0000931763-01-501911.txt : 20011107 0000931763-01-501911.hdr.sgml : 20011107 ACCESSION NUMBER: 0000931763-01-501911 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20011102 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TORCHMARK CORP CENTRAL INDEX KEY: 0000320335 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 630780404 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08052 FILM NUMBER: 1773544 BUSINESS ADDRESS: STREET 1: 2001 3RD AVE S CITY: BIRMINGHAM STATE: AL ZIP: 35233 BUSINESS PHONE: 2053254200 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY NATIONAL INSURANCE HOLDING CO DATE OF NAME CHANGE: 19820701 FORMER COMPANY: FORMER CONFORMED NAME: TORCHMARK CORP SAVINGS & INVESTMENT PLAN DATE OF NAME CHANGE: 19820825 8-K 1 d8k.txt FORM 8-K DATED 11/02/2001 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 2, 2001 TORCHMARK CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-9052 63-0780404 (State or other (Commission File No.) (I.R.S. Employer ID No.) jurisdiction of incorporation) 2001 Third Avenue South, Birmingham, Alabama 35233 (Address of principal executive offices) Registrant's telephone number, including area code: (205) 325-4200 None (Former name or former address, if changed since last report) Item 5. Other Events. ------- ------------- On October 31, 2001, Torchmark Corporation ("Torchmark") and Torchmark Capital Trust I (the "Trust"), entered into an underwriting agreement (the "Underwriting Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc., as Representatives of the Underwriters named in the Underwriting Agreement, for the sale of 4,400,000 7 3/4% Trust Preferred Securities (Liquidation Amount $25 per Trust Preferred Security) of the Trust. Such Trust Preferred Securities are a portion of the $300 million of securities that were registered by Torchmark and the Trust pursuant to a registration statement on Form S-3 under Rule 415 under the Securities Act of 1933, as amended, which registration statement was declared effective on November 30, 1999 (File No. 333-83411 (the "Registration Statement")). A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Form 8-K. The Federal Income Tax Opinion of Maynard, Cooper & Gale, P.C., tax counsel to Torchmark and the Trust, together with the consent of such firm to the reference thereof in the Prospectus Supplement dated October 31, 2001 (the "Prospectus Supplement") is filed as Exhibit 8.1. Copies of the instruments defining the rights of the holders of the Trust Preferred Securities are filed as Exibits 4.1 through 4.5 to this Form 8-K. The consents of Deloitte & Touche LLP and KPMG LLP to the reference to such firms in the Prospectus Supplement are filed as Exhibits 23.1 and 23.2, respectively. The Statements of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Junior Subordinated Indenture, the Amended and Restated Declaration of Trust and the Preferred Securities Guarantee Agreement are filed as Exhibits 25.1 through 25.3 to this Form 8-K. Item 7. Financial Statement and Exhibits. ------- --------------------------------- 1.1 Underwriting Agreement dated October 31, 2001, between Torchmark and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc., as Representatives of the Underwriters named in the Underwriting Agreement. 4.1 Certificate of Amendment to the Certificate of Trust of Torchmark Capital Trust I, dated November 1, 2001. 4.2 Amended and Restated Declaration of Trust of Torchmark Capital Trust I, dated November 2, 2001. 4.3 Junior Subordinated Indenture (the "Indenture"), dated November 2, 2001, between Torchmark and The Bank of New York, as Trustee, defining the rights of the 7 3/4% Junior Subordinated Debentures. 4.4 Officer's Certificate pursuant to Sections 2.1 and 2.3 of the Indenture, dated November 2, 2001, establishing the terms of the 7 3/4% Junior Subordinated Debentures. 4.5 Preferred Securities Guarantee Agreement, dated November 2, 2001, between Torchmark and The Bank of New York, as Trustee, with respect to the Trust Preferred Securities. 8.1 Federal Income Tax Opinion of Maynard, Cooper & Gale, P.C. 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of KPMG LLP 25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Indenture (Torchmark). 25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Amended and Restated Declaration of Trust of Torchmark Capital Trust I. 25.3 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee Agreement (Torchmark). SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TORCHMARK CORPORATION Date: November 2, 2001 /s/ Michael J. Klyce -------------------------- Michael J. Klyce, Vice President & Treasurer EX-1.1 3 dex11.txt UNDERWRITERS AGREEMENT EXHIBIT 1.1 UNDERWRITING AGREEMENT (Trust Preferred Securities) October 31, 2001 Torchmark Corporation 2001 Third Avenue South Birmingham, Alabama 35233 Torchmark Capital Trust I c/o Torchmark Corporation 2001 Third Avenue South Birmingham, Alabama 35233 Ladies and Gentlemen: We (the "Managers") are acting on behalf of the underwriters (including ourselves) named below (such underwriters being herein called the "Underwriters"), and we understand that Torchmark Capital Trust I ("Capital Trust I"), a statutory business trust created under the Delaware Business Trust Act, proposes to issue and sell to the several Underwriters $110,000,000 aggregate liquidation amount of 7 3/4% Trust Preferred Securities (the "Firm Securities") of Capital Trust I. Capital Trust I also proposes to sell to the several Underwriters not more than an additional $16,500,000 aggregate liquidation amount of its 7 3/4% Trust Preferred Securities (the "Additional Securities", and together with the Firm Securities, the "Offered Securities") if and to the extent that we, as Managers acting on behalf of the Underwriters, shall have determined to exercise the right to purchase such Additional Securities. It is understood that substantially contemporaneously with the closing of the sale of the Firm Securities to the Underwriters contemplated hereby, (i) Capital Trust I, its trustees (the "Capital Trustees") and Torchmark Corporation (the "Company") shall enter into an Amended and Restated Declaration of Trust in substantially the form of the Form of Amended and Restated Declaration of Trust attached as Exhibit 4.6 to the Registration Statement referred to below (the "Declaration of Trust"), pursuant to which Capital Trust I shall (x) issue and sell the Offered Securities to the Underwriters pursuant hereto and (y) issue 136,083 (or up to 156,496 if the Underwriters' overallotment option is exercised in full) shares of its Common Securities (the "Common Securities" and, together with the Offered Securities, the "Trust Securities") to the