein called the Trustee ).
RECITALS
WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the Securities ), to be issued in one or more series as in this Indenture provided; and
WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done;
NOW, THEREFORE , THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:
(a) the terms defined in this article have the meanings assigned to them in this article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and, except as otherwise herein expressly provided, the term generally accepted accounting principles with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation;
(d) the words herein hereof and hereunder and other words of similar import refer to this Indenture or the Securities, as applicable, as a whole and not to any particular article, section or other subdivision; and
(e) all references used herein to the male gender shall include the female gender.
Act , when used with respect to any Holder, has the meaning specified in Section 1.04.
Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.
A pplicants has the meaning specified in Section 7.02.
Board of Directors means either the board of directors of the Company or any duly authorized committee of that board duly authorized to act hereunder.
Board Resolution means a copy of a resolution, certified by the secretary or an assistant secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee.
Business Day means, with respect to any Security, any day, other than a Saturday, Sunday, or a day on which banking institutions in the City of New York are authorized or required by law, regulation or executive order to remained closed.
Capital Stock for any entity means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) shares issued by that entity.
Certificated Securities means Securities that are in registered definitive form.
Commission means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
Company means the Person named as the Company in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Company shall mean such successor Person.
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Company Request or Company Order means a written request or order signed in the name of the Company by its chairman of the Board of Directors, a co-chief executive officer , the vice chairman of the Board of Directors, its president or a vice president, and by its treasurer, an assistant treasurer, its secretary or an assistant secretary, and delivered to the Trustee.
Corporate Trust Office means the office of the Trustee at which at any particular time the trust created by this Indenture shall be administered, which office, at the time of the execution of this Indenture, is located, c/o The Bank of New York, Corporate Trust Administration, at 101 Barclay Street, Floor 8W, New York, NY 10286.
Defaulted Interest has the meaning specified in Section 3.07.
Depositary means, unless otherwise specified by the Company pursuant to either Section 2.03 or 3.01, with respect to Securities of any series issuable or issued as a Global Security, The Depository Trust Company, New York, New York, or any successor thereto registered under the Exchange Act, as amended, or other applicable statute or regulation.
Designated Senior Indebtedness means any Senior Indebtedness of the Company permitted to be incurred under this Indenture the principal amount of which is $20,000,000 or more at the time of the designation of such Senior Indebtedness as Designated Senior Indebtedness by the Company in a written instrument delivered to the Trustee.
Event of Default has the meaning specified in Section 5.01.
Exchange Act means the United States Securities Exchange Act of 1934, as amended, and rules and regulations promulgated by the Commission thereunder.
Global Security means a Security issued to evidence all or a part of any series of Securities which is executed by the Company and authenticated and delivered by the Trustee to the applicable Depositary or pursuant to the applicable Depositarys instruction, all in accordance with this Indenture and pursuant to a Company Order, which shall be registered in the name of the applicable Depositary or its nominee.
Holder means a Person in whose name a Security is registered in the Security Register.
Holder Action has the meaning specified in Section 7.02(d).
Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities established as contemplated by Section 3.01.
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Interest , when use d with respect to an Original Issue Discount Security which by its terms bears interest on ly after Maturity, means interest payable after Maturity.
Interest Payment Date , when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
Maturity , when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
Notice of Default has the meaning specified in Section 5.01(4).
Officers Certificate means a certificate signed by the chairman of the Board of Directors, the vice-chairman of the Board of Directors, a co-chief executive officer, the president or a vice president, and by the treasurer, an assistant treasurer, the secretary or an assistant secretary, of the Company, and delivered to the Trustee.
Opinion of Counsel means written opinion of counsel, who may be counsel for the Company and who shall be acceptable to the Trustee.
Original Issue Discount Security means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.
Outstanding , when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
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provided , however , that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgees right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. In case of a dispute as to such right, any decision by the Trustee shall be full protection to the Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of any of the above-described Persons; and, subject to Section 6.01, the Trustee shall be entitled to accept such Officers Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purposes of any such determination.
Paying Agent means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company.
Payment Blockage Notice has the meaning specified in Section 13.02(b).
Payment Blockage Period has the meaning specified in Section 13.02(b).
Permitted Junior Securities means:
Person means any individual, corporation, exempted limited company, limited liability company, partnership , joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
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Place of Payment , when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any) and interest on the Securities of that series are payable as specified as contemplated by Section 3.01.
Predecessor Security of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Redemption Date , when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
Redemption Price , when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
Regular Record Date for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 3.01.
Responsible Officer , when used with respect to the Trustee, means the officer of the Trustee assigned by the Trustee who shall have direct responsibility for the administration of this Indenture, and for the purposes of the reference to Responsible Officers of the Trustee contained in Section 6.02 shall also include any other officer of the Trustee to whom any matter is referred because of such officers knowledge of and familiarity with the particular subject.
Securities has the meaning stated in the first recital of this Indenture and more particularly means any securities authenticated and delivered under this Indenture.
Security Register and Security Registrar have the respective meanings specified in Section 3.05.
Senior Indebtedness , unless otherwise specified in one or more indentures supplemental hereto or approved pursuant to a Board Resolution in accordance with Section 3.01, means, with respect to the Company:
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except, in each case, for the Securities and any such other indebtedness or deferral, amendment, renewal, extension, modification or refunding that contains express terms, or is issued under a deed, indenture or other instrument that contains express terms, providing that it is subordinate to or ranks pari passu with the Securities.
Such Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions of this Indenture irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness and notwithstanding that no express written subordination agreement may have been entered into between the holders of such Senior Indebtedness and the Trustee or any of the Holders.
Special Record Date for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.07.
Stated Maturity , when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.
Subsidiary means, with respect to any Person:
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Trust Indenture Act means the Trust Indenture Act of 1939, as amended, and in force at the date as of which this instrument was executed.
Trustee means the Person named as the Trustee in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, Trustee as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
U.S. Government Obligations means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as to the timely payment of principal and interest as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company which is a member of the Federal Reserve System and having a combined capital and surplus of at least $50,000,000 as custodian with respect to any such obligation evidenced by such depository receipt or a specific payment of interest on or principal of any such obligation held by such custodian for the account of the holder of a depository receipt; provided , however , that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the obligation set forth in (i) or (ii) above or the specific payment of interest on or principal of such obligation evidenced by such depository receipt.
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Every certificate with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate required by Section 10.06) shall include:
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters is erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
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Where any Person is required to make, give or execute two or more applications, requests, consents , certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
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If the Company mails a notice to Holders, it shall mail a copy of such notice to the Trustee at the same time.
In case by reason of the suspension of regular mail service or by reason of any other case it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
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The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
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THE BANK OF NEW YORK, |
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as Trustee |
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By |
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Authorized Signatory |
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UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT
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AS A WHOLE (I) BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR (II) BY A NOMINEE OF THE DEPOSITARY OR THE DEPOSITARY TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., 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.
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The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and set forth in an Officers Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,
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All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in such Officers Certificate or in any such indenture supplemental hereto.
If any of the terms of the Securities of any series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the secretary or an assistant secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers Certificate setting forth the terms of the Securities of any series.
Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices
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prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 2.01 and 3.01, or by one or more indentures supplemental hereto as provided by Section 9.01, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, if it so requests, and (subject to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel to the effect:
(a) that such form has been established in conformity with the provisions of this Indenture;
(b) that such terms have been established in conformity with the provisions of this Indenture;
(c) that this Indenture and such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors rights and to general equity principles; and
(d) that all laws and requirements in respect of the execution and delivery by the Company of the Securities have been complied with.
If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustees rights, duties, liabilities or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication unless otherwise provided by the terms established and contemplated by Section 3.01.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual or facsimile signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.
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If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series.
Subject to Section 2.03, upon surrender for registration or transfer of any Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor.
Subject to Section 2.03, at the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
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Subject to Section 2.03, all Securities issued upon any registration or transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 2.03, 3.04, 9.06 or 11.07 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption (under Section 11.03) and ending at the close of business on the day of such mailing or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.06, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Security or in exchange for such mutilated Security,
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shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this Section 3.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called Defaulted Interest ) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below:
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Subject to the foregoing provisions of this section, each Security lawfully delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
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(A) all Securities of such series theretofore authenticated and delivered (other than (i) Securities of such series which have been mutilated, destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.06 and (ii) Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.03) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for cancellation:
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust
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(i) money in U.S. dollars (or if the Securities are denominated in a currency other than U.S. dollars, an amount of the applicable currency) in an amount sufficient, or
to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company under Sections 3.05, 3.06, and 10.02, the obligations of the Company to the Trustee under Section 6.07, and, if money or U.S. Government Obligations shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section 4.01, the obligations of the Trustee under Section 4.02 and the next to last paragraph of Section 10.03, shall survive.
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(a) the rights of Holders of Securities to receive, from the trust funds described in subparagraph (1) hereof, (i) payment of the principal of (and premium, if any) and each installment of principal of (and premium, if any) or interest on the Securities on the Stated Maturity of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Securities;
(b) the Companys obligations with respect to such Securities under Sections 3.05, 3.06, 10.02 and 10.03; and
(c) the obligations of the Company to the Trustee under Section 6.07, provided , however , that the following conditions shall have been satisfied:
(1) the Company has or caused to be irrevocably deposited (except as provided in Section 4.02) with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities,
(i) money in U.S. Dollars (or if the Securities are denominated in a currency other than U.S. dollars, an amount of the applicable currency) in an amount sufficient, or
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(ii) (a) U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide not later than one day before the due date of any payment referred to in Section 4.01(A) or (B) money in an amount or (b) a combination of such money and such U.S. Government Obligations, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee,
to pay and discharge (A) the principal of (and premium, if any) and each installment of principal of (and premium, if any) and interest on the Outstanding Securities on the Stated Maturity of such principal or installment of principal or interest or on the applicable Redemption Date and (B) any mandatory sinking fund payments applicable to the Securities on the day on which such payments are due and payable in accordance with the terms of this Indenture and of the Securities;
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(i) money in U.S. dollars (or if the Securities are denominated in a currency other than U.S. dollars, an amount of the applicable currency) in an amount sufficient, or
(ii) (a) U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide not later than one day before the due date of any payment referred to in Section 4.01(A) or (B) money in an amount, or (b) a combination of such money and such U.S. Government Obligation, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee,
to pay and discharge (A) the principal of (and premium, if any) and each installment of principal (and premium, if any) and interest on the Outstanding Securities of that series on the Stated Maturity of such principal or installment of principal or interest and (B) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and payable in accordance with the terms of the Indenture and of such Securities;
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In the event the Company effects Covenant Defeasance with respect to any Securities and such Securities are declared due and payable because of the occurrence of any Event of Default, other than an Event of Default with respect to any covenant as to which there has been Covenant Defeasance, the U.S. Government Obligations on deposit with the Trustee will be sufficient to pay amounts due on such Securities at the time of the Stated Maturity but may not be sufficient to pay amounts due on such Securities at the time of the acceleration resulting from such Event of Default.
