Document:

Exhibit

10.2

 

HF FINANCIAL CORP.

 

as Issuer

 

 

INDENTURE

 

Dated as of December 19,

2002

 

 

WILMINGTON TRUST COMPANY

 

as Trustee

 

 

FLOATING RATE JUNIOR

SUBORDINATED DEBT SECURITIES DUE 2033

 

 

TABLE OF

CONTENTS

 

	

  ARTICLE

  I            DEFINITIONS

  
	

   

  	

   

  
	

   

  	

  SECTION 1.01       Definitions.

  
	

   

  	

   

  
	

  ARTICLE II           DEBT SECURITIES

  
	

   

  	

   

  
	

   

  	

  SECTION 2.01       Authentication

  and Dating.

  
	

   

  	

  SECTION

  2.02       Form

  of Trustee’s Certificate of Authentication.

  
	

   

  	

  SECTION

  2.03       Form

  and Denomination of Debt Securities.

  
	

   

  	

  SECTION 2.04       Execution

  of Debt Securities.

  
	

   

  	

  SECTION

  2.05       Exchange

  and Registration of Transfer of Debt Securities.

  
	

   

  	

  SECTION

  2.06       Mutilated,

  Destroyed, Lost or Stolen Debt Securities.

  
	

   

  	

  SECTION 2.07       Temporary

  Debt Securities.

  
	

   

  	

  SECTION 2.08       Payment

  of Interest.

  
	

   

  	

  SECTION

  2.09       Cancellation

  of Debt Securities Paid, etc.

  
	

   

  	

  SECTION 2.10       Computation

  of Interest.

  
	

   

  	

  SECTION

  2.11       Extension

  of Interest Payment Period.

  
	

   

  	

  SECTION 2.12       CUSIP

  Numbers.

  
	

   

  	

   

  
	

  ARTICLE

  III          PARTICULAR COVENANTS OF THE

  COMPANY     

  
	

   

  	

   

  
	

   

  	

  SECTION 3.01       Payment of

  Principal, Premium and Interest; Agreed Treatment of the Debt Securities.

  
	

   

  	

  SECTION

  3.02       Offices

  for Notices and Payments, etc.

  
	

   

  	

  SECTION

  3.03       Appointments

  to Fill Vacancies in Trustee’s Office.

  
	

   

  	

  SECTION 3.04       Provision

  as to Paying Agent.

  
	

   

  	

  SECTION 3.05       Certificate

  to Trustee.

  
	

   

  	

  SECTION 3.06       Additional

  Interest.

  
	

   

  	

  SECTION

  3.07       Compliance

  with Consolidation Provisions.

  
	

   

  	

  SECTION 3.08       Limitation

  on Dividends.

  
	

   

  	

  SECTION 3.09       Covenants

  as to the Trust.

  
	

   

  	

   

  
	

  ARTICLE IV          LISTS AND REPORTS  

  
	

   

  	

   

  
	

   

  	

  SECTION 4.01       Securityholders’

  Lists.

  
	

   

  	

  SECTION

  4.02       Preservation

  and Disclosure of Lists.

  
	

   

  	

   

  
	

  ARTICLE

  V           REMEDIES OF THE TRUSTEE AND

  SECURITYHOLDERS

  
	

   

  	

   

  
	

   

  	

  SECTION 5.01       Events

  of Default.

  
	

   

  	

  SECTION

  5.02       Payment

  of Debt Securities on Default; Suit Therefor.

  
	

   

  	

  SECTION

  5.03       Application

  of Moneys Collected by Trustee.

  
	

   

  	

  SECTION

  5.04       Proceedings

  by Securityholders.

  
	

   

  	

  SECTION 5.05       Proceedings

  by Trustee.

  

 

i

 

	

   

  	

  SECTION

  5.06       Remedies

  Cumulative and Continuing.

  
	

   

  	

  SECTION

  5.07       Direction

  of Proceedings and Waiver of Defaults by Majority of Securityholders.

  
	

   

  	

  SECTION 5.08       Notice

  of Defaults.

  
	

   

  	

  SECTION 5.09       Undertaking

  to Pay Costs.

  
	

   

  	

   

  
	

  ARTICLE

  VI          CONCERNING THE TRUSTEE

  
	

   

  	

   

  
	

   

  	

  SECTION

  6.01       Duties

  and Responsibilities of Trustee.

  
	

   

  	

  SECTION

  6.02       Reliance on Documents, Opinions, etc.

  
	

   

  	

  SECTION

  6.03       No

  Responsibility for Recitals, etc.

  
	

   

  	

  SECTION

  6.04       Trustee,

  Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own

  Debt Securities.

  
	

   

  	

  SECTION 6.05       Moneys

  to be Held in Trust.

  
	

   

  	

  SECTION

  6.06       Compensation

  and Expenses of Trustee.

  
	

   

  	

  SECTION

  6.07       Officers’

  Certificate as Evidence.

  
	

   

  	

  SECTION 6.08       Eligibility

  of Trustee.

  
	

   

  	

  SECTION

  6.09       Resignation

  or Removal of Trustee.

  
	

   

  	

  SECTION

  6.10       Acceptance

  by Successor Trustee.

  
	

   

  	

  SECTION 6.11       Succession

  by Merger, etc.

  
	

   

  	

  SECTION 6.12       Authenticating

  Agents.

  
	

   

  	

   

  
	

  ARTICLE VII        CONCERNING THE SECURITYHOLDERS

  
	

   

  	

   

  
	

   

  	

  SECTION 7.01       Action by

  Securityholders.

  
	

   

  	

  SECTION 7.02       Proof of Execution

  by Securityholders.

  
	

   

  	

  SECTION 7.03       Who Are Deemed

  Absolute Owners.

  
	

   

  	

  SECTION 7.04       Debt Securities

  Owned by Company Deemed Not Outstanding.

  
	

   

  	

  SECTION 7.05       Revocation of Consents;

  Future Holders Bound.

  
	

   

  	

   

  
	

  ARTICLE VIII       SECURITYHOLDERS’ MEETINGS

  
	

   

  	

   

  
	

   

  	

  SECTION 8.01       Purposes of

  Meetings.

  
	

   

  	

  SECTION 8.02       Call of Meetings

  by Trustee.

  
	

   

  	

  SECTION 8.03       Call of Meetings

  by Company or Securityholders.

  
	

   

  	

  SECTION 8.04       Qualifications for

  Voting.

  
	

   

  	

  SECTION 8.05       Regulations.

  
	

   

  	

  SECTION 8.06       Voting.

  
	

   

  	

  SECTION 8.07       Quorum; Actions.

  

 

ii

 

	

  ARTICLE IX         SUPPLEMENTAL INDENTURES

  
	

   

  	

   

  
	

   

  	

  SECTION 9.01       Supplemental

  Indentures without Consent of Securityholders.

  
	

   

  	

  SECTION 9.02       Supplemental

  Indentures with Consent of Securityholders.

  
	

   

  	

  SECTION 9.03       Effect of

  Supplemental Indentures.

  
	

   

  	

  SECTION 9.04       Notation on Debt

  Securities.

  
	

   

  	

  SECTION 9.05       Evidence of

  Compliance of Supplemental Indenture to be Furnished to Trustee.

  
	

   

  	

   

  
	

  ARTICLE X           REDEMPTION OF SECURITIES

  
	

   

  	

   

  
	

   

  	

  SECTION 10.01     Optional Redemption.

  
	

   

  	

  SECTION 10.02     Special Event

  Redemption.

  
	

   

  	

  SECTION 10.03     Notice of

  Redemption; Selection of Debt Securities.

  
	

   

  	

  SECTION 10.04     Payment of Debt

  Securities Called for Redemption.

  
	

   

  	

   

  
	

  ARTICLE

  XI         CONSOLIDATION, MERGER, SALE,

  CONVEYANCE AND LEASE

  
	

   

  	

   

  
	

   

  	

  SECTION 11.01     Company May

  Consolidate, etc., on Certain Terms.

  
	

   

  	

  SECTION 11.02     Successor Entity to

  be Substituted.

  
	

   

  	

  SECTION 11.03     Opinion of Counsel

  to be Given to Trustee.

  
	

   

  	

   

  
	

  ARTICLE XII        SATISFACTION

  AND DISCHARGE OF INDENTURE

  
	

   

  	

   

  
	

   

  	

  SECTION 12.01     Discharge of Indenture.

  
	

   

  	

  SECTION 12.02     Deposited Moneys to

  be Held in Trust by Trustee.

  
	

   

  	

  SECTION 12.03     Paying Agent to

  Repay Moneys Held.

  
	

   

  	

  SECTION 12.04     Return of Unclaimed

  Moneys.

  
	

   

  	

   

  
	

  ARTICLE XIII       IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND

  DIRECTORS

  
	

   

  	

   

  
	

   

  	

  SECTION 13.01     Indenture and Debt

  Securities Solely Corporate Obligations.

  
	

   

  	

   

  
	

  ARTICLE XIV       MISCELLANEOUS

  PROVISIONS

  
	

   

  	

   

  
	

   

  	

  SECTION 14.01     Successors.

  
	

   

  	

  SECTION 14.02     Official Acts by

  Successor Entity.

  
	

   

  	

  SECTION

  14.03     Surrender

  of Company Powers.

  
	

   

  	

  SECTION 14.04     Addresses for

  Notices, etc.

  
	

   

  	

  SECTION 14.05     Governing Law.

  
	

   

  	

  SECTION 14.06     Evidence of Compliance

  with Conditions Precedent.

  
	

   

  	

  SECTION 14.07     Non-Business Days.

  

 

iii

 

	

   

  	

  SECTION 14.08     Table of Contents,

  Headings, etc.

  
	

   

  	

  SECTION 14.09     Execution in

  Counterparts.

  
	

   

  	

  SECTION 14.10     Separability.

  
	

   

  	

  SECTION 14.11     Assignment.

  
	

   

  	

  SECTION 14.12     Acknowledgment of

  Rights.

  
	

   

  	

   

  
	

  ARTICLE

  XV        SUBORDINATION OF DEBT

  SECURITIES

  
	

   

  	

   

  
	

   

  	

  SECTION 15.01     Agreement to

  Subordinate.

  
	

   

  	

  SECTION 15.02     Default on Senior

  Indebtedness.

  
	

   

  	

  SECTION 15.03     Liquidation; Dissolution; Bankruptcy.

  
	

   

  	

  SECTION 15.04     Subrogation.

  
	

   

  	

  SECTION 15.05     Trustee to

  Effectuate Subordination.

  
	

   

  	

  SECTION 15.06     Notice by the Company.

  
	

   

  	

  SECTION 15.07     Rights of the

  Trustee; Holders of Senior Indebtedness.

  
	

   

  	

  SECTION 15.08     Subordination May

  Not Be Impaired.

  
	

   

  	

   

  
	

  EXHIBITS

  
	

   

  	

   

  
	

   

  	

  EXHIBIT

  A           Form of Debt Security

  

 

iv

 

THIS INDENTURE, dated as of December 19, 2002, between

HF Financial Corp., a savings and loan holding company incorporated in Delaware

(hereinafter sometimes called the “Company”), and Wilmington Trust Company, a

Delaware banking corporation, as trustee (hereinafter sometimes called the

“Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, for its lawful corporate purposes, the

Company has duly authorized the issuance of its Floating Rate Junior

Subordinated Debt Securities due 2033 (the “Debt Securities”) under this

Indenture and to provide, among other things, for the execution and

authentication, delivery and administration thereof, the Company has duly

authorized the execution of this Indenture.

 

NOW, THEREFORE, in consideration of the premises, and

the purchase of the Debt Securities by the holders thereof, the Company

covenants and agrees with the Trustee for the equal and proportionate benefit

of the respective holders from time to time of the Debt Securities as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.01       Definitions.

 

The terms defined in this Section 1.01 (except as

herein otherwise expressly provided or unless the context otherwise requires)

for all purposes of this Indenture and of any indenture supplemental hereto

shall have the respective meanings specified in this Section 1.01. All

accounting terms used herein and not expressly defined shall have the meanings

assigned to such terms in accordance with generally accepted accounting

principles and the term “generally accepted accounting principles” means such

accounting principles as are generally accepted in the United States at the

time of any computation.  The words

“herein,” “hereof” and “hereunder” and other words of similar import refer to

this Indenture as a whole and not to any particular Article, Section or other

subdivision.

 

“Additional Interest” shall have the meaning set forth

in Section 3.06.

 

“Additional Provisions” shall have the meaning set

forth in Section 15.01.

 

“Authenticating Agent” means any agent or agents of

the Trustee which at the time shall be appointed and acting pursuant to

Section 6.12.

 

“Bankruptcy Law” means Title 11, U.S. Code, or

any similar federal or state law for the relief of debtors.

 

“Board of Directors” means the board of directors or

the executive committee or any other duly authorized designated officers of the

Company.

 

 

“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 and delivered to the Trustee.

 

“Business Day” means any day other than a Saturday,

Sunday or any other day on which banking institutions in Wilmington, Delaware,

New York City or Sioux Falls, South Dakota are permitted or required

by any applicable law or executive order to close.

 

“Calculation Agent” means the Person identified as

“Trustee” in the first paragraph hereof with respect to the Debt Securities and

the Institutional Trustee with respect to the Trust Securities.

 

“Capital Securities” means undivided beneficial

interests in the assets of the Trust which are designated as “MMCapSSM” and rank pari passu with Common Securities

issued by the Trust; provided, however, that if an Event of

Default (as defined in the Declaration) has occurred and is continuing, the

rights of holders of such Common Securities to payment in respect of

distributions and payments upon liquidation, redemption and otherwise are

subordinated to the rights of holders of such Capital Securities.

 

“Capital Securities Guarantee” means the guarantee

agreement that the Company will enter into with Wilmington Trust Company or

other Persons that operates directly or indirectly for the benefit of holders

of Capital Securities of the Trust.

 

“Capital Treatment Event” means the receipt by the

Company and the Trust of an Opinion of Counsel experienced in such matters to

the effect that, as a result of (a) any amendment to, or change in, the

laws, rules or regulations of the United States or any political subdivision

thereof or therein, or any rules, guidelines or policies of an applicable

regulatory authority for the Company or (b) any official or administrative

pronouncement or action or decision interpreting or applying such laws, rules

or regulations, which amendment or change is effective or which pronouncement,

action or decision is announced on or after the date of original issuance of

the Debt Securities, there is more than an insubstantial risk that the Company

will not, within 90 days of the date of such opinion, be entitled to treat

an amount equal to the aggregate Liquidation Amount of the Capital Securities

as “Tier 1 Capital” (or its then equivalent if the Company were subject to such

capital requirement) applied as if the Company (or its successors) were a bank

holding company for purposes of the capital adequacy guidelines of the Federal

Reserve (or any successor regulatory authority with jurisdiction over bank

holding companies), or any capital adequacy guidelines as then in effect and

applicable to the Company, provided, however, that the

distribution of the Debt Securities in connection with the liquidation of the

Trust by the Company shall not in and of itself constitute a Capital Treatment

Event unless such liquidation shall have occurred in connection with a Tax

Event or an Investment Company Event.

 

“Certificate” means a certificate signed by any one of

the principal executive officer, the principal financial officer or the

principal accounting officer of the Company.

 

“Common Securities” means undivided beneficial

interests in the assets of the Trust which are designated as “Common

Securities” and rank pari passu with Capital Securities

 

2

 

issued by the Trust; provided, however, that if an Event

of Default (as defined in the Declaration) has occurred and is continuing, the

rights of holders of such Common Securities to payment in respect of distributions

and payments upon liquidation, redemption and otherwise are subordinated to the

rights of holders of such Capital Securities.

 

“Company” means HF Financial Corp., a savings and loan

holding company incorporated in Delaware, and, subject to the provisions of

Article XI, shall include its successors and assigns.

 

“Comparable Treasury Issue” means with respect to any

Special Redemption Date, the United States Treasury security selected by the

Quotation Agent as having a maturity comparable to the Remaining Life that

would be utilized, at the time of selection and in accordance with customary

financial practice, in pricing new issues of corporate debt securities of

comparable maturity to the Remaining Life. 

If no United States Treasury security has a maturity which is within a

period from three months before to three months after January 7, 2008, the two

most closely corresponding United States Treasury securities shall be used as

the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or

extrapolated on a straight-line basis, rounding to the nearest month using such

securities.

 

“Comparable Treasury Price” means (a) the average

of five Reference Treasury Dealer Quotations for such Special Redemption Date,

after excluding the highest and lowest such Reference Treasury Dealer

Quotations, or (b) if the Quotation Agent receives fewer than five such

Reference Treasury Dealer Quotations, the average of all such Quotations.

 

“Debt Security” or “Debt Securities” has the meaning

stated in the first recital of this Indenture.

 

“Debt Security Register” has the meaning specified in

Section 2.05.

 

“Declaration” means the Amended and Restated

Declaration of Trust of the Trust dated as of December 19, 2002, as amended or

supplemented from time to time.

 

“Default” means any event, act or condition that with

notice or lapse of time, or both, would constitute an Event of Default.

 

“Defaulted Interest” has the meaning set forth in

Section 2.08.

 

“Deferred Interest” has the meaning set forth in

Section 2.11.

 

“Event of Default” means any event specified in

Section 5.01, which has continued for the period of time, if any, and

after the giving of the notice, if any, therein designated.

 

“Extension Period” has the meaning set forth in

Section 2.11.

 

“Federal Reserve” means the Board of Governors of the

Federal Reserve System.

 

3

 

“Indenture” means this instrument as originally

executed or, if amended or supplemented as herein provided, as so amended or

supplemented, or both.

 

“Institutional Trustee” has the meaning set forth in

the Declaration.

 

“Interest Payment Date” means January 7, April 7, July

7 and October 7 of each year, commencing on April 7, 2003, during the term of

this Indenture.

 

“Interest Rate” means a per annum rate of interest,

reset quarterly, equal to LIBOR, as determined on the LIBOR Determination Date

immediately preceding each Interest Payment Date, plus 3.35%; provided, that

the applicable Interest Rate may not exceed 12.5% through the Interest Payment

Date in January, 2008.

 

“Investment Company Event” means the receipt by the

Company and the Trust of an Opinion of Counsel experienced in such matters to

the effect that, as a result of a change in law or regulation or written change

in interpretation or application of law or regulation by any legislative body,

court, governmental agency or regulatory authority, there is more than an

insubstantial risk that the Trust is or, within 90 days of the date of

such opinion will be, considered an “investment company” that is required to be

registered under the Investment Company Act of 1940, as amended, which change

or prospective change becomes effective or would become effective, as the case

may be, on or after the date of the original issuance of the Debt Securities.

 

“LIBOR” means the London Interbank Offered Rate for

U.S. Dollar deposits in Europe as determined by the Calculation Agent

according to Section 2.10(b).

 

“LIBOR Banking Day” has the meaning set forth in

Section 2.10(b)(i).

 

“LIBOR Business Day” has the meaning set forth in

Section 2.10(b)(i).

 

“LIBOR Determination Date” has the meaning set forth

in Section 2.10(b)(i).

 

“Liquidation Amount” means the stated amount of $1,000

per Trust Security.

 

“Maturity Date” means January 7, 2033.

 

“Officers’ Certificate” means a certificate signed by

the Chairman of the Board, the Vice Chairman, the President or any Vice

President, and by the Chief Financial Officer, the Treasurer, an Assistant

Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an

Assistant Secretary of the Company, and delivered to the Trustee.  Each such certificate shall include the

statements provided for in Section 14.06 if and to the extent required by

the provisions of such Section.

 

“Opinion of Counsel” means an opinion in writing

signed by legal counsel, who may be an employee of or counsel to the Company,

or may be other counsel reasonably satisfactory to the Trustee.  Each such opinion shall include the

statements provided for in Section 14.06 if and to the extent required by

the provisions of such Section.

 

4

 

“OTS” means the Office of Thrift Supervision.

 

The term “outstanding,” when used with reference to

Debt Securities, subject to the provisions of Section 7.04, means, as of

any particular time, all Debt Securities authenticated and delivered by the

Trustee or the Authenticating Agent under this Indenture, except

 

(a)           Debt

Securities theretofore canceled by the Trustee or the Authenticating Agent or

delivered to the Trustee for cancellation;

 

(b)           Debt

Securities, or portions thereof, for the payment or redemption of which moneys

in the necessary amount shall have been deposited in trust with the Trustee or

with any Paying Agent (other than the Company) or shall have been set aside and

segregated in trust by the Company (if the Company shall act as its own Paying

Agent); provided, that, if such Debt Securities, or portions

thereof, are to be redeemed prior to maturity thereof, notice of such

redemption shall have been given as provided in Articles X and XIV or

provision satisfactory to the Trustee shall have been made for giving such

notice; and

 

(c)           Debt

Securities paid pursuant to Section 2.06 or in lieu of or in substitution

for which other Debt Securities shall have been authenticated and delivered

pursuant to the terms of Section 2.06 unless proof satisfactory to the

Company and the Trustee is presented that any such Debt Securities are held by

bona fide holders in due course.

 

“Paying Agent” has the meaning set forth in Section

3.04(e).

 

“Person” means any individual, corporation, limited

liability company, partnership, joint venture, association, joint-stock

company, trust, unincorporated organization or government or any agency or

political subdivision thereof.

 

“Predecessor Security” of any particular Debt Security

means every previous Debt Security evidencing all or a portion of the same debt

as that evidenced by such particular Debt Security; and, for the purposes of

this definition, any Debt Security authenticated and delivered under

Section 2.06 in lieu of a lost, destroyed or stolen Debt Security shall be

deemed to evidence the same debt as the lost, destroyed or stolen Debt

Security.

 

“Primary Treasury Dealer” means a primary United

States Government securities dealer in New York City.

 

“Principal Office of the Trustee” means the office of

the Trustee, at which at any particular time its corporate trust business shall

be principally administered, which at all times shall be located within the

United States and at the time of the execution of this Indenture shall be

Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001.

 

“Quotation Agent” means Salomon Smith Barney Inc. and

its successors; provided, however, that if the foregoing shall

cease to be a Primary Treasury Dealer, the Company shall substitute therefor

another Primary Treasury Dealer.

 

“Redemption Date” has the meaning set forth in

Section 10.01.

 

5

 

“Redemption Price” means 100% of the principal amount

of the Debt Securities being redeemed plus accrued and unpaid interest on such

Debt Securities to the Redemption Date or, in the case of a redemption due to

the occurrence of a Special Event, to the Special Redemption Date if such

Special Redemption Date is on or after January 7, 2008.

 

“Reference Treasury Dealer” means (i) the

Quotation Agent and (ii) any other Primary Treasury Dealer selected by the

Trustee after consultation with the Company.

 

“Reference Treasury Dealer Quotations” means, with

respect to each Reference Treasury Dealer and any Special Redemption Date, the

average, as determined by the Quotation Agent, of the bid and asked prices for

the Comparable Treasury Issue (expressed in each case as a percentage of its principal

amount) quoted in writing to the Trustee by such Reference Treasury Dealer at

5:00 p.m., New York City time, on the third Business Day preceding such Special

Redemption Date.

 

“Remaining Life” means, with respect to any Debt

Security, the period from the Special Redemption Date for such Debt Security to

January 7, 2008.

 

“Responsible Officer” means, with respect to the

Trustee, any officer within the Principal Office of the Trustee with direct

responsibility for the administration of the Indenture, including any vice–president,

any assistant vice–president, any secretary, any assistant secretary, the

treasurer, any assistant treasurer, any trust officer or other officer of the

Principal Office of the Trustee customarily performing functions similar to

those performed by any of the above designated officers and also means, with

respect to a particular corporate trust matter, any other officer to whom such

matter is referred because of that officer’s knowledge of and familiarity with

the particular subject.

 

“Securityholder,” “holder of Debt Securities” or other

similar terms, means any Person in whose name at the time a particular Debt

Security is registered on the Debt Security Register.