Company, in each case with such rights and obligations as shall be set forth in such Declaration of Trust, (ii) the Company and The Bank of New York, as indenture trustee, acting pursuant to an Indenture dated as of November 2, 2001, shall provide for the issuance of $113,402,075 (or up to $130,412,400 if the Underwriters' overallotment option is exercised in full) principal amount of the Company's 7 3/4% Junior Subordinated Debentures due 2041 (the "Junior Subordinated Debentures"), (iii) the Company shall sell such Junior Subordinated Debentures to Capital Trust I, and Capital Trust I shall purchase such Junior Subordinated Debentures with proceeds from the sale of the Offered Securities to the Underwriters and the sale of the Common Securities to the Company contemplated hereby and (iv) the Company and The Bank of New York, as Guarantee Trustee, shall enter into a Preferred Securities Guarantee Agreement in substantially the form of the Preferred Securities Guarantee Agreement attached as Exhibit 4.9 to the Registration Statement referred to below (the "Guarantee") for the benefit of holders from time to time of the Offered Securities. The Offered Securities are being offered and sold pursuant to a shelf registration statement on Form S- 3 (registration no. 333-83411) (as amended to the date hereof, the "Registration Statement") filed by the Company and Capital Trust I with the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933, as amended. Subject to the terms and conditions set forth or incorporated by reference herein, Capital Trust I hereby agrees to sell and the Underwriters agree to purchase, severally and not jointly, the aggregate number of Firm Securities set forth below opposite their names at a purchase price of $25 per Firm Security (the "Purchase Price"); provided that the Company shall pay to the Underwriters underwriting commission equal to $.7875 per Firm Security (the "Underwriting Commission"):
Number of Firm Securities Underwriter to Be Purchased ----------- --------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated 1,126,680 Morgan Stanley & Co. Incorporated 1,126,660 Salomon Smith Barney Inc. 1,126,660 Banc of America Securities LLC 100,000 Banc One Capital Markets, Inc. 100,000 First Union Securities, Inc. 100,000 J.P. Morgan Securities Inc. 100,000 Quick & Reilly, Inc. 100,000 SunTrust Capital Markets, Inc. 100,000 ABN AMRO Incorporated 20,000 BB&T Capital Markets, A division of Scott and Stringfellow, Inc. 20,000
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Number of Firm Securities Underwriter to Be Purchased ----------- --------------- Bear, Stearns & Co. Inc. 20,000 BNY Capital Markets, Inc. 20,000 Dain Rauscher Incorporated 20,000 Deutsche Banc Alex. Brown Inc. 20,000 Fahnestock & Co. Inc. 20,000 Gruntal & Co., L.L.C. 20,000 H&R Block Financial Advisors, Inc. 20,000 HSBC Securities (USA) Inc. 20,000 J.J.B. Hilliard, W.L. Lyons, Inc. 20,000 Legg Mason Wood Walker, Incorporated 20,000 McDonald Investments Inc. 20,000 Morgan Keegan & Company, Inc. 20,000 Raymond James & Associates, Inc. 20,000 Charles Schwab & Co., Inc. 20,000 SWS Securities, Inc. 20,000 Southtrust Securities, Inc. 20,000 Sterne, Agee & Leach, Inc. 20,000 TD Securities (USA) Inc. 20,000 U.S. Bancorp Piper Jaffray Inc. 20,000 --------- Total 4,400,000 =========
Subject to the terms and conditions set forth or incorporated by reference herein, Capital Trust I hereby agrees to sell and the Underwriters shall have a one-time right to purchase, severally and not jointly, up to 660,000 Additional Securities at the Purchase Price; provided that, in the event that the Underwriters exercise such right, the Company shall pay to the Underwriters the Underwriting Commission with respect to the Additional Securities sold. If we elect to exercise such option, we shall so notify the Company and Capital Trust I not later than 30 days after the date of this Agreement, which notice (the "Option Exercise Notice") shall specify the number of Additional Securities to be purchased by the Underwriters and the date on which such Additional Securities are to be purchased. Such date may be the same as the Closing Date (as defined below) but not earlier than the Closing Date nor later than ten business days after the date of such notice. Additional Securities may be purchased as set forth below solely for the purpose of covering overallotments made in connection with the offering of the Firm Securities. If any Additional Securities are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Additional Securities (subject 3 to such adjustments to eliminate fractional securities as we may determine) that bears the same proportion to the total number of Additional Securities to be purchased as the number of Firm Securities to be purchased by such Underwriter as set forth above opposite the name of such Underwriter bears to the total number of Firm Securities. The Underwriters will pay for the Firm Securities upon delivery thereof at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 at 10:00 a.m. (New York time) on November 2, 2001, or at such other time, not later than 5:00 p.m. (New York time) on November 16, 2001, as shall be designated by us. The time and date of such payment and delivery are hereinafter referred to as the "Closing Date". The Underwriters will pay for the Additional Securities upon delivery thereof at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 at 10:00 a.m. (New York time) on the date specified in the Option Exercise Notice. The time and date of such payment and delivery are hereinafter referred to as the "Option Closing Date". The Offered Securities shall have the terms set forth in the Prospectus dated November 30, 1999, and the Prospectus Supplement dated October 31, 2001, including the following: Terms of Offered Securities
Designation of the Offered Securities: Torchmark Capital Trust I 7 3/4% Trust Preferred Securities Issuer of Offered Securities: Torchmark Capital Trust I Aggregate Number of Firm Securities: 4,400,000 Maximum Number of Additional Securities: 660,000 Price to Public: $25 per Offered Security Purchase Price: $25 per Offered Security Underwriting Commission per Offered Security: $.7875 per Offered Security Selling Concession: $.50 per Offered Security Reallowance: $.45 per Offered Security Closing Date: November 2, 2001