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In the case of an Event of Default resulting under Section 5.01(5) or (6), which occurs and is continuing with respect to Securities of any series at the time Outstanding, then all unpaid principal of and accrued interest on all such Outstanding Securities of that series shall become immediately due and payable without any notice or other action on the part of the Trustee or the Holders of any Securities of such series.
At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this article provided, the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee and any predecessor Trustee hereunder and all sums due the Trustee and any predecessor Trustee under Section 6.07; and
No such rescission shall affect any subsequent default or impair any right consequent thereon.
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the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate or rates prescribed therefore in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including all amounts due the Trustee and any predecessor Trustee under Section 6.07.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If any Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
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Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
FIRST: To the payment of all amounts due the Trustee and each predecessor Trustee under Section 6.07;
SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Securities in respect of which or for the benefit of which such money has been collected ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and
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THIRD: To the Company.
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
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Nothing in this Indenture shall impair the right of the Trustee to take any other action deemed proper by the Trustee which is not inconsistent with such direction.
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Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
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The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder unless the Trustee shall be specifically notified in writing of such default by the Company or by the owners of at least 25% in aggregate principal amount of Outstanding Securities or a Responsible Officer of the Trustee shall otherwise have actual knowledge of such default. In the absence of such notice delivered to the Trustee, the Trustee may conclusively assume there is no default except as aforesaid.
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any Board Resolution, resolution, Officers Certificate, certificate, statement, instrument, Opinion of Counsel, 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 or presented by the proper party or parties, and the Trustee need not investigate any fact or matter stated in the document;
(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or
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omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers Certificate and any resolution of the Board of Directors shall be evidenced to the Trustee by a copy thereof certified by the Secretary or Assistant Secretary of the Company;
(d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;
(g) the 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 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;
(h) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;
(i) the Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it;
(j) in the event the Trustee believes any ambiguity or uncertainty exists in any notice, instruction, direction, request or other communication, paper or document received by the Trustee pursuant to this Indenture, or in or under any specific provision of this Indenture, the Trustee shall promptly notify the Company of the details of such alleged ambiguity or uncertainty, and may, in its sole discretion, refrain from taking any action, and the Trustee shall be fully
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protected and shall incur no liability to any Person for refraining from taking such action, absent gross negligence or willful misconduct, unless and until the Trustee receives written instructions with respect to such matter signed by the Company or, in the case of any such ambiguity or uncertainty in any such item submitted to it by any Holder, signed by such Holder, that eliminate such ambiguity or uncertainty to the reasonable satisfaction of the Trustee;
(k) the Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including to the extent beyond the reasonable control of the Trustee, any acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communication services; accidents; labor disputes; acts of civil or military authority and governmental action; provided that the Trustee shall perform such obligations as soon as practicable after any such circumstance ceases to exist;
(l) anything in this Indenture notwithstanding, in no event shall the Trustee be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including loss of profit), even if the Trustee has been advised as to the likelihood of such loss or damage and regardless of the form of action;
(m) the 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 Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it;
(n) the rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, including as Security Registrar and Paying Agent, and each agent, custodian and other Person employed to act hereunder;
(o) the Trustee may request that the Company deliver an Officers Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers Certificate may be signed by any person authorized to sign an Officers Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded; and
(p) the permissive right of the Trustee to take or refrain from taking any actions enumerated in this Indenture shall not be construed as a duty.
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To ensure the performance of the obligations of the Company under this section, the Trustee shall have a senior claim to which the Securities are hereby made subordinate upon all property and funds held or collected by the Trustee as such, except property and funds held in trust for the payment of principal of, premium, if any, or interest on particular Securities. To the extent permitted by law, any compensation or expense accruing to or incurred by the Trustee after a default specified in or pursuant to Section 5.01 is intended to constitute an expense of administration under any then applicable bankruptcy or insolvency law.
The provisions of this Section 6.07 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee and shall apply with equal force and effect to the Trustee in each of its capacities hereunder, including as Security Registrar and Paying Agent.
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then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
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(a) semi-annually, not more than 15 days after each Regular Record Date, or, in the case of any series of Securities on which semi-annual interest is not payable, not more than fifteen days after such semi-annual dates as may be specified by the Trustee, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date or such semi-annual date, as the case may be; and
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
provided , however , that so long as the Trustee is the Security Registrar, no such list need be furnished.
If the Trustee shall elect not to afford such Applicants access to such information, the Trustee shall, upon the written request of such Applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 7.02(a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender
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the Trustee shall mail to such Applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such Applicants respecting their application.
47
Delivery of such reports, information and documents to the Trustee is for information purposes only and the Trustees receipt of such shall not constitute notice or constructive notice of any information contained therein or determinable from information contained therein, including the Companys compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely conclusively on an Officers Certificate).
48
The successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such conveyance, transfer, sale or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities. Subject to Section 9.03, the Company, the Trustee and the successor Person shall enter into a supplemental indenture to evidence the succession and substitution of such successor Person and such discharge and release of the Company.
49
50
It shall not be necessary for any Act of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or supplemental indenture, but it shall be sufficient if such Act approves the substance thereof.
51
After an amendment or supplemental indenture under this Section 9.02 becomes effective, the Company shall mail, or request that the Trustee mail, to each Holder a notice briefly describing the amendment or supplemental indenture.
An amendment or supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
52
The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or prior to each due date of the principal of (and premium, if any) or interest on any Securities of that series, deposit with a Paying Agent a sum
53
sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee a written instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this section, that such Paying Agent will:
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request or on election of the Trustee, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be mailed or published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the City, County and State of New York, or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
54
The Company shall have no obligation to make payment of principal of (or premium, if any) or interest on any Security in immediately available funds, except that if the Company shall have received original payment for Securities in immediately available funds it shall make available immediately available funds for payment of the principal of such Securities.
55
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
56
All notices of redemption shall state:
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Companys request, by the Trustee to each Holder in the name and at the expense of the Company; provided that the Company makes such request in writing at least 15 Business Days prior to the date by which such notice of redemption must be given to Holders in accordance with this Section 11.04.
57
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
The Trustee shall not redeem any Securities of any series pursuant to this article (unless all Outstanding Securities of such series are to be redeemed) or mail or give any notice of redemption of Securities during the continuance of an Event of Default hereunder known to the Trustee with respect to such series, except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities; provided , however , that it shall have received from the Company a sum sufficient for such redemption. Except as aforesaid, any moneys theretofore or thereafter received by the Trustee shall, during the continuance of such Event of Default, be deemed to have been collected under Article V and held for the payment of all such Securities of such series. In case such Event of Default shall have been waived as provided in Section 5.13 or the default cured on or before the 60th day preceding the Redemption Date, such moneys shall thereafter be applied in accordance with the provisions of this article.
58
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an optional sinking fund payment. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
59
The Trustee shall not redeem or cause to be redeemed any Security of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default with respect to such series except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article V and held for the payment of all such Securities of such series. In case such Event of Default shall have been waived as provided in Section 5.13 or the default cured on or before the 60th day preceding the sinking fund payment date, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this section to the redemption of such Securities.
60
Notwithstanding anything herein to the contrary, (x) in no event will a Payment Blockage Period extend beyond 179 days from the date the Payment Blockage Notice in respect thereof was given. Not more than one Payment Blockage Period may be commenced with respect to the Securities during any period of 360 consecutive days. No default or event of default that existed or was continuing on the date of commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period may be, or be made, the basis for the commencement of any other Payment Blockage Period by the holder or holders of such Designated Senior Indebtedness or the trustee or agent acting on behalf of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default has been cured or waived for a period of not less than 90 consecutive days.
61
62
63
64
65
The Securities are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness (as defined in the Indenture, or as set forth in one or more indentures supplemental hereto, a Board Resolution in accordance with Section 3.01 of the Indenture or in this Security). Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect.
66
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
67
IN WITNESS WHEREOF, the undersigned have caused this Indenture to be duly executed as a deed the day and year first before written.
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FINANCIAL SECURITY ASSURANCE
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By: |
/s/ Joseph Simon |
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Name: Joseph Simon |
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Title: Chief Financial Officer |
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By: |
/s/ Bruce E. Stern |
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Name: Bruce E. Stern |
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Title: Secretary |
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THE BANK OF NEW YORK, as Trustee, |
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By: |
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Name: Franca M. Ferrera |
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Title: Assistant Vice President |
68
Exhibit 10.1
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Junior Subordinated Debentures
PURCHASE AGREEMENT
November 17, 2006
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Lehman Brothers Inc.
745 Seventh Avenue
New York, NY 10019
as representatives of the
several Initial Purchasers
listed on Schedule B
Ladies and Gentlemen:
Financial Security Assurance Holdings Ltd., a New York corporation (the Company ), confirms its agreement with the initial purchasers named in Schedule B (each an Initial Purchaser and together the Initial Purchasers ) for whom Goldman, Sachs & Co. and Lehman Brothers Inc. are acting as Representatives (the Representatives ) with respect to the issue and sale by the Company of $300,000,000 principal amount of Junior Subordinated Debentures, Series 2006-1 (the Securities ).
