Document:

Exhibit

10(a)

 

FIRST AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED

CREDIT AGREEMENT (the “Amendment”), dated as of December 11, 2002, (the

“Amendment Date”) is among HAGGAR CLOTHING CO. (“Company”),

HAGGAR CORP. (“Haggar”), each of the banks which are party hereto

(individually a “Bank” and collectively, the “Banks”) and

JPMORGAN CHASE BANK, (formerly The Chase Manhattan Bank) individually as a Bank

and as Agent for itself and the other Banks (in such capacity as Agent,

together with its successors in such capacity, “Agent”).

 

RECITALS:

 

A.            Pursuant

to that certain Second Amended and Restated Credit Agreement dated June 13,

2002 (as the same may be amended, restated or otherwise modified from time to

time, the “Agreement”), the banks party thereto agreed to make Loans to

Company as set forth therein.

 

B.            Company

and Haggar have requested that the Banks agree to modify the Agreement as

herein set forth.  The Banks are willing

to do so upon the terms and provisions of this Amendment.

 

NOW, THEREFORE, in consideration of the premises

herein contained and other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties hereto agree as

follows, effective as of the Amendment Date, unless otherwise indicated:

 

ARTICLE 1.

 

Definitions

 

Section 1.1.            Definitions.  Capitalized

terms used in this Amendment, to the extent not otherwise defined herein, shall

have the same meanings as in the Agreement, as amended hereby.

 

ARTICLE 2.

 

Amendment

 

Section 2.1.            Amendment

to Section 1.1 of the Agreement. Clause (a) of the definition of

“Permitted Indebtedness” contained in Section 1.1 of the Agreement is

amended and restated in its entirety to read as follows:

 

(a)           obligations

to reimburse advances made under commercial letters of credit or similar

instruments (other than Letters of Credit) incurred in the ordinary course of

business but only to the extent that the aggregate outstanding amount thereof

does not exceed $75,000,000;

 

ARTICLE 3.

Miscellaneous

 

Section 3.1.            Ratifications.  The terms and provisions set forth in this

Amendment shall modify and supersede all inconsistent terms and provisions set

forth in the Agreement and except as expressly modified and superseded by this

Amendment, the terms and provisions of the Agreement and the other Loan

Documents are ratified and confirmed and shall continue in full force and

effect.

 

1

 

Section 3.2.            Representations

and Warranties.  Company and Haggar

hereby represent and warrant to Agent and the Banks as follows:  (a) no Default exists and (b) the

representations and warranties set forth in the Loan Documents are true and

correct in all material respects on and as of the date hereof with the same

effect as though made on and as of such date except with respect to any

representations and warranties limited by their terms to a specific date.

 

Section 3.3.            Survival

of Representations and Warranties. 

All representations and warranties made in this Amendment shall survive

the execution and delivery of this Amendment, and no investigation by Agent or

any Bank or any closing shall affect the representations and warranties or the

right of Agent or any Bank to rely upon them.

 

Section 3.4.            Reference

to Agreement.  Each of the Loan

Documents, including the Agreement, are hereby amended so that any reference in

such Loan Documents to the Agreement shall mean a reference to the Agreement as

amended hereby.

 

Section 3.5.            Expenses

of Bank.  As provided in the

Agreement, Company agrees to pay on demand all costs and expenses incurred by

Agent or any Bank in connection with the preparation, negotiation, and

execution of this Amendment, including without limitation, the costs and fees

of Agent’s and each Bank’s legal counsel.

 

Section 3.6.            Severability.  Any provision of this Amendment held by a

court of competent jurisdiction to be invalid or unenforceable shall not impair

or invalidate the remainder of this Amendment and the effect thereof shall be

confined to the provision so held to be invalid or unenforceable.

 

Section 3.7.            Applicable

Law.  This Amendment and all other

Loan Documents shall be governed by and construed in accordance with the laws

of the State of Texas and the applicable laws of the United States of America.

 

Section 3.8.            Successors

and Assigns.  This Amendment is

binding upon and shall inure to the benefit of Agent, each Bank, Company and

Haggar and their respective successors and assigns, except that neither Company

or Haggar may assign or transfer any of its rights or obligations hereunder

without the prior written consent of the Banks.

 

Section 3.9.            Counterparts.  This Amendment may be executed in one or

more counterparts and on telecopy counterparts, each of which when so executed

shall be deemed to be an original, but all of which when taken together shall

constitute one and the same agreement.

 

Section 3.10.          Effect

of Waiver.  No consent or waiver,

express or implied, by Agent or any Bank to or for any breach of or deviation

from any covenant, condition or duty by any Obligated Party shall be deemed a

consent or waiver to or of any other breach of the same or any other covenant,

condition or duty.

 

Section 3.11.          Headings.  The headings, captions, and arrangements

used in this Amendment are for convenience only and shall not affect the

interpretation of this Amendment.

 

Section 3.12.          ENTIRE

AGREEMENT.  THIS AMENDMENT EMBODIES

THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL

PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER

WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR

VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR 

 

2

 

SUBSEQUENT ORAL

AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.  THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

Section 3.13.          Required

Banks.  The Agreement may be

modified as provided in this Amendment with the agreement of the Required Banks

which means the Banks having sixty percent (60%) of the sum of (i) the

aggregate unpaid principal amount of the outstanding Loans plus (ii) the Letter

of Credit Exposure (such percentage applicable to a Bank, herein such Bank’s “Required

Bank Percentage”).  For purposes of

determining the effectiveness of this Amendment, each Bank’s Required Bank

Percentage is set forth on Schedule 3.13 hereto.

 

EXECUTED as of the date first written above.

 

	

   

  	

  Company and Haggar:

  
	

   

  	

   

  
	

   

  	

  HAGGAR CLOTHING

  CO., a Nevada corporation

  
	

   

  	

  HAGGAR CORP., a

  Nevada corporation

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ J. M.

  Haggar, III

  
	

   

  	

   

  	

  J. M Haggar, III

  
	

   

  	

   

  	

  Chief Executive

  Officer for both

  
	

   

  	

   

  
	

   

  	

  Agent:

  
	

   

  	

   

  
	

   

  	

  JPMORGAN

  (formerly The Chase Manhattan Bank),

  Individually and as Agent

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Brian

  McDougal

  
	

   

  	

   

  	

  Name:

  	

  Brian McDougal

  
	

   

  	

   

  	

  Title:

  	

  Vice President

  
	

   

  	

   

  
	

   

  	

  Banks:

  
	

   

  	

   

  
	

   

  	

  GUARANTY BANK

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Robert S.