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Form: Book-entry Ratings: S&P: BBB+ Moody's: Baa2 Other Terms: Maturity Date: November 2, 2041, subject to acceleration under certain circumstances to a date that is not less than 15 years from the date of original issuance Liquidation Amount: $25 per Offered Security Distributions: 7 3/4% per annum Distribution Payment Dates: February 1, May 1, August 1, and November 1 of each year, commencing on February 1, 2002 Redemption: Redeemable prior to maturity at the option of the Company (i) on or after November 2, 2006, in whole at any time or in part from time to time and (ii) prior to November 2, 2006, in whole (but not in part) at any time within 90 days following the occurrence and continuation of a Tax Event or an Investment Company Event, in each case, at par, plus accumulated and unpaid distributions
Capitalized terms used above and not defined herein shall have the meanings set forth in the Prospectus and Prospectus Supplement referred to above. Except as set forth below, all provisions contained in the document entitled Underwriting Agreement Standard Provisions dated October 31, 2001 (the "Standard Provisions") relating to the Preferred Securities of Capital Trust I (fully and unconditionally guaranteed by the Company, based on its obligations under a guarantee, a trust declaration and an indenture), a copy of which is attached hereto, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Underwriting Agreement to the same extent as if such provisions had been set forth in full herein, except that (i) if any term defined in such document is otherwise defined herein, the definition set forth herein shall control, (ii) all references in such document to a type of security that is not an Offered Security or a related Junior Subordinated Debenture shall not be deemed to be a part of this Agreement and (iii) all references in such document to a type of agreement that has not been entered into in connection with the transactions contemplated hereby shall not be deemed to be a part of this Agreement. 5 Please confirm your agreement by having an authorized officer sign a copy of this Agreement in the space set forth below. Very truly yours, MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated Morgan Stanley & Co. Incorporated Salomon Smith Barney Inc. Acting severally on behalf of themselves and as representatives of the several Underwriters named in the third paragraph hereof. By: MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Matthew Malloy --------------------------------------- Name: Matthew Malloy Title: Vice President Agreed and accepted: TORCHMARK CORPORATION By: /s/ Carol A. McCoy --------------------------------------- Name: Carol A. McCoy Title: Vice President, Associate Counsel and Secretary TORCHMARK CAPITAL TRUST I By: /s/ Michael J. Klyce ----------------------- Name: Michael J. Klyce Title: Regular Trustee TORCHMARK CORPORATION UNDERWRITING AGREEMENT STANDARD PROVISIONS (TRUST PREFERRED SECURITIES) October 31, 2001 From time to time, Torchmark Corporation, a Delaware corporation (the "Company"), may, together with Torchmark Capital Trust I, a statutory business trust created under the Delaware Business Trust Act ("Capital Trust I"), enter into one or more underwriting agreements that provide for the sale of designated securities to the several underwriters named therein. The standard provisions set forth herein may be incorporated by reference in any such underwriting agreement (an "Underwriting Agreement"). The Underwriting Agreement, including the provisions incorporated therein by reference, is herein referred to as "this Agreement". Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. Capital Trust I proposes to issue Preferred Securities ("Preferred Securities") pursuant to the provisions of the Declaration of Trust (as defined below). Such Preferred Securities will be guaranteed by the Company to the extent described in the Prospectus (as defined below) with respect to distributions and amounts payable upon liquidation or redemption pursuant to a Preferred Securities Guarantee Agreement to be dated as of the Closing Date (as defined below) executed and delivered by the Company and The Bank of New York, as Guarantee Trustee (the "Guarantee Trustee"), for the benefit of the holders from time to time of the Preferred Securities (the "Guarantee"). If Capital Trust I issues Preferred Securities, it will use the proceeds from the sale of the Preferred Securities and the sale of Common Securities (as defined below) to purchase from the Company an aggregate principal amount of its 7 3/4% Junior Subordinated Debentures due 2041 (the "Junior Subordinated Debentures") equal to the aggregate liquidation amount of the Preferred Securities and Common Securities issued by Capital Trust I pursuant to a Debenture Purchase Agreement to be dated as of the Closing Date (the "Debenture Purchase Agreement"). The Junior Subordinated Debentures will be issued under an Indenture to be dated as of November 2, 2001 between the Company and The Bank of New York, as trustee (the "Indenture Trustee") (as amended and supplemented from time to time, the "Indenture"). With respect to the issuance of Preferred Securities by Capital Trust I, the Company will also be the holder of one hundred percent of the common securities representing undivided beneficial interests in the assets of Capital Trust I (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities"), which shall be issued pursuant to a Subscription Agreement to be dated as of the Closing Date (the "Subscription Agreement"). Capital Trust I has been created under Delaware law pursuant to the filing of a Certificate of Trust (the "Certificate of Trust") with the Secretary of State of the State of Delaware, and will be governed by an Amended and Restated Declaration of Trust (the "Declaration of Trust") among the Company, as 2 sponsor, The Bank of New York, as Property Trustee (the "Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the "Delaware Trustee"), and three individuals who have been selected by the Company, as sponsor. The Company, as sponsor, has appointed the Property Trustee, the Delaware Trustee and three individuals who are officers of or affiliated with the Company to act as administrators with respect to Capital Trust I (the "Regular Trustees" and, together with the Property Trustee and the Delaware Trustee, the "Capital Trustees"). The Bank of New York, as Property Trustee, will act as indenture trustee for purposes of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement including a prospectus or prospectuses relating to the Preferred Securities and the Guarantee (collectively the "Securities") and will file with the Commission a prospectus supplement or supplements specifically relating to any Preferred Securities pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"). The term "Registration Statement" means the registration statement as amended to the date of the Underwriting Agreement. The term "Basic Prospectus" means the prospectus included in the Registration Statement. The term "Prospectus" means the Basic Prospectus together with the prospectus supplement (other than a preliminary prospectus supplement) specifically relating to the Preferred Securities as filed with the Commission pursuant to Rule 424. The term "preliminary prospectus" means a preliminary prospectus supplement specifically relating to the Preferred Securities together with the Basic Prospectus. As used herein, the terms "Registration Statement", "Basic Prospectus", "Prospectus" and "preliminary prospectus" shall include in each case the material, if any, incorporated by reference therein. The term "Firm Underwriters' Securities" means the Preferred Securities to be purchased by the Underwriters herein. The term "Additional Underwriters' Securities" means the additional Preferred Securities, if any, that the Underwriters will have the right to purchase, severally and not jointly, solely for the purpose of covering over-allotments made in connection with the offering of the Firm Underwriters' Securities. The Firm Underwriters' Securities and the Additional Underwriters' Securities are referred to herein as the "Underwriters' Securities". The Company and the Underwriters agree as follows: 1. Public Offering. The Company is advised by the Manager that the --------------- Underwriters propose to make a public offering of their respective portions of the Preferred Securities as soon after this Agreement is entered into as in the 3 Manager's judgment is advisable. The terms of the public offering of the Underwriters' Securities are set forth in the Prospectus. 2. Payment and Delivery. Payment for the Underwriters' Securities -------------------- shall be made by payment in full of the requisite amount of funds specified in the Underwriting Agreement and in accordance with the procedures set forth in the Underwriting Agreement, upon delivery to the Manager for the respective accounts of the several Underwriters of the Underwriters' Securities registered in such names and in such denominations as the Manager shall request in writing not less than two full business days prior to the date of delivery. The time and date of such payment and delivery with respect to the Firm Underwriters' Securities are herein referred to as the "Closing Date". The time and date of such payment and delivery with respect to the Additional Underwriters' Securities are herein referred to as the "Option Closing Date". 3. Conditions of Underwriters' Obligations. The several obligations of --------------------------------------- the Underwriters hereunder are subject to the accuracy of the representations and warranties on the part of the Company and Capital Trust I herein on and as of the Closing Date and, if applicable, the Option Closing Date, to the performance by the Company and Capital Trust I of their obligations hereunder and to the following additional conditions precedent: (a) Subsequent to the execution and delivery of the Underwriting Agreement and prior to the Closing Date and, if applicable, the Option Closing Date, (i) (1) the Preferred Securities shall have been assigned at least the ratings by the rating agencies set forth in the applicable Underwriting Agreement, and, on the Closing Date, the Company shall have delivered to the Manager a letter dated the Closing Date, from each such rating agency, or other evidence satisfactory to the Manager, confirming that the Preferred Securities have such ratings; and (2) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded the Preferred Securities or any of the Company's or Capital Trust I's securities by any "nationally recognized statistical rating organization", as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; (ii) no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the 4 Commission and there shall have been no material adverse change in the condition of the Company and its subsidiaries, taken as a whole, from that set forth in the Registration Statement and the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of the Underwriting Agreement); (iii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of the Underwriting Agreement) that, in the Manager's reasonable judgment, is material and adverse and that makes it, in the Manager's reasonable judgment, impracticable to market the Preferred Securities on the terms and in the manner contemplated in the Prospectus; and (iv) the Manager shall have received on the Closing Date and, if applicable, the Option Closing Date, (1) a certificate, dated the Closing Date or the Option Closing Date, as the case may be, and signed by an executive officer of the Company, or any other person authorized by the Board of Directors of the Company to execute any such written statement (an "Executive Officer"), and (2) a certificate, dated the Closing Date or the Option Closing Date, as the case may be, and signed by a Regular Trustee of Capital Trust I, (A) to the effect set forth in Sections 3(a)(i)(2) and 3(a)(ii) hereof (in the case of the certificate signed by an Executive Officer of the Company); and (B) to the effect that the representations and warranties of the Company and Capital Trust I contained in this Agreement are true and correct as of the Closing Date or the Option Closing Date, as the case may be, and that each of the Company and Capital Trust I, as applicable, has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied on or before the Closing Date or the Option Closing Date, as the case may be. The Executive Officer and the Regular Trustee signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. 5 (b) The Manager shall have received on the Closing Date and, if applicable, the Option Closing Date, an opinion of Carol A. McCoy, Esq., Vice President, Associate Counsel and Secretary for the Company, dated the Closing Date or the Option Closing Date, as the case may be, in substantially the form set forth as Exhibit A. (c) The Manager shall have received on the Closing Date and, if applicable, the Option Closing Date, an opinion of Maynard, Cooper & Gale, P.C., special counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, in substantially the form set forth as Exhibit B. (d) The Manager shall have received on the Closing Date and, if applicable, the Option Closing Date, an opinion of Morris, Nichols, Arsht & Tunnell, special Delaware counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, to the effect set forth in Exhibit C. (e) The Manager shall have received on the Closing Date and, if applicable, the Option Closing Date, an opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated the Closing Date or the Option Closing Date, as the case may be, in substantially the form set forth as Exhibit D. (f) The Manager shall have received (i) on the date of the Underwriting Agreement a letter dated such date, (ii) on the Closing Date a letter dated the Closing Date and, (iii) if applicable, on the Option Closing Date a letter dated the Option Closing Date, in each case in form and substance satisfactory to the Manager, from the independent public accountants of the Company, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement and the Prospectus. (g) On the Closing Date and, if applicable, the Option Closing Date, the Preferred Securities shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, and the Manager shall have received evidence satisfactory to it of such approval. 