The Securities will be issued in book-entry form to Cede & Co. as nominee of The Depository Trust Company ( DTC ).
The Securities are to be offered without being registered under the Securities Act of 1933, as amended (the Securities Act ), to persons who are (a) qualified institutional buyers (each a Qualified Institutional Buyer ) within the meaning of Rule 144A under the Securities Act ( Rule 144A ), or (b) non-United States persons within the meaning of Regulation S under the Securities Act ( Regulation S ).
The Company has prepared a preliminary offering memorandum (the Preliminary Offering Memorandum ) dated November 15, 2006 and will prepare a final offering memorandum (the Final Offering Memorandum and, together with the Preliminary Offering Memorandum, the Offering Memorandum ) including or incorporating by reference a description of the terms of the Securities, the terms of the offering and a description of the Company. As used herein, any reference to Offering Memorandum should include in each case the documents incorporated by reference therein. The terms supplement, amendment and amend as used herein with respect to an Offering Memorandum shall include all documents deemed to be incorporated by reference in the Preliminary Offering Memorandum or Final Offering Memorandum that are filed subsequent to the date of such Offering Memorandum
with the Securities and Exchange Commission (the Commission ) pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act ). All capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Offering Memorandum.
At or prior to the time when sales of the Securities were first made (the Time of Sale ), the following information shall have been prepared (collectively, the Pricing Disclosure Package ): the Preliminary Offering Memorandum, as supplemented and amended immediately prior to the Time of Sale, taken together with the written communications listed on Schedule A hereto.
2
3
4
5
Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to each Initial Purchaser of global certificates for the Securities to be purchased by it. The global certificates representing the Securities shall be in definitive form and in such denominations and registered in such names as the applicable Initial Purchaser may request in writing at least one full business day prior to the Closing Date and shall be made available for examination and packaging by the Initial Purchaser in The City of New York not later than 10:00 a.m. New York City time on the business day prior to the Closing Date.
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9
10
11
12
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14
15
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Please confirm, by signing and returning to us five (5) counterparts of this Agreement, that you are acting on behalf of yourself and as Representatives of the Initial Purchasers and that the foregoing correctly sets forth the Agreement between the Company and each Initial Purchaser.
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Very truly yours, |
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FINANCIAL SECURITY ASSURANCE |
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HOLDINGS LTD. |
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By: |
/s/ Joseph W. Simon |
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Name: Joseph W. Simon |
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Title: Managing Director |
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By: |
/s/ Bruce E. Stern |
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Name: Bruce E. Stern |
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Title: Secretary |
CONFIRMED AND ACCEPTED, |
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as of the date first above mentioned: |
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/s/ Goldman, Sachs & Co. |
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(GOLDMAN, SACHS & CO.) |
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LEHMAN BROTHERS INC. |
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By: |
/s/ John Jedlicki |
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Name: |
John Jedlicki |
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Title: |
Managing Director |
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For themselves and the other several initial Purchasers named in Schedule B
18
SCHEDULE A-1
Written Communications in addition to the Preliminary Offering Memorandum forming part of the Pricing Disclosure Package:
Supplement to Preliminary Offering Memorandum dated November 15, 2006
Supplement to Preliminary Offering Memorandum dated November 16, 2006
Final Term Sheet dated November 17, 2006
SCHEDULE A-2
[Term Sheet]
SCHEDULE B
Initial Purchaser |
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Principal Amount of Securities |
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Goldman, Sachs & Co. |
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$ |
105,000,000 |
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Lehman Brothers Inc. |
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105,000,000 |
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JPMorgan Securities Inc. |
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30,000,000 |
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UBS Securities LLC |
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30,000,000 |
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Wachovia Capital Markets, LLC |
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30,000,000 |
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Total |
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$ |
300,000,000 |
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EXHIBIT A
FORM OF OPINION OF GENERAL COUNSEL OF FSA
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
2
3
Exhibit 10.2
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Junior Subordinated Debentures, Series 2006-1
Officers Certificate Pursuant to Sections 1.02
and 3.01 of the Indenture
Pursuant to Sections 1.02 and 3.01 of the Indenture dated as of November 22, 2006 (the Indenture) between Financial Security Assurance Holdings Ltd. (the Company) and The Bank of New York (the Trustee), the undersigned officers of the Company hereby certify that the Board of Directors of the Company has, pursuant to Board resolutions dated November 9, 2006, authorized the establishment of a series of Securities, the title of which shall be Junior Subordinated Debentures, Series 2006-1 (the Debentures) and further certify that the terms of the Securities of such series shall be as follows:
2
Pursuant to Section 1.02 of the Indenture, each of the undersigned officers of the Company hereby further certifies that (i) he has read the applicable conditions precedent in the Indenture relating to the establishment of a series of Securities and the issuance thereof; (ii) he has examined the appropriate documentation and made such further investigation as he has deemed to be necessary; (iii) he is of the opinion that he has made such examination and investigation as is necessary to enable him to express an informed opinion with respect to whether or not such conditions precedent have been complied with; and (iv) he is of the opinion that as of the date hereof, all conditions precedent set forth in the Indenture relating to the establishment of the series of Securities designated as the Junior Subordinated Debentures, Series 2006-1 have been complied with and upon delivery by the Company of instructions to the Trustee directing the Trustee to authenticate Securities of such series from time to time, subject to the limitations set forth in the Company order to authenticate dated the date hereof, all conditions precedent for the issuance thereof shall have been complied with.
Capitalized terms used and not otherwise defined herein shall have the meanings set froth in the Indenture.
The terms of the Debentures (including the Form of Debenture) shall be as set forth in Exhibit A , as established pursuant to resolutions duly adopted by the Board of Directors of the Company on November 9, 2006 (a copy of such resolutions being attached hereto as Exhibit B )
IN WITNESS WHEREOF, the undersigned Chief Financial Officer and Secretary of the Company have executed this certificate as of the 22nd of November, 2006.
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/s/ Joseph W. Simon |
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Name: |
Joseph W. Simon |
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Title: |
Chief Financial Officer |
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/s/ Bruce E. Stern |
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Name: |
Bruce E. Stern |
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Title: |
Secretary |
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3
Exhibit 10.3
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (I) BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR (II) BY A NOMINEE OF THE DEPOSITARY OR THE DEPOSITARY TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., 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 SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
1
CUSIP: [U31745AA7/31769PAB6]
ISIN: USU31745AA71/US31769PAB67]
Junior Subordinated Debenture, Series 2006-1
No. R-[ ] |
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$[ ] |
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of [ ] DOLLARS ($[ ]) as such amount may be adjusted as set forth on the Schedule of Increases or Decreases annexed hereto on December 15, 2066 or such later date as shall become the Final Repayment Date pursuant to clause (ix) of Section 4 of this Security, or if any such day is not a Business Day, the following Business Day; provided that the principal amount of, and all accrued and unpaid interest on, this Security shall be payable in full on December 15, 2036, or if such day is not a Business Day, the following Business Day, or any subsequent Monthly Interest Payment Date to the extent set forth in Section 4 of this Security. Financial Security Assurance Holdings Ltd. further promises to pay interest on said principal sum from November 22, 2006 or from the most recent Interest Payment Date for which interest has been paid or duly provided for. This Security shall bear interest as set forth in Section 5 of this Security.
Additional provisions of this Security are set forth on the other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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FINANCIAL SECURITY ASSURANCE
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By: |
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Name: |
Joseph Simon |
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Title: |
Chief Financial Officer |
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By: |
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Name: |
Bruce E. Stern |
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Title: |
Secretary |
TRUSTEES CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated: |
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THE BANK OF NEW YORK, as Trustee, |
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by |
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Authorized Signatory |
2
[Reverse of Debenture]
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Junior Subordinated Debenture, Series 2006-1
1. Indenture
This Security is one of a duly authorized issue of Securities of the Company, designated as its Junior Subordinated Debentures, Series 2006-1 (herein called the Debentures), issued and to be issued under an indenture, dated as of November 22, 2006 (herein called the Indenture), between FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation (such company, and its successors and assigns under the Indenture hereinafter referred to, being herein called the Company), and THE BANK OF NEW YORK, as trustee (the Trustee), to which Indenture and all indentures supplemental thereto relevant to the Debentures reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Debentures. Capitalized terms used but not defined in this Debenture shall have the meanings ascribed to them in the Indenture.
Each Debenture is subject to, and qualified by, all such terms as set forth in the Indenture, certain of which are summarized herein, and each Holder of a Debenture is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in this Debenture and the Indenture, the provisions of this Debenture shall govern.
2. Definitions
For all purposes of this Debenture, except as otherwise expressly provided or unless the context otherwise requires, (i) references to any section or subdivision are references to a section or other subdivision of this Debenture, (ii) all capitalized terms used herein and not defined herein shall have the meanings set forth in the Indenture, (iii) all words and phrases defined in the Indenture shall have the same meaning in this Debenture, except as otherwise appears in this section, and (iv) the following terms used in this Debenture, have the following respective meanings:
Additional Interest means the interest, if any, that shall accrue on any interest on the Debentures the payment of which has not been made when due and which shall accrue, to the extent permitted by law, at the rate per annum in effect on the Debentures from the applicable Interest Payment Date, compounded on each subsequent Interest Payment Date until paid in accordance with Section 8.
APM Commencement Date means, with respect to any Deferral Period, the earlier of (i) the first Interest Payment Date following the commencement of such Deferral Period on which the Company pays any current interest on the Debentures and (ii) the fifth anniversary of the commencement of such Deferral Period.
3
APM Period means, with respect to any Deferral Period, the period commencing on the APM Commencement Date and ending on the next Interest Payment Date on which the Company has raised an amount of Eligible Proceeds at least equal to the aggregate amount of accrued and unpaid deferred interest, including Additional Interest, on the Debentures.
Applicable Rate means in the case of an Optional Redemption, 0.25% and in the case of a Tax or Rating Agency Redemption, 0.50%.
Bankruptcy Event means any of the events set forth in Section 5.01(5) or Section 5.01(6) of the Indenture.