  Hays

  
	

   

  	

   

  	

  Name:

  	

  Robert S. Hays

  
	

   

  	

   

  	

  Title:

  	

  Senior Vice

  President

  
	

   

  	

   

  
	

   

  	

  COMERICA BANK –

  TEXAS

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Margareth

  Fanini

  
	

   

  	

   

  	

  Name:

  	

  Margareth Fanini

  
	

   

  	

   

  	

  Title:

  	

  Assistant Vice

  President

  

 

3

 

	

   

  	

  BANK OF AMERICA,

  N.A.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Chitt

  Swamidasan

  
	

   

  	

   

  	

  Name:

  	

  Chitt Swamidasan

  
	

   

  	

   

  	

  Title:

  	

  Principal

  
	

   

  	

   

  
	

   

  	

  SOUTHWEST BANK

  OF TEXAS, N.A.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Preston

  Moore

  
	

   

  	

   

  	

  Name:

  	

  Preston Moore

  
	

   

  	

   

  	

  Title:

  	

  Senior Vice

  President

  
	

   

  	

   

  
	

   

  	

  U.S. BANK

  NATIONAL ASSOCIATION

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John A.

  Holland

  
	

   

  	

   

  	

  Name:

  	

  John A. Holland

  
	

   

  	

   

  	

  Title:

  	

  Senior Vice

  President

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  THE BANK OF NOVA

  SCOTIA

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Chris J.

  Allen

  
	

   

  	

   

  	

  Name:

  	

  Chris J. Allen

  
	

   

  	

   

  	

  Title:

  	

  Managing

  Director & Office Head

  

 

4

 

CONSENT OF DOMESTIC SUBSIDIARIES

 

Each of the undersigned Subsidiaries hereby

(a) agrees that the Subsidiary Guaranty to which it is a signatory is and

shall remain in full force and effect; (b) ratifies and confirms all terms

and provisions of the Subsidiary Guaranty to which it is a signatory,

(c) acknowledges its consent and agreement to the Amendment,

(d) reaffirms all agreements and obligations under the Subsidiary Guaranty

to which it is a signatory, with respect to the Loans, the Notes, the Agreement

and all other documents, instruments or agreements governing, securing or

pertaining to the Loans, and (f) represents and warrants that all

requisite corporate action necessary for it to execute this Consent of Domestic

Subsidiaries has been taken.

 

BOWIE MANUFACTURING COMPANY, a Nevada corporation

CORSICANA COMPANY, a Nevada corporation

DALLAS PANT MANUFACTURING COMPANY, a Nevada

corporation

GREENVILLE PANT MANUFACTURING COMPANY, a Nevada

corporation

MCKINNEY PANT MANUFACTURING COMPANY, a Nevada

corporation

OLNEY MANUFACTURING COMPANY, a Nevada corporation

WAXAHACHIE GARMENT COMPANY, a Nevada corporation

LA ROMANA MANUFACTURING CORPORATION, a Nevada

corporation

HAGGAR SERVICES, INC., a Texas corporation

DUNCAN MANUFACTURING COMPANY, an Oklahoma corporation

WESLACO CUTTING, INC., a Nevada corporation

WESLACO SEWING, INC., a Nevada corporation

HAGGAR DIRECT, INC., a Nevada corporation

SAN GABRIEL ENTERPRISES, INC., a Texas corporation

MULTIPLES, U.S.A., INC., a Texas corporation

EDINBURG DIRECT GARMENT COMPANY, INC., a Texas

corporation

WESLACO DIRECT CUTTING COMPANY, INC., a Texas

corporation

HAGGAR.COM, INC., a Texas corporation

JERELL CLOTHING MANAGEMENT, INC., a Texas corporation

JERELL, LTD, a Texas limited partnership

HAGGAR CANADA, INC, a Nevada corporation

 

	

   

  	

  By:

  	

  /s/ J. M.

  Haggar, III

  
	

   

  	

   

  	

  J. M. Haggar,

  III

  
	

   

  	

   

  	

  Chairman/Chief

  Executive Officer of each Subsidiary

  

 

5

 

SCHEDULE 3.13

to

HAGGAR  CORP.

 

FIRST AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

REQUIRED BANK

PERCENTAGE

 

	

  Bank

  	

   

  	

  Required

  Bank

  Percentage Held

  	

   

  	

  Banks

  Agreeing to First

  Amendment (insert        % from 

  prior column if Bank signs

  First Amendment then total        %

  in this column)

  	

   

  
	

  JPMorgan Chase Bank

  	

   

  	

  17.272727273

  	

  %

  	

  17.272727273

  	

  %

  
	

  Comerica Bank

  	

   

  	

  15.454545455

  	

  %

  	

  15.454545455

  	

  %

  
	

  Guaranty Bank

  	

   

  	

  15.454545455

  	

  %

  	

  15.454545455

  	

  %

  
	

  Bank of America, N.A.

  	

   

  	

  13.636363636

  	

  %

  	

  13.636363636

  	

  %

  
	

  Southwest Bank of Texas, N.A.

  	

   

  	

  12.727272727

  	

  %

  	

  12.727272727

  	

  %

  
	

  U.S. Bank National Association

  	

   

  	

  12.727272727

  	

  %

  	

  12.727272727

  	

  %

  
	

  The Bank of Nova Scotia

  	

   

  	

  12.727272727

  	

  %

  	

  12.727272727

  	

  %

  
	

  TOTAL

  	

   

  	

  100.00

  	

  %

  	

  100.00

  	

  %

  

 

6Exhibit

10.1

 

GUARANTEE AGREEMENT

 

HF FINANCIAL CORP.

 

Dated as of December 19,

2002

 

 

TABLE OF

CONTENTS

 

	

  ARTICLE

  I

  	

  DEFINITIONS AND INTERPRETATION

  
	

   

  	

   

  
	

  SECTION

  1.1

  	

  Definitions and Interpretation.

  
	

   

  	

   

  
	

  ARTICLE II

  	

  POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

  
	

   

  	

   

  
	

  SECTION

  2.1

  	

  Powers and Duties of the Guarantee Trustee.

  
	

   

  	

   

  
	

  SECTION

  2.2

  	

  Certain Rights of the Guarantee Trustee.

  
	

   

  	

   

  
	

  SECTION

  2.3

  	

  Not Responsible for Recitals or Issuance of Guarantee.

  
	

   

  	

   

  
	

  SECTION

  2.4

  	

  Events of Default; Waiver.

  
	

   

  	

   

  
	

  SECTION

  2.5

  	

  Events of Default; Notice.

  
	

   

  	

   

  
	

  ARTICLE III 

  	

  THE GUARANTEE TRUSTEE

  
	

   

  	

   

  
	

  SECTION

  3.1

  	

  The Guarantee Trustee; Eligibility.

  
	

   

  	

   

  
	

  SECTION

  3.2

  	

  Appointment, Removal and Resignation of the Guarantee Trustee.

  
	

   

  	

   

  
	

  ARTICLE IV

  	

  GUARANTEE

  
	

   

  	

   

  
	

  SECTION

  4.1

  	

  Guarantee.

  
	

   

  	

   

  
	

  SECTION

  4.2

  	

  Waiver of Notice and Demand.

  
	

   

  	

   

  
	

  SECTION

  4.3

  	

  Obligations Not Affected.