 

“Senior Indebtedness” means, with respect to the

Company, (i) the principal, premium, if any, and interest in respect of (A)

indebtedness of the Company for money borrowed and (B) indebtedness evidenced

by securities, debentures, notes, bonds or other similar instruments issued by

the Company; (ii) all capital lease obligations of the Company; (iii) all

obligations of the Company issued or assumed as the deferred purchase price of

property, all conditional sale obligations of the Company and all obligations

of the Company under any title retention agreement (but excluding trade

accounts payable arising in the ordinary course of business); (iv) all

obligations of the Company for the reimbursement of any letter of credit, any

banker’s acceptance, any security purchase facility, any repurchase agreement

or similar arrangement, any interest rate swap, any other hedging arrangement,

any obligation under options or any similar credit or other transaction; (v)

all obligations of the type referred to in clauses (i) through (iv) above of

other Persons for the payment of which the Company is responsible or liable as

obligor, guarantor or otherwise; and (vi) all obligations of the type referred

to in clauses (i) through (v) above of other Persons secured by any lien on any

property or asset of the Company (whether or not such obligation is assumed by

the Company), whether incurred on or prior to the date of this Indenture or

thereafter incurred, unless, with the prior

 

6

 

approval of the OTS if not otherwise generally approved, in the instrument

creating or evidencing the same or pursuant to which the same is outstanding,

it is provided that such obligations are not superior or are pari passu in right of payment to the Debt

Securities.

 

“Special Event” means any of a Tax Event, an Investment

Company Event or a Capital Treatment Event.

 

“Special Redemption Date” has the meaning set forth in

Section 10.02.

 

“Special Redemption Price” means (1) if the Special Redemption

Date is before January 7, 2008, the

greater of (a) 100% of the principal amount of the Debt Securities being

redeemed pursuant to Section 10.02 or (b) as determined by a

Quotation Agent, the sum of the present values of the principal amount payable

as part of the Redemption Price with respect to a redemption as of January

7, 2008, together with the present value of

interest payments calculated at a fixed per annum rate of interest equal to 7.125% over the Remaining Life of such Debt

Securities, discounted to the Special Redemption Date on a quarterly basis

(assuming a 360-day year consisting of twelve 30-day months) at the Treasury

Rate plus .50%, plus, in the case of

either (a) or (b), accrued and unpaid interest on such Debt Securities to the

Special Redemption Date and (2) if the Special Redemption Date is on or

after January 7, 2008, the

Redemption Price for such Special Redemption Date.

 

“Subsidiary” means, with respect to any Person,

(i) any corporation, at least a majority of the outstanding voting stock

of which is owned, directly or indirectly, by such Person or by one or more of

its Subsidiaries, or by such Person and one or more of its Subsidiaries,

(ii) any general partnership, joint venture or similar entity, at least a

majority of the outstanding partnership or similar interests of which shall at

the time be owned by such Person, or by one or more of its Subsidiaries, or by

such Person and one or more of its Subsidiaries, and (iii) any limited

partnership of which such Person or any of its Subsidiaries is a general

partner.  For the purposes of this

definition, “voting stock” means shares, interests, participations or other

equivalents in the equity interest (however designated) in such Person having

ordinary voting power for the election of a majority of the directors (or the

equivalent) of such Person, other than shares, interests, participations or

other equivalents having such power only by reason of the occurrence of a

contingency.

 

“Tax Event” means the receipt by the Company and the

Trust of an Opinion of Counsel experienced in such matters to the effect that,

as a result of any amendment to or change (including any announced prospective

change) in the laws or any regulations thereunder of the United States or any

political subdivision or taxing authority thereof or therein, or as a result of

any official administrative pronouncement (including any private letter ruling,

technical advice memorandum, regulatory procedure, notice or announcement (an

“Administrative Action”)) or judicial decision interpreting or applying such

laws or regulations, regardless of whether such Administrative Action or

judicial decision is issued to or in connection with a proceeding involving the

Company or the Trust and whether or not subject to review or appeal, which

amendment, clarification, change, Administrative Action or decision is enacted,

promulgated or announced, in each case on or after the date of original

issuance of the Debt Securities, there is more than an insubstantial risk that:

(i) the Trust is, or will be within 90 days of the date of such

opinion, subject to United States federal income tax with respect to income

received or accrued

 

7

 

on the Debt Securities; (ii) interest payable by the Company on

the Debt Securities is not, or within 90 days of the date of such opinion,

will not be, deductible by the Company, in whole or in part, for United States

federal income tax purposes; or (iii) the Trust is, or will be within

90 days of the date of such opinion, subject to or otherwise required to

pay, or required to withhold from distributions to holders of Trust Securities,

more than a de minimis amount of other taxes (including withholding taxes),

duties, assessments or other governmental charges.

 

“Treasury Rate” means (i) the yield, under the

heading which represents the average for the week immediately prior to the date

of calculation, appearing in the most recently published statistical release

designated H.15 (519) or any successor publication which is published

weekly by the Federal Reserve and which establishes yields on actively traded

United States Treasury securities adjusted to constant maturity under the

caption “Treasury Constant Maturities,” for the maturity corresponding to the

Remaining Life (if no maturity is within three months before or after the

Remaining Life, yields for the two published maturities most closely

corresponding to the Remaining Life shall be determined and the Treasury Rate

shall be interpolated or extrapolated from such yields on a straight-line

basis, rounding to the nearest month) or (ii) if such release (or any

successor release) is not published during the week preceding the calculation

date or does not contain such yields, the rate per annum equal to the quarterly

equivalent yield to maturity of the Comparable Treasury Issue, calculated using

a price for the Comparable Treasury Issue (expressed as a percentage of its

principal amount) equal to the Comparable Treasury Price for such Special

Redemption Date.  The Treasury Rate

shall be calculated on the third Business Day preceding the Special Redemption

Date.

 

“Trust” means HF Financial Capital Trust III, the Delaware statutory

trust, or any other similar trust created for the purpose of issuing Capital

Securities in connection with the issuance of Debt Securities under this

Indenture, of which the Company is the sponsor.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended

from time to time, or any successor legislation.

 

“Trust Securities” means Common Securities and Capital Securities of HF

Financial Capital Trust III.

 

“Trustee” means the Person identified as “Trustee” in the first

paragraph hereof, and, subject to the provisions of Article VI hereof,

shall also include its successors and assigns as Trustee hereunder.

 

“United States” means the United States of America and the District of

Columbia.

 

“U.S. Person” has the meaning given to United States Person as set

forth in Section 7701(a)(30) of the Internal Revenue Code of 1986, as

amended.

 

8

 

ARTICLE II

DEBT SECURITIES

 

SECTION 2.01       Authentication and Dating.

 

Upon the execution and delivery of this Indenture, or from time to time

thereafter, Debt Securities in an aggregate principal amount not in excess of

$5,155,000 may be executed and delivered by the Company to the Trustee for

authentication, and the Trustee shall thereupon authenticate and make available

for delivery said Debt Securities to or upon the written order of the Company,

signed by its Chairman of the Board of Directors, Vice Chairman, President or

Chief Financial Officer or one of its Vice Presidents, without any further

action by the Company hereunder.  In

authenticating such Debt Securities, and accepting the additional

responsibilities under this Indenture in relation to such Debt Securities, the

Trustee shall be entitled to receive, and (subject to Section 6.01) shall

be fully protected in relying upon a copy of any Board Resolution or Board

Resolutions relating thereto and, if applicable, an appropriate record of any

action taken pursuant to such resolution, in each case certified by the

Secretary or an Assistant Secretary or other officers with appropriate

delegated authority of the Company as the case may be.

 

The Trustee shall have the right to decline to

authenticate and deliver any Debt Securities under this Section if the Trustee,

being advised by counsel, determines that such action may not lawfully be taken

or if a Responsible Officer of the Trustee in good faith shall determine that

such action would expose the Trustee to personal liability to existing

Securityholders.

 

The definitive Debt Securities shall be typed,

printed, lithographed or engraved on steel engraved borders or may be produced

in any other manner, all as determined by the officers executing such Debt

Securities, as evidenced by their execution of such Debt Securities.

 

SECTION 2.02       Form of Trustee’s Certificate of

Authentication.

 

The Trustee’s certificate of authentication on all Debt Securities

shall be in substantially the following form:

 

This is one of the Debt Securities referred to in the within-mentioned

Indenture.

 

	

   

  	

  Wilmington Trust

  Company,

  
	

   

  	

  not in its individual

  capacity

  but solely as trustee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Authorized Officer

  
					

 

SECTION 2.03       Form and Denomination of Debt

Securities.

 

The Debt Securities shall be substantially in the form of Exhibit A

hereto.  The Debt Securities shall be in

registered, certificated form without coupons and in minimum denominations of

$100,000 and any multiple of $1,000 in excess thereof.  The Debt Securities

 

9

 

shall be numbered, lettered, or otherwise distinguished in such manner

or in accordance with such plans as the officers executing the same may

determine with the approval of the Trustee as evidenced by the execution and

authentication thereof.

 

SECTION 2.04       Execution of Debt Securities.

 

The Debt Securities shall be signed in the name and on behalf of the

Company by the manual or facsimile signature of its Chairman of the Board of

Directors, Vice Chairman, President or Chief Financial Officer or one of its

Executive Vice Presidents, Senior Vice Presidents or Vice Presidents, under its

corporate seal which may be affixed thereto or printed, engraved or otherwise

reproduced thereon, by facsimile or otherwise, and which need not be attested.  Only such Debt Securities as shall bear

thereon a certificate of authentication substantially in the form herein before

recited, executed by the Trustee or the Authenticating Agent by the manual

signature of an authorized officer, shall be entitled to the benefits of this

Indenture or be valid or obligatory for any purpose.  Such certificate by the Trustee or the Authenticating Agent upon

any Debt Security executed by the Company shall be conclusive evidence that the

Debt Security so authenticated has been duly authenticated and delivered

hereunder and that the holder is entitled to the benefits of this Indenture.

 

In case any officer of the Company who shall have signed any of the

Debt Securities shall cease to be such officer before the Debt Securities so

signed shall have been authenticated and delivered by the Trustee or the

Authenticating Agent, or disposed of by the Company, such Debt Securities

nevertheless may be authenticated and delivered or disposed of as though the

Person who signed such Debt Securities had not ceased to be such officer of the

Company; and any Debt Security may be signed on behalf of the Company by such

Persons as, at the actual date of the execution of such Debt Security, shall be

the proper officers of the Company, although at the date of the execution of

this Indenture any such person was not such an officer.

 

Every Debt Security shall be dated the date of its authentication.

 

SECTION 2.05       Exchange and Registration of Transfer

of Debt Securities.

 

The Company shall cause to be kept, at the office or agency maintained

for the purpose of registration of transfer and for exchange as provided in

Section 3.02, a register (the “Debt Security Register”) for the Debt

Securities issued hereunder in which, subject to such reasonable regulations as

it may prescribe, the Company shall provide for the registration and transfer

of all Debt Securities as provided in this Article II.  Such register shall be in written form or in

any other form capable of being converted into written form within a reasonable

time.

 

Debt Securities to be exchanged may be surrendered at the Principal

Office of the Trustee or at any office or agency to be maintained by the

Company for such purpose as provided in Section 3.02, and the Company

shall execute, the Company or the Trustee shall register and the Trustee or the

Authenticating Agent shall authenticate and make available for delivery in

exchange therefor the Debt Security or Debt Securities which the Securityholder

making the exchange shall be entitled to receive.  Upon due presentment for registration of transfer of any Debt

Security at the Principal Office of the Trustee or at any office or agency of

 

10

 

the Company maintained for such purpose as provided in

Section 3.02, the Company shall execute, the Company or the Trustee shall

register and the Trustee or the Authenticating Agent shall authenticate and

make available for delivery in the name of the transferee or transferees a new

Debt Security for a like aggregate principal amount. Registration or

registration of transfer of any Debt Security by the Trustee or by any agent of

the Company appointed pursuant to Section 3.02, and delivery of such Debt

Security, shall be deemed to complete the registration or registration of

transfer of such Debt Security.

 

All Debt Securities presented for registration of transfer or for

exchange or payment shall (if so required by the Company or the Trustee or the

Authenticating Agent) be duly endorsed by, or be accompanied by, a written

instrument or instruments of transfer in form satisfactory to the Company and

either the Trustee or the Authenticating Agent duly executed by, the holder or

such holder’s attorney duly authorized in writing.

 

No service charge shall be made for any exchange or registration of

transfer of Debt Securities, but the Company or the Trustee may require payment

of a sum sufficient to cover any tax, fee or other governmental charge that may

be imposed in connection therewith.

 

The Company or the Trustee shall not be required to exchange or

register a transfer of any Debt Security for a period of 15 days

immediately preceding the date of selection of Debt Securities for redemption.

 

Notwithstanding the foregoing, Debt Securities may not be transferred except

in compliance with the restricted securities legend set forth below, unless

otherwise determined by the Company in accordance with applicable law, which

legend shall be placed on each Debt Security:

 

THIS

SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED

(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE

SECURITIES LAWS.  NEITHER THIS SECURITY

NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,

TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF

SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,

THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO

OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY,

(B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT

(“RULE 144A”), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED

INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN

ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS

GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,

(C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

SECURITIES ACT TO AN “ACCREDITED

INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF

RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS

OWN ACCOUNT, OR FOR THE ACCOUNT OF AN 

 

11

 

“ACCREDITED INVESTOR,” FOR INVESTMENT

PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY

DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D) PURSUANT TO

ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR

TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN

OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT

IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE

COMPANY.  THE HOLDER OF THIS SECURITY BY

ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

 

THE

HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND

WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS

SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

 

THE

HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND

WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR

OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME

SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE

INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (EACH A “PLAN”), OR AN

ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S

INVESTMENT IN THE ENTITY AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY

ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR

HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER

U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,

95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND

HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR

SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING.  ANY PURCHASER OR HOLDER OF THIS SECURITY OR

ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND

HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN

THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975

OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN

EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS

OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR

(ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER

SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS

NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

 

IN

CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL DELIVER TO THE

REGISTRAR AND TRANSFER AGENT SUCH

 

12

 

CERTIFICATES AND OTHER INFORMATION AS

MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE

FOREGOING RESTRICTIONS.

 

THIS

SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A

PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS

THEREOF.  ANY ATTEMPTED TRANSFER OF THIS

SECURITY IN A BLOCK HAVING A PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE

DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED

TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY

PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS

SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST

WHATSOEVER IN THIS SECURITY.

 

SECTION 2.06       Mutilated, Destroyed, Lost or Stolen

Debt Securities.

 

In case any Debt Security shall become mutilated or be destroyed, lost

or stolen, the Company shall execute, and upon its written request the Trustee

shall authenticate and deliver, a new Debt Security bearing a number not

contemporaneously outstanding, in exchange and substitution for the mutilated

Debt Security, or in lieu of and in substitution for the Debt Security so

destroyed, lost or stolen.  In every

case the applicant for a substituted Debt Security shall furnish to the Company

and the Trustee such security or indemnity as may be required by them to save

each of them harmless, and, in every case of destruction, loss or theft, the

applicant shall also furnish to the Company and the Trustee evidence to their

satisfaction of the destruction, loss or theft of such Debt Security and of the

ownership thereof.

 

The Trustee may authenticate any such substituted Debt Security and

deliver the same upon the written request or authorization of any officer of

the Company.  Upon the issuance of any

substituted Debt Security, the Company may require the payment of a sum

sufficient to cover any tax or other governmental charge that may be imposed in

relation thereto and any other expenses connected therewith.  In case any Debt Security which has matured

or is about to mature or has been called for redemption in full shall become

mutilated or be destroyed, lost or stolen, the Company may, instead of issuing

a substitute Debt Security, pay or authorize the payment of the same (without

surrender thereof except in the case of a mutilated Debt Security) if the

applicant for such payment shall furnish to the Company and the Trustee such

security or indemnity as may be required by them to save each of them harmless

and, in case of destruction, loss or theft, evidence satisfactory to the

Company and to the Trustee of the destruction, loss or theft of such Security

and of the ownership thereof.

 

Every substituted Debt Security issued pursuant to the provisions of

this Section 2.06 by virtue of the fact that any such Debt Security is

destroyed, lost or stolen shall constitute an additional contractual obligation

of the Company, whether or not the destroyed, lost or stolen Debt Security

shall be found at any time, and shall be entitled to all the benefits of this

Indenture equally and proportionately with any and all other Debt Securities

duly issued hereunder.  All Debt

Securities shall be held and owned upon the express condition that, to the

extent permitted by applicable law, the foregoing provisions are exclusive with

respect to the 

 

13

 

replacement or payment of mutilated, destroyed, lost or stolen Debt

Securities and shall preclude any and all other rights or remedies

notwithstanding any law or statute existing or hereafter enacted to the

contrary with respect to the replacement or payment of negotiable instruments

or other securities without their surrender.

 

SECTION 2.07       Temporary Debt Securities.

 

Pending the preparation of definitive Debt Securities, the Company may

execute and the Trustee shall authenticate and make available for delivery

temporary Debt Securities that are typed, printed or lithographed. Temporary

Debt Securities shall be issuable in any authorized denomination, and

substantially in the form of the definitive Debt Securities but with such

omissions, insertions and variations as may be appropriate for temporary Debt

Securities, all as may be determined by the Company.  Every such temporary Debt Security shall be executed by the

Company and be authenticated by the Trustee upon the same conditions and in

substantially the same manner, and with the same effect, as the definitive Debt

Securities.  Without unreasonable delay,

the Company will execute and deliver to the Trustee or the Authenticating Agent

definitive Debt Securities and thereupon any or all temporary Debt Securities

may be surrendered in exchange therefor, at the Principal Office of the Trustee

or at any office or agency maintained by the Company for such purpose as

provided in Section 3.02, and the Trustee or the Authenticating Agent

shall authenticate and make available for delivery in exchange for such

temporary Debt Securities a like aggregate principal amount of such definitive

Debt Securities.  Such exchange shall be

made by the Company at its own expense and without any charge therefor except

that in case of any such exchange involving a registration of transfer the

Company may require payment of a sum sufficient to cover any tax, fee or other

governmental charge that may be imposed in relation thereto.  Until so exchanged, the temporary Debt

Securities shall in all respects be entitled to the same benefits under this

Indenture as definitive Debt Securities authenticated and delivered hereunder.

 

SECTION 2.08       Payment of Interest.

 

Each Debt Security will bear interest at the then applicable Interest

Rate from and including each Interest Payment Date or, in the case of the first

interest period, the original date of issuance of such Debt Security to, but

excluding, the next succeeding Interest Payment Date or, in the case of the

last interest period, the Redemption Date, Special Redemption Date or Maturity

Date, as applicable, on the principal thereof, on any overdue principal and (to

the extent that payment of such interest is enforceable under applicable law)

on Deferred Interest and on any overdue installment of interest (including

Defaulted Interest), payable (subject to the provisions of Article XII) on

each Interest Payment Date commencing on April 7, 2003.  Interest and any Deferred Interest on any

Debt Security that is payable, and is punctually paid or duly provided for by

the Company, on any Interest Payment Date shall be paid to the Person in whose

name said Debt Security (or one or more Predecessor Securities) is registered

at the close of business on the regular record date for such interest

installment, except that interest and any Deferred Interest payable on the

Maturity Date shall be paid to the Person to whom principal is paid.  In the event that any Debt Security or

portion thereof is called for redemption and the redemption date is subsequent

to a regular record date with respect to any Interest Payment Date and prior to

such Interest Payment Date, interest on such Debt Security will be paid upon

presentation and surrender of such Debt Security.

 

14

 

Any interest on any Debt Security, other than Deferred Interest, that

is payable, but is not punctually paid or duly provided for by the Company, on

any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith

cease to be payable to the registered holder on the relevant regular record

date by virtue of having been such holder, and such Defaulted Interest shall be

paid by the Company to the Persons in whose names such Debt Securities (or

their respective Predecessor Securities) are registered at the close of

business on a special record date for the payment of such Defaulted Interest,

which shall be fixed in the following manner: 

the Company shall notify the Trustee in writing of the amount of

Defaulted Interest proposed to be paid on each such Debt Security and the date

of the proposed payment, and at the same time the Company shall deposit with

the Trustee an amount of money equal to the aggregate amount proposed to be

paid in respect of such Defaulted Interest or shall make arrangements

reasonably satisfactory to the Trustee for such deposit prior to the date of

the proposed payment, such money when deposited to be held in trust for the

benefit of the Persons entitled to such Defaulted Interest as in this clause

provided.  Thereupon the Trustee shall fix

a special record date for the payment of such Defaulted Interest which shall

not be more than fifteen nor less than ten days prior to the date of the

proposed payment and not less than ten days after the receipt by the

Trustee of the notice of the proposed payment. 

The Trustee shall promptly notify the Company of such special record

date and, in the name and at the expense of the Company, shall cause notice of

the proposed payment of such Defaulted Interest and the special record date

therefor to be mailed, first class postage prepaid, to each Securityholder at

his or her address as it appears in the Debt Security Register, not less than

ten days prior to such special record date.  Notice of the proposed payment of such Defaulted Interest and the

special record date therefor having been mailed as aforesaid, such Defaulted

Interest shall be paid to the Persons in whose names such Debt Securities (or

their respective Predecessor Securities) are registered on such special record

date and thereafter the Company shall have no further payment obligation in

respect of the Defaulted Interest.

 

Any interest scheduled to become payable on an Interest Payment Date

occurring during an Extension Period shall not be Defaulted Interest and shall

be payable on such other date as may be specified in the terms of such Debt

Securities.

 

The term “regular record date” as used in this Section shall mean the

fifteenth day prior to an Interest Payment Date whether or not such date

is a Business Day.

 

Subject to the foregoing provisions of this Section, each Debt Security

delivered under this Indenture upon registration of transfer of or in exchange

for or in lieu of any other Debt Security shall carry the rights to interest

accrued and unpaid, and to accrue, that were carried by such other Debt

Security.

 

SECTION 2.09       Cancellation of Debt Securities Paid,

etc.

 

All Debt Securities surrendered for the purpose of payment, redemption,

exchange or registration of transfer, shall, if surrendered to the Company or

any Paying Agent, be surrendered to the Trustee and promptly canceled by it,

or, if surrendered to the Trustee or any Authenticating Agent, shall be

promptly canceled by it, and no Debt Securities shall be issued in lieu thereof

except as expressly permitted by any of the provisions of this Indenture.  All Debt Securities canceled by any

Authenticating Agent shall be delivered to the Trustee.  The

 

15

 

Trustee shall destroy all canceled Debt Securities unless the Company

otherwise directs the Trustee in writing, in which case the Trustee shall

dispose of such Debt Securities as directed by the Company.  If the Company shall acquire any of the Debt

Securities, however, such acquisition shall not operate as a redemption or

satisfaction of the indebtedness represented by such Debt Securities unless and

until the same are surrendered to the Trustee for cancellation.

 

SECTION 2.10       Computation of Interest.

 

(a)           The

amount of interest payable for any interest period will be computed on the basis

of a 360-day year and the actual number of days elapsed in the relevant

interest period; provided, however, that upon the occurrence of a

Special Event Redemption pursuant to Section 10.02 the amounts payable

pursuant to this Indenture shall be calculated as set forth in the definition

of Special Redemption Price.

 

(b)           LIBOR

shall be determined by the Calculation Agent in accordance with the following

provisions:

 

(i)            On the second LIBOR Business Day (provided, that

on such day commercial banks are open for business (including dealings in

foreign currency deposits) in London (a “LIBOR Banking Day”), and otherwise the

next preceding LIBOR Business Day that is also a LIBOR Banking Day) prior to

January 15, April 15, July 15 and October 15 (except, with respect to the first

interest payment period, on December 17, 2002), (each such day, a “LIBOR

Determination Date”), LIBOR shall equal the rate, as obtained by the

Calculation Agent for three-month U.S. Dollar deposits in Europe, which appears

on Telerate Page 3750 (as defined in the International Swaps and Derivatives

Association, Inc. 1991 Interest Rate and Currency Exchange Definitions) or such

other page as may replace such  Telerate

Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date, as

reported by Bloomberg Financial Markets Commodities News.  “LIBOR Business Day” means any day that is

not a Saturday, Sunday or other day on which commercial banking institutions in

New York, New York or Wilmington, Delaware are authorized or obligated by law

or executive order to be closed.  If

such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00

noon (London time) on the same LIBOR Determination Date, the corrected rate as

so substituted will be the applicable LIBOR for that LIBOR Determination Date.