Business Day is any day, other than a Saturday, a Sunday or (i) a day on which banking institutions in the City of New York are authorized or required by law, regulation or executive order to remain closed, or (ii) on or after December 15, 2036, a day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London, England.
Calculation Agent means the Trustee, or its successor appointed by the Company, acting as calculation agent for this Debenture.
Commercially Reasonable Efforts has the meaning set forth in Section 4(vi).
Common Stock means common stock of the Company.
Common Stock Issuance Cap has the meaning set forth in Section 9(1).
Company Market Disruption Event means the occurrence or existence of any of the following events or sets of circumstances:
4
Contribution Agreement means the Contribution Agreement, dated as of November 22, 2006, between Dexia S.A. and the Company.
Deferral Period means each period beginning on an Interest Payment Date with respect to which the Company elects pursuant to Section 7 to defer all or part of any interest payment and ending on the earlier of (i) the tenth anniversary of such Interest Payment Date and (ii) the next Interest Payment Date on which the Company has paid all deferred interest and all other accrued and unpaid interest on this Debenture (including Additional Interest thereon).
Eligible Proceeds means, with respect to any Interest Payment Date, the Net Proceeds the Company has received during the 180-day period prior to such Interest Payment Date from the issuance of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to Persons that are not Subsidiaries of the Company.
Extension Certificate has the meaning set forth in Section 4(ix)(E).
Extension Date has the meaning set forth in Section 4(ix).
Final Repayment Date has the meaning set forth in Section 4(ix).
Intent-Based Replacement Disclosure has the meaning ascribed to it in the Replacement Capital Covenant.
Interest Payment Date means a Monthly Interest Payment Date or a Semi-Annual Interest Payment Date, as the case may be.
Interest Period means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, November 22, 2006) to but excluding the next Interest Payment Date.
LIBOR Determination Date means the second London Banking Day immediately preceding the first day of the relevant Interest Period.
5
London Banking Day means any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London, England.
Make-Whole Redemption Price means the present value of scheduled payments of principal and interest from the Redemption Date to December 15, 2036, on any Debenture being redeemed, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate plus the Applicable Rate.
Market Capitalization means, as of any date, an amount equal to the number of shares of Common Stock Outstanding on such date multiplied by the current market price of one share of Common Stock on such date.
Mandatory Trigger Provision has the meaning ascribed to it in the Replacement Capital Covenant.
Maximum Contribution Amount has the meaning ascribed to it in the Contribution Agreement.
MoneyLine Telerate Page means the display on MoneyLine Telerate, Inc., or any successor service, on Telerate Page 3750.
Monthly Interest Payment Date has the meaning set forth in Section 5.
Moodys has the meaning set forth in Section 4(ix)(A).
Nationally Recognized Statistical Rating Organization has the same meaning as used in Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act of 1934, as amended.
Net Proceeds means, with respect to the issuance or sale of any securities, the net proceeds of such issuance or sale (after underwriters or placement agents fees, commissions or discounts and other expenses relating to the issuance).
One-month LIBOR means, with respect to any Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a one-month period commencing on the first day of that Interest Period and ending on the next Interest Payment Date that appears on MoneyLine Telerate Page as of 11:00 a.m. (London time) on the LIBOR Determination Date for that Interest Period. If such rate does not appear on MoneyLine Telerate Page, One-month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a one-month period commencing on the first day of that Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London time on the LIBOR Determination Date for that Interest Period. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are
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provided, one-month LIBOR with respect to that Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of such quotations. If fewer than two quotations are provided, one-month LIBOR with respect to that Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of the rates quoted by three major banks in New York City selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for a one-month period commencing on the first day of that Interest Period and in a principal amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, one-month LIBOR for that Interest Period will be the same as one-month LIBOR as determined for the previous Interest Period or, in the case of the Interest Period commencing on the Scheduled Maturity Date, 5.32%. The establishment of one-month LIBOR for each Interest Period commencing on or after the Scheduled Maturity Date by the Calculation Agent shall (in the absence of manifest error) be final and binding.
Optional Redemption has the meaning set forth in Section 12.
Parent means Dexia S.A., a Belgian corporation.
Permitted Remedies has the meaning ascribed to it in the Replacement Capital Covenant.
Preferred Stock means any preferred stock of the Company.
Preferred Stock Issuance Cap has the meaning set forth in Section 9(1).
Publicly Traded means with respect to any security, that such security is listed for trading on a national securities exchange or quoted in the Nasdaq National Market.
Qualifying Capital Securities has the meaning ascribed to it in the Replacement Capital Covenant.
Qualifying Non-Cumulative Perpetual Preferred Stock means the Companys non-cumulative perpetual Preferred Stock that (i) has no maturity date, (ii) contains no remedies other than Permitted Remedies, and (iii) (a) is subject to Intent-Based Replacement Disclosure and has a Mandatory Trigger Provision or (b) is subject to a replacement capital covenant substantially similar to the Replacement Capital Covenant.
Rating Agency Event means a change by any Nationally Recognized Statistical Rating Organization that currently publishes a rating for the Company (a Rating Agency ) to its equity credit criteria for securities such as the Debentures, as such criteria is in effect on the date of the initial issuance of the Debentures (the Current Criteria ), which change results in a lower equity credit being given to the Debentures as of the date of such change than the equity credit that would have been assigned to the
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Debentures as of the date of such change by such Rating Agency pursuant to its Current Criteria. For the avoidance of doubt, a Rating Agency Event will not have occurred if at any date after the date of the initial issuance of the Debentures the equity credit given to the Debentures is reduced solely due to a failure of the Final Repayment Date to be extended.
Regular Record Date for the interest payable on any Interest Payment Date with respect to the Debentures means (i) in the case of Debentures represented by one or more Global Securities, the Business Day preceding such Interest Payment Date and (ii) in the case of Debentures not represented by one or more Global Securities, the date which is fifteen days next preceding such Interest Payment Date (whether or not a Business Day).
Repayment Date means the Scheduled Maturity Date and each of the Monthly Interest Payment Dates thereafter.
Replacement Capital Covenant means the Replacement Capital Covenant, dated as of November 22, 2006, of the Company, without giving any effect to any amendment or supplement thereto.
S&P has the meaning set forth in section 4(ix)(A).
Scheduled Maturity Date has the meaning set forth in Section 4(i).
Semi-Annual Interest Payment Date has the meaning set forth in Section 5.
Senior Indebtedness has the meaning set forth in Section 16.
Tax Event means that the Company has requested and received an opinion of counsel experienced in such matters to the effect that, as a result of:
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there is more than an insubstantial risk that interest payable by the Company on this Debenture is not, or will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
Tax or Rating Agency Redemption has the meaning set forth in Section 12.
Telerate Page 3750 means the display designated on page 3750 on MoneyLine Telerate Page (or such other page as may replace the 3750 page on the service or such other service as may be nominated by the British Bankers Association for the purpose of displaying London interbank offered rates for U.S. Dollar deposits).
Treasury Dealer means a nationally recognized firm that is a primary U.S. Government Obligations dealer specified by the Company.
Treasury Price means the bid-side price for the Treasury Security as of the third trading day preceding the Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York on that trading day and designated Composite 3:30 p.m. Quotations for U.S. Government Securities, except that: (i) if that release (or any successor release) is not published or does not contain that price information on that trading day or (ii) if the Treasury Dealer determines that the price information is not reasonably reflective of the actual bid-side price of the Treasury Security prevailing at 3:30 p.m., New York City time, on that trading day, then Treasury Price will instead mean the bid-side price for the Treasury Security at or around 3:30 p.m., New York City time, on that trading day (expressed on a next trading day settlement basis) as determined by the Treasury Dealer through such alternative means as the Treasury Dealer considers to be appropriate under the circumstances.
Treasury Rate means the semi-annual equivalent yield to maturity of the Treasury Security that corresponds to the Treasury Price (calculated in accordance with standard market practice and computed as of the second trading day preceding the Redemption Date).
Treasury Security means the United States Treasury security that the Treasury Dealer determines would be appropriate to use, at the time of determination and in accordance with standard market practice, in pricing the Debentures being redeemed in a tender offer based on a spread to United States Treasury yields.
3. Denominations
The Debentures will be issued only in fully registered form, and the authorized minimum denominations of the Debentures shall be $100,000 principal amount and integral multiples of $1,000 in excess of $100,000.
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4. Scheduled Maturity Date
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(A) to raise sufficient Net Proceeds from the issuance of Qualifying Capital Securities during a 180-day period ending on the date, not more than 30 and not less than five Business Days prior to the Scheduled Maturity Date, on which the Company delivers the notice required by Section 18(i) to permit repayment of the Debentures in full on the Scheduled Maturity Date pursuant to clause (i) of this Section 4; and
(B) if the Company is unable for any reason to raise sufficient Net Proceeds from the issuance of Qualifying Capital Securities to permit payment in full on the Scheduled Maturity Date or any subsequent Monthly Interest Payment Date on which the Company delivers the notice required by Section 18(i), to raise sufficient Net Proceeds from the issuance of Qualifying Capital Securities to permit repayment of the Debentures in full on such date pursuant to clause (ii) of this Section 4; and
the Company shall apply any such Net Proceeds to the repayment of the Debentures as provided in clause (viii) of this Section 4.
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No more than 45 and no less than 30 days prior to the then Final Repayment Date, the Trustee shall request from the Company the Extension Certificate and Officers Certificate, if any. The Company shall deliver an Extension Certificate if the Company believes that the certifications to be made in such Extension Certificate would be true and correct as of the date of such Extension Certificate. The Company shall deliver an Officers Certificate to the Trustee, who shall mail such certificate by first class mail, postage repaid, addressed to each holder of record of the Debentures within 30 days after any extension of the Final Repayment Date pursuant to this clause (ix), stating the applicable Extension Date and the Final Repayment Date after giving effect to the applicable extension.