  
	

   

  	

   

  
	

  SECTION

  4.4

  	

  Rights of Holders.

  
	

   

  	

   

  
	

  SECTION

  4.5

  	

  Guarantee of Payment.

  
	

   

  	

   

  
	

  SECTION

  4.6

  	

  Subrogation.

  
	

   

  	

   

  
	

  SECTION

  4.7

  	

  Independent Obligations.

  
	

   

  	

   

  
	

  SECTION

  4.8

  	

  Enforcement.

  
	

   

  	

   

  
	

  ARTICLE V

  	

  LIMITATION OF TRANSACTIONS; SUBORDINATION

  
	

   

  	

   

  
	

  SECTION

  5.1

  	

  Limitation of Transactions.

  
	

   

  	

   

  
	

  SECTION

  5.2

  	

  Ranking.

  
			

 

i

 

	

  ARTICLE VI

  	

  TERMINATION

  
	

   

  	

   

  
	

  SECTION

  6.1

  	

  Termination.

  
	

   

  	

   

  
	

  ARTICLE VII

  	

  INDEMNIFICATION

  
	

   

  	

   

  
	

  SECTION

  7.1

  	

  Exculpation.

  
	

   

  	

   

  
	

  SECTION

  7.2

  	

  Indemnification.

  
	

   

  	

   

  
	

  SECTION

  7.3

  	

  Compensation; Reimbursement of Expenses.

  
	

   

  	

   

  
	

  ARTICLE VIII

  	

  MISCELLANEOUS

  
	

   

  	

   

  
	

  SECTION

  8.1

  	

  Successors and Assigns.

  
	

   

  	

   

  
	

  SECTION

  8.2

  	

  Amendments.

  
	

   

  	

   

  
	

  SECTION

  8.3

  	

  Notices.

  
	

   

  	

   

  
	

  SECTION

  8.4

  	

  Benefit.

  
	

   

  	

   

  
	

  SECTION

  8.5

  	

  Governing Law.

  
	

   

  	

   

  
	

  SECTION

  8.6

  	

  Counterparts.

  
			

 

ii

 

GUARANTEE AGREEMENT

 

This GUARANTEE AGREEMENT (the “Guarantee”), dated as

of December 19, 2002, is executed and delivered by HF Financial Corp., a

savings and loan holding company incorporated in Delaware (the “Guarantor”),

and Wilmington Trust Company, a Delaware banking corporation, as trustee (the

“Guarantee Trustee”), for the benefit of the Holders (as defined herein) from

time to time of the Capital Securities (as defined herein) of HF Financial

Capital Trust III, a Delaware statutory trust (the “Issuer”).

 

WHEREAS, pursuant to an Amended and Restated

Declaration of Trust (the “Declaration”), dated as of December 19, 2002, among

the trustees named therein of the Issuer, HF Financial Corp., as sponsor, and

the Holders from time to time of undivided beneficial interests in the assets

of the Issuer, the Issuer is issuing on the date hereof securities, having an

aggregate liquidation amount of up to $5,000,000, designated the Floating Rate

MMCapSSM (the “Capital

Securities”); and

 

WHEREAS,

as incentive for the Holders to purchase the Capital Securities, the Guarantor

desires irrevocably and

unconditionally to agree, to the extent set forth in this Guarantee, to pay to

the Holders of Capital Securities the Guarantee Payments (as defined herein)

and to make certain other payments on the terms and conditions set forth

herein.

 

NOW, THEREFORE, in consideration of the purchase by

each Holder of the Capital Securities, which purchase the Guarantor hereby agrees shall

benefit the Guarantor, the Guarantor executes and delivers this Guarantee for

the benefit of the Holders.

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1   Definitions and

Interpretation.

 

In

this Guarantee,

unless the context

otherwise requires:

 

(a)           capitalized terms used in this

Guarantee but not defined in the preamble above have the respective meanings

assigned to them in this Section 1.1;

 

(b)           a term defined anywhere in this

Guarantee has the same meaning throughout;

 

(c)           all references to “the Guarantee” or

“this Guarantee” are to this Guarantee as modified, supplemented or amended

from time to time;

 

(d)           all references in this Guarantee to

Articles and Sections are to Articles and Sections of this Guarantee, unless

otherwise specified;

 

1

 

(e)           terms defined in the Declaration as

of the date of execution of this Guarantee have the same meanings when used in

this Guarantee, unless otherwise defined in this Guarantee or unless the

context otherwise requires; and

 

(f)            a reference to the singular includes

the plural and vice versa.

 

“Beneficiaries”

means any Person to whom the Issuer is or hereafter becomes indebted or liable.

 

“Corporate

Trust Office” means the office of the Guarantee Trustee at which the corporate

trust business of the Guarantee Trustee shall, at any particular time, be

principally administered, which office at the date of execution of this

Guarantee is located at Rodney Square North, 1100 North Market Street,

Wilmington, Delaware 19890-0001.

 

“Covered

Person” means any Holder of Capital Securities.

 

“Debentures”

means the junior subordinated debentures of HF Financial Corp., designated the

Floating Rate Junior Subordinated Debt Securities due 2033 held by the

Institutional Trustee (as defined in the Declaration) of the Issuer.

 

 “Event of Default” has the meaning set forth

in Section 2.4.

 

“Guarantee

Payments” means the following payments or distributions, without duplication,

with respect to the Capital Securities, to the extent not paid or made by the

Issuer: (i) any accrued and unpaid Distributions (as defined in the

Declaration) which are required to be paid on such Capital Securities to the

extent the Issuer has funds available in the Property Account (as defined in

the Declaration) therefor at such time, (ii) the Redemption Price (as defined

in the Indenture) to the extent the Issuer has funds available in the Property

Account therefor at such time, with respect to any Capital Securities called

for redemption by the Issuer, (iii) the Special Redemption Price (as defined in

the Indenture) to the extent the Issuer has funds available in the Property

Account therefor at such time, with respect to Capital Securities called for

redemption upon the occurrence of a Special Event (as defined in the Indenture),

and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up

or termination of the Issuer (other than in connection with the distribution of

Debentures to the Holders of the Capital Securities in exchange therefor as

provided in the Declaration), the lesser of (a) the aggregate of the

liquidation amount and all accrued and unpaid Distributions on the Capital

Securities to the date of payment, to the extent the Issuer has funds available

in the Property Account therefor at such time, and (b) the amount of assets of

the Issuer remaining available for distribution to Holders in liquidation of

the Issuer after satisfaction of liabilities to creditors of the Issuer as

required by applicable law (in either case, the “Liquidation Distribution”).

 

“Guarantee

Trustee” means Wilmington Trust Company, until a Successor Guarantee Trustee

has been appointed and has accepted such appointment pursuant to the terms of

this Guarantee and thereafter means each such Successor Guarantee Trustee.