 

(ii)           If, on any

LIBOR Determination Date, such rate does not appear on Telerate Page 3750

as reported by Bloomberg Financial Markets Commodities News or such other page

as may replace such Telerate Page 3750, the Calculation Agent shall

determine the arithmetic mean of the offered quotations of the Reference Banks

(as defined below) to leading banks in the London interbank market for

three-month U.S. Dollar deposits in Europe (in an amount determined by the

Calculation Agent) by reference to requests for quotations as of approximately

11:00 a.m. (London time) on the LIBOR Determination Date made by the

Calculation Agent to the Reference Banks. 

If, on any LIBOR Determination Date, at least two of the Reference Banks

provide such quotations, LIBOR shall equal the arithmetic mean of such

quotations.  If, on any LIBOR

Determination Date, only one or none of the Reference Banks provide such a

quotation, LIBOR shall be deemed to be the arithmetic mean of the offered

quotations that at least

 

16

 

two leading banks in the City of New York (as selected

by the Calculation Agent) are quoting on the relevant LIBOR Determination Date

for three-month U.S. Dollar deposits in Europe at approximately

11:00 a.m. (London time) (in an amount determined by the Calculation

Agent). As used herein, “Reference Banks” means four major banks in the London

interbank market selected by the Calculation Agent.

 

(iii)          If the

Calculation Agent is required but is unable to determine a rate in accordance

with at least one of the procedures provided above, LIBOR shall be LIBOR in

effect on the previous LIBOR Determination Date (whether or not LIBOR for such

period was in fact determined on such LIBOR Determination Date).

 

(c)           All

percentages resulting from any calculations on the Debt Securities will be

rounded, if necessary, to the nearest one hundred-thousandth of a percentage

point, with five one-millionths of a percentage point rounded upward (e.g.,

9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all

dollar amounts used in or resulting from such calculation will be rounded to

the nearest cent (with one-half cent being rounded upward).

 

(d)           On

each LIBOR Determination Date, the Calculation Agent shall notify, in writing,

the Company and the Paying Agent of the applicable Interest Rate in effect for

the related Interest Payment Date.  The

Calculation Agent shall, upon the request of the holder of any Debt Securities,

provide the Interest Rate then in effect. 

All calculations made by the Calculation Agent in the absence of

manifest error shall be conclusive for all purposes and binding on the Company

and the Holders of the Debt Securities. 

The Paying Agent shall be entitled to rely on information received from

the Calculation Agent or the Company as to the Interest Rate.  The Company shall, from time to time,

provide any necessary information to the Paying Agent relating to any original

issue discount and interest on the Debt Securities that is included in any

payment and reportable for taxable income calculation purposes.

 

SECTION 2.11       Extension of Interest Payment Period.

 

So long as no Event of Default has occurred and is continuing, the

Company shall have the right, from time to time and without causing an Event of

Default, to defer payments of interest on the Debt Securities by extending the

interest payment period on the Debt Securities, at any time and from time to

time during the term of the Debt Securities, for up to twenty consecutive quarterly

periods (each such extended interest payment period, an “Extension Period”),

during which Extension Period no interest shall be due and payable (except any

Additional Interest that may be due and payable).  No Extension Period may end on a date other than an Interest

Payment Date.  During any Extension

Period, interest will continue to accrue on the Debt Securities, and interest

on such accrued interest (such accrued interest and interest thereon referred

to herein as “Deferred Interest”) will accrue at an annual rate equal to the

Interest Rate in effect for such Extension Period, compounded quarterly from

the date such Deferred Interest would have been payable were it not for the

Extension Period, to the extent permitted by law.  No interest or Deferred Interest shall be due and payable during

an Extension Period, except at the end thereof.  At the end of any such Extension Period the Company shall pay all

Deferred Interest then accrued and unpaid on the Debt Securities; provided,

however, that no Extension Period may extend beyond the Maturity Date; and provided

further, however, that during any such Extension Period, the

Company shall be subject to the restrictions set forth in 

 

17

 

Section 3.08 of this Indenture. 

Prior to the termination of any Extension Period, the Company may

further extend such period, provided, that such period together

with all such previous and further consecutive extensions thereof shall not

exceed twenty consecutive quarterly periods, or extend beyond the Maturity

Date.  Upon the termination of any

Extension Period and upon the payment of all Deferred Interest, the Company may

commence a new Extension Period, subject to the foregoing requirements.  The Company must give the Trustee notice of

its election to begin such Extension Period at least one Business Day prior to

the earlier of (i) the next succeeding date on which interest on the Debt

Securities would have been payable except for the election to begin such

Extension Period or (ii) the date such interest is payable, but in any

event not later than the related regular record date.  The Trustee shall give notice of the Company’s election to begin

a new Extension Period to the Securityholders.

 

SECTION 2.12       CUSIP Numbers.

 

The Company in issuing the Debt Securities may use a “CUSIP” number (if

then generally in use), and, if so, the Trustee shall use a “CUSIP” number in

notices of redemption as a convenience to Securityholders; provided, that

any such notice may state that no representation is made as to the correctness

of such number either as printed on the Debt Securities or as contained in any

notice of a redemption and that reliance may be placed only on the other

identification numbers printed on the Debt Securities, and any such redemption

shall not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee

in writing of any change in the CUSIP number.

 

ARTICLE III

PARTICULAR COVENANTS OF THE COMPANY

 

SECTION 3.01       Payment of Principal, Premium and

Interest; Agreed Treatment of the Debt Securities.

 

(a)           The

Company covenants and agrees that it will duly and punctually pay or cause to

be paid all payments due on the Debt Securities at the place, at the respective

times and in the manner provided in this Indenture and the Debt

Securities.  At the option of the

Company, each installment of interest on the Debt Securities may be paid

(i) by mailing checks for such interest payable to the order of the

holders of Debt Securities entitled thereto as they appear on the Debt Security

Register or (ii) by wire transfer to any account with a banking

institution located in the United States designated by such Person to the

Paying Agent no later than the related record date.

 

(b)           The

Company will treat the Debt Securities as indebtedness, and the interest

payable in respect of such Debt Securities as interest, for all

U.S. federal income tax purposes. 

All payments in respect of such Debt Securities will be made free and

clear of U.S. withholding tax to any beneficial owner thereof that has

provided an Internal Revenue Service Form W-8 BEN (or any substitute or

successor form) establishing its non-U.S. status for U.S. federal income

tax purposes.

 

18

 

(c)           As

of the date of this Indenture, the Company has no intention to exercise its

right under Section 2.11 to defer payments of interest on the Debt

Securities by commencing an Extension Period.

 

(d)           As

of the date of this Indenture, the Company believes that the likelihood that it

would exercise its right under Section 2.11 to defer payments of interest

on the Debt Securities by commencing an Extension Period at any time during

which the Debt Securities are outstanding is remote because of the restrictions

that would be imposed on the Company’s ability to declare or pay dividends or

distributions on, or to redeem, purchase or make a liquidation payment with

respect to, any of its outstanding equity and on the Company’s ability to make

any payments of principal of or interest on, or repurchase or redeem, any of

its debt securities that rank pari passu in all respects with (or junior

in interest to) the Debt Securities.

 

SECTION 3.02       Offices for Notices and Payments, etc.

 

So long as any of the Debt Securities remain outstanding, the Company

will maintain in Wilmington, Delaware or in Sioux Falls, South Dakota an office

or agency where the Debt Securities may be presented for payment, an office or

agency where the Debt Securities may be presented for registration of transfer

and for exchange as provided in this Indenture and an office or agency where

notices and demands to or upon the Company in respect of the Debt Securities or

of this Indenture may be served.  The

Company will give to the Trustee written notice of the location of any such

office or agency and of any change of location thereof.  Until otherwise designated from time to time

by the Company in a notice to the Trustee, or specified as contemplated by

Section 2.05, such office or agency for all of the above purposes shall be

the Principal Office of the Trustee.  In

case the Company shall fail to maintain any such office or agency in

Wilmington, Delaware or in Sioux Falls, South Dakota, or shall fail to give such

notice of the location or of any change in the location thereof, presentations

and demands may be made and notices may be served at the Principal Office of

the Trustee.

 

In addition to any such office or agency, the Company may from time to

time designate one or more offices or agencies outside Wilmington, Delaware or

Sioux Falls, South Dakota where the Debt Securities may be presented for

registration of transfer and for exchange in the manner provided in this

Indenture, and the Company may from time to time rescind such designation, as

the Company may deem desirable or expedient; provided, however,

that no such designation or rescission shall in any manner relieve the Company

of its obligation to maintain any such office or agency in Wilmington, Delaware

or in Sioux Falls, South Dakotafor the purposes above mentioned.  The Company will give to the Trustee prompt

written notice of any such designation or rescission thereof.

 

SECTION 3.03       Appointments to Fill Vacancies in

Trustee’s Office.

 

The Company, whenever necessary to avoid or fill a vacancy in the

office of Trustee, will appoint, in the manner provided in Section 6.09, a

Trustee, so that there shall at all times be a Trustee hereunder.

 

19

 

SECTION 3.04       Provision as to Paying Agent.

 

(a)           If

the Company shall appoint a Paying Agent other than the Trustee, it will cause

such Paying Agent to execute and deliver to the Trustee an instrument in which

such agent shall agree with the Trustee, subject to the provision of this

Section 3.04,

 

(i)            that it will

hold all sums held by it as such agent for the payment of all payments due on

the Debt Securities (whether such sums have been paid to it by the Company or

by any other obligor on the Debt Securities) in trust for the benefit of the

holders of the Debt Securities;

 

(ii)           that it will

give the Trustee prompt written notice of any failure by the Company (or by any

other obligor on the Debt Securities) to make any payment on the Debt

Securities when the same shall be due and payable; and

 

(iii)          that it

will, at any time during the continuance of any Event of Default, upon the

written request of the Trustee, forthwith pay to the Trustee all sums so held

in trust by such Paying Agent.

 

(b)           If

the Company shall act as its own Paying Agent, it will, on or before each due

date of the payments due on the Debt Securities, set aside, segregate and hold

in trust for the benefit of the holders of the Debt Securities a sum sufficient

to pay such payments so becoming due and will notify the Trustee in writing of

any failure to take such action and of any failure by the Company (or by any

other obligor under the Debt Securities) to make any payment on the Debt

Securities when the same shall become due and payable.

 

Whenever the Company shall have one or more Paying Agents for the Debt

Securities, it will, on or prior to each due date of the payments on the Debt

Securities, deposit with a Paying Agent a sum sufficient to pay all payments so

becoming due, such sum to be held in trust for the benefit of the Persons entitled

thereto and (unless such Paying Agent is the Trustee) the Company shall

promptly notify the Trustee in writing of its action or failure to act.

 

(c)           Anything

in this Section 3.04 to the contrary notwithstanding, the Company may, at

any time, for the purpose of obtaining a satisfaction and discharge with

respect to the Debt Securities, or for any other reason, pay, or direct any

Paying Agent to pay to the Trustee all sums held in trust by the Company or any

such Paying Agent, such sums to be held by the Trustee upon the same terms and

conditions herein contained.

 

(d)           Anything

in this Section 3.04 to the contrary notwithstanding, the agreement to

hold sums in trust as provided in this Section 3.04 is subject to

Sections 12.03 and 12.04.

 

(e)           The

Company hereby initially appoints the Trustee to act as Paying Agent (the

“Paying Agent”).

 

20

 

SECTION 3.05       Certificate to Trustee.

 

The Company will deliver to the Trustee on or before 120 days

after the end of each fiscal year, so long as Debt Securities are outstanding

hereunder, a Certificate stating that in the course of the performance by the

signers of their duties as officers of the Company they would normally have

knowledge of any default by the Company in the performance of any covenants of

the Company contained herein, stating whether or not they have knowledge of any

such default and, if so, specifying each such default of which the signers have

knowledge and the nature thereof.

 

SECTION 3.06       Additional Interest.

 

If and for so long as the Trust is the holder of all Debt Securities

and is subject to or otherwise required to pay, or is required to withhold from

distributions to holders of Trust Securities, any additional taxes (including

withholding taxes), duties, assessments or other governmental charges as a

result of a Tax Event, the Company will pay such additional amounts (the

“Additional Interest”) on the Debt Securities as shall be required so that the

net amounts received and retained by the Trust for distribution to holders of

Trust Securities after paying all taxes (including withholding taxes on

distributions to holders of Trust Securities), duties, assessments or other

governmental charges will be equal to the amounts the Trust would have received

and retained for distribution to holders of Trust Securities after paying all

taxes (including withholding taxes on distributions to holders of Trust

Securities), duties, assessments or other governmental charges if no such

additional taxes, duties, assessments or other governmental charges had been

imposed.  Whenever in this Indenture or

the Debt Securities there is a reference in any context to the payment of

principal of or interest on the Debt Securities, such mention shall be deemed

to include mention of payments of the Additional Interest provided for in this

paragraph to the extent that, in such context, Additional Interest is, was or

would be payable in respect thereof pursuant to the provisions of this

paragraph and express mention of the payment of Additional Interest (if

applicable) in any provisions hereof shall not be construed as excluding

Additional Interest in those provisions hereof where such express mention is

not made, provided, however, that the deferral of the payment of

interest during an Extension Period pursuant to Section 2.11 shall not

defer the payment of any Additional Interest that may be due and payable.

 

SECTION 3.07       Compliance with Consolidation

Provisions.

 

The Company will not, while any of the Debt Securities remain outstanding,

consolidate with, or merge into any other Person, or merge into itself, or sell

or convey all or substantially all of its property to any other Person unless

the provisions of Article XI hereof are complied with.

 

SECTION 3.08       Limitation on Dividends.

 

If Debt Securities are initially issued to the Trust or a trustee of

such Trust in connection with the issuance of Trust Securities by the Trust

(regardless of whether Debt Securities continue to be held by such Trust) and

(i) there shall have occurred and be continuing an Event of Default,

(ii) the Company shall be in default with respect to its payment of any

 

21

 

obligations under the Capital Securities Guarantee or (iii) the

Company shall have given notice of its election to defer payments of interest

on the Debt Securities by extending the interest payment period as provided

herein and such period, or any extension thereof, shall have commenced and be

continuing, then the Company may not (A) declare or pay any dividends or

distributions on, or redeem, purchase, acquire, or make a liquidation payment

with respect to, any of the Company’s capital stock or (B) make any

payment of principal of or interest or premium, if any, on or repay, repurchase

or redeem any debt securities of the Company that rank pari passu in  all

respects with or junior in interest to the Debt Securities (other than

(a) repurchases, redemptions or other acquisitions of shares of capital

stock of the Company (I) in connection with any employment contract,

benefit plan or other similar arrangement with or for the benefit of one or

more employees, officers, directors or consultants, (II) in connection

with a dividend reinvestment or stockholder stock purchase plan or

(III) in connection with the issuance of capital stock of the Company (or

securities convertible into or exercisable for such capital stock), as

consideration in an acquisition transaction entered into prior to the

occurrence of (i), (ii) or (iii) above, (b) as a result of any exchange or

conversion of any class or series of the Company’s capital stock (or any

capital stock of a subsidiary of the Company) for any class or series of the

Company’s capital stock or of any class or series of the Company’s indebtedness

for any class or series of the Company’s capital stock, (c) the purchase

of fractional interests in shares of the Company’s capital stock pursuant to

the conversion or exchange provisions of such capital stock or the security

being converted or exchanged, (d) any declaration of a dividend in

connection with any stockholder’s rights plan, or the issuance of rights, stock

or other property under any stockholder’s rights plan, or the redemption or

repurchase of rights pursuant thereto, or (e) any dividend in the form of

stock, warrants, options or other rights where the dividend stock or the stock

issuable upon exercise of such warrants, options or other rights is the same

stock as that on which the dividend is being paid or ranks pari passu with or junior to

such stock).

 

SECTION 3.09       Covenants as to the Trust.

 

For so long as such Trust Securities remain outstanding, the Company

shall maintain 100% ownership of the Common Securities; provided, however,

that any permitted successor of the Company under this Indenture that is a

U.S. Person may succeed to the Company’s ownership of such Common

Securities.  The Company, as owner of

the Common Securities, shall use commercially reasonable efforts to cause the

Trust (a) to remain a statutory trust, except in connection with a distribution

of Debt Securities to the holders of Trust Securities in liquidation of the

Trust, the redemption of all of the Trust Securities or certain mergers,

consolidations or amalgamations, each as permitted by the Declaration,

(b) to otherwise continue to be classified as a grantor trust for United

States federal income tax purposes and (c) to cause each holder of Trust

Securities to be treated as owning an undivided beneficial interest in the Debt

Securities.

 

22

 

ARTICLE IV

LISTS AND REPORTS

 

SECTION 4.01       Securityholders’ Lists.

 

The Company covenants and agrees that it will furnish

or cause to be furnished to the Trustee:

 

(a)           on

each regular record date for an Interest Payment Date, a list, in such form as

the Trustee may reasonably require, of the names and addresses of the

Securityholders of the Debt Securities as of such record date; and

 

(b)           at

such other times as the Trustee may request in writing, within 30 days

after the receipt by the Company of any such request, a list of similar form

and content as of a date not more than 15 days prior to the time such list

is furnished;

 

except that no such lists need be furnished under this

Section 4.01 so long as the Trustee is in possession thereof by reason of

its acting as Debt Security registrar.

 

SECTION 4.02       Preservation and Disclosure of Lists.

 

(a)           The

Trustee shall preserve, in as current a form as is reasonably practicable, all

information as to the names and addresses of the holders of Debt Securities

(1) contained in the most recent list furnished to it as provided in

Section 4.01 or (2) received by it in the capacity of Debt Securities

registrar (if so acting) hereunder.  The

Trustee may destroy any list furnished to it as provided in Section 4.01 upon

receipt of a new list so furnished.

 

(b)           In

case three or more holders of Debt Securities (hereinafter referred to as

“applicants”) apply in writing to the Trustee and furnish to the Trustee

reasonable proof that each such applicant has owned a Debt Security for a

period of at least six months preceding the date of such application, and such

application states that the applicants desire to communicate with other holders

of Debt Securities with respect to their rights under this Indenture or under

such Debt Securities and is accompanied by a copy of the form of proxy or other

communication which such applicants propose to transmit, then the Trustee shall

within five Business Days after the receipt of such application, at its

election, either:

 

(i)            afford such

applicants access to the information preserved at the time by the Trustee in

accordance with the provisions of subsection (a) of this

Section 4.02, or

 

(ii)           inform such

applicants as to the approximate number of holders of Debt Securities whose

names and addresses appear in the information preserved at the time by the

Trustee in accordance with the provisions of subsection (a) of this

Section 4.02, and as to the approximate cost of mailing to such

Securityholders the form of proxy or other communication, if any, specified in

such application.

 

If the Trustee shall elect not to afford such applicants access to such

information, the Trustee shall, upon the written request of such applicants,

mail to each Securityholder of

 

23

 

Debt Securities whose name and address appear in the information

preserved at the time by the Trustee in accordance with the provisions of

subsection (a) of this Section 4.02 a copy of the form of proxy or

other communication which is specified in such request with reasonable

promptness after a tender to the Trustee of the material to be mailed and of

payment, or provision for the payment, of the reasonable expenses of mailing,

unless within five days after such tender, the Trustee shall mail to such

applicants and file with the Securities and Exchange Commission, if permitted

or required by applicable law, together with a copy of the material to be

mailed, a written statement to the effect that, in the opinion of the Trustee,

such mailing would be contrary to the best interests of the holders of all Debt

Securities, as the case may be, or would be in violation of applicable

law.  Such written statement shall

specify the basis of such opinion.  If

said Commission, as permitted or required by applicable law, after opportunity

for a hearing upon the objections specified in the written statement so filed,

shall enter an order refusing to sustain any of such objections or if, after

the entry of an order sustaining one or more of such objections, said

Commission shall find, after notice and opportunity for hearing, that all the

objections so sustained have been met and shall enter an order so declaring,

the Trustee shall mail copies of such material to all such Securityholders with

reasonable promptness after the entry of such order and the renewal of such

tender; otherwise the Trustee shall be relieved of any obligation or duty to

such applicants respecting their application.

 

(c)           Each

and every holder of Debt Securities, by receiving and holding the same, agrees

with the Company and the Trustee that neither the Company nor the Trustee nor

any Paying Agent shall be held accountable by reason of the disclosure of any

such information as to the names and addresses of the holders of Debt Securities

in accordance with the provisions of subsection (b) of this

Section 4.02, regardless of the source from which such information was

derived, and that the Trustee shall not be held accountable by reason of

mailing any material pursuant to a request made under said subsection (b).

 

ARTICLE V

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

 

SECTION 5.01       Events of Default.

 

The following events shall be “Events of Default” with

respect to Debt Securities:

 

(a)           the

Company defaults in the payment of any interest upon any Debt Security when it

becomes due and payable, and continuance of such default for a period of

30 days; for the avoidance of doubt, an extension of any interest payment

period by the Company in accordance with Section 2.11 of this Indenture

shall not constitute a default under this clause 5.01(a); or

 

(b)           the

Company defaults in the payment of all or any part of the principal of (or

premium, if any, on) any Debt Securities as and when the same shall become due

and payable either at maturity, upon redemption, by declaration of acceleration

pursuant to Section 5.01 of this Indenture or otherwise; or

 

(c)           the

Company defaults in the performance of, or breaches, any of its covenants or

agreements in Sections 3.06, 3.07, 3.08 or 3.09 of this Indenture (other

than a

 

24

 

covenant or agreement a default in whose performance or whose breach is

elsewhere in this Section specifically dealt with), and continuance of such

default or breach for a period of 90 days after there has been given, by

registered or certified mail, to the Company by the Trustee or to the Company

and the Trustee by the holders of not less than 25% in aggregate principal

amount of the outstanding Debt Securities, a written notice specifying such default

or breach and requiring it to be remedied and stating that such notice is a

“Notice of Default” hereunder; or

 

(d)           a

court having jurisdiction in the premises shall enter a decree or order for

relief in respect of the Company in an involuntary case under any applicable

bankruptcy, insolvency or other similar law now or hereafter in effect, or

appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or

similar official) of the Company or for any substantial part of its property, or

orders the winding-up or liquidation of its affairs and such decree or order

shall remain unstayed and in effect for a period of 90 consecutive days; or

 

(e)           the

Company shall commence a voluntary case under any applicable bankruptcy,

insolvency or other similar law now or hereafter in effect, shall consent to

the entry of an order for relief in an involuntary case under any such law, or

shall consent to the appointment of or taking possession by a receiver,

liquidator, assignee, trustee, custodian, sequestrator (or other similar

official) of the Company or of any substantial part of its property, or shall

make any general assignment for the benefit of creditors, or shall fail

generally to pay its debts as they become due; or

 

(f)            the

Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up

its business or otherwise terminated its existence except in connection with

(1) the distribution of the Debt Securities to holders of the Trust

Securities in liquidation of their interests in the Trust, (2) the

redemption of all of the outstanding Trust Securities or (3) certain

mergers, consolidations or amalgamations, each as permitted by the Declaration.

 

If an Event of Default occurs and is continuing with respect to the

Debt Securities, then, and in each and every such case, unless the principal of

the Debt Securities shall have already become due and payable, either the

Trustee or the holders of not less than 25% in aggregate principal amount of

the Debt Securities then outstanding hereunder, by notice in writing to the

Company (and to the Trustee if given by Securityholders), may declare the

entire principal of the Debt Securities and the interest accrued, but unpaid,

thereon, if any, to be due and payable immediately, and upon any such declaration

the same shall become immediately due and payable.