4. Certain Covenants of the Company and Capital Trust I. In further ---------------------------------------------------- consideration of the agreements of the Underwriters contained in this Agreement, each of the Company and Capital Trust I covenants as follows: 6 (a) To furnish the Manager, without charge, as many copies of the Registration Statement, including exhibits and materials, if any, incorporated by reference therein and, during the period mentioned in paragraph (c) below, the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement, as the Manager may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement with respect to the Registration Statement, Prospectus or preliminary prospectus shall include all documents filed by the Company with the Commission subsequent to the date of the Basic Prospectus, pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are deemed to be incorporated by reference in the Prospectus. (b) Before amending or supplementing the Registration Statement or the Prospectus with respect to the Preferred Securities, to furnish the Manager a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Manager reasonably objects promptly after reasonable notice thereof. (c) If, during such period after the commencement of the public offering of the Preferred Securities as in the opinion of counsel for the Underwriters the Prospectus is required by law to be delivered with respect thereto, any event shall occur or condition exist as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with law, forthwith at its own expense, to amend or to supplement the Prospectus and to furnish such amendment or supplement to the Underwriters, so as to correct such statement or omission or effect such compliance. (d) To qualify the Preferred Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Manager shall reasonably request and to pay all reasonable expenses (including fees and disbursements of counsel) in connection with such qualification. (e) To make generally available to the Company's security holders as soon as practicable an earnings statement of the Company covering a twelve month period beginning after the date of the 7 Underwriting Agreement (but in no event commencing later than 90 days after such date), which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder and to advise the Manager in writing when such statement has been made available. (f) During a period of 90 days from the date of the Underwriting Agreement, without the prior written consent of the Manager, on behalf of the Underwriters, not to offer, sell, contract to sell, grant any option for the sale of, or otherwise dispose of, any Preferred Securities or Junior Subordinated Debentures, any other beneficial interests of Capital Trust I or any securities of the Company that are substantially similar to the Preferred Securities or Junior Subordinated Debentures, including the Guarantee, and including, but not limited to, any securities that are convertible into or exercisable or exchangeable for or that represent the right to receive Preferred Securities or Junior Subordinated Debentures or any such substantially similar securities of either Capital Trust I or the Company (other than the Junior Subordinated Debentures and the Preferred Securities offered hereby). (g) Whether or not any sale of Preferred Securities is consummated, to pay or cause to be paid all expenses incident to the performance of the obligations of the Company and Capital Trust I under the Underwriting Agreement, including, without limitation: (i) the preparation and filing of the Registration Statement and the Prospectus and all amendments and supplements thereto, (ii) the preparation, issuance and delivery of the Preferred Securities, (iii) the fees and disbursements of the Company's counsel and accountants, of Capital Trust I's counsel and of the Capital Trustees and their counsel, (iv) the qualification of the Securities under securities or Blue Sky laws in accordance with the provisions of Section 4 hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the printing or producing and delivery of any Blue Sky or legal investment memoranda, (v) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and all amendments thereto and of the Prospectus and any amendments or supplements thereto, (vi) the filing fees incident to, and the fees and disbursements of counsel to the Underwriters in connection with, the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Preferred Securities, (vii) any fees charged by rating agencies for the rating of the Preferred Securities and (viii) all costs and expenses, if any, incident to listing the Preferred Securities on the New York Stock Exchange. 8 5. Representations and Warranties of the Company. Each of the Company --------------------------------------------- and Capital Trust I, jointly and severally, represents and warrants to each Underwriter that: (a) (i) each document filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations thereunder, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations thereunder, (iii) each part of the Registration Statement (including the documents incorporated reference therein), filed with the Commission pursuant to the Securities Act relating to the Preferred Securities, when such part became effective, did not contain and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iv) the Prospectus, as of its date, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the above representations and warranties do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information furnished to the Company and Capital Trust I in writing by any Underwriter expressly for use therein or to that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of the trustees referred to in the Registration Statement. (b) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission. (c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. (d) Each "significant subsidiary" (within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission) (the 9 "Significant Subsidiaries") of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each Significant Subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. (e) Each of the Company and its Significant Subsidiaries engaged in the business of insurance are duly organized and licensed as insurance companies or insurance holding companies, as the case may be, in their respective jurisdictions of incorporation (if so required) and, in the case of the Company, each other jurisdiction where it is required to be so licensed or authorized to conduct its business, and, in the case of the Significant Subsidiaries engaged in the business of insurance, each other jurisdiction in which such Significant Subsidiary has written 5% or more of the total amount of premiums written by it during each of the last two calendar years, except for any such jurisdictions in which the failure to be so licensed or authorized would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; neither the Company nor any Significant Subsidiary engaged in the business of insurance has received any notification from any insurance regulatory authority to the effect that any additional authorization, approval, order, consent, license, certificate, permit, registration or qualification from such insurance regulatory authority is needed to be obtained by the Company or any such Significant Subsidiary in any case where it would be reasonably expected that failure to obtain any such additional authorization, approval, order, consent, license, certificate, permit, registration or qualification would have a material adverse effect on the Company and its subsidiaries, taken as a whole. (f) Capital Trust I has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, is a "grantor trust" for United States federal income tax purposes, has the power and authority to conduct its business as presently conducted and as 10 described in the Prospectus and is not required to be authorized to do business in any other jurisdiction. (g) The Underwriting Agreement has been duly authorized, executed and delivered by the Company and Capital Trust I. (h) The Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized by the Company and, upon execution and delivery thereof by the Company (and assuming due authorization, execution and delivery by the Indenture Trustee), will, as of the Closing Date, be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (i) The Guarantee has been duly qualified under the Trust Indenture Act and has been duly authorized by the Company and, upon execution and delivery thereof by the Company (and assuming due authorization, execution and delivery by the Guarantee Trustee), will, as of the Closing Date, be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (j) The Declaration of Trust has been duly qualified under the Trust Indenture Act and has been duly authorized by the Company and, upon execution and delivery thereof by the Company (and assuming due authorization, execution and delivery thereof by each party thereto other than the Company), will, as of the Closing Date, be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. 11 (k) Each of the Debenture Purchase Agreement and the Subscription Agreement has been duly authorized by the Company and Capital Trust I and, upon execution and delivery thereof by the Company and Capital Trust I, will, as of the Closing Date, be a valid and binding agreement of each of the Company and Capital Trust I, enforceable against each of the Company and Capital Trust I in accordance with its terms except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (l) The Preferred Securities have been duly authorized by the Declaration of Trust and, when executed and authenticated in accordance with the provisions of the Declaration of Trust and delivered to and paid for by the Underwriters in accordance with the terms of the Underwriting Agreement, will be validly issued and (subject to the terms of the Declaration of Trust) fully paid and non- assessable undivided beneficial interests in the assets of Capital Trust I, and the issuance of such Preferred Securities will not be subject to any preemptive or similar rights. Holders of the Preferred Securities will be entitled to the same limitation of personal liability as that extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. The Common Securities have been duly authorized by the Declaration of Trust and, when issued and executed in accordance with the provisions of the Declaration of Trust and delivered to the Company against payment therefor as set forth in the Subscription Agreement, will be validly issued undivided beneficial interests in the assets of Capital Trust I, and the issuance of such Common Securities will not be subject to any preemptive rights. (m) The Junior Subordinated Debentures have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture, and delivered to and paid for by Capital Trust I in accordance with the terms of the Debenture Purchase Agreement, will be entitled to the benefits of the Indenture, and will be valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture, except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. 12 (n) The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Underwriting Agreement, the Indenture, the Declaration of Trust, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures and the issuance and sale of the Preferred Securities as contemplated in the Underwriting Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under the Underwriting Agreement, the Indenture, the Declaration of Trust, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures except such as have been obtained or may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Preferred Securities. (o) The execution and delivery by Capital Trust I of, and the performance by Capital Trust I of its obligations under, the Underwriting Agreement, the Subscription Agreement, the Debenture Purchase Agreement and the Trust Securities will not contravene any provision of applicable law or the Declaration of Trust or any agreement or other instrument binding upon Capital Trust I that is material to Capital Trust I, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over Capital Trust I, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by Capital Trust I of its obligations under the Underwriting Agreement, the Subscription Agreement, the Debenture Purchase Agreement and the Trust Securities, except such as have been obtained or may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Preferred Securities. (p) Capital Trust I is not in