 

“Holder”

means any holder, as registered on the books and records of the Issuer, of any

Capital Securities; provided, however, that, in determining

whether the holders of the

 

2

 

requisite percentage of Capital Securities

have given any request, notice, consent or waiver hereunder, “Holder” shall not

include the Guarantor or any Affiliate of the Guarantor.

 

“Indemnified

Person” means the Guarantee Trustee (including in its individual capacity), any

Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,

members, partners, employees, representatives, nominees, custodians or agents

of the Guarantee Trustee.

 

“Indenture”

means the Indenture, dated as of December 19, 2002, between the Guarantor and

Wilmington Trust Company, not in its individual capacity but solely as trustee,

and any indenture supplemental thereto pursuant to which the Debentures are to

be issued to the Institutional Trustee of the Issuer.

 

“Liquidation

Distribution” has the meaning set forth in the definition of “Guarantee

Payments” herein.

 

“Majority in

liquidation amount of the Capital Securities” means Holder(s) of outstanding

Capital Securities, voting together as a class, but separately from the holders

of Common Securities, of more than 50% of the aggregate liquidation amount

(including the stated amount that would be paid on redemption, liquidation or

otherwise, plus accrued and unpaid Distributions to, but excluding, the date

upon which the voting percentages are determined) of all Capital Securities

then outstanding.

 

“Obligations”

means any costs, expenses or liabilities (but not including liabilities related

to taxes) of the Issuer, other than obligations of the Issuer to pay to holders

of any Trust Securities the amounts due such holders pursuant to the terms of

the Trust Securities.

 

“Officer’s

Certificate” means, with respect to any Person, a certificate signed by one

Authorized Officer of such Person.  Any

Officer’s Certificate delivered with respect to compliance with a condition or

covenant provided for in this Guarantee shall include:

 

(a)           a statement that each officer signing

the Officer’s Certificate has read the covenant or condition and the

definitions relating thereto;

 

(b)           a brief statement of the nature and scope

of the examination or investigation undertaken by each officer in rendering the

Officer’s Certificate;

 

(c)           a statement that each such officer

has made such examination or investigation as, in such officer’s opinion, is

necessary to enable such officer to express an informed opinion as to whether

or not such covenant or condition has been complied with; and

 

(d)           a statement as to whether, in the

opinion of each such officer, such condition or covenant has been complied

with.

 

“Person”

means a legal person, including any individual, corporation, estate,

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

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

political subdivision thereof, or any other entity of whatever nature.

 

3

 

“Responsible

Officer” means, with respect to the Guarantee Trustee, any officer within the

Corporate Trust Office of the Guarantee Trustee with direct responsibility for

the administration of any matters relating to this Guarantee, 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 Corporate Trust Office of the Guarantee 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.

 

“Successor

Guarantee Trustee” means a successor Guarantee Trustee possessing the

qualifications to act as Guarantee Trustee under Section 3.1.

 

“Trust

Securities” means the Common Securities and the Capital Securities.

 

ARTICLE II

 

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

SECTION 2.1   Powers and Duties of

the Guarantee Trustee.

 

(a)           This Guarantee shall be held by the

Guarantee Trustee for the benefit of the Holders of the Capital Securities, and

the Guarantee Trustee shall not transfer this Guarantee to any Person except a

Holder of Capital Securities exercising his or her rights pursuant to Section

4.4 (b) or to a Successor Guarantee Trustee on acceptance by such Successor

Guarantee Trustee of its appointment to act as Successor Guarantee

Trustee.  The right, title and interest

of the Guarantee Trustee shall automatically vest in any Successor Guarantee

Trustee, and such vesting and cessation of title shall be effective whether or

not conveyancing documents have been executed and delivered pursuant to the

appointment of such Successor Guarantee Trustee.

 

(b)           If an Event of Default actually known

to a Responsible Officer of the Guarantee Trustee has occurred and is

continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit

of the Holders of the Capital Securities.

 

(c)           The Guarantee Trustee, before the

occurrence of any Event of Default and after the curing or waiving of all

Events of Default that may have occurred, shall undertake to perform only such

duties as are specifically set forth in this Guarantee, and no implied

covenants shall be read into this Guarantee against the Guarantee Trustee.  In case an Event of Default has occurred

(that has not been cured or waived pursuant to Section 2.4(b)) and is actually

known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee

shall exercise such of the rights and powers vested in it by this Guarantee,

and use the same degree of care and skill in its exercise thereof, as a prudent

person would exercise or use under the circumstances in the conduct of his or

her own affairs.

 

(d)           No provision of this Guarantee shall

be construed to relieve the Guarantee Trustee from liability for its own

negligent action, its own negligent failure to act, or its own willful

misconduct, except that:

 

4

 

(i)            prior

to the occurrence of any Event of Default and after the curing or waiving of

all Events of Default that may have occurred:

 

(A)          the

duties and obligations of the Guarantee Trustee shall be determined solely by

the express provisions of this Guarantee, and the Guarantee Trustee shall not

be liable except for the performance of such duties and obligations as are

specifically set forth in this Guarantee, and no implied covenants or

obligations shall be read into this Guarantee against the Guarantee Trustee;

and

 

(B)           in

the absence of bad faith on the part of the Guarantee Trustee, the Guarantee

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 Guarantee Trustee and conforming to the requirements

of this Guarantee; but in the case of any such certificates or opinions

furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty

to examine the same to determine whether or not on their face they conform to

the requirements of this Guarantee;

 

(ii)           the

Guarantee Trustee shall not be liable for any error of judgment made in good

faith by a Responsible Officer of the Guarantee Trustee, unless it shall be

proved that such Responsible Officer of the Guarantee Trustee or the Guarantee

Trustee was negligent in ascertaining the pertinent facts upon which such

judgment was made;

 

(iii)          the

Guarantee 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 written

direction of the Holders of not less than a Majority in liquidation amount of

the Capital Securities relating to the time, method and place of conducting any

proceeding for any remedy available to the Guarantee Trustee, or exercising any

trust or power conferred upon the Guarantee Trustee under this Guarantee; and

 

(iv)          no

provision of this Guarantee shall require the Guarantee Trustee to expend or

risk its own funds or otherwise incur personal financial liability in the

performance of any of its duties or in the exercise of any of its rights or

powers, if the Guarantee Trustee shall have reasonable grounds for believing

that the repayment of such funds is not reasonably assured to it under the

terms of this Guarantee, or security and indemnity, reasonably satisfactory to

the Guarantee Trustee, against such risk or liability is not reasonably assured

to it.

 

SECTION 2.2   Certain Rights of the

Guarantee Trustee.

 

(a)           Subject to the provisions of Section

2.1:

 

(i)            The

Guarantee 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, direction, consent, order, bond,

debenture, note, other evidence of indebtedness or other paper or document

 

5

 

believed by it to

be genuine and to have been signed, sent or presented by the proper party or

parties.

 

(ii)           Any

direction or act of the Guarantor contemplated by this Guarantee shall be

sufficiently evidenced by an Officer’s Certificate.