5. Rate of Interest
The Debentures bear interest (i) from and including November 22, 2006 to but excluding December 15, 2036 at the annual rate of 6.40%, computed on the basis of a 360-day year comprised of twelve 30-day months, and (ii) thereafter, as to any unpaid amounts that remain Outstanding, at a floating rate equal to One-month LIBOR plus 2.215%, computed on the basis of a 360-day year and the actual number of days elapsed. Subject to Sections 8 and 9, interest on the Debentures shall be payable in cash (i) semi-annually in arrears on June 15 and December 15 of each year, or if such day is not a Business Day, the Business Day immediately following such day (provided that no interest will accrue as a result of such postponement), commencing on June 15, 2007, until December 15, 2036 (each such date, a Semi-Annual Interest Payment Date ) and (ii) thereafter, monthly in arrears on the 15th day of each month, or if such day is not a Business Day, the Business Day immediately following such day (each such date, a Monthly Interest Payment Date ). Any installment of interest (or portion thereof) deferred in accordance with Section 7 or otherwise unpaid shall bear interest, to the extent permitted by law, at the rate of interest then in effect on the Debentures, from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date, until paid in accordance with Section 8.
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6. To Whom Interest Payable
Interest shall be payable to the Person in whose name the Debentures are registered at the close of business on the Regular Record Date next preceding the Interest Payment Date, except that (i) interest payable on any Debentures pursuant to their repayment in full in accordance with Section 18 and (ii) interest payable on the Final Repayment Date shall be paid to the Person to whom principal is paid.
7. Option to Defer Interest Payments
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8. Payment of Deferred Interest
The Company shall not pay deferred interest on the Debentures (including Additional Interest thereon) prior to the Final Repayment Date from any source other than Eligible Proceeds. Notwithstanding the foregoing, the Company may pay current interest at all times from any available funds and the Company shall pay deferred interest on the Debentures (and Additional Interest thereon) from all sources (including Eligible Proceeds) following the Final Repayment Date or an acceleration of the Debentures pursuant to Section 5.02 of the Indenture. To the extent that the Company applies Eligible Proceeds from the sale of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay interest on the Debentures, such proceeds shall be allocated first to deferred payments of interest (including Additional Interest thereon) in chronological order based on the date each payment was first deferred. The payment of interest from any other source shall be applied to current or deferred interest as directed by the Company and notified to the Trustee prior to the applicable Interest Payment Date. To the extent any payment allocable to any installment of interest (including Additional Interest thereon) is insufficient to pay such installment in full, such payment shall be applied pro rata to the Outstanding Debentures. If the Company has outstanding securities in addition to, and that rank pari passu with, the Debentures under which it is obligated to sell Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock and apply the Net Proceeds to the payment of deferred interest distributions, then on any date and for any period the amount of Net Proceeds received by the Company from those sales and available for payment of the deferred interest shall be applied to the Debentures and those
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other securities on a pro rata basis in proportion to the total amounts that are due on the Debentures and such other securities.
9. Alternative Payment Mechanism
Immediately following any APM Commencement Date and until the termination of the related Deferral Period, the Company shall issue Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock until the Company has raised an amount of Eligible Proceeds at least equal to the aggregate amount of accrued and unpaid amount of deferred interest on the Debentures (including Additional Interest thereon) and applied such Eligible Proceeds on the next Interest Payment Date to the payment of deferred interest (including Additional Interest thereon) in accordance with Section 8; provided that:
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For the avoidance of doubt, once the Company reaches the Common Stock Issuance Cap, the Company shall not be required to issue more Common Stock prior to the fifth anniversary of the commencement of such related Deferral Period (including Additional Interest thereon) pursuant to Section 9 even if the Companys Market Capitalization subsequently increases prior to such fifth anniversary. The Company shall not be excused from its obligations under this Section 9 if it determines not to pursue or complete the sale of Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock due to pricing, coupon dividend rate or dilution considerations.
10. Contribution Agreement
If at any time (i) the Company is required to issue shares of Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9, (ii) the Company has attempted to issue shares of Qualifying Non-Cumulative Perpetual Preferred Stock but has not raised sufficient Eligible Proceeds through the sale of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all deferred interest (including Additional Interest thereon) and (iii) the Contribution Agreement is in full force and effect, then the Company is required to (a) promptly make a request under the Contribution Agreement to Parent (or such other Person that has assumed Parents obligations under the Contribution Agreement) to use its commercially reasonable efforts to raise common equity to the extent it is required to do so pursuant to the Contribution Agreement and (b) enforce the Contribution Agreement after the Company makes such a request if within a reasonable period of time after such request Parent (or such other Person) fails to comply with the Contribution Agreement.
11. Events of Default
For purposes of the Debentures, clauses (1), (3) and (4) of Section 5.01 of the Indenture shall not apply. In addition to clauses (2), (5), (6) and (7) of Section 5.01 of the Indenture, the following clause (1) shall constitute an Event of Default:
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For the avoidance of doubt, and without prejudice to any other remedies that may be available to the Trustee or the Holders of the Debentures under the Indenture, no breach by the Company of any other covenant or obligation under the Indenture or the terms of the Debentures shall be an Event of Default with respect to the Debentures.
12. Redemption
The Debentures shall be redeemable (a) in whole or in part at the option of the Company at any time prior to December 15, 2036 at a Redemption Price equal to the greater of (i) 100% of the principal amount of the Debentures then Outstanding plus accrued and unpaid interest to the Redemption Date or (ii) the applicable Make-Whole Redemption Price, provided that in the event of a redemption in part that the principal amount Outstanding after such redemption is at least $50,000,000 (any such redemption, an Optional Redemption ) and (b) in whole but not in part, prior to December 15, 2036, within 90 days following the occurrence of a Tax Event or Rating Agency Event at a Redemption Price equal to the greater of (i) 100% of the principal amount of the Debentures then Outstanding plus accrued and unpaid interest to the Redemption Date or (ii) the applicable Make-Whole Redemption Price (any such redemption, a Tax or Rating Agency Redemption ).
13. Replacement Capital Covenant
The Company shall not modify the Replacement Capital Covenant to impose additional restrictions on the type or amount of Qualifying Capital Securities for purposes of determining the extent to which repayment, redemption, repurchase or defeasance of the Debentures is permitted on or after the Scheduled Maturity Date, except with the consent of the Holders of a majority by principal amount of the Debentures. Except as aforesaid, the Company may modify the Replacement Capital Covenant without the consent of the Holders of the Debentures.
14. Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership
Each Holder, by such Holders acceptance of the Debentures, agrees that if a Bankruptcy Event shall occur prior to the redemption or repayment of such Debentures, the Holder of Debentures will have no claim for, and thus no right to receive, optionally deferred and unpaid interest (including Additional Interest thereon) that has not been settled through the application of the Alternative Payment Mechanism, to the extent the amount of such interest exceeds two years of accumulated and unpaid interest (including Additional Interest thereon) on such Holders Debentures.
15. Sinking Fund
The Debentures shall not be subject to any sinking fund or similar provisions.
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16. Subordination
The subordination provisions of Article XIII of the Indenture shall apply. The Debentures are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. Each Holder by accepting a Debenture agrees to such subordination and authorizes the Trustee to give it effect. For the purposes of the Debentures (but not for the purposes of any other Securities unless specifically set forth in the terms of such Securities or the instrument creating the same), Senior Indebtedness as used in connection with the Debentures has the meaning in ascribed to it in the Indenture, except that (i) all other Securities issued under the Indenture shall also be Senior Indebtedness, unless, by their express terms or by the express terms of the supplemental indenture under which such Securities are issued, such Securities rank pari passu or junior to the Debentures and (ii) Senior Indebtedness shall not include trade accounts payable and accrued liabilities arising in the ordinary course of business.
17. Business Combinations
If the Company engages in any transaction that is subject to Section 8.01 of the Indenture, where immediately after the consummation of such transaction more than 50% of the voting securities of the Person formed by such transaction, or the Person that is the surviving entity of such transaction, or the Person to whom such properties and assets are conveyed, transferred or leased in such transaction, are owned by the securityholders of the other party to such transaction, then (i) the requirement that the Company issue Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9 and the first sentence of Section 8 shall not apply to any interest on the Debentures that is deferred and unpaid as of the date of consummation of such transaction and (ii) the provisions of clause (iii) of Section 7 shall not apply to any Deferral Period that is terminated on the next Interest Payment Date following the date of consummation of such transaction.
18. Repayment of the Debentures
The Trustee shall promptly notify the Company in writing of the Debentures selected for partial repayment and the principal amount thereof to be repaid.
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For all purposes hereof, unless the context otherwise requires, all provisions relating to the repayment of Debentures shall relate, in the case of any Debenture repaid or to be repaid only in part, to the portion of the principal amount of such Debenture which has been or is to be repaid. If the Company shall so direct, Debentures registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Debentures selected for repayment.
Each notice of repayment shall identify the Debentures to be repaid (including CUSIP number, if a CUSIP number has been assigned to the Debentures) and shall state:
(1) the Repayment Date;
(2) the principal amount of the Debentures to be repaid;
(3) if less than all Outstanding Debentures are to be repaid, the identification (and, in the case of partial repayment, the respective principal amounts) of the particular Debentures to be redeemed;
(4) that on the Repayment Date, the principal amount of the Debentures to be repaid will become due and payable upon each such Debenture or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; and
(5) the place or places where such Debentures are to be surrendered for payment of the principal amount thereof.
Notice of repayment shall be given by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Debentures designated for repayment as a whole or in part shall not affect the validity of the proceedings for the repayment of any other Debentures.
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Upon presentation of any Debenture repaid in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Company, a new Debenture or Debentures, of authorized denominations, in aggregate principal amount equal to the portion of the Debenture not repaid and so presented and having the same date of original issuance, Stated Maturity and terms.
If any Debenture called for repayment shall not be so paid upon surrender thereof, the principal of such Debenture shall, until paid, bear interest from the Repayment Date at the rate prescribed therefore in the Debenture.
19. Successors and Assigns
All covenants and agreements in this Debenture by the Company shall bind its successors and assigns, whether so expressed or not.
20. Governing Law
THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
21. Rule 144A Information
The Company will furnish to Holders of the Debentures and to prospective investors, upon request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Debentures are not freely transferable under the Securities Act.