 

The foregoing provisions, however, are subject to the condition that

if, at any time after the principal of the Debt Securities shall have been so

declared due and payable, and before any judgment or decree for the payment of

the moneys due shall have been obtained or entered as hereinafter provided,

(i) the Company shall pay or shall deposit with the Trustee a sum

sufficient to pay all matured installments of interest upon all the Debt

Securities and all payments on the Debt Securities which shall have become due

otherwise than by acceleration (with interest upon all such payments and

Deferred Interest, to the extent permitted by law) and such amount as shall be

sufficient to cover reasonable compensation to the Trustee and each predecessor

Trustee, their respective agents, attorneys and counsel, and all other amounts

due to the Trustee pursuant to Section 6.06, if any, and (ii) all

Events of Default under this Indenture, 

 

25

 

other than the non-payment of the payments on Debt Securities which

shall have become due by acceleration, shall have been cured, waived or

otherwise remedied as provided herein, then and in every such case the holders

of a majority in aggregate principal amount of the Debt Securities then

outstanding, by written notice to the Company and to the Trustee, may waive all

defaults and rescind and annul such declaration and its consequences, but no

such waiver or rescission and annulment shall extend to or shall affect any

subsequent default or shall impair any right consequent thereon.

 

In case the Trustee shall have proceeded to enforce any right under

this Indenture and such proceedings shall have been discontinued or abandoned

because of such rescission or annulment or for any other reason or shall have

been determined adversely to the Trustee, then and in every such case the

Company, the Trustee and the holders of the Debt Securities shall be restored

respectively to their several positions and rights hereunder, and all rights,

remedies and powers of the Company, the Trustee and the holders of the Debt

Securities shall continue as though no such proceeding had been taken.

 

SECTION 5.02       Payment of Debt Securities on Default;

Suit Therefor.

 

The Company covenants that upon the occurrence of an Event of Default

pursuant to clause 5.01(a) or 5.01(b) and upon demand of the Trustee, the

Company will pay to the Trustee, for the benefit of the holders of the Debt

Securities, the whole amount that then shall have become due and payable on all

Debt Securities including Deferred Interest accrued on the Debt Securities;

and, in addition thereto, such further amount as shall be sufficient to cover

the costs and expenses of collection, including a reasonable compensation to

the Trustee, its agents, attorneys and counsel, and any other amounts due to

the Trustee under Section 6.06.  In

case the Company shall fail forthwith to pay such amounts upon such demand, the

Trustee, in its own name and as trustee of an express trust, shall be entitled

and empowered to institute any actions or proceedings at law or in equity for

the collection of the sums so due and unpaid, and may prosecute any such action

or proceeding to judgment or final decree, and may enforce any such judgment or

final decree against the Company or any other obligor on such Debt Securities

and collect in the manner provided by law out of the property of the Company or

any other obligor on such Debt Securities wherever situated the moneys adjudged

or decreed to be payable.

 

In case there shall be pending proceedings for the bankruptcy or for

the reorganization of the Company or any other obligor on the Debt Securities

under Bankruptcy Law, or in case a receiver or trustee shall have been appointed

for the property of the Company or such other obligor, or in the case of any

other similar judicial proceedings relative to the Company or other obligor

upon the Debt Securities, or to the creditors or property of the Company or

such other obligor, the Trustee, irrespective of whether the principal of the

Debt Securities shall then be due and payable as therein expressed or by

declaration of acceleration or otherwise and irrespective of whether the

Trustee shall have made any demand pursuant to the provisions of this

Section 5.02, shall be entitled and empowered, by intervention in such

proceedings or otherwise, to file and prove a claim or claims for the whole

amount of principal and interest owing and unpaid in respect of the Debt

Securities and, in case of any judicial proceedings, to file such proofs of

claim and other papers or documents as may be necessary or advisable in order

to have the claims of the Trustee (including any claim for reasonable

compensation to the Trustee and each predecessor Trustee, and their respective

agents, attorneys

 

26

 

and counsel, and for reimbursement of all other amounts due to the

Trustee under Section 6.06) and of the Securityholders allowed in such

judicial proceedings relative to the Company or any other obligor on the Debt

Securities, or to the creditors or property of the Company or such other

obligor, unless prohibited by applicable law and regulations, to vote on behalf

of the holders of the Debt Securities in any election of a trustee or a standby

trustee in arrangement, reorganization, liquidation or other bankruptcy or

insolvency proceedings or Person performing similar functions in comparable

proceedings, and to collect and receive any moneys or other property payable or

deliverable on any such claims, and to distribute the same after the deduction

of its charges and expenses; and any receiver, assignee or trustee in

bankruptcy or reorganization is hereby authorized by each of the

Securityholders to make such payments to the Trustee, and, in the event that

the Trustee shall consent to the making of such payments directly to the

Securityholders, to pay to the Trustee such amounts as shall be sufficient to

cover reasonable compensation to the Trustee, each predecessor Trustee and

their respective agents, attorneys and counsel, and all other amounts due to

the Trustee under Section 6.06.

 

Nothing herein contained shall be construed to authorize the Trustee to

authorize or consent to or accept or adopt on behalf of any Securityholder any

plan of reorganization, arrangement, adjustment or composition affecting the

Debt Securities or the rights of any holder thereof or to authorize the Trustee

to vote in respect of the claim of any Securityholder in any such proceeding.

 

All rights of action and of asserting claims under this Indenture, or

under any of the Debt Securities, may be enforced by the Trustee without the

possession of any of the Debt Securities, or the production thereof at any

trial or other proceeding relative thereto, and any such suit or proceeding

instituted by the Trustee shall be brought in its own name as trustee of an

express trust, and any recovery of judgment shall be for the ratable benefit of

the holders of the Debt Securities.

 

In any proceedings brought by the Trustee (and also any proceedings

involving the interpretation of any provision of this Indenture to which the

Trustee shall be a party) the Trustee shall be held to represent all the

holders of the Debt Securities, and it shall not be necessary to make any

holders of the Debt Securities parties to any such proceedings.

 

SECTION 5.03       Application of Moneys Collected by

Trustee.

 

Any moneys collected by the Trustee shall be applied in the following

order, at the date or dates fixed by the Trustee for the distribution of such

moneys, upon presentation of the several Debt Securities in respect of which

moneys have been collected, and stamping thereon the payment, if only partially

paid, and upon surrender thereof if fully paid:

 

First: To the payment of costs and expenses incurred by, and reasonable

fees of, the Trustee, its agents, attorneys and counsel, and of all other

amounts due to the Trustee under Section 6.06;

 

Second: To the payment of all Senior Indebtedness of the Company if and

to the extent required by Article XV;

 

27

 

Third:  To the payment of the

amounts then due and unpaid upon Debt Securities, in respect of which or for

the benefit of which money has been collected, ratably, without preference or

priority of any kind, according to the amounts due on such Debt Securities; and

 

Fourth: The balance, if any, to the Company.

 

SECTION 5.04       Proceedings by Securityholders.

 

No holder of any Debt Security shall have any right to institute any

suit, action or proceeding for any remedy hereunder, unless such holder

previously shall have given to the Trustee written notice of an Event of

Default with respect to the Debt Securities and unless the holders of not less

than 25% in aggregate principal amount of the Debt Securities then outstanding

shall have given the Trustee a written request to institute such action, suit

or proceeding and shall have offered to the Trustee such reasonable indemnity

as it may require against the costs, expenses and liabilities to be incurred

thereby, and the Trustee for 60 days after its receipt of such notice,

request and offer of indemnity shall have failed to institute any such action,

suit or proceeding; provided, that no holder of Debt Securities

shall have any right to prejudice the rights of any other holder of Debt

Securities, obtain priority or preference over any other such holder or enforce

any right under this Indenture except in the manner herein provided and for the

equal, ratable and common benefit of all holders of Debt Securities.

 

Notwithstanding any other provisions in this Indenture, however, the

right of any holder of any Debt Security to receive payment of the principal

of, premium, if any, and interest on such Debt Security when due, or to

institute suit for the enforcement of any such payment, shall not be impaired

or affected without the consent of such holder.  For the protection and enforcement of the provisions of this

Section, each and every Securityholder and the Trustee shall be entitled to

such relief as can be given either at law or in equity.

 

SECTION 5.05       Proceedings by Trustee.

 

In case of an Event of Default hereunder the Trustee may in its

discretion proceed to protect and enforce the rights vested in it by this

Indenture by such appropriate judicial proceedings as the Trustee shall deem

most effectual to protect and enforce any of such rights, either by suit in

equity or by action at law or by proceeding in bankruptcy or otherwise, whether

for the specific enforcement of any covenant or agreement contained in this

Indenture or in aid of the exercise of any power granted in this Indenture, or

to enforce any other legal or equitable right vested in the Trustee by this

Indenture or by law.

 

SECTION 5.06       Remedies Cumulative and Continuing.

 

Except as otherwise provided in Section 2.06, all powers and

remedies given by this Article V to the Trustee or to the Securityholders

shall, to the extent permitted by law, be deemed cumulative and not exclusive

of any other powers and remedies available to the Trustee or the holders of the

Debt Securities, by judicial proceedings or otherwise, to enforce the

performance or observance of the covenants and agreements contained in this

Indenture or otherwise established with respect to the Debt Securities, and no

delay or omission of the Trustee or of any holder of any of the Debt Securities

to exercise any right or power accruing upon any 

 

28

 

Event of Default occurring and continuing as aforesaid shall impair any

such right or power, or shall be construed to be a waiver of any such default

or an acquiescence therein; and, subject to the provisions of

Section 5.04, every power and remedy given by this Article V or by

law to the Trustee or to the Securityholders may be exercised from time to

time, and as often as shall be deemed expedient, by the Trustee or by the

Securityholders.

 

SECTION 5.07       Direction of Proceedings and Waiver of

Defaults by Majority of Securityholders.

 

The holders of a majority in aggregate principal amount of the Debt

Securities affected (voting as one class) at the time outstanding shall have

the right to direct the time, method and place of conducting any proceeding for

any remedy available to the Trustee, or exercising any trust or power conferred

on the Trustee with respect to such Debt Securities; provided, however,

that (subject to the provisions of Section 6.01) the Trustee shall have

the right to decline to follow any such direction if the Trustee shall

determine that the action so directed would be unjustly prejudicial to the

holders not taking part in such direction or if the Trustee being advised by

counsel determines that the action or proceeding so directed may not lawfully

be taken or if a Responsible Officer of the Trustee shall determine that the

action or proceedings so directed would involve the Trustee in personal

liability.  Prior to any declaration

accelerating the maturity of the Debt Securities, the holders of a majority in

aggregate principal amount of the Debt Securities at the time outstanding may

on behalf of the holders of all of the Debt Securities waive (or modify any

previously granted waiver of) any past default or Event of Default and its

consequences, except a default (a) in the payment of principal of, premium,

if any, or interest on any of the Debt Securities, (b) in respect of

covenants or provisions hereof which cannot be modified or amended without the

consent of the holder of each Debt Security affected, or (c)  in respect

of the covenants contained in Section 3.09; provided, however,

that if the Debt Securities are held by the Trust or a trustee of such trust,

such waiver or modification to such waiver shall not be effective until the

holders of a majority in liquidation preference of the Trust Securities of the

Trust shall have consented to such waiver or modification to such waiver; provided,

further, that if the consent of the holder of each outstanding Debt

Security is required, such waiver shall not be effective until each holder of

the Trust Securities of the Trust shall have consented to such waiver.  Upon any such waiver, the default covered

thereby shall be deemed to be cured for all purposes of this Indenture and the

Company, the Trustee and the holders of the Debt Securities shall be restored

to their former positions and rights hereunder, respectively; but no such

waiver shall extend to any subsequent or other default or Event of Default or

impair any right consequent thereon. 

Whenever any default or Event of Default hereunder shall have been

waived as permitted by this Section 5.07, said default or Event of Default

shall for all purposes of the Debt Securities and this Indenture be deemed to

have been cured and to be not continuing.

 

SECTION 5.08       Notice of Defaults.

 

The Trustee shall, within 90 days after a Responsible Officer of

the Trustee shall have actual knowledge or received written notice of the

occurrence of a default with respect to the Debt Securities, mail to all

Securityholders, as the names and addresses of such holders appear upon the Debt

Security Register, notice of all defaults with respect to the Debt Securities

known to the Trustee, unless such defaults shall have been cured before the

giving of such notice (the term “defaults” for the purpose of this

Section 5.08 being hereby defined to be the events 

 

29

 

specified in subsections (a), (b), (c), (d) and (e) of

Section 5.01, not including periods of grace, if any, provided for

therein); provided, that, except in the case of default in the

payment of the principal of, premium, if any, or interest on any of the Debt

Securities, the Trustee shall be protected in withholding such notice if and so

long as a Responsible Officer of the Trustee in good faith determines that the

withholding of such notice is in the interests of the Securityholders.

 

SECTION 5.09       Undertaking to Pay Costs.

 

All parties to this Indenture agree, and each holder of any Debt

Security by such holder’s acceptance thereof shall be deemed to have agreed,

that any court may in its discretion require, in any suit for the enforcement

of any right or remedy under this Indenture, or in any suit against the Trustee

for any action taken or omitted by it as Trustee, the filing by any party

litigant in such suit of an undertaking to pay the costs of such suit, and that

such court may in its discretion assess reasonable costs, including reasonable

attorneys’ fees and expenses, against any party litigant in such suit, having

due regard to the merits and good faith of the claims or defenses made by such

party litigant; but the provisions of this Section 5.09 shall not apply to

any suit instituted by the Trustee, to any suit instituted by any

Securityholder, or group of Securityholders, holding in the aggregate more than

10% in principal amount of the Debt Securities outstanding, or to any suit

instituted by any Securityholder for the enforcement of the payment of the

principal of (or premium, if any) or interest on any Debt Security against the

Company on or after the same shall have become due and payable.

 

ARTICLE VI

CONCERNING THE TRUSTEE

 

SECTION 6.01       Duties and Responsibilities of Trustee.

 

With respect to the holders of Debt Securities issued hereunder, the

Trustee, prior to the occurrence of an Event of Default with respect to the Debt

Securities and after the curing or waiving of all Events of Default which may

have occurred, with respect to the Debt Securities, undertakes to perform such

duties and only such duties as are specifically set forth in this Indenture.  In case an Event of Default with respect to

the Debt Securities has occurred (which has not been cured or waived) the

Trustee shall exercise such of the rights and powers vested in it by this

Indenture, and use the same degree of care and skill in their exercise, as a

prudent person would exercise or use under the circumstances in the conduct of

such person’s own affairs.

 

No provision of this Indenture shall be construed to relieve the

Trustee from liability for its own negligent action, its own negligent failure

to act or its own willful misconduct, except that:

 

(a)           prior

to the occurrence of an Event of Default with respect to the Debt Securities

and after the curing or waiving of all Events of Default which may have

occurred,

 

(i)            the duties

and obligations of the Trustee with respect to the Debt Securities shall be

determined solely by the express provisions of this Indenture, and the 

 

30

 

Trustee shall not be liable except for the performance of such duties

and obligations with respect to the Debt Securities as are specifically set

forth in this Indenture, and no implied covenants or obligations shall be read

into this Indenture against the Trustee; and

 

(ii)           in the

absence of bad faith on the part of the Trustee, the Trustee may conclusively

rely, as to the truth of the statements and the correctness of the opinions

expressed therein, upon any certificates or opinions furnished to the Trustee

and conforming to the requirements of this Indenture; but, in the case of any such

certificates or opinions which by any provision hereof are specifically

required to be furnished to the Trustee, the Trustee shall be under a duty to

examine the same to determine whether or not they conform on their face to the

requirements of this Indenture;

 

(b)           the

Trustee shall not be liable for any error of judgment made in good faith by a

Responsible Officer or Officers of the Trustee, unless it shall be proved that

the Trustee was negligent in ascertaining the pertinent facts;

 

(c)           the

Trustee shall not be liable with respect to any action taken or omitted to be

taken by it in good faith, in accordance with the direction of the

Securityholders pursuant to Section 5.07, relating to the time, method and

place of conducting any proceeding for any remedy available to the Trustee, or

exercising any trust or power conferred upon the Trustee, under this Indenture;

and

 

(d)           the

Trustee shall not be charged with knowledge of any Default or Event of Default

with respect to the Debt Securities unless either (1) a Responsible

Officer shall have actual knowledge of such Default or Event of Default or

(2) written notice of such Default or Event of Default shall have been

given to the Trustee by the Company or any other obligor on the Debt Securities

or by any holder of the Debt Securities, except with respect to an Event of

Default pursuant to Sections 5.01(a) or 5.01(b) hereof (other than an

Event of Default resulting from the default in the payment of Additional

Interest or premium, if any, if the Trustee does not have actual knowledge or

written notice that such payment is due and payable), of which the Trustee

shall be deemed to have knowledge.

 

None of the provisions contained in this Indenture shall require the

Trustee to expend or risk its own funds or otherwise incur personal financial

liability in the performance of any of its duties or in the exercise of any of

its rights or powers.

 

SECTION 6.02       Reliance on Documents, Opinions, etc.

 

Except as otherwise provided in Section 6.01:

 

(a)           the

Trustee may conclusively rely and shall be fully protected in acting or

refraining from acting upon any resolution, certificate, statement, instrument,

opinion, report, notice, request, consent, order, bond, note, debenture or

other paper or document believed by it in good faith to be genuine and to have

been signed or presented by the proper party or parties;

 

(b)           any

request, direction, order or demand of the Company mentioned herein shall be

sufficiently evidenced by an Officers’ Certificate (unless other evidence in

respect 

 

31

 

thereof be herein specifically prescribed); and any Board Resolution

may be evidenced to the Trustee by a copy thereof certified by the Secretary or

an Assistant Secretary of the Company;

 

(c)           the

Trustee may consult with counsel of its selection and any advice or Opinion of

Counsel shall be full and complete authorization and protection in respect of

any action taken, suffered or omitted by it hereunder in good faith and in

accordance with such advice or Opinion of Counsel;

 

(d)           the

Trustee shall be under no obligation to exercise any of the rights or powers

vested in it by this Indenture at the request, order or direction of any of the

Securityholders, pursuant to the provisions of this Indenture, unless such

Securityholders shall have offered to the Trustee reasonable security or

indemnity against the costs, expenses and liabilities which may be incurred

therein or thereby;

 

(e)           the

Trustee shall not be liable for any action taken or omitted by it in good faith

and reasonably believed by it to be authorized or within the discretion or

rights or powers conferred upon it by this Indenture; nothing contained herein

shall, however, relieve the Trustee of the obligation, upon the occurrence of

an Event of Default with respect to the Debt Securities (that has not been

cured or waived) to exercise with respect to the Debt Securities such of the

rights and powers vested in it by this Indenture, and to use the same degree of

care and skill in their exercise, as a prudent person would exercise or use

under the circumstances in the conduct of such person’s own affairs;

 

(f)            the

Trustee shall not be bound to make any investigation into the facts or matters

stated in any resolution, certificate, statement, instrument, opinion, report,

notice, request, consent, order, approval, bond, debenture, coupon or other

paper or document, unless requested in writing to do so by the holders of not

less than a majority in principal amount of the outstanding Debt Securities affected

thereby; provided, however, that if the payment within a reasonable time to the

Trustee of the costs, expenses or liabilities likely to be incurred by it in

the making of such investigation is, in the opinion of the Trustee, not

reasonably assured to the Trustee by the security afforded to it by the terms

of this Indenture, the Trustee may require reasonable indemnity against such

expense or liability as a condition to so proceeding; and

 

(g)           the

Trustee may execute any of the trusts or powers hereunder or perform any duties

hereunder either directly or by or through agents (including any Authenticating

Agent) or attorneys, and the Trustee shall not be responsible for any

misconduct or negligence on the part of any such agent or attorney appointed by

it with due care.

 

SECTION 6.03       No Responsibility for Recitals, etc.

 

The recitals contained herein and in the Debt Securities (except in the

certificate of authentication of the Trustee or the Authenticating Agent) shall

be taken as the statements of the Company and the Trustee and the

Authenticating Agent assume no responsibility for the correctness of the

same.  The Trustee and the

Authenticating Agent make no representations as to the validity or sufficiency

of this Indenture or of the Debt Securities. 

The Trustee and the Authenticating Agent shall not be accountable for

the use or application by the Company of any 

 

32

 

Debt Securities or the proceeds of any Debt Securities authenticated

and delivered by the Trustee or the Authenticating Agent in conformity with the

provisions of this Indenture.

 

SECTION 6.04       Trustee, Authenticating Agent, Paying

Agents, Transfer Agents or Registrar May Own Debt Securities.

 

The Trustee or any Authenticating Agent or any Paying Agent or any

transfer agent or any Debt Security registrar, in its individual or any other

capacity, may become the owner or pledgee of Debt Securities with the same

rights it would have if it were not Trustee, Authenticating Agent, Paying

Agent, transfer agent or Debt Security registrar.

 

SECTION 6.05       Moneys to be Held in Trust.

 

Subject to the provisions of Section 12.04, all moneys received by

the Trustee or any Paying Agent shall, until used or applied as herein

provided, be held in trust for the purpose for which they were received, but

need not be segregated from other funds except to the extent required by

law.  The Trustee and any Paying Agent

shall be under no liability for interest on any money received by it hereunder

except as otherwise agreed in writing with the Company.  So long as no Event of Default shall have

occurred and be continuing, all interest allowed on any such moneys, if any,

shall be paid from time to time to the Company upon the written order of the

Company, signed by the Chairman of the Board of Directors, the President, the

Chief Operating Officer, a Vice President, the Treasurer or an Assistant

Treasurer of the Company.

 

SECTION 6.06       Compensation and Expenses of Trustee.

 

The Company covenants and agrees to pay to the Trustee from time to

time, and the Trustee shall be entitled to, such compensation as shall be

agreed to in writing between the Company and the Trustee (which shall not be

limited by any provision of law in regard to the compensation of a trustee of

an express trust), and the Company will pay or reimburse the Trustee upon its

written request for all documented reasonable expenses, disbursements and

advances incurred or made by the Trustee in accordance with any of the

provisions of this Indenture (including the reasonable compensation and the

reasonable expenses and disbursements of its counsel and of all Persons not

regularly in its employ) except any such expense, disbursement or advance that

arises from its negligence or bad faith. 

The Company also covenants to indemnify each of the Trustee (including

in its individual capacity) and any predecessor Trustee (and its officers,

agents, directors and employees) for, and to hold it harmless against, any and

all loss, damage, claim, liability or expense including taxes (other than taxes

based on the income of the Trustee), except to the extent such loss, damage,

claim, liability or expense results from the negligence or bad faith of such

indemnitee, arising out of or in connection with the acceptance or administration

of this Trust, including the costs and expenses of defending itself against any

claim or liability in the premises.  The

obligations of the Company under this Section 6.06 to compensate and

indemnify the Trustee and to pay or reimburse the Trustee for documented

expenses, disbursements and advances shall constitute additional indebtedness

hereunder.  Such additional indebtedness

shall be secured by a lien prior to that of the Debt Securities upon all

property and funds held or collected by the Trustee as such, except funds held

in trust for the benefit of the holders of particular Debt Securities.

 

33

 

Without prejudice to any other rights available to the Trustee under

applicable law, when the Trustee incurs expenses or renders services in

connection with an Event of Default specified in subsections (d), (e) or

(f) of Section 5.01, the expenses (including the reasonable charges and

expenses of its counsel) and the compensation for the services are intended to

constitute expenses of administration under any applicable federal or state

bankruptcy, insolvency or other similar law.

 

The provisions of this Section shall survive the resignation or removal

of the Trustee and the defeasance or other termination of this Indenture.

 

SECTION 6.07       Officers’ Certificate as Evidence.

 

Except as otherwise provided in Sections 6.01 and 6.02, whenever

in the administration of the provisions of this Indenture the Trustee shall

deem it necessary or desirable that a matter be proved or established prior to

taking or omitting any action hereunder, such matter (unless other evidence in

respect thereof be herein specifically prescribed) may, in the absence of

negligence or bad faith on the part of the Trustee, be deemed to be conclusively

proved and established by an Officers’ Certificate delivered to the Trustee,

and such certificate, in the absence of negligence or bad faith on the part of

the Trustee, shall be full warrant to the Trustee for any action taken or

omitted by it under the provisions of this Indenture upon the faith thereof.

 

SECTION 6.08       Eligibility of Trustee.