 

(iii)          Whenever,

in the administration of this Guarantee, the Guarantee Trustee shall deem it

desirable that a matter be proved or established before taking, suffering or

omitting any action hereunder, the Guarantee Trustee (unless other evidence is

herein specifically prescribed) may, in the absence of bad faith on its part,

request and conclusively rely upon an Officer’s Certificate of the Guarantor

which, upon receipt of such request, shall be promptly delivered by the

Guarantor.

 

(iv)          The

Guarantee Trustee shall have no duty to see to any recording, filing or

registration of any instrument or other writing (or any rerecording, refiling

or reregistration thereof).

 

(v)           The

Guarantee Trustee may consult with counsel of its selection, and the advice or

opinion of such counsel with respect to legal matters shall be full and

complete authorization and protection in respect of any action taken, suffered

or omitted by it hereunder in good faith and in accordance with such advice or

opinion.  Such counsel may be counsel to

the Guarantor or any of its Affiliates and may include any of its

employees.  The Guarantee Trustee shall

have the right at any time to seek instructions concerning the administration

of this Guarantee from any court of competent jurisdiction.

 

(vi)          The

Guarantee Trustee shall be under no obligation to exercise any of the rights or

powers vested in it by this Guarantee at the request or direction of any

Holder, unless such Holder shall have provided to the Guarantee Trustee such

security and indemnity, reasonably satisfactory to the Guarantee Trustee,

against the costs, expenses (including attorneys’ fees and expenses and the

expenses of the Guarantee Trustee’s agents, nominees or custodians) and

liabilities that might be incurred by it in complying with such request or

direction, including such reasonable advances as may be requested by the

Guarantee Trustee; provided, however, that nothing contained in

this Section 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon

the occurrence of an Event of Default, of its obligation to exercise the rights

and powers vested in it by this Guarantee.

 

(vii)         The

Guarantee Trustee shall not be bound to make any investigation into the facts

or matters stated in any resolution, certificate, statement, instrument, opinion,

report, notice, request, direction, consent, order, bond, debenture, note,

other evidence of indebtedness or other paper or document, but the Guarantee

Trustee, in its discretion, may make such further inquiry or investigation into

such facts or matters as it may see fit.

 

6

 

(viii)        The

Guarantee Trustee may execute any of the trusts or powers hereunder or perform

any duties hereunder either directly or by or through agents, nominees,

custodians or attorneys, and the Guarantee Trustee shall not be responsible for

any misconduct or negligence on the part of any agent or attorney appointed

with due care by it hereunder.

 

(ix)           Any

action taken by the Guarantee Trustee or its agents hereunder shall bind the Holders

of the Capital Securities, and the signature of the Guarantee Trustee or its

agents alone shall be sufficient and effective to perform any such action.  No third party shall be required to inquire

as to the authority of the Guarantee Trustee to so act or as to its compliance

with any of the terms and provisions of this Guarantee, both of which shall be

conclusively evidenced by the Guarantee Trustee’s or its agent’s taking such

action.

 

(x)            Whenever

in the administration of this Guarantee the Guarantee Trustee shall deem it

desirable to receive instructions with respect to enforcing any remedy or right

or taking any other action hereunder, the Guarantee Trustee (A) may request

instructions from the Holders of a Majority in liquidation amount of the Capital

Securities, (B) may refrain from enforcing such remedy or right or taking such

other action until such instructions are received and (C) shall be protected in

conclusively relying on or acting in accordance with such instructions.

 

(xi)           The

Guarantee Trustee shall not be liable for any action taken, suffered, or

omitted to be taken by it in good faith and reasonably believed by it to be

authorized or within the discretion or rights or powers conferred upon it by

this Guarantee.

 

(b)           No provision of this Guarantee shall

be deemed to impose any duty or obligation on the Guarantee Trustee to perform

any act or acts or exercise any right, power, duty or obligation conferred or

imposed on it, in any jurisdiction in which it shall be illegal or in which the

Guarantee Trustee shall be unqualified or incompetent in accordance with

applicable law to perform any such act or acts or to exercise any such right,

power, duty or obligation.  No

permissive power or authority available to the Guarantee Trustee shall be construed

to be a duty.

 

SECTION 2.3   Not

Responsible for Recitals or Issuance of Guarantee.

 

The recitals

contained in this Guarantee shall be taken as the statements of the Guarantor,

and the Guarantee Trustee does not assume any responsibility for their

correctness.  The Guarantee Trustee

makes no representation as to the validity or sufficiency of this Guarantee.

 

SECTION 2.4   Events of Default;

Waiver.

 

(a)           An Event of Default under this

Guarantee will occur upon the failure of the Guarantor to perform any of its

payment or other obligations hereunder.

 

7

 

(b)           The Holders of a Majority in

liquidation amount of the Capital Securities may, voting or consenting as a

class, on behalf of the Holders of all of the Capital Securities, waive any

past Event of Default and its consequences. 

Upon such waiver, any such Event of Default shall cease to exist, and

shall be deemed to have been cured, for every purpose of this Guarantee, but no

such waiver shall extend to any subsequent or other default or Event of Default

or impair any right consequent thereon.

 

SECTION 2.5   Events of Default;

Notice.

 

(a)           The Guarantee Trustee shall, within

90 days after the occurrence of an Event of Default, transmit by mail, first class

postage prepaid, to the Holders of the Capital Securities, notices of all

Events of Default actually known to a Responsible Officer of the Guarantee

Trustee, unless such defaults have been cured before the giving of such notice,

provided, however, that the Guarantee Trustee shall be protected

in withholding such notice if and so long as a Responsible Officer of the

Guarantee Trustee in good faith determines that the withholding of such notice

is in the interests of the Holders of the Capital Securities.

 

(b)           The Guarantee Trustee shall not be

charged with knowledge of any Event of Default unless the Guarantee Trustee

shall have received written notice thereof from the Guarantor or a Holder of

the Capital Securities, or a Responsible Officer of the Guarantee Trustee

charged with the administration of this Guarantee shall have actual knowledge

thereof.

 

ARTICLE III

 

THE GUARANTEE TRUSTEE

 

SECTION 3.1   The

Guarantee Trustee; Eligibility.

 

(a)           There shall at all times be a

Guarantee Trustee which shall:

 

(i)            not

be an Affiliate of the Guarantor; and

 

(ii)           be

a corporation or national association organized and doing business under the

laws of the United States of America or any state or territory thereof or of

the District of Columbia, or Person authorized under such laws to exercise

corporate trust powers, having a combined capital and surplus of at least 50

million U.S. dollars ($50,000,000), and subject to supervision or examination

by federal, state, territorial or District of Columbia authority.  If such corporation or national association

publishes reports of condition at least annually, pursuant to law or to the

requirements of the supervising or examining authority referred to above, then,

for the purposes of this Section 3.1(a)(ii), 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 report of condition so

published.