violation of the Declaration of Trust or the Certificate of Trust; neither the Company nor any Significant Subsidiary is in violation of its certification of incorporation or by-laws; none of Capital Trust I, the Company or any Significant Subsidiary is in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed 13 of trust, loan or credit agreement, note, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except for such defaults that will not have a material adverse effect on the Company and its subsidiaries, taken as a whole. (q) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of the Underwriting Agreement). (r) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder. (s) There are no legal or governmental proceedings pending or threatened to which Capital Trust I or the Company or any of its subsidiaries is a party or to which any of the properties of Capital Trust I or the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. (t) Each of the Company and Capital Trust I is not and, after giving effect to the offering and sale of the Preferred Securities and the application of the proceeds thereof as described in the Prospectus, will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. (u) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required 14 permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (v) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (w) Deloitte & Touche LLP, and, with respect to the financial statements and supporting schedules for the year ended December 31, 1998, KPMG LLP, the accountants who certified the financial statements and supporting schedules included in or incorporated by reference in the Registration Statement and the Prospectus are independent public accountants as required by the Securities Act and the rules and regulations of the Commission thereunder. 6. Indemnification and Contribution. (a) Each of the Company and Capital -------------------------------- Trust I, jointly and severally, agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities and any amounts paid in settlements caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company or Capital Trust I shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except to the extent that such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company and Capital Trust I by any Underwriter expressly for use therein; provided, however, that the foregoing -------- ------- indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Preferred Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company or Capital Trust I shall have furnished any amendments or supplement 15 thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Preferred Securities to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure is the result of noncompliance by the Company with Section 4(a) hereof. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless Capital Trust I, the Capital Trustees, the Company, its directors, its officers who sign the Registration Statement and any person controlling Capital Trust I or the Company to the same extent as the foregoing indemnity from the Company and Capital Trust I to each Underwriter, but only with reference to information relating to such Underwriter furnished to the Company and Capital Trust I in writing by such Underwriter expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus or any amendments or supplements thereto. (c) If any proceeding (including any government investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties, and that all such fees and expenses shall be paid as they are incurred. Such firm shall be designated in writing by the Manager in the case of parties indemnified pursuant to the second 16 preceding paragraph and by the Company and Capital Trust I in the case of parties indemnified pursuant to the immediately preceding paragraph. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b) in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and Capital Trust I on the one hand and the Underwriters on the other from the offering of the Preferred Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and Capital Trust I on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and Capital Trust I on the one hand and the Underwriters on the other in connection with the offering of the Preferred Securities shall be deemed to be in the same proportion as the total net proceeds from the offering of such Preferred Securities (before deducting expenses) received by the Company and Capital Trust I bear to the total underwriting discounts and commissions received by the Underwriters in respect thereof. The relative fault of the Company and Capital Trust I on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and Capital Trust I or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company, Capital Trust I and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the considerations referred to in 17 the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Preferred Securities underwritten and distributed to the public by such Underwriter were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriter's obligations to contribute pursuant to this Section 6 are several, in proportion to the respective principal amounts of Preferred Securities purchased by each of such Underwriters, and not joint. (f) The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Company in this Agreement shall remain operative and in full force and affect regardless of (i) any termination of this Agreement, (ii) any investigation made by any Underwriter or on behalf of any Underwriter or any person controlling any Underwriter or buyer on behalf of Capital Trust I, the Company, its directors or officers or any person controlling the Company or Capital Trust I and (iii) acceptance of and payment for any of the Preferred Securities. 7. Termination in Certain Events. This Agreement, and with respect to ----------------------------- the Option Closing Date, the obligations of the Underwriters to purchase and of Capital Trust I to sell, the Additional Underwriters' Securities to be purchased and sold on the Option Closing Date, shall be subject to termination in the absolute discretion of the Manager, by notice given to the Company and Capital Trust I, if (a) after the execution and delivery of this Agreement and prior to the Closing Date or the Option Closing Date, as the case may be, (i) trading generally shall have been suspended or materially limited on the New York Stock Exchange or on any other exchange on which the Preferred Securities are listed, (ii) a general moratorium on commercial banking activities in the State of New York shall have been declared by either Federal or New York State authorities, (iii) trading of any securities of or guaranteed by the Company or Capital Trust I shall have been suspended on any exchange or in any over-the-counter market, (iv) a material 18 disruption has occurred in commercial banking or securities settlement or clearance services in the United States or (v) there shall have occurred any material adverse change in the financial markets, material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude and severity in its effect on the financial markets of the United States and (b) such event singly or together with any other such event makes it, in the reasonable judgment of the Manager, impracticable to market the Preferred Securities on the terms and in the manner contemplated in the Prospectus. 