 

The Trustee hereunder shall at all times be a U.S. Person that is

a banking corporation or national association organized and doing business

under the laws of the United States of America or any state thereof or of the

District of Columbia and authorized under such laws to exercise corporate trust

powers, having a combined capital and surplus of at least fifty million

U.S. dollars ($50,000,000) and subject to supervision or examination by

federal, state, or District of Columbia authority.  If such corporation or national association publishes reports of

condition at least annually, pursuant to law or to the requirements of the

aforesaid supervising or examining authority, then for the purposes of this

Section 6.08 the combined capital and surplus of such corporation or

national association shall be deemed to be its combined capital and surplus as

set forth in its most recent records of condition so published.

 

The Company may not, nor may any Person directly or indirectly

controlling, controlled by, or under common control with the Company, serve as

Trustee, notwithstanding that such corporation or national association shall be

otherwise eligible and qualified under this Article.

 

In case at any time the Trustee shall cease to be eligible in

accordance with the provisions of this Section 6.08, the Trustee shall

resign immediately in the manner and with the effect specified in

Section 6.09.

 

If the Trustee has or shall acquire any “conflicting interest” within

the meaning of §310(b) of the Trust Indenture Act, the Trustee shall either

eliminate such interest or resign, to the extent and in the manner provided by,

and subject to this Indenture.

 

34

 

SECTION 6.09       Resignation or Removal of Trustee.

 

(a)           The

Trustee, or any trustee or trustees hereafter appointed, may at any time resign

by giving written notice of such resignation to the Company and by mailing

notice thereof, at the Company’s expense, to the holders of the Debt Securities

at their addresses as they shall appear on the Debt Security Register.  Upon receiving such notice of resignation,

the Company shall promptly appoint a successor trustee or trustees by written

instrument, in duplicate, executed by order of its Board of Directors, one copy

of which instrument shall be delivered to the resigning Trustee and one copy to

the successor Trustee.  If no successor

Trustee shall have been so appointed and have accepted appointment within

30 days after the mailing of such notice of resignation to the affected

Securityholders, the resigning Trustee may petition any court of competent

jurisdiction for the appointment of a successor Trustee, or any Securityholder

who has been a bona fide holder of a Debt Security or Debt Securities for at

least six months may, subject to the provisions of Section 5.09, on behalf

of himself or herself and all others similarly situated, petition any such

court for the appointment of a successor Trustee.  Such court may thereupon, after such notice, if any, as it may

deem proper and prescribe, appoint a successor Trustee.

 

(b)           In

case at any time any of the following shall occur:

 

(i)            the Trustee

shall fail to comply with the provisions of the last paragraph of

Section 6.08 after written request therefor by the Company or by any

Securityholder who has been a bona fide holder of a Debt Security or Debt

Securities for at least six months;

 

(ii)           the Trustee

shall cease to be eligible in accordance with the provisions of

Section 6.08 and shall fail to resign after written request therefor by

the Company or by any such Securityholder; or

 

(iii)          the Trustee

shall become incapable of acting, or shall be adjudged bankrupt or insolvent,

or a receiver of the Trustee or of its property shall be appointed, or any

public officer shall take charge or control of the Trustee or of its property

or affairs for the purpose of rehabilitation, conservation or liquidation,

 

then, in any such case, the Company may remove the Trustee and appoint

a successor Trustee by written instrument, in duplicate, executed by order of

the Board of Directors, one copy of which instrument shall be delivered to the

Trustee so removed and one copy to the successor Trustee, or, subject to the

provisions of Section 5.09, if no successor Trustee shall have been so

appointed and have accepted appointment within 30 days of the occurrence

of any of (i), (ii) or (iii) above, any Securityholder who has been a bona fide

holder of a Debt Security or Debt Securities for at least six months may, on

behalf of himself or herself and all others similarly situated, petition any

court of competent jurisdiction for the removal of the Trustee and the

appointment of a successor Trustee. 

Such court may thereupon, after such notice, if any, as it may deem

proper and prescribe, remove the Trustee and appoint a successor Trustee.

 

(e)           Upon

prior written notice to the Company and the Trustee, the holders of a majority

in aggregate principal amount of the Debt Securities at the time outstanding

may at any 

 

35

 

time remove the Trustee and nominate a successor Trustee, which shall

be deemed appointed as successor Trustee unless within ten Business Days after

such nomination the Company objects thereto, in which case or in the case of a

failure by such holders to nominate a successor Trustee, the Trustee so removed

or any Securityholder, upon the terms and conditions and otherwise as in

subsection (a) of this Section 6.09 provided, may petition any court

of competent jurisdiction for an appointment of a successor.

 

(f)            Any

resignation or removal of the Trustee and appointment of a successor Trustee

pursuant to any of the provisions of this Section 6.09 shall become

effective upon acceptance of appointment by the successor Trustee as provided

in Section 6.10.

 

SECTION 6.10       Acceptance by Successor Trustee.

 

Any successor Trustee appointed as provided in Section 6.09 shall

execute, acknowledge and deliver to the Company and to its predecessor Trustee

an instrument accepting such appointment hereunder, and thereupon the

resignation or removal of the retiring Trustee shall become effective and such

successor Trustee, without any further act, deed or conveyance, shall become

vested with all the rights, powers, duties and obligations with respect to the

Debt Securities of its predecessor hereunder, with like effect as if originally

named as Trustee herein; but, nevertheless, on the written request of the

Company or of the successor Trustee, the Trustee ceasing to act shall, upon

payment of the amounts then due it pursuant to the provisions of

Section 6.06, execute and deliver an instrument transferring to such

successor Trustee all the rights and powers of the Trustee so ceasing to act

and shall duly assign, transfer and deliver to such successor Trustee all

property and money held by such retiring Trustee hereunder.  Upon request of any such successor Trustee,

the Company shall execute any and all instruments in writing for more fully and

certainly vesting in and confirming to such successor Trustee all such rights

and powers.  Any Trustee ceasing to act

shall, nevertheless, retain a lien upon all property or funds held or collected

by such Trustee to secure any amounts then due it pursuant to the provisions of

Section 6.06.

 

If a successor Trustee is appointed, the Company, the retiring Trustee

and the successor Trustee shall execute and deliver an indenture supplemental

hereto which shall contain such provisions as shall be deemed necessary or

desirable to confirm that all the rights, powers, trusts and duties of the

retiring Trustee with respect to the Debt Securities as to which the

predecessor Trustee is not retiring shall continue to be vested in the

predecessor Trustee, and shall add to or change any of the provisions of this

Indenture as shall be necessary to provide for or facilitate the administration

of the Trust hereunder by more than one Trustee, it being understood that

nothing herein or in such supplemental indenture shall constitute such Trustees

co-trustees of the same trust and that each such Trustee shall be Trustee of a

trust or trusts hereunder separate and apart from any trust or trusts hereunder

administered by any other such Trustee.

 

No successor Trustee shall accept appointment as provided in this

Section 6.10 unless at the time of such acceptance such successor Trustee

shall be eligible and qualified under the provisions of Section 6.08.

 

36

 

In no event shall a retiring Trustee be liable for the acts or

omissions of any successor Trustee hereunder.

 

Upon acceptance of appointment by a successor Trustee as provided in

this Section 6.10, the Company shall mail notice of the succession of such

Trustee hereunder to the holders of Debt Securities at their addresses as they

shall appear on the Debt Security Register. 

If the Company fails to mail such notice within ten Business Days after

the acceptance of appointment by the successor Trustee, the successor Trustee

shall cause such notice to be mailed at the expense of the Company.

 

SECTION 6.11       Succession by Merger, etc.

 

Any corporation into which the Trustee may be merged or converted or

with which it may be consolidated, or any corporation resulting from any

merger, conversion or consolidation to which the Trustee shall be a party, or

any corporation succeeding to all or substantially all of the corporate trust

business of the Trustee, shall be the successor of the Trustee hereunder

without the execution or filing of any paper or any further act on the part of

any of the parties hereto; provided, that such corporation shall

be otherwise eligible and qualified under this Article.

 

In case at the time such successor to the Trustee shall succeed to the

trusts created by this Indenture any of the Debt Securities shall have been

authenticated but not delivered, any such successor to the Trustee may adopt

the certificate of authentication of any predecessor Trustee, and deliver such

Debt Securities so authenticated; and in case at that time any of the Debt

Securities shall not have been authenticated, any successor to the Trustee may

authenticate such Debt Securities either in the name of any predecessor

hereunder or in the name of the successor Trustee; and in all such cases such

certificates shall have the full force which it is anywhere in the Debt

Securities or in this Indenture provided that the certificate of the Trustee

shall have; provided, however, that the right to adopt the

certificate of authentication of any predecessor Trustee or authenticate Debt

Securities in the name of any predecessor Trustee shall apply only to its

successor or successors by merger, conversion or consolidation.

 

SECTION 6.12       Authenticating Agents.

 

There may be one or more Authenticating Agents appointed by the Trustee

upon the request of the Company with power to act on its behalf and subject to

its direction in the authentication and delivery of Debt Securities issued upon

exchange or registration of transfer thereof as fully to all intents and purposes

as though any such Authenticating Agent had been expressly authorized to

authenticate and deliver Debt Securities; provided, that the

Trustee shall have no liability to the Company for any acts or omissions of the

Authenticating Agent with respect to the authentication and delivery of Debt

Securities.  Any such Authenticating

Agent shall at all times be a corporation organized and doing business under

the laws of the United States or of any state or territory thereof or of the

District of Columbia authorized under such laws to act as Authenticating Agent,

having a combined capital and surplus of at least $50,000,000 and being subject

to supervision or examination by federal, state, territorial or District of

Columbia authority.  If such corporation

publishes reports of condition at least annually pursuant to law or the

requirements of such authority, then for the purposes of this 

 

37

 

Section 6.12 the combined capital and surplus of such corporation

shall be deemed to be its combined capital and surplus as set forth in its most

recent report of condition so published. 

If at any time an Authenticating Agent shall cease to be eligible in

accordance with the provisions of this Section, it shall resign immediately in

the manner and with the effect herein specified in this Section.

 

Any corporation into which any Authenticating Agent may be merged or

converted or with which it may be consolidated, or any corporation resulting

from any merger, consolidation or conversion to which any Authenticating Agent

shall be a party, or any corporation succeeding to all or substantially all of

the corporate trust business of any Authenticating Agent, shall be the

successor of such Authenticating Agent hereunder, if such successor corporation

is otherwise eligible under this Section 6.12 without the execution or

filing of any paper or any further act on the part of the parties hereto or

such Authenticating Agent.

 

Any Authenticating Agent may at any time resign by giving written

notice of resignation to the Trustee and to the Company.  The Trustee may at any time terminate the

agency of any Authenticating Agent with respect to the Debt Securities by

giving written notice of termination to such Authenticating Agent and to the

Company.  Upon receiving such a notice

of resignation or upon such a termination, or in case at any time any

Authenticating Agent shall cease to be eligible under this Section 6.12,

the Trustee may, and upon the request of the Company shall, promptly appoint a

successor Authenticating Agent eligible under this Section 6.12, shall

give written notice of such appointment to the Company and shall mail notice of

such appointment to all holders of Debt Securities as the names and addresses

of such holders appear on the Debt Security Register.  Any successor Authenticating Agent upon acceptance of its

appointment hereunder shall become vested with all rights, powers, duties and

responsibilities with respect to the Debt Securities of its predecessor

hereunder, with like effect as if originally named as Authenticating Agent

herein.

 

The Company agrees to pay to any Authenticating Agent from time to time

reasonable compensation for its services. 

Any Authenticating Agent shall have no responsibility or liability for

any action taken by it as such in accordance with the directions of the

Trustee.

 

ARTICLE VII

CONCERNING THE SECURITYHOLDERS

 

SECTION 7.01       Action by Securityholders.

 

Whenever in this Indenture it is provided that the holders of a

specified percentage in aggregate principal amount of the Debt Securities may

take any action (including the making of any demand or request, the giving of

any notice, consent or waiver or the taking of any other action), the fact that

at the time of taking any such action the holders of such specified percentage

have joined therein may be evidenced (a) by any instrument or any number

of instruments of similar tenor executed by such Securityholders in person or

by agent or proxy appointed in writing, or (b) by the record of such holders

of Debt Securities voting in favor thereof at any meeting of such

Securityholders duly called and held in accordance with the provisions of

Article VIII, or (c) by a combination of such instrument or

instruments and any 

 

38

 

such record of such a meeting of such Securityholders, or (d) by

any other method the Trustee deems satisfactory.

 

If the Company shall solicit from the Securityholders any request,

demand, authorization, direction, notice, consent, waiver or other action or

revocation of the same, the Company may, at its option, as evidenced by an

Officers’ Certificate, fix in advance a record date for such Debt Securities

for the determination of Securityholders entitled to give such request, demand,

authorization, direction, notice, consent, waiver or other action or revocation

of the same, but the Company shall have no obligation to do so.  If such a record date is fixed, such

request, demand, authorization, direction, notice, consent, waiver or other

action or revocation of the same may be given before or after the record date,

but only the Securityholders of record at the close of business on the record

date shall be deemed to be Securityholders for the purposes of determining

whether Securityholders of the requisite proportion of outstanding Debt

Securities have authorized or agreed or consented to such request, demand,

authorization, direction, notice, consent, waiver or other action or revocation

of the same, and for that purpose the outstanding Debt Securities shall be

computed as of the record date; provided, however, that no such

authorization, agreement or consent by such Securityholders on the record date

shall be deemed effective unless it shall become effective pursuant to the

provisions of this Indenture not later than six months after the record date.

 

SECTION 7.02       Proof of Execution by Securityholders.

 

Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof

of the execution of any instrument by a Securityholder or such Securityholder’s

agent or proxy shall be sufficient if made in accordance with such reasonable

rules and regulations as may be prescribed by the Trustee or in such manner as

shall be satisfactory to the Trustee. 

The ownership of Debt Securities shall be proved by the Debt Security

Register or by a certificate of the Debt Security registrar.  The Trustee may require such additional

proof of any matter referred to in this Section as it shall deem

necessary.

 

The record of any Securityholders’ meeting shall be proved in the

manner provided in Section 8.06.

 

SECTION 7.03       Who Are Deemed Absolute Owners.

 

Prior to due presentment for registration of transfer of any Debt

Security, the Company, the Trustee, any Authenticating Agent, any Paying Agent,

any transfer agent and any Debt Security registrar may deem the Person in whose

name such Debt Security shall be registered upon the Debt Security Register to

be, and may treat such Person as, the absolute owner of such Debt Security

(whether or not such Debt Security shall be overdue) for the purpose of

receiving payment of or on account of the principal of, premium, if any, and

interest on such Debt Security and for all other purposes; and neither the

Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor

any transfer agent nor any Debt Security registrar shall be affected by any

notice to the contrary.  All such

payments so made to any holder for the time being or upon such holder’s order

shall be valid, and, to the extent of the sum or sums so paid, effectual to

satisfy and discharge the liability for moneys payable upon any such Debt

Security.

 

39

 

SECTION 7.04       Debt Securities Owned by Company

Deemed Not Outstanding.

 

In determining whether the holders of the requisite aggregate principal

amount of Debt Securities have concurred in any direction, consent or waiver

under this Indenture, Debt Securities which are owned by the Company or any

other obligor on the Debt Securities or by any Person directly or indirectly

controlling or controlled by or under direct or indirect common control with

the Company or any other obligor on the Debt Securities shall be disregarded

and deemed not to be outstanding for the purpose of any such determination; provided,

that for the purposes of determining whether the Trustee shall be

protected in relying on any such direction, consent or waiver, only Debt

Securities which a Responsible Officer of the Trustee actually knows are so

owned shall be so disregarded.  Debt

Securities so owned which have been pledged in good faith may be regarded as

outstanding for the purposes of this Section 7.04 if the pledgee shall

establish to the satisfaction of the Trustee the pledgee’s right to vote such

Debt Securities and that the pledgee is not the Company or any such other

obligor or Person directly or indirectly controlling or controlled by or under

direct or indirect common control with the Company or any such other

obligor.  In the case of a dispute as to

such right, any decision by the Trustee taken upon the advice of counsel shall

be full protection to the Trustee.

 

SECTION 7.05       Revocation of Consents; Future Holders

Bound.

 

At any time prior to (but not after) the evidencing to the Trustee, as

provided in Section 7.01, of the taking of any action by the holders of

the percentage in aggregate principal amount of the Debt Securities specified

in this Indenture in connection with such action, any holder (in cases where no

record date has been set pursuant to Section 7.01) or any holder as of an

applicable record date (in cases where a record date has been set pursuant to

Section 7.01) of a Debt Security (or any Debt Security issued in whole or

in part in exchange or substitution therefor) the serial number of which is

shown by the evidence to be included in the Debt Securities the holders of

which have consented to such action may, by filing written notice with the

Trustee at the Principal Office of the Trustee and upon proof of holding as

provided in Section 7.02, revoke such action so far as concerns such Debt

Security (or so far as concerns the principal amount represented by any

exchanged or substituted Debt Security). 

Except as aforesaid any such action taken by the holder of any Debt

Security shall be conclusive and binding upon such holder and upon all future

holders and owners of such Debt Security, and of any Debt Security issued in

exchange or substitution therefor or on registration of transfer thereof,

irrespective of whether or not any notation in regard thereto is made upon such

Debt Security or any Debt Security issued in exchange or substitution therefor.

 

ARTICLE VIII

SECURITYHOLDERS’ MEETINGS

 

SECTION 8.01       Purposes of Meetings.

 

A meeting of Securityholders may be called at any time and from time to

time pursuant to the provisions of this Article VIII for any of the

following purposes:

 

(a)           to

give any notice to the Company or to the Trustee, or to give any directions to

the Trustee, or to consent to the waiving of any default hereunder and its 

 

40

 

consequences, or to take any other action authorized to be taken by

Securityholders pursuant to any of the provisions of Article V;

 

(b)           to

remove the Trustee and nominate a successor trustee pursuant to the provisions

of Article VI;

 

(c)           to

consent to the execution of an indenture or indentures supplemental hereto

pursuant to the provisions of Section 9.02; or

 

(g)           to

take any other action authorized to be taken by or on behalf of the holders of

any specified aggregate principal amount of such Debt Securities under any

other provision of this Indenture or under applicable law.

 

SECTION 8.02       Call of Meetings by Trustee.

 

The Trustee may at any time call a meeting of Securityholders to take

any action specified in Section 8.01, to be held at such time and at such

place in New York or Wilmington, Delaware, as the Trustee shall determine.  Notice of every meeting of the

Securityholders, setting forth the time and the place of such meeting and in general

terms the action proposed to be taken at such meeting, shall be mailed to

holders of Debt Securities affected at their addresses as they shall appear on

the Debt Securities Register.  Such

notice shall be mailed not less than 20 nor more than 180 days prior to

the date fixed for the meeting.

 

SECTION 8.03       Call of Meetings by Company or

Securityholders.

 

In case at any time the Company pursuant to a Board Resolution, or the

holders of at least 10% in aggregate principal amount of the Debt Securities,

as the case may be, then outstanding, shall have requested the Trustee to call

a meeting of Securityholders, by written request setting forth in reasonable

detail the action proposed to be taken at the meeting, and the Trustee shall

not have mailed the notice of such meeting within 20 days after receipt of

such request, then the Company or such Securityholders may determine the time

and the place in Sioux Falls, South Dakota for such meeting and may call such

meeting to take any action authorized in Section 8.01, by mailing notice

thereof as provided in Section 8.02.

 

SECTION 8.04       Qualifications for Voting.

 

To be entitled to vote at any meeting of Securityholders a Person shall

be (a) a holder of one or more Debt Securities with respect to which the

meeting is being held or (b) a Person appointed by an instrument in

writing as proxy by a holder of one or more such Debt Securities.  The only Persons who shall be entitled to be

present or to speak at any meeting of Securityholders shall be the Persons

entitled to vote at such meeting and their counsel and any representatives of

the Trustee and its counsel and any representatives of the Company and its

counsel.

 

SECTION 8.05       Regulations.

 

Notwithstanding any other provisions of this Indenture, the Trustee may

make such reasonable regulations as it may deem advisable for any meeting of

Securityholders, in 

 

41

 

regard to proof of the holding of Debt Securities and of the

appointment of proxies, and in regard to the appointment and duties of

inspectors of votes, the submission and examination of proxies, certificates

and other evidence of the right to vote, and such other matters concerning the

conduct of the meeting as it shall deem appropriate.

 

The Trustee shall, by an instrument in writing, appoint a temporary

chairman of the meeting, unless the meeting shall have been called by the

Company or by Securityholders as provided in Section 8.03, in which case

the Company or the Securityholders calling the meeting, as the case may be,

shall in like manner appoint a temporary chairman. A permanent chairman and a

permanent secretary of the meeting shall be elected by majority vote at the

meeting.

 

Subject to the provisions of Section 7.04, at any meeting each

holder of Debt Securities with respect to which such meeting is being held or

proxy therefor shall be entitled to one vote for each $1,000 principal amount

of Debt Securities held or represented by such holder; provided, however,

that no vote shall be cast or counted at any meeting in respect of any Debt

Security challenged as not outstanding and ruled by the chairman of the meeting

to be not outstanding.  The chairman of

the meeting shall have no right to vote other than by virtue of Debt Securities

held by such chairman or instruments in writing as aforesaid duly designating

such chairman as the Person to vote on behalf of other Securityholders.  Any meeting of Securityholders duly called

pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from

time to time by a majority of those present, whether or not constituting a

quorum, and the meeting may be held as so adjourned without further notice.

 

SECTION 8.06       Voting.

 

The vote upon any resolution submitted to any meeting of holders of

Debt Securities with respect to which such meeting is being held shall be by

written ballots on which shall be subscribed the signatures of such holders or

of their representatives by proxy and the serial number or numbers of the Debt

Securities held or represented by them. 

The permanent chairman of the meeting shall appoint two inspectors of

votes who shall count all votes cast at the meeting for or against any

resolution and who shall make and file with the secretary of the meeting their

verified written reports in triplicate of all votes cast at the meeting. A record

in duplicate of the proceedings of each meeting of Securityholders shall be

prepared by the secretary of the meeting and there shall be attached to said

record the original reports of the inspectors of votes on any vote by ballot

taken thereat and affidavits by one or more Persons having knowledge of the

facts setting forth a copy of the notice of the meeting and showing that said

notice was mailed as provided in Section 8.02.  The record shall show the serial numbers of the Debt Securities

voting in favor of or against any resolution. The record shall be signed and

verified by the affidavits of the permanent chairman and secretary of the

meeting and one of the duplicates shall be delivered to the Company and the

other to the Trustee to be preserved by the Trustee, the latter to have

attached thereto the ballots voted at the meeting.

 

Any record so signed and verified shall be conclusive evidence of the

matters therein stated.

 

42

 

SECTION 8.07       Quorum; Actions.

 

The Persons entitled to vote a majority in outstanding principal amount

of the Debt Securities shall constitute a quorum for a meeting of

Securityholders; provided, however, that if any action is to be

taken at such meeting with respect to a consent, waiver, request, demand,

notice, authorization, direction or other action which may be given by the

holders of not less than a specified percentage in outstanding principal amount

of the Debt Securities, the Persons holding or representing such specified percentage

in outstanding principal amount of the Debt Securities will constitute a

quorum.  In the absence of a quorum

within 30 minutes of the time appointed for any such meeting, the meeting

shall, if convened at the request of Securityholders, be dissolved.  In any other case the meeting may be

adjourned for a period of not less than 10 days as determined by the

permanent chairman of the meeting prior to the adjournment of such meeting.  In the absence of a quorum at any such

adjourned meeting, such adjourned meeting may be further adjourned for a period

of not less than 10 days as determined by the permanent chairman of the

meeting prior to the adjournment of such adjourned meeting.  Notice of the reconvening of any adjourned

meeting shall be given as provided in Section 8.02, except that such

notice need be given only once not less than five days prior to the date

on which the meeting is scheduled to be reconvened.  Notice of the reconvening of an adjourned meeting shall state

expressly the percentage, as provided above, of the outstanding principal

amount of the Debt Securities which shall constitute a quorum.