 

(b)           If at any time the Guarantee Trustee

shall cease to be eligible to so act under Section 3.1(a), the Guarantee

Trustee shall immediately resign in the manner and with the effect set forth in

Section 3.2(c).

 

8

 

(c)           If the Guarantee Trustee has or shall

acquire any “conflicting interest” within the meaning of Section 310(b) of the

Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest

or resign to the extent and in the manner provided by, and subject to, this

Guarantee.

 

SECTION 3.2   Appointment, Removal

and Resignation of the Guarantee Trustee.

 

(a)           Subject to Section 3.2(b), the

Guarantee Trustee may be appointed or removed without cause at any time by the

Guarantor except during an Event of Default.

 

(b)           The Guarantee Trustee shall not be

removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee

has been appointed and has accepted such appointment by written instrument

executed by such Successor Guarantee Trustee and delivered to the Guarantor.

 

(c)           The Guarantee Trustee appointed to office

shall hold office until a Successor Guarantee Trustee shall have been appointed

or until its removal or resignation. 

The Guarantee Trustee may resign from office (without need for prior or

subsequent accounting) by an instrument in writing executed by the Guarantee

Trustee and delivered to the Guarantor, which resignation shall not take effect

until a Successor Guarantee Trustee has been appointed and has accepted such

appointment by an instrument in writing executed by such Successor Guarantee

Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.

 

(d)           If no Successor Guarantee Trustee

shall have been appointed and accepted appointment as provided in this Section

3.2 within 60 days after delivery of an instrument of removal or resignation,

the Guarantee Trustee resigning or being removed may petition any court of

competent jurisdiction for appointment of a Successor Guarantee Trustee.  Such court may thereupon, after prescribing

such notice, if any, as it may deem proper, appoint a Successor Guarantee

Trustee.

 

(e)           No Guarantee Trustee shall be liable

for the acts or omissions to act of any Successor Guarantee Trustee.

 

(f)            Upon termination of this Guarantee

or removal or resignation of the Guarantee Trustee pursuant to this Section

3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to the

Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such

termination, removal or resignation.

 

ARTICLE IV

 

GUARANTEE

 

SECTION 4.1   Guarantee.

 

(a)           The Guarantor irrevocably and

unconditionally agrees to pay in full to the Holders the Guarantee Payments

(without duplication of amounts theretofore paid by the Issuer), as and when

due, regardless of any defense (except as defense of payment by the Issuer),

right of set-off or counterclaim that the Issuer may have or assert.  The Guarantor’s obligation to make a 

 

9

 

Guarantee Payment may be

satisfied by direct payment of the required amounts by the Guarantor to the Holders

or by causing the Issuer to pay such amounts to the Holders.

 

(b)           The Guarantor hereby also agrees to

assume any and all Obligations of the Issuer and in the event any such

Obligation is not so assumed, subject to the terms and conditions hereof, the

Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary

the full payment, when and as due, of any and all Obligations to such

Beneficiaries.  This Guarantee is

intended to be for the Beneficiaries who have received notice hereof.

 

SECTION 4.2   Waiver of Notice and

Demand.

 

The Guarantor

hereby waives notice of acceptance of this Guarantee and of any liability to

which it applies or may apply, presentment, demand for payment, any right to

require a proceeding first against the Issuer or any other Person before

proceeding against the Guarantor, protest, notice of nonpayment, notice of

dishonor, notice of redemption and all other notices and demands.

 

SECTION 4.3   Obligations

Not Affected.

 

The

obligations, covenants, agreements and duties of the Guarantor under this

Guarantee shall in no way be affected or impaired by reason of the happening

from time to time of any of the following:

 

(a)           the release or waiver, by operation

of law or otherwise, of the performance or observance by the Issuer of any

express or implied agreement, covenant, term or condition relating to the

Capital Securities to be performed or observed by the Issuer;

 

(b)           the extension of time for the payment

by the Issuer of all or any portion of the Distributions, Redemption Price,

Special Redemption Price, Liquidation Distribution or any other sums payable

under the terms of the Capital Securities or the extension of time for the

performance of any other obligation under, arising out of, or in connection

with, the Capital Securities (other than an extension of time for the payment

of the Distributions, Redemption Price, Special Redemption Price, Liquidation

Distribution or other sums payable that results from the extension of any

interest payment period on the Debentures or any extension of the maturity date

of the Debentures permitted by the Indenture);

 

(c)           any failure, omission, delay or lack

of diligence on the part of the Holders to enforce, assert or exercise any

right, privilege, power or remedy conferred on the Holders pursuant to the

terms of the Capital Securities, or any action on the part of the Issuer

granting indulgence or extension of any kind;

 

(d)           the voluntary or involuntary

liquidation, dissolution, sale of any collateral, receivership, insolvency,

bankruptcy, assignment for the benefit of creditors, reorganization,

arrangement, composition or readjustment of debt of, or other similar

proceedings affecting, the Issuer or any of the assets of the Issuer;

 

(e)           any invalidity of, or defect or

deficiency in, the Capital Securities;

 

10

 

(f)            the settlement or compromise of any

obligation guaranteed hereby or hereby incurred; or

 

(g)           any other circumstance whatsoever

that might otherwise constitute a legal or equitable discharge or defense of a

guarantor, it being the intent of this Section 4.3 that the obligations of the

Guarantor hereunder shall be absolute and unconditional under any and all

circumstances.

 

There shall

be no obligation of the Holders to give notice to, or obtain consent of, the

Guarantor with respect to the happening of any of the foregoing.

 

SECTION 4.4   Rights of Holders.

 

(a)           The Holders of a Majority in

liquidation amount of the Capital Securities have the right to direct the time,

method and place of conducting any proceeding for any remedy available to the

Guarantee Trustee in respect of this Guarantee or to direct the exercise of any

trust or power conferred upon the Guarantee Trustee under this Guarantee; provided,

however, that (subject to Sections 2.1 and 2.2) the Guarantee Trustee

shall have the right to decline to follow any such direction if the Guarantee

Trustee shall determine that the actions so directed would be unjustly

prejudicial to the Holders not taking part in such direction or if the

Guarantee Trustee being advised by legal counsel determines that the action or

proceeding so directed may not lawfully be taken or if the Guarantee Trustee in

good faith by its board of directors or trustees, executive committee or a

trust committee of directors or trustees and/or Responsible Officers shall

determine that the action or proceeding so directed would involve the Guarantee

Trustee in personal liability.

 

(b)           Any Holder of Capital Securities may

institute a legal proceeding directly against the Guarantor to enforce the

Guarantee Trustee’s rights under this Guarantee, without first instituting a

legal proceeding against the Issuer, the Guarantee Trustee or any other

Person.  The Guarantor waives any right

or remedy to require that any such action be brought first against the Issuer,

the Guarantee Trustee or any other Person before so proceeding directly against

the Guarantor.

 

SECTION 4.5   Guarantee of Payment.

 

This

Guarantee creates a guarantee of payment and not of collection.

 

SECTION 4.6         Subrogation.