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SCHEDULE OF INCREASES OR DECREASES
The initial principal amount of this Security is $200,000. The following increases or decreases in this Security have been made:
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Exhibit 10.4
EXECUTION COPY
CONTRIBUTION AGREEMENT dated as of November 22, 2006 (this Agreement ), between DEXIA S.A., a Belgian corporation ( Parent ), and FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation ( Issuer ).
WHEREAS, Parent is the ultimate beneficial owner of a majority of the outstanding common stock of Issuer; and
WHEREAS, Parent and Issuer desire to enter into this agreement in connection with the issuance by Issuer of $300,000,000 of its Junior Subordinated Debentures pursuant to the Indenture (the Debentures) on the date hereof;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree as follows:
SECTION 1. Definitions . Capitalized terms used but not defined herein shall have the respective meanings given to them in the Indenture dated as of November 22, 2006 (the Indenture ) between Issuer and The Bank of New York, as indenture trustee (the Trustee ), or the Debentures.
SECTION 2. Contribution . (a) If, at any time, (i) Issuer, in accordance with the terms of the Indenture, optionally defers interest on the Debentures for a period of five years or, optionally defers interest on the Debentures and pays current interest thereon prior to the fifth anniversary of the commencement of the applicable Deferral Period, and therefore is required to issue shares of its common stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9 of the Debentures and (ii) Issuer has attempted to issue shares of its Qualifying Non-Cumulative Perpetual Preferred Stock but has not raised sufficient Eligible Proceeds through the sale of its common stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all deferred interest (including compounded amounts thereon), then, subject to paragraph (b) of this Section 2, Parent shall, upon receipt of a request of Issuer (an Issuance Request ), (1) prior to the date that Parent obtains the Dexia Stock Issuance Board Approval, promptly use its commercially reasonable efforts, taking into account its own funding requirements, to subscribe for additional shares of Issuers common stock for an amount equal to the Shortfall Amount with any source of funds then available to it, and (2) from and after the date that Parent obtains the Dexia Stock Issuance Board Approval, promptly use its commercially reasonable efforts to raise common equity providing Parent with net proceeds (after underwriters or placement agents fees, commissions or discounts and other expenses relating to the issuance) in an amount equal to the Shortfall Amount. If Parent is successful in raising any such common equity pursuant to the preceding clause (2), then Parent shall promptly subscribe for additional shares of Issuers common stock with such net proceeds. If, subsequent to Parent obtaining the Dexia Stock Issuance Board Approval, Parent is not successful in raising any such common equity pursuant to the preceding clause (2), then Parent will not be required to subscribe for additional shares of Issuers common stock or otherwise have any obligation to contribute any of its
assets to Issuer under the preceding clause (2), and specifically, Parent shall not be required to apply any of its other assets to discharge its obligations under the preceding clause (2).
(b) Notwithstanding the foregoing Parent shall not be required to (i) issue common equity or subscribe for shares of Issuers common stock to the extent that the net proceeds of such issuance of common equity, together with the net proceeds of all other common equity which has been previously issued pursuant to Issuance Requests, would exceed, in the aggregate, an amount equal to the Shortfall Amount, (ii) use its commercially reasonable efforts to issue common equity during the continuance of a Parent Market Disruption Event or (iii) issue common equity or subscribe for shares of Issuers common stock at any time after Parent has acquired shares of Issuers common stock pursuant to this Agreement for an aggregate purchase price equal to the Maximum Contribution Amount.
(c) For purposes of this Agreement, Dexia Stock Issuance Board Approval means the approval by Parents Board of Directors of Parents obligation to raise common equity described under clause (a)(2) of this Section 2.
(d) For purposes of this Agreement, Parent Market Disruption Event means the occurrence or existence of any of the following events or sets of circumstances: (i) a material suspension of or limitation on trading or on settlement procedures for transactions in Parents common equity and/or preferred securities through the primary stock exchange or exchanges on which such securities are then traded or the principal central securities depositary through which such securities are then cleared; (ii) a prohibition or material restriction imposed by applicable law (or by order, decree or regulation of any governmental entity, stock exchange or self-regulating body having jurisdiction) on the ability of Parent to issue or transfer its common equity or preferred securities; (iii) Parent would be required to obtain the consent or approval of its shareholders to issue common equity as required by this Agreement, and Parent fails to obtain that consent or approval notwithstanding its commercially reasonable efforts to obtain that consent or approval; or (iv) Parent is subject to a blackout period which, under applicable securities laws or Parent policies then in place, would not permit Parent to issue common equity and/or preferred securities until the release of information which has resulted in the commencement of such blackout period or such blackout period has otherwise terminated.
(e) For purposes of this Agreement, Shortfall Amount means, as of any date, (i) the aggregate amount of interest accrued (including compounded amounts thereon and interest accrued after Issuer is required to issue common stock and Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Alternative Payment Mechanism) on the Debentures during the then current Deferral Period, measured as of the next regularly scheduled Interest Payment Date, minus (ii) the amount of any Eligible Proceeds that Issuer has raised by issuing common stock and/or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Alternative Payment Mechanism in respect of the then current Deferral Period.
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(f) For purposes of this Agreement, Maximum Contribution Amount means the greater of (i) $300,000,000 and (ii) such amount to which Parent shall have, in its sole discretion by written notice to Issuer, elected to increase the Maximum Contribution Amount.
SECTION 3. Waivers . Parent hereby waives any failure or delay on the part of Issuer in asserting or enforcing any of its rights or in making any claims or demands hereunder.
SECTION 4. Termination . This Agreement shall remain in full force and effect for so long as any of the Debentures are outstanding, provided , however , that this Agreement may be terminated by (a) Parent upon 10 business days prior notice to Issuer at any time on or after which:
(i) Parent and its Subsidiaries have sold or otherwise transferred 50% or more of Issuers outstanding voting securities to another Person (other than Parent or one of its Subsidiaries) that has not assumed Parents obligations under this Agreement; provided that Parent has used its commercially reasonable efforts to cause such Person to agree to assume such obligations;
(ii) Parent and its Subsidiaries have ceased to beneficially own securities constituting greater than 50% of Issuers outstanding voting securities; provided that as of such date Issuers common stock is listed for trading on a national securities exchange or is quoted in the Nasdaq National Market; or
(iii) Issuer has conveyed, transferred or leased all or substantially all of its properties to another Person, and if such Person is a Subsidiary of another Person (the Third Party Parent Company ), such Third Party Parent Company has not assumed Parents obligations under this Agreement; provided that Parent has used its commercially reasonable efforts to cause such Third Party Parent Company to agree to assume such obligations; or
(b) Parent or Issuer at any time that Issuer shall have received an opinion of counsel experienced in such matters to the effect that such termination would not increase the risk that the Debentures will be treated other than as debt for U.S. federal income tax purposes.
SECTION 5. Amendments and Waivers . This Agreement may not be amended, and none of the terms or provisions of this Agreement may be waived, except by an instrument in writing signed on behalf of each of the parties hereto; provided that no such amendment or waiver shall be effective unless Issuer shall have received an opinion of counsel experienced in such matters to the effect that such amendment or waiver would not increase the risk that the debentures will be treated other than as debt for U.S. federal income tax purposes.
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SECTION 6. Notices . All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or recognized overnight courier service and shall be deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one Business Day in the case of express mail or overnight courier service), as follows:
(i) if to Parent,
Dexia S.A.
Dexia Tower
Place Roger II
1210 Brussels
Belgium
Phone: 011 322 213 5736
Fax: 011 322 213 5890
Attention: Secretary General;
and
(ii) if to Issuer,
Financial Security Assurance Holdings Ltd.
31 West 52nd Street
New York, New York, 10019, U.S.A.
Phone: 001 212 826 0100
Fax: 001 212 857 0541
Attention: General Counsel.
SECTION 7. Governing Law; Jurisdiction; Service of Process . (a) This Agreement shall be governed by the laws of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
(b) Each of Parent and Issuer hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or U.S. Federal court sitting in the Borough of Manhattan in The City of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of Parent and Issuer hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such U.S. Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
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(c) Parent has irrevocably appointed Dexia Credit Local New York Branch as its authorized agent (the Authorized Agent ), upon whom service of process may be served in any suit, action or proceeding arising out of or based upon this Agreement that may be instituted in any such court. Parent hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and Parent agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon Parent. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. If for any reason the Authorized Agent is unable to serve in such capacity, Parent shall appoint another agent reasonably satisfactory to the Trustee.
(d) Each of Parent and Issuer irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection to any suit, action or proceeding that may be brought in connection with this Agreement in such courts whether on grounds of venue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum. Each Parent and Issuer hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
SECTION 8. No Third Party Beneficiaries . Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.
SECTION 9. Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
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DEXIA S.A., |
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Name: Axel Miller |
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Managing Director and Chairman of the Management Board |
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FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., |
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/s/ Joseph W. Simon |
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Name: Joseph W. Simon |
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Managing Director and Chief Financial Officer of Holdings |
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Exhibit 10.5
EXECUTION COPY
REPLACEMENT CAPITAL COVENANT, dated as of November 22, 2006 (this Replacement Capital Covenant ), by FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation (together with its successors and assigns, the Corporation ), in favor of and for the benefit of each Covered Debtholder (as defined below).
WHEREAS, on the date hereof, the Corporation is issuing $300,000,000 aggregate principal amount of its Junior Subordinated Debentures, Series 2006-1 (the Debentures );
WHEREAS, this Replacement Capital Covenant is the replacement capital covenant described in the Offering Memorandum, dated November 17, 2006, relating to the Debentures (the Offering Memorandum );
WHEREAS, the Corporation is entering into and disclosing the content of this Replacement Capital Covenant in the manner provided below with the intent that the covenants provided for in this Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Corporation be estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the fullest extent permitted by applicable law; and
WHEREAS, the Corporation acknowledges that reliance by each Covered Debtholder upon the covenants in this Replacement Capital Covenant is reasonable and foreseeable by the Corporation and that, were the Corporation to disregard its covenants in this Replacement Capital Covenant, each Covered Debtholder would have sustained an injury as a result of its reliance on such covenants;
NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in favor of and for the benefit of each Covered Debtholder.