 

Except as limited by the proviso in the first paragraph of

Section 9.02, any resolution presented to a meeting or adjourned meeting

duly reconvened at which a quorum is present as aforesaid may be adopted by the

affirmative vote of the holders of not less than a majority in outstanding

principal amount of the Debt Securities; provided, however, that,

except as limited by the proviso in the first paragraph of Section 9.02,

any resolution with respect to any consent, waiver, request, demand, notice,

authorization, direction or other action that this Indenture expressly provides

may be given by the holders of not less than a specified percentage in outstanding

principal amount of the Debt Securities may be adopted at a meeting or an

adjourned meeting duly reconvened and at which a quorum is present as aforesaid

only by the affirmative vote of the holders of not less than such specified

percentage in outstanding principal amount of the Debt Securities.

 

Any resolution passed or decision taken at any meeting of holders of

Debt Securities duly held in accordance with this Section shall be binding on

all the Securityholders, whether or not present or represented at the meeting.

 

ARTICLE IX

SUPPLEMENTAL INDENTURES

 

SECTION 9.01       Supplemental Indentures without

Consent of Securityholders.

 

The Company, when authorized by a Board Resolution, and the Trustee may

from time to time and at any time enter into an indenture or indentures

supplemental hereto, without the consent of the Securityholders, for one or

more of the following purposes:

 

43

 

(a)           to

evidence the succession of another corporation to the Company, or successive

successions, and the assumption by the successor corporation of the covenants,

agreements and obligations of the Company, pursuant to Article XI hereof;

 

(b)           to

add to the covenants of the Company such further covenants, restrictions or

conditions for the protection of the holders of Debt Securities as the Board of

Directors shall consider to be for the protection of the holders of such Debt

Securities, and to make the occurrence, or the occurrence and continuance, of a

default in any of such additional covenants, restrictions or conditions a

default or an Event of Default permitting the enforcement of all or any of the

several remedies provided in this Indenture as herein set forth; provided,

however, that in respect of any such additional covenant, restriction or

condition such supplemental indenture may provide for a particular period of

grace after default (which period may be shorter or longer than that allowed in

the case of other defaults) or may provide for an immediate enforcement upon

such default or may limit the remedies available to the Trustee upon such

default;

 

(c)           to

cure any ambiguity or to correct or supplement any provision contained herein

or in any supplemental indenture which may be defective or inconsistent with

any other provision contained herein or in any supplemental indenture, or to

make such other provisions in regard to matters or questions arising under this

Indenture; provided, that any such action shall not adversely

affect the interests of the holders of the Debt Securities;

 

(d)           to

add to, delete from, or revise the terms of Debt Securities, including, without

limitation, any terms relating to the issuance, exchange, registration or

transfer of Debt Securities, including to provide for transfer procedures and

restrictions substantially similar to those applicable to the Capital

Securities, as required by Section 2.05 (for purposes of assuring that no

registration of Debt Securities is required under the Securities Act of 1933,

as amended); provided, that any such action shall not adversely

affect the interests of the holders of the Debt Securities then outstanding (it

being understood, for purposes of this proviso, that transfer restrictions on

Debt Securities substantially similar to those applicable to Capital Securities

shall not be deemed to adversely affect the holders of the Debt Securities);

 

(e)           to

evidence and provide for the acceptance of appointment hereunder by a successor

Trustee with respect to the Debt Securities and to add to or change any of the

provisions of this Indenture as shall be necessary to provide for or facilitate

the administration of the trusts hereunder by more than one Trustee, pursuant

to the requirements of Section 6.10;

 

(f)            to

make any change (other than as elsewhere provided in this paragraph) that does

not adversely affect the rights of any Securityholder in any material respect;

or

 

(g)           to

provide for the issuance of and establish the form and terms and conditions of

the Debt Securities, to establish the form of any certifications required to be

furnished pursuant to the terms of this Indenture or the Debt Securities, or to

add to the rights of the holders of Debt Securities.

 

The Trustee is hereby authorized to join with the Company in the

execution of any such supplemental indenture, to make any further appropriate

agreements and stipulations 

 

44

 

which may be therein contained and to accept the conveyance, transfer

and assignment of any property thereunder, but the Trustee shall not be obligated

to, but may in its discretion, enter into any such supplemental indenture which

affects the Trustee’s own rights, duties or immunities under this Indenture or

otherwise.

 

Any supplemental indenture authorized by the provisions of this

Section 9.01 may be executed by the Company and the Trustee without the

consent of the holders of any of the Debt Securities at the time outstanding,

notwithstanding any of the provisions of Section 9.02.

 

SECTION 9.02       Supplemental Indentures with Consent

of Securityholders.

 

With the consent (evidenced as provided in Section 7.01) of the

holders of not less than a majority in aggregate principal amount of the Debt

Securities at the time outstanding affected by such supplemental indenture

(voting as a class), the Company, when authorized by a Board Resolution, and

the Trustee may from time to time and at any time enter into an indenture or

indentures supplemental hereto (which shall conform to the provisions of the

Trust Indenture Act, then in effect, applicable to indentures qualified

thereunder) for the purpose of adding any provisions to or changing in any

manner or eliminating any of the provisions of this Indenture or of any

supplemental indenture or of modifying in any manner the rights of the holders

of the Debt Securities; provided, however, that no such supplemental indenture

shall without such consent of the holders of each Debt Security then

outstanding and affected thereby (i) extend the fixed maturity of any Debt

Security, or reduce the principal amount thereof or any premium thereon, or

reduce the rate or extend the time of payment of interest thereon, or reduce

any amount payable on redemption thereof or make the principal thereof or any

interest or premium thereon payable in any coin or currency other than that

provided in the Debt Securities, or impair or affect the right of any

Securityholder to institute suit for payment thereof or impair the right of

repayment, if any, at the option of the holder, or (ii) reduce the

aforesaid percentage of Debt Securities the holders of which are required to

consent to any such supplemental indenture; and provided, further, that if the

Debt Securities are held by the Trust or a trustee of such trust, such

supplemental indenture shall not be effective until the holders of a majority

in liquidation preference of the Trust Securities shall have consented to such

supplemental indenture; provided, further, that if the consent of

the Securityholder of each outstanding Debt Security is required, such

supplemental indenture shall not be effective until each holder of the Trust

Securities shall have consented to such supplemental indenture.

 

Upon the request of the Company accompanied by a Board Resolution

authorizing the execution of any such supplemental indenture, and upon the filing

with the Trustee of evidence of the consent of Securityholders as aforesaid,

the Trustee shall join with the Company in the execution of such supplemental

indenture unless such supplemental indenture affects the Trustee’s own rights,

duties or immunities under this Indenture or otherwise, in which case the

Trustee may in its discretion, but shall not be obligated to, enter into such

supplemental indenture.

 

Promptly after the execution by the Company and the Trustee of any

supplemental indenture pursuant to the provisions of this Section, the Trustee

shall transmit by mail, first class postage prepaid, a notice, prepared by the

Company, setting forth in general terms the substance of such supplemental

indenture, to the Securityholders as their names and 

 

45

 

addresses appear upon the Debt Security Register.  Any failure of the Trustee to mail such

notice, or any defect therein, shall not, however, in any way impair or affect

the validity of any such supplemental indenture.

 

It shall not be necessary for the consent of the Securityholders under

this Section 9.02 to approve the particular form of any proposed

supplemental indenture, but it shall be sufficient if such consent shall

approve the substance thereof.

 

SECTION 9.03       Effect of Supplemental Indentures.

 

Upon the execution of any supplemental indenture pursuant to the

provisions of this Article IX, this Indenture shall be and be deemed to be

modified and amended in accordance therewith and the respective rights,

limitations of rights, obligations, duties and immunities under this Indenture

of the Trustee, the Company and the holders of Debt Securities shall thereafter

be determined, exercised and enforced hereunder subject in all respects to such

modifications and amendments and all the terms and conditions of any such

supplemental indenture shall be and be deemed to be part of the terms and

conditions of this Indenture for any and all purposes.

 

SECTION 9.04       Notation on Debt Securities.

 

Debt Securities authenticated and delivered after the execution of any

supplemental indenture pursuant to the provisions of this Article IX may

bear a notation as to any matter provided for in such supplemental

indenture.  If the Company or the

Trustee shall so determine, new Debt Securities so modified as to conform, in

the opinion of the Board of Directors of the Company, to any modification of

this Indenture contained in any such supplemental indenture may be prepared and

executed by the Company, authenticated by the Trustee or the Authenticating

Agent and delivered in exchange for the Debt Securities then outstanding.

 

SECTION 9.05       Evidence of Compliance of Supplemental

Indenture to be Furnished to Trustee.

 

The Trustee, subject to the provisions of Sections 6.01 and 6.02,

shall, in addition to the documents required by Section 14.06, receive an

Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any

supplemental indenture executed pursuant hereto complies with the requirements

of this Article IX.  The Trustee

shall receive an Opinion of Counsel as conclusive evidence that any

supplemental indenture executed pursuant to this Article IX is authorized

or permitted by, and conforms to, the terms of this Article IX and that it

is proper for the Trustee under the provisions of this Article IX to join

in the execution thereof.

 

ARTICLE X

REDEMPTION OF SECURITIES

 

SECTION 10.01     Optional Redemption.

 

At any time the Company shall have the right, subject

to the receipt by the Company of prior approval from the OTS, if then required

under applicable capital guidelines or policies of the OTS, to redeem the Debt

Securities, in whole or in part, on any January 7, April 7, 

 

46

 

July 7 or October 7 on or after January 7, 2008 (the “Redemption

Date”), at the Redemption Price.

 

SECTION 10.02     Special Event Redemption.

 

If a Special Event shall occur and be continuing, the Company shall

have the right, subject to the receipt by the Company of prior approval from

the OTS if then required under applicable capital guidelines or policies of the

OTS, to redeem the Debt Securities, in whole but not in part, at any time

within 90 days following the occurrence of such Special Event (the

“Special Redemption Date”), at the Special Redemption Price.

 

SECTION 10.03     Notice of Redemption; Selection of Debt

Securities.

 

In case the Company shall desire to exercise the right to redeem all,

or, as the case may be, any part of the Debt Securities, it shall fix a date

for redemption and shall mail a notice of such redemption at least 30 and not

more than 60 days prior to the date fixed for redemption to the holders of

Debt Securities so to be redeemed as a whole or in part at their last addresses

as the same appear on the Debt Security Register.  Such mailing shall be by first class mail.  The notice if mailed in the manner herein

provided shall be conclusively presumed to have been duly given, whether or not

the holder receives such notice.  In any

case, failure to give such notice by mail or any defect in the notice to the

holder of any Debt Security designated for redemption as a whole or in part

shall not affect the validity of the proceedings for the redemption of any

other Debt Security.

 

Each such notice of redemption shall specify the CUSIP number, if any,

of the Debt Securities to be redeemed, the date fixed for redemption, the

redemption price at which Debt Securities are to be redeemed, the place or

places of payment, that payment will be made upon presentation and surrender of

such Debt Securities, that interest accrued to the date fixed for redemption

will be paid as specified in said notice, and that on and after said date

interest thereon or on the portions thereof to be redeemed will cease to

accrue. If less than all the Debt Securities are to be redeemed the notice of

redemption shall specify the numbers of the Debt Securities to be

redeemed.  In case the Debt Securities

are to be redeemed in part only, the notice of redemption shall state the

portion of the principal amount thereof to be redeemed and shall state that on

and after the date fixed for redemption, upon surrender of such Debt Security,

a new Debt Security or Debt Securities in principal amount equal to the

unredeemed portion thereof will be issued.

 

Prior to 10:00 a.m. New York City time on the Redemption Date or the

Special Redemption Date specified in the notice of redemption given as provided

in this Section, the Company will deposit with the Trustee or with one or more

Paying Agents an amount of money sufficient to redeem on the redemption date

all the Debt Securities so called for redemption at the appropriate redemption

price, together with accrued interest to the date fixed for redemption.

 

The Company will give the Trustee notice not less than 45 nor more than

60 days prior to the redemption date as to the redemption price at which

the Debt Securities are to be redeemed and the aggregate principal amount of

Debt Securities to be redeemed and the Trustee 

 

47

 

shall select, in such manner as in its sole discretion it shall deem

appropriate and fair, the Debt Securities or portions thereof (in integral

multiples of $1,000) to be redeemed.

 

SECTION 10.04     Payment of Debt Securities Called for

Redemption.

 

If notice of redemption has been given as provided in

Section 10.03, the Debt Securities or portions of Debt Securities with

respect to which such notice has been given shall become due and payable on the

Redemption Date or the Special Redemption Date (as the case may be) and at the

place or places stated in such notice at the applicable redemption price,

together with interest accrued to the date fixed for redemption, and on and

after said Redemption Date or the Special Redemption Date (unless the Company

shall default in the payment of such Debt Securities at the redemption price,

together with interest accrued to said date) interest on the Debt Securities or

portions of Debt Securities so called for redemption shall cease to

accrue.  On presentation and surrender

of such Debt Securities at a place of payment specified in said notice, such

Debt Securities or the specified portions thereof shall be paid and redeemed by

the Company at the applicable redemption price, together with interest accrued

thereon to the Redemption Date or the Special Redemption Date (as the case may

be).

 

Upon presentation of any Debt Security redeemed in part only, the

Company shall execute and the Trustee shall authenticate and make available for

delivery to the holder thereof, at the expense of the Company, a new Debt

Security or Debt Securities of authorized denominations in principal amount

equal to the unredeemed portion of the Debt Security so presented.

 

ARTICLE XI

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

 

SECTION 11.01     Company May Consolidate, etc., on

Certain Terms.

 

Nothing contained in this Indenture or in the Debt Securities shall

prevent any consolidation or merger of the Company with or into any other

corporation or corporations (whether or not affiliated with the Company) or successive

consolidations or mergers in which the Company or its successor or successors

shall be a party or parties, or shall prevent any sale, conveyance, transfer or

other disposition of the property or capital stock of the Company or its

successor or successors as an entirety, or substantially as an entirety, to any

other corporation (whether or not affiliated with the Company, or its successor

or successors) authorized to acquire and operate the same; provided, however,

that the Company hereby covenants and agrees that, upon any such consolidation,

merger (where the Company is not the surviving corporation), sale, conveyance,

transfer or other disposition, the due and punctual payment of all payments due

on all of the Debt Securities in accordance with their terms, according to

their tenor, and the due and punctual performance and observance of all the

covenants and conditions of this Indenture to be kept or performed by the

Company, shall be expressly assumed by supplemental indenture reasonably satisfactory

in form to the Trustee executed and delivered to the Trustee by the entity

formed by such consolidation, or into which the Company shall have been merged,

or by the entity which shall have acquired such property or capital stock.

 

48

 

SECTION 11.02     Successor Entity to be Substituted.

 

In case of any such consolidation, merger, sale, conveyance, transfer

or other disposition and upon the assumption by the successor entity, by

supplemental indenture, executed and delivered to the Trustee and reasonably

satisfactory in form to the Trustee, of the due and punctual payment of the

principal of and premium, if any, and interest on all of the Debt Securities

and the due and punctual performance and observance of all of the covenants and

conditions of this Indenture to be performed or observed by the Company, such

successor entity shall succeed to and be substituted for the Company, with the

same effect as if it had been named herein as the Company, and thereupon the

predecessor entity shall be relieved of any further liability or obligation

hereunder or upon the Debt Securities. 

Such successor entity thereupon may cause to be signed, and may issue

either in its own name or in the name of the Company, any or all of the Debt

Securities issuable hereunder which theretofore shall not have been signed by

the Company and delivered to the Trustee or the Authenticating Agent; and, upon

the order of such successor entity instead of the Company and subject to all

the terms, conditions and limitations in this Indenture prescribed, the Trustee

or the Authenticating Agent shall authenticate and deliver any Debt Securities

which previously shall have been signed and delivered by the officers of the

Company, to the Trustee or the Authenticating Agent for authentication, and any

Debt Securities which such successor entity thereafter shall cause to be signed

and delivered to the Trustee or the Authenticating Agent for that purpose.  All the Debt Securities so issued shall in

all respects have the same legal rank and benefit under this Indenture as the

Debt Securities theretofore or thereafter issued in accordance with the terms

of this Indenture as though all of such Debt Securities had been issued at the

date of the execution hereof.

 

SECTION 11.03     Opinion of Counsel to be Given to

Trustee.

 

The Trustee, subject to the provisions of Sections 6.01 and 6.02,

shall receive, in addition to the Opinion of Counsel required by

Section 9.05, an Opinion of Counsel as conclusive evidence that any

consolidation, merger, sale, conveyance, transfer or other disposition, and any

assumption, permitted or required by the terms of this Article XI complies

with the provisions of this Article XI.

 

ARTICLE XII

SATISFACTION AND DISCHARGE OF INDENTURE

 

SECTION 12.01     Discharge of Indenture.

 

When (a) the Company shall deliver to the Trustee for cancellation

all Debt Securities theretofore authenticated (other than any Debt Securities

which shall have been destroyed, lost or stolen and which shall have been replaced

or paid as provided in Section 2.06) and not theretofore canceled, or

(b) all the Debt Securities not theretofore canceled or delivered to the

Trustee for cancellation shall have become due and payable, or are by their

terms to become due and payable within one year or are to be called for

redemption within one year under arrangements satisfactory to the Trustee for

the giving of notice of redemption, and the Company shall deposit with the

Trustee, in trust, funds, which shall be immediately due and payable,

sufficient to pay at maturity or upon redemption all of the Debt Securities

(other than any Debt 

 

49

 

Securities which shall have been destroyed, lost or stolen and which

shall have been replaced or paid as provided in Section 2.06) not

theretofore canceled or delivered to the Trustee for cancellation, including

principal and premium, if any, and interest due or to become due to such date

of maturity or redemption date, as the case may be, but excluding, however, the

amount of any moneys for the payment of principal of, and premium, if any, or

interest on the Debt Securities (1) theretofore repaid to the Company in

accordance with the provisions of Section 12.04, or (2) paid to any state

or to the District of Columbia pursuant to its unclaimed property or similar

laws, and if in the case of either clause (a) or clause (b) the

Company shall also pay or cause to be paid all other sums payable hereunder by

the Company, then this Indenture shall cease to be of further effect except for

the provisions of Sections 2.05, 2.06, 3.01, 3.02, 3.04, 6.06, 6.09 and

12.04 hereof, which shall survive until such Debt Securities shall mature or

are redeemed, as the case may be, and are paid.  Thereafter, Sections 6.06, 6.09 and 12.04 shall survive, and

the Trustee, on demand of the Company accompanied by an Officers’ Certificate

and an Opinion of Counsel, each stating that all conditions precedent herein

provided for relating to the satisfaction and discharge of this Indenture have

been complied with, and at the cost and expense of the Company, shall execute

proper instruments acknowledging satisfaction of and discharging this

Indenture, the Company, however, hereby agreeing to reimburse the Trustee for

any costs or expenses thereafter reasonably and properly incurred by the

Trustee in connection with this Indenture or the Debt Securities.

 

SECTION 12.02     Deposited Moneys to be Held in Trust by

Trustee.

 

Subject to the provisions of Section 12.04, all moneys deposited

with the Trustee pursuant to Section 12.01 shall be held in trust and

applied by it to the payment, either directly or through any Paying Agent

(including the Company if acting as its own Paying Agent), to the holders of

the particular Debt Securities for the payment of which such moneys have been

deposited with the Trustee, of all sums due and to become due thereon for

principal, and premium, if any, and interest.

 

SECTION 12.03     Paying Agent to Repay Moneys Held.

 

Upon the satisfaction and discharge of this Indenture, all moneys then

held by any Paying Agent of the Debt Securities (other than the Trustee) shall,

upon demand of the Company, be repaid to the Company or paid to the Trustee,

and thereupon such Paying Agent shall be released from all further liability

with respect to such moneys.

 

SECTION 12.04     Return of Unclaimed Moneys.

 

Any moneys deposited with or paid to the Trustee or any Paying Agent

for payment of the principal of, and premium, if any, or interest on Debt

Securities and not applied but remaining unclaimed by the holders of Debt

Securities for two years after the date upon which the principal of, and

premium, if any, or interest on such Debt Securities, as the case may be, shall

have become due and payable, shall be repaid to the Company by the Trustee or

such Paying Agent on written demand; and the holder of any of the Debt

Securities shall thereafter look only to the Company for any payment which such

holder may be entitled to collect and all liability of the Trustee or such

Paying Agent with respect to such moneys shall thereupon cease.

 

50

 

ARTICLE XIII

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS

 

SECTION 13.01     Indenture and Debt Securities Solely

Corporate Obligations.

 

No recourse for the payment of the principal of or premium, if any, or

interest on any Debt Security, or for any claim based thereon or otherwise in

respect thereof, and no recourse under or upon any obligation, covenant or

agreement of the Company in this Indenture or in any supplemental indenture, or

in any such Debt Security, or because of the creation of any indebtedness

represented thereby, shall be had against any incorporator, stockholder,

officer, director, employee or agent, as such, past, present or future, of the

Company or of any predecessor or successor corporation of the Company, either

directly or through the Company or any successor corporation of the Company,

whether by virtue of any constitution, statute or rule of law, or by the

enforcement of any assessment or penalty or otherwise; it being expressly

understood that all such liability is hereby expressly waived and released as a

condition of, and as a consideration for, the execution of this Indenture and

the issue of the Debt Securities.

 

ARTICLE XIV

MISCELLANEOUS PROVISIONS

 

SECTION 14.01     Successors.

 

All the covenants, stipulations, promises and agreements of the Company

contained in this Indenture shall bind its successors and assigns whether so

expressed or not.

 

SECTION 14.02     Official Acts by Successor Entity.

 

Any act or proceeding by any provision of this Indenture authorized or

required to be done or performed by any board, committee or officer of the

Company shall and may be done and performed with like force and effect by the

like board, committee, officer or other authorized Person of any entity that

shall at the time be the lawful successor of the Company.

 

SECTION 14.03     Surrender of Company Powers.

 

The Company by instrument in writing executed by authority of 2/3

(two-thirds) of its Board of Directors and delivered to the Trustee may

surrender any of the powers reserved to the Company and thereupon such power so

surrendered shall terminate both as to the Company and as to any permitted

successor.

 

SECTION 14.04     Addresses for Notices, etc.

 

Any notice or demand which by any provision of this Indenture is

required or permitted to be given or served by the Trustee or by the

Securityholders on the Company may be given or served in writing by being

deposited postage prepaid by registered or certified mail in a post office

letter box addressed (until another address is filed by the Company with the

Trustee for such purpose) to the Company at 225 South Main Avenue, Sioux Falls,

South Dakota 57104, Attention: Curtis L. Hage. 

Any notice, direction, request or demand by any Securityholder or the 

 

51

 

Company to or upon the Trustee shall be deemed to have been

sufficiently given or made, for all purposes, if given or made in writing at

the office of Wilmington Trust Company at Rodney Square North, 1100 North

Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust

Administrator.

 

SECTION 14.05     Governing Law.

 

This Indenture and each Debt Security shall be deemed to be a contract

made under the law of the State of New York, and for all purposes shall be

governed by and construed in accordance with the law of said State, without

regard to conflict of laws principles thereof.

 

SECTION 14.06     Evidence of Compliance with Conditions

Precedent.

 

Upon any application or demand by the Company to the Trustee to take

any action under any of the provisions of this Indenture, the Company shall

furnish to the Trustee an Officers’ Certificate stating that in the opinion of

the signers all conditions precedent, if any, provided for in this Indenture

relating to the proposed action have been complied with and an Opinion of

Counsel stating that, in the opinion of such counsel, all such conditions

precedent have been complied with (except that no such Opinion of Counsel is

required to be furnished to the Trustee in connection with the authentication

and issuance of Debt Securities issued on the date of this Indenture).

 

Each certificate or opinion provided for in this Indenture and

delivered to the Trustee with respect to compliance with a condition or

covenant provided for in this Indenture (except certificates delivered pursuant

to Section 3.05) shall include (a) a statement that the person making

such certificate or opinion has read such covenant or condition; (b) a

brief statement as to the nature and scope of the examination or investigation

upon which the statements or opinions contained in such certificate or opinion

are based; (c) a statement that, in the opinion of such person, he or she

has made such examination or investigation as is necessary to enable him or her

to express an informed opinion as to whether or not such covenant or condition

has been complied with; and (d) a statement as to whether or not, in the

opinion of such person, such condition or covenant has been complied with.