 

The Guarantor shall be subrogated to all (if any)

rights of the Holders of Capital Securities against the Issuer in respect of

any amounts paid to such Holders by the Guarantor under this Guarantee; provided,

however, that the Guarantor shall not (except to the extent required by

applicable provisions of law) be entitled to enforce or exercise any right that

it may acquire by way of subrogation or any indemnity, reimbursement or other

agreement, in all cases as a result of payment under this Guarantee, if, after

giving effect to any such payment, any amounts are due and unpaid under this

Guarantee.  If any amount shall be paid

to the Guarantor in violation of the preceding sentence, the Guarantor agrees

to hold such amount in trust for the Holders and to pay over such amount to the

Holders.

 

11

 

SECTION 4.7   Independent

Obligations.

 

The Guarantor

acknowledges that its obligations hereunder are independent of the obligations

of the Issuer with respect to the Capital Securities and that the Guarantor

shall be liable as principal and as debtor hereunder to make Guarantee Payments

pursuant to the terms of this Guarantee notwithstanding the occurrence of any

event referred to in subsections (a) through (g), inclusive, of Section 4.3

hereof.

 

SECTION 4.8   Enforcement.

 

A Beneficiary

may enforce the Obligations of the Guarantor contained in Section 4.1(b)

directly against the Guarantor, and the Guarantor waives any right or remedy to

require that any action be brought against the Issuer or any other person or

entity before proceeding against the Guarantor.

 

The Guarantor

shall be subrogated to all rights (if any) of any Beneficiary against the

Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor

under this Guarantee; provided, however, that the Guarantor shall

not (except to the extent required by applicable provisions of law) be entitled

to enforce or exercise any rights that it may acquire by way of subrogation or

any indemnity, reimbursement or other agreement, in all cases as a result of

payment under this Guarantee, if, after giving effect to such payment, any

amounts are due and unpaid under this Guarantee.

 

ARTICLE V

 

LIMITATION OF TRANSACTIONS; SUBORDINATION

 

SECTION 5.1   Limitation

of Transactions.

 

So long as

any Capital Securities remain outstanding, if (a) there shall have occurred and

be continuing an Event of Default or (b) the Guarantor shall have selected an

Extension Period as provided in the Declaration and such period, or any

extension thereof, shall have commenced and be continuing, then the Guarantor

may not (x) declare or pay any dividends or distributions on, or redeem,

purchase, acquire, or make a liquidation payment with respect to, any of the

Guarantor’s capital stock or (y) make any payment of principal of or interest

or premium, if any, on or repay, repurchase or redeem any debt securities of

the Guarantor that rank pari passu in all respects with or junior

in interest to the Debentures (other than (i) payments under this Guarantee,

(ii) repurchases, redemptions or other acquisitions of shares of capital stock

of the Guarantor (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 Guarantor (or securities convertible into or

exercisable for such capital stock), as consideration in an acquisition

transaction entered into prior to the occurrence of the Event of Default or the

applicable Extension Period, (iii) as a result of any exchange or conversion of

any class or series of the Guarantor’s capital stock (or any capital stock of a

subsidiary of the Guarantor) for any class or series of the Guarantor’s capital

stock or of any class or series of the Guarantor’s

 

12

 

indebtedness for any class or series of

the Guarantor’s capital stock, (iv) the purchase of fractional interests in

shares of the Guarantor’s capital stock pursuant to the conversion or exchange

provisions of such capital stock or the security being converted or exchanged,

(v) 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 (vi) 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 5.2   Ranking.

 

This

Guarantee will constitute an unsecured obligation of the Guarantor and will

rank subordinate and junior in right of payment to all present and future

Senior Indebtedness (as defined in the Indenture) of the Guarantor.  By their acceptance thereof, each Holder of

Capital Securities agrees to the foregoing provisions of this Guarantee and the

other terms set forth herein.

 

The right of

the Guarantor to participate in any distribution of assets of any of its

subsidiaries upon any such subsidiary’s liquidation or reorganization or

otherwise is subject to the prior claims of creditors of that subsidiary,

except to the extent the Guarantor may itself be recognized as a creditor of

that subsidiary.  Accordingly, the

Guarantor’s obligations under this Guarantee will be effectively subordinated

to all existing and future liabilities of the Guarantor’s subsidiaries, and

claimants should look only to the assets of the Guarantor for payments

thereunder. This Guarantee does not limit the incurrence or issuance of other

secured or unsecured debt of the Guarantor, including Senior Indebtedness of

the Guarantor, under any indenture or agreement that the Guarantor may enter

into in the future or otherwise.

 

ARTICLE VI

 

TERMINATION

 

SECTION 6.1   Termination.

 

This

Guarantee shall terminate as to the Capital Securities (i) upon full

payment of the Redemption Price or the Special Redemption Price, as the case

may be, of all Capital Securities then outstanding, (ii) upon the distribution

of all of the Debentures to the Holders of all of the Capital Securities or

(iii) upon full payment of the amounts payable in accordance with the

Declaration upon dissolution of the Issuer. 

This Guarantee will continue to be effective or will be reinstated, as

the case may be, if at any time any Holder of Capital Securities must restore

payment of any sums paid under the Capital Securities or under this Guarantee.

 

13

 

ARTICLE VII

 

INDEMNIFICATION

 

SECTION 7.1   Exculpation.

 

(a)           No Indemnified Person shall be

liable, responsible or accountable in damages or otherwise to the Guarantor or

any Covered Person for any loss, damage or claim incurred by reason of any act

or omission of such Indemnified Person in good faith in accordance with this

Guarantee and in a manner that such Indemnified Person reasonably believed to

be within the scope of the authority conferred on such Indemnified Person by

this Guarantee or by law, except that an Indemnified Person shall be liable for

any such loss, damage or claim incurred by reason of such Indemnified Person’s

negligence or willful misconduct with respect to such acts or omissions.

 

(b)           An Indemnified Person shall be fully

protected in relying in good faith upon the records of the Issuer or the

Guarantor and upon such information, opinions, reports or statements presented

to the Issuer or the Guarantor by any Person as to matters the Indemnified

Person reasonably believes are within such other Person’s professional or

expert competence and who, if selected by such Indemnified Person, has been

selected with reasonable care by such Indemnified Person, including

information, opinions, reports or statements as to the value and amount of the

assets, liabilities, profits, losses, or any other facts pertinent to the

existence and amount of assets from which Distributions to Holders of Capital

Securities might properly be paid.

 

SECTION 7.2   Indemnification.

 

(a)           The Guarantor agrees to indemnify

each Indemnified Person for, and to hold each Indemnified Person harmless

against, any and all loss, liability, damage, claim or expense incurred without

negligence or willful misconduct on the part of the Indemnified Person, arising

out of or in connection with the acceptance or administration of the trust or

trusts hereunder, including but not limited to the costs and expenses

(including reasonable legal fees and expenses) of the Indemnified Person

defending itself against, or investigating, any claim or liability in

connection with the exercise or performance of any of the Indemnified Person’s

powers or duties hereunder.  The

obligation to indemnify as set forth in this Section 7.2 shall survive the

resignation or removal of the Guarantee Trustee and the termination of this

Guarantee.