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From and after the Termination Date, the obligations of the Corporation pursuant to this Replacement Capital Covenant shall be of no further force and effect.
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IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to be executed by its duly authorized officer, as of the day and year first above written.
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FINANCIAL SECURITY HOLDINGS LTD., |
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/s/ Joseph Simon |
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Name: Joseph Simon |
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Title: Chief Financial Officer |
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/s/ Bruce E. Stern |
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Name: Bruce E. Stern |
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Title: Secretary |
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SCHEDULE 1
Definitions
Alternative Payment Mechanism means, with respect to any securities or combination of securities, either:
(b) provisions in the related transaction documents requiring the Corporation to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising eligible proceeds at least equal to the deferred Distributions on such securities and apply the proceeds to pay unpaid Distributions on such securities, commencing on the earlier of (x) the first Distribution Date after commencement of a deferral period on which the Corporation pays current Distributions on such securities and (y) the fifth anniversary of the commencement of such deferral period, and that in the case of this clause (b):
(i) define eligible proceeds to mean, for purposes of such Alternative Payment Mechanism, the net proceeds (after underwriters or placement agents fees, commissions or discounts and other expenses relating to the issuance or sale of the relevant securities, where applicable, and including the fair market value of property received by the Corporation or any of its Subsidiaries as consideration for such securities) that the Corporation has received during the 180 days prior to the related Distribution Date from the issuance of APM Qualifying Securities, up to the Preferred Cap (as defined in paragraph (iv)(B) of this definition) in the case of APM Qualifying Securities that are Qualifying Non-Cumulative Perpetual Preferred Stock;
(ii) permit the Corporation to pay current Distributions on any Distribution Date out of any source of funds but (x) require the Corporation to pay deferred Distributions only out of eligible proceeds and (y) prohibit the Corporation from paying deferred Distributions out of any source of funds other than eligible proceeds;
(iii) if deferral of Distributions continues for more than one year, require the Corporation not to redeem or repurchase any securities of the Corporation that on a bankruptcy or liquidation of the Corporation rank pari passu with or junior to such securities until at least one year after all deferred Distributions have been paid;
(iv) limit the obligation of the Corporation to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities up to:
(v) provide that in certain events of the Corporations bankruptcy, insolvency or receivership prior to the redemption or repayment of such securities the holder of such securities will have no claim for optionally deferred and unpaid interest that has not been settled through the application of the Alternative Payment Mechanism, to the extent the amount of such interest exceeds (x) if the APM Qualifying Securities include only Common Stock or rights to acquire Common Stock and do not include Qualifying Non-Cumulative Perpetual Preferred Stock, 25% of the principal or stated amount of such securities then outstanding and (y) if the APM Qualifying Securities include Qualifying Non-Cumulative Perpetual Preferred Stock, two years of accumulated and unpaid interest on such securities; provided , however , that if the APM Qualifying Securities include Qualifying Non-Cumulative Perpetual Preferred Stock
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and, accordingly, clause (y) applies, holders of such securities may have an additional preferred equity claim in respect of accumulated and unpaid interest which is in excess of two years of accumulated and unpaid interest on such securities that is senior to the Corporations Common Stock and is or would be pari passu with any Qualifying Non-Cumulative Preferred Stock up to the amount equal to their pro rata shares of any unused portion of the Preferred Cap (as defined above); and
(vi) provide that if at any time (A) the Corporation is required to issue shares of its Common Stock, rights to purchase Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Alternative Payment Mechanism, (B) the Corporation has attempted to issue shares of its Qualifying Non-Cumulative Perpetual Preferred Stock but it has not raised sufficient eligible proceeds through the sale of its Common Stock, rights to purchase Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all deferred interest and (C) the Corporation is a party to a contribution agreement substantially similar to the Contribution Agreement, which is in full force and effect, then the Corporation is required to (1) make a request under such contribution agreement and (2) enforce such contribution agreement after making such a request;
provided that:
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APM Qualifying Securities means, with respect to an Alternative Payment Mechanism, one or more of the following (as designated in the transaction documents for the Qualifying Capital Securities that include an Alternative Payment Mechanism or Debt Exchangeable for Equity):
provided that if the APM Qualifying Securities for any Alternative Payment Mechanism include both Common Stock and rights to purchase Common Stock, such Alternative Payment Mechanism may permit, but need not require, the Corporation to issue rights to purchase Common Stock.
Applicable Percentage means:
(a) 133.33% with respect to any repayment, redemption, repurchase or defeasance on or prior to the date that is 50 years prior to the Final Repayment Date;
(b) 200.00% with respect to any repayment, redemption, repurchase or defeasance after the date that is 50 years prior to the Final Repayment Date and on or prior to the date that is 30 years prior to the Final Repayment Date; and
(c) 400.00% with respect to any repayment, redemption, repurchase or defeasance after the date that is 30 years prior to the Final Repayment Date and prior to the date that is 20 years prior to the Final Repayment Date.
Business Day means each day other than:
(a) a Saturday or Sunday; or
(b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or, on or after December 15, 2036, a day that is not a London business day. A London business day is any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.
Commission means the United States Securities and Exchange Commission.
Common Stock means common stock of the Corporation.
Company Market Disruption Events shall have the meaning assigned to such term in the Indenture or the Debentures.
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Contribution Agreement means the Contribution Agreement, dated as of November 22, 2006, between Dexia S.A. and the Corporation.
Covered Debt means:
(a) at the date of this Replacement Capital Covenant and continuing to but not including the first Redesignation Date, the Initial Covered Debt; and
(b) thereafter, commencing with each Redesignation Date and continuing to but not including the next succeeding Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such period.
Covered Debtholder means each Person (whether a Holder or a beneficial owner holding through a participant in a clearing agency) that buys, holds or sells long-term indebtedness for money borrowed of the Corporation during the period that such long-term indebtedness for money borrowed is Covered Debt.
Debt Exchangeable for Equity means a security or combination of securities that:
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Distribution Date means, as to any securities or combination of securities, the dates on which periodic Distributions on such securities are scheduled to be made.
Distribution Period means, as to any securities or combination of securities, each period from and including a Distribution Date for such securities to but not including the next succeeding Distribution Date for such securities.
Distributions means, as to a security or combination of securities, dividends, interest payments or other income distributions to the holders thereof that are not Subsidiaries of the Corporation.
Eligible Debt means, at any time, Eligible Subordinated Debt or, if no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.
Eligible Senior Debt means, at any time in respect of any issuer, each series of outstanding long-term indebtedness for money borrowed of such issuer that:
(a) upon a bankruptcy, liquidation, dissolution or winding up of the issuer, ranks most senior among the issuers then outstanding classes of indebtedness for money borrowed;
(b) is then assigned a rating by at least one NRSRO ( provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding senior long-term indebtedness for money borrowed that satisfies the requirements of clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO);
(c) has an outstanding principal amount of not less than $100,000,000, and;
(d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents.
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For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuers long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.
Eligible Subordinated Debt means, at any time in respect of any issuer, each series of the issuers then outstanding long-term indebtedness for money borrowed that:
(a) upon a bankruptcy, liquidation, dissolution or winding up of the issuer, ranks subordinate to the issuers then outstanding series of indebtedness for money borrowed that ranks most senior;
(b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding subordinated long-term indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO);
(c) has an outstanding principal amount of not less than $100,000,000; and
(d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents.
For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuers long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.
Final Repayment Date shall have the meaning assigned to such term in the Indenture or the Debentures.
Holder means, as to the Covered Debt then in effect, each holder of such Covered Debt as reflected on the securities register maintained by or on behalf of the Corporation with respect to such Covered Debt.
Indenture means the Indenture, dated as of November 22, 2006, between the Corporation and the Indenture Trustee.
Indenture Trustee means The Bank of New York, a New York corporation.
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Initial Covered Debt means the Corporations 5.60% Notes due July 15, 2103.
Intent-Based Replacement Disclosure means, as to any security or combination of securities, that the issuer thereof has publicly stated its intention, either in the prospectus or other offering document under which such securities were initially offered for sale or in filings with the Commission made by such issuer under the Securities Exchange Act prior to or contemporaneously with the issuance of such securities, that such issuer will repay, redeem or repurchase such securities only with the proceeds of specified replacement capital securities that have terms and provisions at the time of repayment, redemption or repurchase that are as or more equity-like than the securities then being repaid, redeemed or repurchased, raised within 180 days prior to the delivery of notice of such repayment or redemption or the date of such repurchase.
Mandatorily Convertible Preferred Stock means cumulative preferred stock with:
(a) no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise; and
(b) a requirement that such preferred stock convert into common stock within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of such preferred stock.