 

SECTION 14.07     Non-Business Days.

 

In any case where the date of payment of interest on or principal of

the Debt Securities is not a Business Day, the payment of such interest on or

principal of the Debt Securities need not be made on such date but may be made

on the next succeeding Business Day, with the same force and effect as if made

on the date of payment, except if such Business Day is in the next succeeding

calendar year, such payment will be made on the immediately preceding Business

Day.

 

SECTION 14.08     Table of Contents, Headings, etc.

 

The table of contents and the titles and headings of the articles and

sections of this Indenture have been inserted for convenience of reference

only, are not to be considered a part hereof, and shall in no way modify or

restrict any of the terms or provisions hereof.

 

52

 

SECTION 14.09     Execution in Counterparts.

 

This Indenture may be executed in any number of counterparts, each of

which shall be an original, but such counterparts shall together constitute but

one and the same instrument.

 

SECTION 14.10     Separability.

 

In case any one or more of the provisions contained in this Indenture

or in the Debt Securities shall for any reason be held to be invalid, illegal

or unenforceable in any respect, such invalidity, illegality or

unenforceability shall not affect any other provisions of this Indenture or of

such Debt Securities, but this Indenture and such Debt Securities shall be construed

as if such invalid or illegal or unenforceable provision had never been

contained herein or therein.

 

SECTION 14.11     Assignment.

 

Subject to Article XI, the Company will have the right at all

times to assign any of its rights or obligations under this Indenture to a

direct or indirect wholly owned Subsidiary of the Company, provided, that,

in the event of any such assignment, the Company will remain liable for all

such obligations. Subject to the foregoing, this Indenture is binding upon and

inures to the benefit of the parties hereto and their respective successors and

assigns. This Indenture may not otherwise be assigned by the parties thereto.

 

SECTION 14.12     Acknowledgment of Rights.

 

The Company acknowledges that, with respect to any Debt Securities held

by the Trust or the Institutional Trustee of the Trust, if the Institutional

Trustee of the Trust fails to enforce its rights under this Indenture as the

holder of Debt Securities held as the assets of the Trust after the holders of

a majority in Liquidation Amount of the Capital Securities of the Trust have so

directed in writing such Institutional Trustee, a holder of record of such

Capital Securities may to the fullest extent permitted by law institute legal

proceedings directly against the Company to enforce such Institutional

Trustee’s rights under this Indenture without first instituting any legal

proceedings against such Institutional Trustee or any other Person.  Notwithstanding the foregoing, if an Event

of Default has occurred and is continuing and such event is attributable to the

failure of the Company to pay interest (or premium, if any) or principal on the

Debt Securities on the date such interest (or premium, if any) or principal is

otherwise due and payable (or in the case of redemption, on the redemption

date), the Company acknowledges that a holder of record of Capital Securities

of the Trust may directly institute a proceeding against the Company for

enforcement of payment to such holder directly of the principal of (or premium,

if any) or interest on the Debt Securities having an aggregate principal amount

equal to the aggregate Liquidation Amount of the Capital Securities of such

holder on or after the respective due date specified in the Debt Securities.

 

53

 

ARTICLE XV

SUBORDINATION OF DEBT SECURITIES

 

SECTION 15.01     Agreement to Subordinate.

 

The Company covenants and agrees, and each holder of Debt Securities

issued hereunder and under any supplemental indenture (the “Additional Provisions”)

by such Securityholder’s acceptance thereof likewise covenants and agrees, that

all Debt Securities shall be issued subject to the provisions of this

Article XV; and each holder of a Debt Security, whether upon original

issue or upon transfer or assignment thereof, accepts and agrees to be bound by

such provisions.

 

The payment by the Company of the payments due on all Debt Securities

issued hereunder and under any Additional Provisions shall, to the extent and

in the manner hereinafter set forth, be subordinated and junior in right of

payment to the prior payment in full of all Senior Indebtedness of the Company,

whether outstanding at the date of this Indenture or thereafter incurred.

 

No provision of this Article XV shall prevent the occurrence of

any default or Event of Default hereunder.

 

SECTION 15.02     Default on Senior Indebtedness.

 

In the event and during the continuation of any default by the Company

in the payment of principal, premium, interest or any other payment due on any

Senior Indebtedness of the Company following any applicable grace period, or in

the event that the maturity of any Senior Indebtedness of the Company has been

accelerated because of a default, and such acceleration has not been rescinded

or canceled and such Senior Indebtedness has not been paid in full, then, in

either case, no payment shall be made by the Company with respect to the

payments due on the Debt Securities.

 

In the event that, notwithstanding the foregoing, any payment shall be

received by the Trustee when such payment is prohibited by the preceding

paragraph of this Section 15.02, such payment shall, subject to

Section 15.06, be held in trust for the benefit of, and shall be paid over

or delivered to, the holders of Senior Indebtedness or their respective representatives,

or to the trustee or trustees under any indenture pursuant to which any of such

Senior Indebtedness may have been issued, as their respective interests may

appear, but only to the extent that the holders of the Senior Indebtedness (or

their representative or representatives or a trustee) notify the Trustee in

writing within 90 days of such payment of the amounts then due and owing

on the Senior Indebtedness and only the amounts specified in such notice to the

Trustee shall be paid to the holders of Senior Indebtedness.

 

SECTION 15.03     Liquidation; Dissolution; Bankruptcy.

 

Upon any payment by the Company or distribution of assets of the

Company of any kind or character, whether in cash, property or securities, to

creditors upon any dissolution or winding-up or liquidation or reorganization

of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,

receivership or other proceedings, all amounts due upon all Senior 

 

54

 

Indebtedness of the Company shall first be paid in full, or payment

thereof provided for in money in accordance with its terms, before any payment

is made by the Company on the Debt Securities; and upon any such dissolution or

winding-up or liquidation or reorganization, any payment by the Company, or

distribution of assets of the Company of any kind or character, whether in

cash, property or securities, to which the Securityholders or the Trustee would

be entitled to receive from the Company, except for the provisions of this

Article XV, shall be paid by the Company, or by any receiver, trustee in

bankruptcy, liquidating trustee, agent or other Person making such payment or

distribution, or by the Securityholders or by the Trustee under this Indenture

if received by them or it, directly to the holders of Senior Indebtedness of

the Company (pro rata to such holders on the basis of the respective amounts of

Senior Indebtedness held by such holders, as calculated by the Company) or

their representative or representatives, or to the trustee or trustees under

any indenture pursuant to which any instruments evidencing such Senior

Indebtedness may have been issued, as their respective interests may appear, to

the extent necessary to pay such Senior Indebtedness in full, in money or

money’s worth, after giving effect to any concurrent payment or distribution to

or for the holders of such Senior Indebtedness, before any payment or

distribution is made to the Securityholders.

 

In the event that, notwithstanding the foregoing, any payment or

distribution of assets of the Company of any kind or character, whether in

cash, property or securities, prohibited by the foregoing, shall be received by

the Trustee before all Senior Indebtedness of the Company is paid in full, or

provision is made for such payment in money in accordance with its terms, such

payment or distribution shall be held in trust for the benefit of and shall be

paid over or delivered to the holders of such Senior Indebtedness or their

representative or representatives, or to the trustee or trustees under any

indenture pursuant to which any instruments evidencing such Senior Indebtedness

may have been issued, as their respective interests may appear, as calculated

by the Company, for application to the payment of all Senior Indebtedness of

the Company remaining unpaid to the extent necessary to pay such Senior

Indebtedness in full in money in accordance with its terms, after giving effect

to any concurrent payment or distribution to or for the benefit of the holders of

such Senior Indebtedness.

 

For purposes of this Article XV, the words “cash, property or

securities” shall not be deemed to include shares of stock of the Company as

reorganized or readjusted, or securities of the Company or any other

corporation provided for by a plan of reorganization or readjustment, the

payment of which is subordinated at least to the extent provided in this

Article XV with respect to the Debt Securities to the payment of all

Senior Indebtedness of the Company, that may at the time be outstanding, provided,

that (a) such Senior Indebtedness is assumed by the new

corporation, if any, resulting from any such reorganization or readjustment,

and (b) the rights of the holders of such Senior Indebtedness are not,

without the consent of such holders, altered by such reorganization or

readjustment.  The consolidation of the

Company with, or the merger of the Company into, another corporation or the

liquidation or dissolution of the Company following the conveyance or transfer

of its property as an entirety, or substantially as an entirety, to another

corporation upon the terms and conditions provided for in Article IX of

this Indenture shall not be deemed a dissolution, winding-up, liquidation or

reorganization for the purposes of this Section 15.03 if such other

corporation shall, as a part of such consolidation, merger, conveyance or

transfer, comply with the conditions stated in Article IX of this

Indenture.  Nothing in

Section 15.02 or in this Section 15.03 shall apply to claims of, or

payments to, the Trustee under or pursuant to Section 6.06 of this

Indenture.

 

55

 

SECTION 15.04     Subrogation.

 

Subject to the payment in full of all Senior Indebtedness of the

Company, the Securityholders shall be subrogated to the rights of the holders

of such Senior Indebtedness to receive payments or distributions of cash,

property or securities of the Company applicable to such Senior Indebtedness

until all payments due on the Debt Securities shall be paid in full; and, for

the purposes of such subrogation, no payments or distributions to the holders

of such Senior Indebtedness of any cash, property or securities to which the

Securityholders or the Trustee would be entitled except for the provisions of

this Article XV, and no payment over pursuant to the provisions of this

Article XV to or for the benefit of the holders of such Senior

Indebtedness by Securityholders or the Trustee, shall, as between the Company,

its creditors other than holders of Senior Indebtedness of the Company, and the

holders of the Debt Securities be deemed to be a payment or distribution by the

Company to or on account of such Senior Indebtedness.  It is understood that the provisions of this Article XV are

and are intended solely for the purposes of defining the relative rights of the

holders of the Debt Securities, on the one hand, and the holders of such Senior

Indebtedness, on the other hand.

 

Nothing contained in this Article XV or elsewhere in this

Indenture, any Additional Provisions or in the Debt Securities is intended to

or shall impair, as between the Company, its creditors other than the holders

of Senior Indebtedness of the Company, and the holders of the Debt Securities,

the obligation of the Company, which is absolute and unconditional, to pay to

the holders of the Debt Securities all payments on the Debt Securities as and

when the same shall become due and payable in accordance with their terms, or

is intended to or shall affect the relative rights of the holders of the Debt Securities

and creditors of the Company, other than the holders of Senior Indebtedness of

the Company, nor shall anything herein or therein prevent the Trustee or the

holder of any Debt Security from exercising all remedies otherwise permitted by

applicable law upon default under this Indenture, subject to the rights, if

any, under this Article XV of the holders of such Senior Indebtedness in

respect of cash, property or securities of the Company received upon the

exercise of any such remedy.

 

Upon any payment or distribution of assets of the Company referred to

in this Article XV, the Trustee, subject to the provisions of

Article VI of this Indenture, and the Securityholders shall be entitled to

conclusively rely upon any order or decree made by any court of competent

jurisdiction in which such dissolution, winding-up, liquidation or

reorganization proceedings are pending, or a certificate of the receiver,

trustee in bankruptcy, liquidation trustee, agent or other Person making such

payment or distribution, delivered to the Trustee or to the Securityholders,

for the purposes of ascertaining the Persons entitled to participate in such

distribution, the holders of Senior Indebtedness and other indebtedness of the

Company, the amount thereof or payable thereon, the amount or amounts paid or

distributed thereon and all other facts pertinent thereto or to this

Article XV.

 

SECTION 15.05     Trustee to Effectuate Subordination.

 

Each Securityholder by such Securityholder’s acceptance thereof

authorizes and directs the Trustee on such Securityholder’s behalf to take such

action as may be necessary or appropriate to effectuate the subordination

provided in this Article XV and appoints the Trustee such Securityholder’s

attorney-in-fact for any and all such purposes.

 

56

 

SECTION 15.06     Notice by the Company.

 

The Company shall give prompt written notice to a Responsible Officer

of the Trustee at the Principal Office of the Trustee of any fact known to the

Company that would prohibit the making of any payment of moneys to or by the

Trustee in respect of the Debt Securities pursuant to the provisions of this

Article XV.  Notwithstanding the

provisions of this Article XV or any other provision of this Indenture or

any Additional Provisions, the Trustee shall not be charged with knowledge of

the existence of any facts that would prohibit the making of any payment of

moneys to or by the Trustee in respect of the Debt Securities pursuant to the

provisions of this Article XV, unless and until a Responsible Officer of

the Trustee at the Principal Office of the Trustee shall have received written

notice thereof from the Company or a holder or holders of Senior Indebtedness

or from any trustee therefor; and before the receipt of any such written

notice, the Trustee, subject to the provisions of Article VI of this

Indenture, shall be entitled in all respects to assume that no such facts

exist; provided, however, that if the Trustee shall not have

received the notice provided for in this Section 15.06 at least two

Business Days prior to the date upon which by the terms hereof any money may

become payable for any purpose (including, without limitation, the payment of

the principal of (or premium, if any) or interest on any Debt Security), then,

anything herein contained to the contrary notwithstanding, the Trustee shall

have full power and authority to receive such money and to apply the same to

the purposes for which they were received, and shall not be affected by any

notice to the contrary that may be received by it within two Business Days

prior to such date.

 

The Trustee, subject to the provisions of Article VI of this

Indenture, shall be entitled to conclusively rely on the delivery to it of a

written notice by a Person representing himself or herself to be a holder of

Senior Indebtedness of the Company (or a trustee or representative on behalf of

such holder) to establish that such notice has been given by a holder of such

Senior Indebtedness or a trustee or representative on behalf of any such holder

or holders.  In the event that the

Trustee determines in good faith that further evidence is required with respect

to the right of any Person as a holder of such Senior Indebtedness to

participate in any payment or distribution pursuant to this Article XV,

the Trustee may request such Person to furnish evidence to the reasonable

satisfaction of the Trustee as to the amount of such Senior Indebtedness held

by such Person, the extent to which such Person is entitled to participate in

such payment or distribution and any other facts pertinent to the rights of

such Person under this Article XV, and, if such evidence is not furnished,

the Trustee may defer any payment to such Person pending judicial determination

as to the right of such Person to receive such payment.

 

SECTION 15.07     Rights of the Trustee; Holders of Senior

Indebtedness.

 

The Trustee in its individual capacity shall be entitled to all the

rights set forth in this Article XV in respect of any Senior Indebtedness

at any time held by it, to the same extent as any other holder of Senior

Indebtedness, and nothing in this Indenture or any Additional Provisions shall

deprive the Trustee of any of its rights as such holder.

 

With respect to the holders of Senior Indebtedness of the Company, the

Trustee undertakes to perform or to observe only such of its covenants and

obligations as are specifically set forth in this Article XV, and no

implied covenants or obligations with respect to the holders of such Senior

Indebtedness shall be read into this Indenture or any Additional Provisions

against 

 

57

 

the Trustee.  The Trustee shall

not owe or be deemed to owe any fiduciary duty to the holders of such Senior

Indebtedness and, subject to the provisions of Article VI of this

Indenture, the Trustee shall not be liable to any holder of such Senior

Indebtedness if it shall pay over or deliver to Securityholders, the Company or

any other Person money or assets to which any holder of such Senior Indebtedness

shall be entitled by virtue of this Article XV or otherwise.

 

Nothing in this Article XV shall apply to claims of, or payments

to, the Trustee under or pursuant to Section 6.06.

 

SECTION 15.08     Subordination May Not Be Impaired.

 

No right of any present or future holder of any Senior Indebtedness of

the Company to enforce subordination as herein provided shall at any time in

any way be prejudiced or impaired by any act or failure to act on the part of

the Company, or by any act or failure to act, in good faith, by any such

holder, or by any noncompliance by the Company, with the terms, provisions and

covenants of this Indenture, regardless of any knowledge thereof that any such

holder may have or otherwise be charged with.

 

Without in any way limiting the generality of the foregoing paragraph,

the holders of Senior Indebtedness of the Company may, at any time and from

time to time, without the consent of or notice to the Trustee or the

Securityholders, without incurring responsibility to the Securityholders and without

impairing or releasing the subordination provided in this Article XV or

the obligations hereunder of the holders of the Debt Securities to the holders

of such Senior Indebtedness, do any one or more of the following:

(a) change the manner, place or terms of payment or extend the time of

payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or

supplement in any manner such Senior Indebtedness or any instrument evidencing

the same or any agreement under which such Senior Indebtedness is outstanding;

(b) sell, exchange, release or otherwise deal with any property pledged,

mortgaged or otherwise securing such Senior Indebtedness; (c) release any

Person liable in any manner for the collection of such Senior Indebtedness; and

(d) exercise or refrain from exercising any rights against the Company,

and any other Person.

 

Wilmington Trust Company, in its capacity as Trustee, hereby accepts

the trusts in this Indenture declared and provided, upon the terms and

conditions herein above set forth.

 

58

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be

duly executed by their respective officers thereunto duly authorized, as of the

day and year first above written.

 

	

   

  	

  HF FINANCIAL CORP.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Curtis L. Hage

  
	

   

  	

  Chairman, President and Chief Executive 

  Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  WILMINGTON TRUST COMPANY,

  
	

   

  	

  as Trustee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

EXHIBIT

A

 

FORM OF

FLOATING RATE JUNIOR SUBORDINATED DEBT SECURITY DUE 2033

 

[FORM OF FACE OF

SECURITY]

 

THIS

SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED

(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE

SECURITIES LAWS.  NEITHER THIS SECURITY

NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,

TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF

SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,

THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO

OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY,

(B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT

(“RULE 144A”), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED

INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN

ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS

GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,

(C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

SECURITIES ACT TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF

SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE

SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE

ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A

VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION

OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM

THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S

RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR

(D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR

OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY

OF WHICH MAY BE OBTAINED FROM THE COMPANY. 

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL

COMPLY WITH THE FOREGOING RESTRICTIONS.

 

THE

HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND

WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS

SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

 

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO

AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL

RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE

EMPLOYEE RETIREMENT 

 

A-1

 

INCOME SECURITY

ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE

CODE OF 1986, AS AMENDED (THE “CODE”), (EACH A “PLAN”), OR AN ENTITY WHOSE

UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN

THE ENTITY AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR

HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS

ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR

PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR

ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS

NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE

WITH RESPECT TO SUCH PURCHASE OR HOLDING. 

ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE

DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER

(i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF

SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS

APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN

OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT

PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT

RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR

SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR

ADMINISTRATIVE EXEMPTION.

 

IN

CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL DELIVER TO THE

REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE

REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE

FOREGOING RESTRICTIONS.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN

BLOCKS HAVING A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF

$1,000 IN EXCESS THEREOF.  ANY ATTEMPTED

TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL AMOUNT OF LESS THAN

$100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH

PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR

ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON

THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO

INTEREST WHATSOEVER IN THIS SECURITY.

 

THIS

OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY

AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE

CORPORATION (THE “FDIC”).  THIS

OBLIGATION IS SUBORDINATED TO THE CLAIMS OF DEPOSITORS AND THE CLAIMS OF

GENERAL AND SECURED CREDITORS OF THE COMPANY, IS 

 

A-2

 

INELIGIBLE

AS COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS NOT

SECURED.

 

A-3

 

Floating Rate Junior

Subordinated Debt Security due 2033

 

of

 

HF FINANCIAL CORP.

 

HF Financial Corp., a savings and loan holding company incorporated

inDelaware (the “Company”), for value received promises to pay to Wilmington

Trust Company, not in its individual capacity but solely as Institutional

Trustee for HF Financial Capital Trust III, a Delaware statutory trust (the

“Holder”), or registered assigns, the principal sum of Five Million One Hundred

and Fifty Five Thousand Dollars ($5,155,000) on January 7, 2033, and to pay

interest on said principal sum from December 19, 2002, or from the most recent

interest payment date (each such date, an “Interest Payment Date”) to which

interest has been paid or duly provided for, quarterly (subject to deferral as

set forth herein) in arrears on January 7, April 7, July 7 and October 7 of

each year, commencing on April 7, 2003, at a variable per annum rate equal to

LIBOR (as defined in the Indenture) plus 3.35% (the “Interest Rate”) (provided,

that the applicable Interest Rate may not exceed 12.5% through the

Interest Payment Date in January, 2008) until the principal hereof shall have

become due and payable, and on any overdue principal and (without duplication

and to the extent that payment of such interest is enforceable under applicable

law) on any overdue installment of interest at an annual rate equal to the

Interest Rate in effect for each such Extension Period compounded

quarterly.  The amount of interest

payable on any Interest Payment Date shall be computed on the basis of a

360-day year and the actual number of days elapsed in the relevant interest

period.  In the event that any date on

which the principal or interest is payable on this Debt Security is not a

Business Day, then payment payable on such date will be made on the next

succeeding day that is a Business Day, except that, if such Business Day is in

the next succeeding calendar year, such payment shall be made on the

immediately preceding Business Day, in each case with the same force and effect

as if made on such date.  The interest

installment so payable, and punctually paid or duly provided for, on any

Interest Payment Date will, as provided in the Indenture, be paid to the Person

in whose name this Debt Security (or one or more Predecessor Securities, as

defined in said Indenture) is registered at the close of business on the

regular record date for such interest installment, except that interest and any

Deferred Interest payable on the Maturity Date shall be paid to the Person to

whom principal is paid.  Any such

interest installment not punctually paid or duly provided for shall forthwith

cease to be payable to the registered holders on such regular record date and

may be paid to the Person in whose name this Debt Security (or one or more

Predecessor Debt Securities) is registered at the close of business on a

special record date to be fixed by the Trustee for the payment of such

defaulted interest, notice whereof shall be given to the registered holders of

the Debt Securities not less than 10 days prior to such special record date,

all as more fully provided in the Indenture. 

The principal of and interest on this Debt Security shall be payable at

the office or agency of the Trustee (or other Paying Agent appointed by the

Company) maintained for that purpose in any coin or currency of the United

States of America that at the time of payment is legal tender for payment of

public and private debts; provided, however, that payment of

interest may be made at the option of the Company by check mailed to the

registered holder at such address as shall appear in the Debt Security Register

or by wire transfer to an account appropriately designated by the holder

hereof.  Notwithstanding the foregoing,

so long as the holder of this Debt Security is the Institutional Trustee, the

payment of 

 

A-4

 

the principal of and interest on this Debt Security will be made in

immediately available funds at such place and to such account as may be

designated by the Trustee.

 

So long as no Event of Default has occurred and is continuing, the

Company shall have the right, from time to time and without causing an Event of

Default, to defer payments of interest on the Debt Securities by extending the

interest payment period on the Debt Securities at any time and from time to

time during the term of the Debt Securities, for up to 20 consecutive quarterly

periods (each such extended interest payment period, an “Extension Period”),

during which Extension Period no interest shall be due and payable (except any

Additional Interest that may be due and payable).  During any Extension Period, interest will continue to accrue on

the Debt Securities, and interest on such accrued interest (such accrued

interest and interest thereon referred to herein as “Deferred Interest”) will

accrue at an annual rate equal to the Interest Rate in effect for each such Extension

Period, compounded quarterly from the date such Deferred Interest would have

been payable were it not for the Extension Period, to the extent permitted by

law.  No Extension Period may end on a

date other than an Interest Payment Date. 