 

(b)           Promptly after receipt by an

Indemnified Person under this Section 7.2 of notice of the commencement of

any action, such Indemnified Person will, if a claim in respect thereof is to

be made against the Guarantor under this Section 7.2, notify the Guarantor

in writing of the commencement thereof; but the failure so to notify the

Guarantor (i) will not relieve the Guarantor from liability under

paragraph (a) above unless and to the extent that the Guarantor did not

otherwise learn of such action and such failure results in the forfeiture by

the Guarantor of substantial rights and defenses and (ii) will not, in any

event, relieve the Guarantor from any obligations to any Indemnified Person

other than the indemnification obligation provided in paragraph (a) above.  The Guarantor shall be entitled to appoint

counsel of the

 

14

 

Guarantor’s choice at the

Guarantor’s expense to represent the Indemnified Person in any action for which

indemnification is sought (in which case the Guarantor shall not thereafter be

responsible for the fees and expenses of any separate counsel retained by the

Indemnified Person or Persons except as set forth below); provided, however,

that such counsel shall be satisfactory to the Indemnified Person.  Notwithstanding the Guarantor’s election to

appoint counsel to represent the Indemnified Person in any action, the

Indemnified Person shall have the right to employ separate counsel (including

local counsel), and the Guarantor shall bear the reasonable fees, costs and

expenses of such separate counsel, if (i) the use of counsel chosen by the

Guarantor to represent the Indemnified Person would present such counsel with a

conflict of interest, (ii) the actual or potential defendants in, or

targets of, any such action include both the Indemnified Person and the

Guarantor and the Indemnified Person shall have reasonably concluded that there

may be legal defenses available to it and/or other Indemnified Persons which

are different from or additional to those available to the Guarantor,

(iii) the Guarantor shall not have employed counsel satisfactory to the

Indemnified Person to represent the Indemnified Person within a reasonable time

after notice of the institution of such action or (iv) the Guarantor shall

authorize the Indemnified Person to employ separate counsel at the expense of

the Guarantor.  The Guarantor will not,

without the prior written consent of the Indemnified Persons, settle or

compromise or consent to the entry of any judgment with respect to any pending

or threatened claim, action, suit or proceeding in respect of which

indemnification or contribution may be sought hereunder (whether or not the

Indemnified Persons are actual or potential parties to such claim or action)

unless such settlement, compromise or consent includes an unconditional release

of each Indemnified Person from all liability arising out of such claim,

action, suit or proceeding.

 

SECTION 7.3   Compensation;

Reimbursement of Expenses.

 

The Guarantor

agrees:

 

(a)           to pay to the Guarantee Trustee from

time to time such compensation for all services rendered by it hereunder as the

parties shall agree to from time to time (which compensation shall not be

limited by any provision of law in regard to the compensation of a trustee of

an express trust); and

 

(b)           except as otherwise expressly

provided herein, to reimburse the Guarantee Trustee upon request for all

reasonable expenses, disbursements and advances incurred or made by it in

accordance with any provision of this Guarantee (including the reasonable

compensation and the expenses and disbursements of its agents and counsel),

except any such expense, disbursement or advance as may be attributable to its

negligence or willful misconduct.

 

The

provisions of this Section 7.3 shall survive the resignation or removal of the

Guarantee Trustee and the termination of this Guarantee.

 

15

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.1   Successors

and Assigns.

 

All

guarantees and agreements contained in this Guarantee shall bind the

successors, assigns, receivers, trustees and representatives of the Guarantor

and shall inure to the benefit of the Holders of the Capital Securities then outstanding.  Except in connection with any merger or

consolidation of the Guarantor with or into another entity or any sale,

transfer or lease of the Guarantor’s assets to another entity, in each case to

the extent permitted under the Indenture, the Guarantor may not assign its

rights or delegate its obligations under this Guarantee without the prior

approval of the Holders of not less than a Majority in liquidation amount of

the Capital Securities.

 

SECTION 8.2   Amendments.

 

Except with

respect to any changes that do not adversely affect the rights of Holders of

the Capital Securities in any material respect (in which case no consent of

Holders will be required), this Guarantee may be amended only with the prior

approval of the Holders of not less than a Majority in liquidation amount of

the Capital Securities.  The provisions

of the Declaration with respect to amendments thereof shall apply equally with

respect to amendments of the Guarantee.

 

SECTION 8.3   Notices.

 

All notices

provided for in this Guarantee shall be in writing, duly signed by the party

giving such notice, and shall be delivered, telecopied or mailed by first class

mail, as follows:

 

(a)           If given to the Guarantee Trustee, at

the Guarantee Trustee’s mailing address set forth below (or such other address

as the Guarantee Trustee may give notice of to the Holders of the Capital

Securities):

 

Wilmington

Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate

Trust Administrator

Telecopy: 302-651-8882

Telephone:  302-651-1000

 

(b)           If given to the Guarantor, at the

Guarantor’s mailing address set forth below (or such other address as the

Guarantor may give notice of to the Holders of the Capital Securities and to

the Guarantee Trustee):

 

16

 

HF Financial Capital Trust III

c/o HF Financial Corp.

225 South Main Avenue

Sioux Falls, South Dakota 57104

Attention: Curtis L. Hage

Telecopy: (605) 331-7621

Telephone: (605) 333-7558

 

(c)           If given to any Holder of the Capital

Securities, at the address set forth on the books and records of the Issuer.

 

All such

notices shall be deemed to have been given when received in person, telecopied

with receipt confirmed, or mailed by first class mail, postage prepaid, except

that if a notice or other document is refused delivery or cannot be delivered

because of a changed address of which no notice was given, such notice or other

document shall be deemed to have been delivered on the date of such refusal or

inability to deliver.

 

SECTION 8.4   Benefit.

 

This

Guarantee is solely for the benefit of the Holders of the Capital Securities

and, subject to Section 2.1(a), is not separately transferable from the Capital

Securities.

 

SECTION 8.5   Governing Law.

 

THIS

GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE

STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

SECTION 8.6   Counterparts.

 

This

Guarantee may contain more than one counterpart of the signature page and this

Guarantee may be executed by the affixing of the signature of the Guarantor and

the Guarantee Trustee to any of such counterpart signature pages.  All of such counterpart signature pages

shall be read as though one, and they shall have the same force and effect as

though all of the signers had signed a single signature page.

 

17

 

THIS

GUARANTEE is executed as of the day and year first above written.

 

	

   

  	

  HF FINANCIAL CORP., 

  as Guarantor

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Curtis L. Hage

  
	

   

  	

  Chairman, President and Chief Executive

  Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  WILMINGTON TRUST COMPANY,

  
	

   

  	

  as Guarantee Trustee

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

18

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