Mandatory Trigger Provision means as to any security or combination of securities, provisions in the terms thereof or of the related transaction agreements that:
(a) require, or at its option in the case of non-cumulative perpetual preferred stock permit, the issuer of such security or combination of securities to make payment of Distributions on such securities only pursuant to the issuance and sale of common stock or rights to purchase common stock or Qualifying Non-Cumulative Perpetual Preferred Stock, within either (i) one year of the failure of the issuer thereof to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements or (ii) two years of the failure of the issuer thereof to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements if the terms thereof or of the related transaction agreements prohibit the issuer of such security or combination of securities from repurchasing any of its common stock prior to the date one year after the issuer applies the net proceeds of the sales of common stock described in this clause (a) to pay such unpaid Distributions in full, in the case of clause (i) or (ii) in an amount such that the net proceeds of such sale are at least equal to the amount of unpaid Distributions on such securities (including without limitation all deferred and accumulated amounts), and in either case require the application of the net proceeds of such sale to pay such unpaid Distributions; provided that:
(i) the amount of Qualifying Non-Cumulative Perpetual Preferred Stock the net proceeds of which the issuer may apply to pay such
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Distributions pursuant to such provision may not exceed 25% of the liquidation or principal amount of such securities; and
(ii) if the Mandatory Trigger Provision requires such issuance and sale within one year of such failure and the securities include an Optional Deferral Provision, such Mandatory Trigger Provision need not limit the issuance of common stock or rights to purchase common stock to a maximum of 2% of the issuers Market Capitalization;
(b) upon any liquidation, dissolution, winding up, reorganization or in connection with any insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer of such security or combination of securities, limit the claim of the holders of such securities (other than non-cumulative perpetual preferred stock) for Distributions that accumulate during a period in which the issuer of such security or combination of securities fails to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements to (x) 25% of the principal amount of such securities then outstanding in the case of securities not permitting the issuance and sale pursuant to the provisions described in clause (a) above of securities other than common stock or rights to acquire common stock or (y) two years of accumulated and unpaid Distributions (including compounded amounts thereon) in all other cases. No remedy other than Permitted Remedies will arise by the terms of such securities or related transaction agreements in favor of the holders of such securities as a result of the issuers failure to pay Distributions because of the Mandatory Trigger Provision or as a result of the issuers exercise of its right under an Optional Deferral Provision until Distributions have been deferred for one or more Distribution Periods that total together at least ten years; and
(c) require that if at any time (i) the Corporation is required to issue shares of its Common Stock, rights to purchase Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Mandatory Trigger Provision, (ii) the Corporation has attempted to issue shares of its Qualifying Non-Cumulative Perpetual Preferred Stock but it has not raised sufficient net proceeds through the sale of its Common Stock, rights to purchase Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all unpaid Distributions and (iii) the Corporation is a party to a contribution agreement substantially similar to the Contribution Agreement, which is in full force and effect, then the Corporation is required to (a) make a request under such contribution agreement and (b) enforce such contribution agreement after making such a request.
Market Capitalization means, with respect to any Person, as of any date, an amount equal to the number of shares of common stock of such Person outstanding on such date multiplied by the current market price of one share of common stock of such Person on such date.
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Measurement Date means, with respect to any repayment, redemption, repurchase or defeasance of Debentures, the later of:
(a) the date 180 days prior to delivery of notice of such repayment, redemption or defeasance or the date of such repurchase; and
(b) to the extent the Debentures remain outstanding after December 15, 2036, the most recent date, if any, on which a notice of repayment, redemption or defeasance was delivered in respect of, or on which the Corporation repurchased, any Debentures.
Non-Cumulative means, with respect to any securities, that the issuer thereof may elect not to make any number of periodic Distributions without any remedy arising under the terms of the securities or related agreements in favor of the holders, other than one or more Permitted Remedies. Securities that include either:
(a) provisions requiring the issuer to issue Non-Cumulative perpetual preferred stock and common stock or rights to purchase common stock and apply the proceeds to pay unpaid Distributions pursuant to an Alternative Payment Mechanism; or
(b) a Mandatory Trigger Provision
shall also be deemed to be Non-Cumulative for all purposes of this Replacement Capital Covenant other than the definition of Qualifying Non-Cumulative Perpetual Preferred Stock.
NRSRO means a nationally recognized statistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.
Optional Deferral Provision means, as to any securities, a provision in the terms thereof or of the related transaction agreements to the following effect:
(a) the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if an event substantially similar to a Company Market Disruption Event is continuing, ten years, without any remedy other than Permitted Remedies and the obligation described in clause (b) below; and
(b) if the issuer of such securities has exhausted its right to defer Distributions and no event substantially similar to a Company Market Disruption Event is continuing, the issuer will be obligated to issue common stock, rights to purchase common stock and/or Non-Cumulative perpetual preferred stock in an amount such that the net proceeds of such sale equal or exceed the amount of unpaid Distributions on such securities (including without limitation all deferred
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and accumulated amounts) and to apply the net proceeds of such sale to pay such unpaid Distributions in full.
Permitted Remedies means, with respect to any securities, one or more of the following remedies:
(a) rights in favor of the holders of such securities permitting such holders to elect one or more directors of the issuer (including any such rights required by the listing requirements of any stock or securities exchange on which such securities may be listed or traded); and
(b) complete or partial prohibitions on the issuer paying Distributions on or repurchasing common stock or other securities that rank pari passu with or junior as to Distributions to such securities for so long as Distributions on such securities, including unpaid Distributions, remain unpaid.
Person means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof.
Qualifying Capital Securities means securities (other than Common Stock, rights to acquire Common Stock and securities convertible into Common Stock, such as Mandatorily Convertible Preferred Stock and Debt Exchangeable for Equity) that, in the determination of the Corporations board of directors, reasonably construing the definitions and other terms of this Replacement Capital Covenant, meet one of the following criteria:
(a) in connection with any repayment, redemption, repurchase or defeasance of Debentures on or prior to the date that is 50 years prior to the Final Repayment Date:
(i) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon the liquidation, dissolution or winding up of the Corporation, (B) have terms that are substantially similar to the terms of the Debentures and (C) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or have a Mandatory Trigger Provision and an Optional Deferral Provision and are subject to Intent-Based Replacement Disclosure;
(ii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon the liquidation, dissolution or winding up of the Corporation, (B) are Non-Cumulative, (C) have no maturity or a maturity of at least 60 years and (D) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or have a Mandatory Trigger Provision and are subject to Intent-Based Replacement Disclosure; or
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(iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu or junior to other preferred stock of the issuer, (B) have no maturity or a maturity of at least 40 years, (C) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and (D) have a Mandatory Trigger Provision and an Optional Deferral Provision; or
(b) in connection with any repayment, redemption, repurchase or defeasance of Debentures after the date that is 50 years prior to the Final Repayment Date and on or prior to the date that is 30 years prior to the Final Repayment Date:
(i) all securities described under clause (a) of this definition;
(ii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) have an Optional Deferral Provision or a Ten-Year Optional Deferral Provision, (C) have no maturity or a maturity of at least 60 years and (D) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant;
(iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) are Non-Cumulative and (C) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure;
(iv) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) are Non-Cumulative, (C) have no maturity or a maturity of at least 40 years and (D) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or have a Mandatory Trigger Provision and an Optional Deferral Provision and are subject to Intent-Based Replacement Disclosure;
(v) securities issued by the Corporation or its Subsidiaries that (A) would rank junior to all of the senior and subordinated debt of the Corporation other than the Debentures, (B) have a Mandatory Trigger Provision and an Optional Deferral Provision and (C) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure;
(vi) cumulative preferred stock issued by the Corporation or its Subsidiaries that (A) has no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and
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(B) (1) has no maturity or a maturity of at least 60 years and (2) is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant; or
(vii) other securities issued by the Corporation or its Subsidiaries that (A) rank upon a liquidation, dissolution or winding up of the Corporation either (1) pari passu with or junior to the Debentures or (2) pari passu with the claims of the Corporations trade creditors and junior to all of the Corporations long-term indebtedness for money borrowed (other than the Corporations long-term indebtedness for money borrowed from time to time outstanding that by its terms ranks pari passu with such securities on a liquidation, dissolution or winding up of the Corporation); and (B) either (1) have no maturity or a maturity of at least 40 years, are subject to Intent-Based Replacement Disclosure and have a Mandatory Trigger Provision and an Optional Deferral Provision or (2) have no maturity or a maturity of at least 25 years and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and have a Mandatory Trigger Provision and an Optional Deferral Provision; or
(c) in connection with any repayment, redemption, repurchase or defeasance of Debentures at any time after the date that is 30 years prior to the Final Repayment Date and prior to the date that is 20 years prior to the Final Repayment Date:
(i) all securities described under clauses (a) or (b) of this definition;
(ii) preferred stock issued by the Corporation that (A) has no maturity or a maturity of at least 60 years and is subject to Intent-Based Replacement Disclosure and (B) has an Optional Deferral Provision or a Ten-Year Optional Deferral Provision;
(iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) either (1) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure or (2) have no maturity or a maturity of at least 30 years and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and (C) have an Optional Deferral Provision or a Ten-Year Optional Deferral Provision;
(iv) securities issued by the Corporation or its Subsidiaries that (A) would rank junior to all of the senior and subordinated debt of the Corporation other than the Debentures, (B) have a Mandatory Trigger Provision and an Optional Deferral Provision and (C) have no maturity or
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a maturity of at least 30 years and are subject to Intent-Based Replacement Disclosure; or
(v) cumulative preferred stock issued by the Corporation or its Subsidiaries that either (A) has no maturity or a maturity of at least 60 years and is subject to Intent-Based Replacement Disclosure or (B) has a maturity of at least 40 years and is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant.
Qualifying Non-Cumulative Perpetual Preferred Stock means non-cumulative perpetual preferred stock of the Corporation or its Subsidiaries that:
(a) has no maturity date;
(b) contains no remedies other than Permitted Remedies;
(c) (i) is subject to Intent-Based Replacement Disclosure and has a provision providing for mandatory deferral of interest if there is a breach of financial triggers or (ii) is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant; and
(d) ranks pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation.
Redesignation Date means, as to the Covered Debt in effect at any time, the earliest of:
(a) the date that is two years prior to the final maturity date of such Covered Debt;
(b) if the Corporation elects to repay or redeem, or the Corporation or a Subsidiary of the Corporation elects to repurchase, such Covered Debt either in whole or in part with the consequence that after giving effect to such repayment or redemption or repurchase the outstanding principal amount of such Covered Debt is less than $100,000,000, the applicable redemption or repurchase date; and
(c) if such Covered Debt is not Eligible Subordinated Debt, the date on which the Corporation issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.
Securities Exchange Act means the Securities Exchange Act of 1934, as amended.
Subsidiary means, at any time, any Person the shares of stock or other ownership interests of which having ordinary voting power to elect a majority of the board of directors or other managers of such Person are at the time owned, or the management or policies of which are otherwise at the time controlled, directly or
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indirectly through one or more intermediaries (including other Subsidiaries) or both, by another Person.
Ten-Year Optional Deferral Provision means, as to any securities, a provision in the terms thereof or of the related transaction agreements to the effect that the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to ten years without any remedy other than Permitted Remedies.
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