At the end of any such Extension Period the Company shall pay all

Deferred Interest then accrued and unpaid on the Debt Securities; provided,

however, that no Extension Period may extend beyond the Maturity Date

and provided, further, however, during any such Extension Period,

the Company may not (i) declare or pay any dividends or distributions on,

or redeem, purchase, acquire, or make a liquidation payment with respect to,

any of the Company’s capital stock or (ii) make any payment on or repay,

repurchase or redeem any debt securities of the Company that rank pari passu

in all respects with or junior in interest to the Debt Securities (other than

(a) repurchases, redemptions or other acquisitions of shares of capital

stock of the Company (A) in connection with any employment contract,

benefit plan or other similar arrangement with or for the benefit of one or

more employees, officers, directors or consultants, (B) in connection with

a dividend reinvestment or stockholder stock purchase plan or (C) in

connection with the issuance of capital stock of the Company (or securities

convertible into or exercisable for such capital stock), as consideration in an

acquisition transaction entered into prior to the applicable Extension Period,

(b) as a result of any exchange or conversion of any class or series of

the Company’s capital stock (or any capital stock of a subsidiary of the

Company) for any class or series of the Company’s capital stock or of any class

or series of the Company’s indebtedness for any class or series of the Company’s

capital stock, (c) the purchase of fractional interests in shares of the

Company’s capital stock pursuant to the conversion or exchange provisions of

such capital stock or the security being converted or exchanged, (d) any

declaration of a dividend in connection with any stockholder’s rights plan, or

the issuance of rights, stock or other property under any stockholder’s rights

plan, or the redemption or repurchase of rights pursuant thereto, or

(e) any dividend in the form of stock, warrants, options or other rights

where the dividend stock or the stock issuable upon exercise of such warrants,

options or other rights is the same stock as that on which the dividend is

being paid or ranks pari passu with or junior to such

stock).  Prior to the termination of any

Extension Period, the Company may further extend such period, provided, that

such period together with all such previous and further consecutive extensions

thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the

Maturity Date.  Upon the termination of

any Extension Period and upon the payment of all Deferred Interest, the Company

may commence a new Extension Period, subject to the foregoing requirements.  No interest or Deferred Interest shall be

due and payable during an Extension Period, except at the end thereof, but

Deferred Interest shall accrue upon each installment of interest that would

otherwise have been due and payable during such Extension Period until such

installment is paid.  The Company 

 

A-5

 

must give the Trustee notice of its election to begin such Extension

Period at least one Business Day prior to the earlier of (i) the next

succeeding date on which interest on the Debt Securities would have been

payable except for the election to begin such Extension Period or (ii) the

date such interest is payable, but in any event not later than the related

regular record date.

 

The indebtedness evidenced by this Debt Security is, to the extent

provided in the Indenture, subordinate and junior in right of payment to the

prior payment in full of all Senior Indebtedness, and this Debt Security is

issued subject to the provisions of the Indenture with respect thereto.  Each holder of this Debt Security, by

accepting the same, (a) agrees to and shall be bound by such provisions,

(b) authorizes and directs the Trustee on such holder’s behalf to take

such action as may be necessary or appropriate to acknowledge or effectuate the

subordination so provided and (c) appoints the Trustee such holder’s

attorney-in-fact for any and all such purposes.  Each holder hereof, by such holder’s acceptance hereof, hereby

waives all notice of the acceptance of the subordination provisions contained

herein and in the Indenture by each holder of Senior Indebtedness, whether now

outstanding or hereafter incurred, and waives reliance by each such holder upon

said provisions.

 

The Company waives demand, presentment for payment, notice of

nonpayment, notice of protest, and all other notices.

 

This Debt Security shall not be entitled to any benefit under the

Indenture hereinafter referred to and shall not be valid or become obligatory

for any purpose until the certificate of authentication hereon shall have been

signed by or on behalf of the Trustee.

 

The provisions of this Debt Security are continued on the reverse side

hereof and such continued provisions shall for all purposes have the same

effect as though fully set forth at this place.

 

A-6

 

IN WITNESS WHEREOF, the Company has duly executed this certificate.

 

	

   

  	

   

  	

  HF FINANCIAL CORP.

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Curtis L. Hage

  	

   

  
	

   

  	

   

  	

   

  	

  Chairman, President and Chief Executive 

  Officer

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Dated: 

                 ,       

  	

   

  	

   

  	

   

  	

   

  

 

CERTIFICATE OF

AUTHENTICATION

 

This is one of the Debt Securities referred to in the within-mentioned

Indenture.

 

	

   

  	

   

  	

  WILMINGTON TRUST COMPANY,

  	

   

  
	

   

  	

   

  	

   

  	

  not in its individual capacity but solely

  as the Trustee

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Authorized Officer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Dated: 

                 ,       

  	

   

  	

   

  	

   

  	

   

  

 

A-7

 

[FORM OF REVERSE OF SECURITY]

 

This Debt Security is one of a duly authorized series of Debt

Securities of the Company, all issued or to be issued pursuant to an Indenture

(the “Indenture”), dated as of December 19, 2002, duly executed and delivered

between the Company and Wilmington Trust Company, as Trustee (the “Trustee”),

to which Indenture and all indentures supplemental thereto reference is hereby

made for a description of the rights, limitations of rights, obligations,

duties and immunities thereunder of the Trustee, the Company and the holders of

the Debt Securities (referred to herein as the “Debt Securities”) of which this

Debt Security is a part.  The summary of

the terms of this Debt Security contained herein does not purport to be

complete and is qualified by reference to the Indenture.

 

Upon the occurrence and continuation of a Tax Event, an Investment

Company Event or a Capital Treatment Event (each a “Special Event”), this Debt

Security may become due and payable, in whole but not in part, at any time,

within 90 days following the occurrence of such Tax Event, Investment

Company Event or Capital Treatment Event (the “Special Redemption Date”), as

the case may be, at the Special Redemption Price.  The Company shall also have the right to redeem this Debt

Security at the option of the Company, in whole or in part, on any January 7,

April 7, July 7 or October 7 on or after January 7, 2008 (a “Redemption Date”),

at the Redemption Price.

 

Any redemption pursuant to the preceding paragraph will be made,

subject to the receipt by the Company of prior approval from the Office of

Thrift Supervision (the “OTS”) if then required under applicable capital

guidelines or policies of the OTS, upon not less than 30 days’ nor more

than 60 days’ notice.  If the Debt

Securities are only partially redeemed by the Company, the Debt Securities will

be redeemed pro rata  or by lot or by any other method utilized

by the Trustee.

 

“Redemption Price” means 100% of the principal amount of the Debt

Securities being redeemed plus accrued and unpaid interest on such Debt

Securities to the Redemption Date or, in the case of a redemption due to the

occurrence of a Special Event, to the Special Redemption Date if such Special

Redemption Date is on or after January 7, 2008.

 

“Special Redemption Price” means (1) if the

Special Redemption Date is before January 7, 2008, the greater of (a) 100% of the principal amount of the Debt Securities being redeemed pursuant to Section 10.02 of the Indenture

or (b) as determined by a Quotation Agent, the sum of the present values

of the principal amount payable as part of the Redemption Price with respect to

a redemption as of January 7, 2008,

together with the present value of interest payments calculated at a fixed per

annum rate of interest equal to 7.125%

over the Remaining Life of such Debt Securities, discounted to the Special

Redemption Date on a quarterly basis (assuming a 360-day year consisting of

twelve 30-day months) at the Treasury Rate plus .50%, plus, in the case of either (a) or (b),

accrued and unpaid interest on such Debt Securities to the Special Redemption

Date and (2) if the Special Redemption Date is on or after January

7, 2008, the Redemption Price for such Special

Redemption Date.

 

“Comparable Treasury Issue” means, with respect to any Special

Redemption Date, the United States Treasury security selected by the Quotation

Agent as having a maturity 

 

A-8

 

comparable to the Remaining Life that would be utilized, at the time of

selection and in accordance with customary financial practice, in pricing new

issues of corporate debt securities of comparable maturity to the Remaining

Life.  If no United States Treasury security

has a maturity which is within a period from three months before to three

months after January 7, 2008, the two most closely corresponding United States

Treasury securities shall be used as the Comparable Treasury Issue, and the

Treasury Rate shall be interpolated or extrapolated on a straight-line basis,

rounding to the nearest month using such securities.

 

“Comparable Treasury Price” means (a)the average of five Reference

Treasury Dealer Quotations for such Special Redemption Date, after excluding

the highest and lowest such Reference Treasury Dealer Quotations, or

(b) if the Quotation Agent receives fewer than five such Reference

Treasury Dealer Quotations, the average of all such Quotations.

 

“Primary Treasury Dealer” means a primary United States Government

securities dealer in New York City.

 

“Quotation Agent” means Salomon Smith Barney Inc. and its successors; provided,

however, that if the foregoing shall cease to be a Primary Treasury

Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer” means (i) the Quotation Agent and

(ii) any other Primary Treasury Dealer selected by the Trustee after

consultation with the Company.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference

Treasury Dealer and any Special Redemption Date, the average, as determined by

the Quotation Agent, of the bid and asked prices for the Comparable Treasury

Issue (expressed in each case as a percentage of its principal amount) quoted

in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New

York City time, on the third Business Day preceding such Special Redemption

Date.

 

“Treasury Rate” means (i) the yield, under the heading which

represents the average for the week immediately prior to the date of

calculation, appearing in the most recently published statistical release

designated H.15 (519) or any successor publication which is published

weekly by the Federal Reserve and which establishes yields on actively traded

United States Treasury securities adjusted to constant maturity under the

caption “Treasury Constant Maturities,” for the maturity corresponding to the

Remaining Life (if no maturity is within three months before or after the

Remaining Life, yields for the two published maturities most closely

corresponding to the Remaining Life shall be determined and the Treasury Rate

shall be interpolated or extrapolated from such yields on a straight-line

basis, rounding to the nearest month) or (ii) if such release (or any successor

release) is not published during the week preceding the calculation date or

does not contain such yields, the rate per annum equal to the quarterly

equivalent yield to maturity of the Comparable Treasury Issue, calculated using

a price for the Comparable Treasury Issue (expressed as a percentage of its

principal amount) equal to the Comparable Treasury Price for such Special

Redemption Date.  The Treasury Rate

shall be calculated on the third Business Day preceding the Special Redemption

Date.

 

A-9

 

In the event of redemption of this Debt Security in part only, a new

Debt Security or Debt Securities for the unredeemed portion hereof will be

issued in the name of the holder hereof upon the cancellation hereof.

 

In case an Event of Default, as defined in the Indenture, shall have

occurred and be continuing, the principal of all of the Debt Securities may be

declared due and payable, and upon such declaration of acceleration shall

become due and payable, in the manner, with the effect and subject to the

conditions provided in the Indenture.

 

The Indenture contains provisions permitting the Company and the

Trustee, with the consent of the holders of not less than a majority in

aggregate principal amount of the Debt Securities at the time outstanding

affected thereby, as specified in the Indenture, to execute supplemental

indentures for the purpose of adding any provisions to or changing in any

manner or eliminating any of the provisions of the Indenture or of any supplemental

indenture or of modifying in any manner the rights of the holders of the Debt

Securities; provided, however, that no such supplemental

indenture shall, among other things, without the consent of the holders of each

Debt Security then outstanding and affected thereby (i) extend the fixed

maturity of the Debt Securities, or reduce the principal amount thereof or any

redemption premium thereon, or reduce the rate or extend the time of payment of

interest thereon, or make payments due on the Debt Securities payable in any

coin or currency other than that provided in the Debt Securities, or impair or

affect the right of any holder of Debt Securities to institute suit for the

payment thereof, or (ii) reduce the aforesaid percentage of Debt Securities,

the holders of which are required to consent to any such supplemental

indenture.  The Indenture also contains

provisions permitting the holders of a majority in aggregate principal amount

of the Debt Securities at the time outstanding, on behalf of all of the holders

of the Debt Securities, to waive any past default in the performance of any of

the covenants contained in the Indenture, or established pursuant to the

Indenture, and its consequences, except a default in payments due on any of the

Debt Securities.  Any such consent or

waiver by the registered holder of this Debt Security (unless revoked as

provided in the Indenture) shall be conclusive and binding upon such holder and

upon all future holders and owners of this Debt Security and of any Debt Security

issued in exchange herefor or in place hereof (whether by registration of

transfer or otherwise), irrespective of whether or not any notation of such

consent or waiver is made upon this Debt Security.

 

No reference herein to the Indenture and no provision of this Debt

Security or of the Indenture shall alter or impair the obligation of the

Company, which is absolute and unconditional, to pay all payments due on this

Debt Security at the time and place and at the rate and in the money herein

prescribed.

 

As provided in the Indenture and subject to certain limitations herein

and therein set forth, this Debt Security is transferable by the registered

holder hereof on the Debt Security Register of the Company, upon surrender of

this Debt Security for registration of transfer at the office or agency of the

Trustee in Wilmington, Delaware accompanied by a written instrument or

instruments of transfer in form satisfactory to the Company or the Trustee duly

executed by the registered holder hereof or such holder’s attorney duly

authorized in writing, and thereupon one or more new Debt Securities of

authorized denominations and for the same aggregate principal amount will be

issued to the designated transferee or transferees.  No service charge will be

 

A-10

 

made for any such registration of transfer, but the Company may require

payment of a sum sufficient to cover any tax or other governmental charge

payable in relation thereto.

 

Prior to due presentment for registration of transfer of this Debt

Security, the Company, the Trustee, any Authenticating Agent, any Paying Agent,

any transfer agent and the Debt Security registrar may deem and treat the

registered holder hereof as the absolute owner hereof (whether or not this Debt

Security shall be overdue and notwithstanding any notice of ownership or

writing hereon) for the purpose of receiving payment of or on account of the

principal hereof and interest due hereon and for all other purposes, and

neither the Company nor the Trustee nor any Authenticating Agent nor any Paying

Agent nor any transfer agent nor any Debt Security registrar shall be affected

by any notice to the contrary.

 

No recourse shall be had for the payment of the principal of or the

interest on this Debt Security, or for any claim based hereon, or otherwise in

respect hereof, or based on or in respect of the Indenture, against any

incorporator, stockholder, officer or director, past, present or future, as

such, of the Company or of any predecessor or successor corporation, whether by

virtue of any constitution, statute or rule of law, or by the enforcement of

any assessment or penalty or otherwise, all such liability being, by the

acceptance hereof and as part of the consideration for the issuance hereof, expressly

waived and released.

 

The Debt Securities are issuable only in registered certificated form

without coupons.  As provided in the

Indenture and subject to certain limitations herein and therein set forth, Debt

Securities are exchangeable for a like aggregate principal amount of Debt

Securities of a different authorized denomination, as requested by the holder

surrendering the same.

 

All terms used in this Debt Security that are defined in the Indenture

shall have the meanings assigned to them in the Indenture.

 

THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE

DEBT SECURITIES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

A-11Exhibit 10.1

 

 

 

 

November 12, 2002

 

 

 

Daniel Smith

Florists’ Transworld Delivery

3113 Woodcreek Drive

Downers Grove, Illinois 60515

 

Dear Dan:

 

This letter agreement (this “Agreement”) sets forth

the terms of your employment with Florists’ Transworld Delivery Inc. (“FTD”).

Duties.  You shall

serve as Executive Vice President, FTD.COM or in a substantially similar

position with any entity that acquires FTD or all or substantially all of FTD’s

assets through October  31, 2004, which term shall automatically renew for

two-year periods thereafter unless this Agreement is terminated as provided

herein upon notice by FTD Inc. and /or FTD prior to the commencement of any

two-year renewal period.  You shall

perform the duties assigned by FTD from time to time.  You shall devote your entire business time to the affairs of FTD

to the performance of your duties under this Agreement and to the promotion of

FTD’s interests.

Compensation.  As full

compensation for the performance by you of your duties under this Agreement,

FTD shall compensate you as follows:

(a)   Salary.  During the term of this Agreement, FTD shall

pay to you a salary of $175,000 per year, payable in the periodic installments

ordinarily paid by FTD to employees of FTD at comparable levels to you.  You shall be entitled to such merit

increases in base salary as the Board of Directors may determine, in its

discretion.

(b) Performance Bonus. 

You shall be entitled to participate in a performance bonus as set by

the Board of Directors based upon performance criteria to be set by the

Board.  If your employment with FTD is

terminated for any reason other than “cause” (as defined below under

“Severance”) following a change in control (as defined below), you shall be

entitled to received a pro rata bonus for the applicable fiscal year if you are

entitled to one based upon the performance criteria set by the Board.  For purposes of this agreement, “Change of

Control” shall mean:

(1) the

acquisition by any individual, entity or group (within the meaning of Section

13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange

Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3

promulgated under the Exchange Act) of more than 50% of the combined voting

power of the then-outstanding voting

 

 

securities

entitled to vote generally in the election of directors (“Voting Stock”) of FTD

Inc. or FTD, respectively; provided, however, that for purposes of this

subsection (i), the following acquisitions shall not constitute a Change

of Control:  (A) any acquisition

directly from FTD Inc. or FTD, (B) any acquisition by FTD Inc., FTD, any

subsidiary of FTD Inc. or FTD or any employee benefit plan (or related trust)

sponsored or maintained by FTD Inc. or FTD or any such subsidiary or

(C) any acquisition by any of Perry Acquisition Partners, L.P., Bain

Capital, Inc., Fleet Private Equity Co. Inc. or any of their respective

affiliates;

(2) a change in a majority of the members of the Board

of Directors of FTD Inc. or FTD, respectively, occurs (A) within one year

following the public announcement of an actual or threatened election contest

(within the meaning of Rule 14a-11 under the Exchange Act) or the filing of a

Schedule 13D or other public announcement indicating a Person intends to effect

a change in control of FTD Inc. or FTD or (B) as a result of a majority of

the members of the Board having been proposed, designated or nominated by a

Person (other than FTD Inc. or FTD through their respective Boards of Directors

or duly authorized committees thereof or through the exercise of contractual

rights);

(3) consummation of a reorganization, merger or

consolidation or sale or other disposition of all or substantially all of the

assets of FTD Inc. or FTD (a “Business Combination”), in each case, unless,

following such Business Combination, (A) more than 50% of the Voting Stock

of the entity resulting from such Business Combination is held in the aggregate

by (1) the holders of securities entitled to vote generally in the

election of directors of FTD Inc. or FTD immediately prior to such transaction,

(2) any employee benefit plan (or related trust) sponsored or maintained

by FTD Inc. or FTD or such entity or any subsidiary of any of them or

(3) any of Perry Acquisition Partners, L.P., Bain Capital, Inc., Fleet

Private Equity Co. Inc. or any of their respective affiliates and (B) at

least half of the members of the board of directors of the entity resulting

from such Business Combination were members of the Board of Directors of  FTD Inc. or FTD at the time of the execution

of the initial agreement, or the action of the Board of Directors of  FTD Inc. or FTD, providing for such Business

Combination; or

(4) approval by the stockholders of FTD Inc. or FTD of

a complete liquidation or dissolution of FTD Inc. or FTD.

(c) Paid Vacation. 

You shall be entitled to four weeks of paid vacation per year in

accordance with FTD’s policies with respect to vacations then in effect.

(d) Benefits. 

You shall be entitled to the additional employment-related benefits that

are made available from time to time to employees of FTD at comparable levels

to you.

(e) Expense Reimbursement. 

FTD shall reimburse you, in accordance with the practice from time to

time in effect for other employees of FTD, for all reasonable and necessary travel

expenses and other disbursements incurred by you, for or on behalf of FTD, in

the performance of your duties under this Agreement.

 

2

 

Severance.  FTD shall

have the right to terminate your employment by giving you written notice of the

effective date of the termination.  If

your employment is terminated (i) without “cause” by FTD or (ii) by

you following your assignment to a position that represents a material

diminution in your operating responsibilities (it being understood that a

change in your title shall not by itself entitle you to terminate your

employment and receive the right to severance payments under this paragraph),

FTD will pay you continued salary for one year from the effective date of any

such termination of employment and any pro rata bonus to which you may be

entitled pursuant to this Agreement. 

FTD’s severance obligations are subject to your best efforts to

mitigate.  FTD shall have no further

obligation hereunder.

For purposes of this Agreement, “cause” means any of

the following events that FTD or the FTD Board of Directors has determined, in

good faith, has occurred: (i) your continual or deliberate neglect of the

performance of your material duties; (ii) your failure to devote substantially

all of your working time to the business of FTD and its subsidiaries or

affiliated companies; (iii) your engaging willfully in misconduct in

connection with the performance of any of your duties, including, without

limitation, the misappropriation of funds or securing or attempting to secure

personally any profit in connection with any transaction entered into on behalf

of FTD or its subsidiaries or affiliated companies; (iv) your willful

breach of any confidentiality or nondisclosure agreements with FTD (including

this Agreement) or your violation, in any material respect, of any code or

standard of behavior generally applicable to employees or executive employees

of FTD; (v) your active disloyalty to FTD, including, without limitation,

willfully aiding a competitor or improperly disclosing confidential

information; or (vi) your engaging in conduct that may reasonably result

in material injury to the reputation of FTD, including conviction or entry of a

plea of nolo contendre for a felony or any crime involving fraud under Federal,

state or local laws, embezzlement, bankruptcy, insolvency or general assignment

for the benefit of creditors.

Confidential Information and Non-Competition. 

You agree to enter into a separate agreement with FTD (attached hereto

as Exhibit A) that provides for (i) non-disclosure of

confidential information, (ii) non-competition and

(iii) non-solicitation of customers, suppliers and employees.  This Agreement shall not be effective until you

have executed and delivered such agreement to the Company.

Limitation on

Payments and Benefits.  Notwithstanding any other

provision of this Agreement to the contrary, in the event that it shall be

determined (as hereafter provided) that any payment or distribution by FTD or

any of its affiliates to you or for your benefit, whether paid or payable or

distributed or distributable pursuant to the terms of this Agreement or

otherwise pursuant to or by reason of any other agreement, policy, plan,

program or arrangement, including without limitation any stock option,

performance share, performance unit, stock appreciation right or similar right,

or the lapse or termination of any restriction on or the vesting or

exercisability of any of the foregoing, would be subject to the excise tax imposed

by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”)

(or any successor provision thereto), by reason of being considered “contingent

on a change in ownership or

 

3

 

control”

of FTD within the meaning of Section 280G of the Code (or any successor

provision thereto), or to any similar tax imposed by state or local law, or any

interest or penalties with respect to such taxes, then such payments and

benefits to be paid or provided shall be reduced to an amount (but not below

zero) that would result in the maximum possible net after tax receipts to you

from all such payments or distributions (determined by reference to the present

value determined in accordance with Section 280G(d)(4) of the Code (or any

successor provision thereto) of all such payments net of all such taxes, or any

interest or penalties with respect to such taxes, determined by applying the

highest marginal rate under Section 1 of the Code (or any successor provision

thereto) that applied to your taxable income for the immediately preceding

taxable year) (the “Reduced Amount”). 

The fact that your payments or benefits may be reduced by reason of the

limitations contained in this paragraph will not of itself limit or otherwise

affect any of your other rights other than pursuant to this Agreement.  If it is determined that you should receive

a Reduced Amount, FTD will provide you notice to that effect and a copy of the

detailed calculation thereof.  You will

then be entitled to designate the payments or benefits to be so reduced in

order to give effect to this paragraph. 

In the event that you fail to make such designation within ten business

days of notification of the reduction in payments or benefits is required

pursuant to this paragraph, FTD may effect such reduction in any manner it

deems appropriate.

Miscellaneous.  This

Agreement shall be governed by the internal laws of the State of Illinois,

excluding the conflicts-of-law principles thereof.  You and FTD consent to jurisdiction and venue in any federal or

state court in the City of Chicago. 

This Agreement and the accompanying Exhibit A state our

entire agreement and understanding regarding your employment with FTD.  This agreement may be amended only by a

written document signed by both you and FTD. 

No delay or failure to exercise any right under this Agreement waives

such rights under the Agreement.  If any

provision of this Agreement is partially or completely invalid or

unenforceable, then that provision shall only be ineffective to such extent of

its invalidity or unenforceability, and the validity or enforceability of any

other provision of this Agreement shall not be affected.  Any controversy relating to this Agreement shall

be settled by arbitration in Chicago, Illinois in accordance with the

Commercial Arbitration Rules of the American Arbitration Association, except as

otherwise provided in the Confidentiality and Non-Competition agreement

attached hereto as Exhibit A. 

In the event of any inconsistency between this Agreement and any

personnel policy or manual of FTD with respect to any matter, this Agreement

shall govern the matter.

 

Signature page follows

 

4

 

                                                                                                                Sincerely,

 

 

	

   

  	

  /s/ Robert L. Norton

  
	

   

  	

  Robert L. Norton

  
	

   

  	

  CEO, and Chairman of the

  Board

  

 

 

Accepted

as of this 12th day of November, 2002

 

 

	

  /s/ Daniel Smith

  	

   

  
	

  Daniel Smith

  	

   

  

 

5

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