8. Defaulting Underwriters. If, on the Closing Date or the Option ----------------------- Closing Date, as the case may be, any one or more of the Underwriters shall default in its or their obligations to take up and pay for the Preferred Securities or otherwise fail or refuse to purchase Preferred Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of Preferred Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Preferred Securities to be purchased on such date, the non- defaulting Underwriters may make arrangements satisfactory to the Company and the non-defaulting Underwriters for the purchase of such Preferred Securities, but if no such arrangements are made, the non-defaulting Underwriters shall be obligated severally in the proportions which the aggregate number of Preferred Securities set forth opposite their names in the Underwriting Agreement bear to the aggregate number of Preferred Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Manager may specify, to purchase the Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the aggregate number of Preferred -------- Securities which any non-defaulting Underwriter has agreed to purchase pursuant to the Underwriting Agreement be increased pursuant to this paragraph by an amount in excess of one-ninth of such number of Preferred Securities without the written consent of such non-defaulting Underwriter. In any such case either the Manager or the Company shall have the right to postpone the Closing Date, or the Option Closing Date, as the case may be, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. If any Underwriter or Underwriters shall fail or refuse to purchase Preferred Securities and the aggregate number of Preferred Securities with respect to which such default occurs is more than one-tenth of the aggregate number of the Preferred Securities, and arrangements satisfactory to the Manager and the Company for the purchase of such Preferred Securities are not made within 36 hours after such default, this Agreement, or with respect to the Option Closing Date, the obligations of the Underwriters to purchase and of Capital Trust I to sell, the Additional Underwriters' Securities to be purchased and sold on the Option 19 Closing Date, will terminate without liability on the part of any non-defaulting Underwriter or of the Company. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 9. Reimbursement of Underwriters' Expenses. If this Agreement shall be --------------------------------------- terminated by the Underwriters or any of them because of any failure or refusal on the part of the Company or Capital Trust I to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company or Capital Trust I shall be unable to perform its obligations under this Agreement, the Company and Capital Trust I jointly and severally agree to reimburse the Underwriters or such Underwriters as have so terminated this Agreement, with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel itemized in detail reasonably satisfactory to the Company) reasonably incurred by such Underwriters in connection with the Preferred Securities. 10. Counterparts. This Agreement may be signed in any number of ------------ counterparts, each of which shall be an original, with the same affect as if the signatures thereto and hereto were upon the same instrument. 11. Governing Law. This Agreement shall be governed by and construed ------------- in accordance with the laws of the State of New York. 12. Parties In Interest. This Agreement has been and is made solely ------------------- for the benefit of the Underwriters, the Company and Capital Trust I, and the controlling persons, directors and officers referred to in Section 6 hereof, and their respective successors, assigns, executors and administrators. No other person shall acquire or have any right under or by virtue of this Agreement. 13. Section Headings. The Section headings in this Agreement have been ---------------- inserted as a matter of convenience of reference and are not a part of this Agreement. 20 EXHIBIT A FORM OF OPINION OF CAROL A. MCCOY, ESQ. VICE PRESIDENT, ASSOCIATE COUNSEL AND SECRETARY FOR THE COMPANY [Date] [Names and Addresses of Managers] Dear Ladies and Gentlemen: I am Vice President, Associate Counsel and Secretary of Torchmark Corporation, a Delaware corporation (the "Company"), and, as such, have served as counsel for the Company in connection with the issuance and sale to the several Underwriters named in the Underwriting Agreement dated October 31, 2001, (the "Underwriting Agreement") of $110,000,000 in liquidation amount of 7 3/4% Trust Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities") of Torchmark Capital Trust I, a Delaware business trust (the "Trust") to be issued pursuant to the Declaration (as defined below). Terms used in this opinion and not otherwise defined have the same meanings as in the Underwriting Agreement. In connection with the issuance of the Preferred Securities, the Trust is also issuing $3,402,075 in liquidation amount of its Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"), representing undivided beneficial interests in the assets of the Trust. The entire proceeds from the sale of the Preferred Securities and the Common Securities (collectively, the "Trust Securities") are to be used by the Trust to purchase $113,402,075 aggregate principal amount of 7 3/4% Junior Subordinated Debentures due 2041 of the Company (the "Junior Subordinated Debentures"). The Junior Subordinated Debentures are to be issued pursuant to an indenture, dated as of November 2, 2001, between the Company and The Bank of New York, as indenture trustee, and an Officer's Certificate, dated as of such date and issued pursuant thereto (collectively, the "Indenture"). The Trust Securities are being issued pursuant to the amended and restated declaration of trust of the Trust, dated as of November 2, 2001 (the "Declaration"), among the Company, as sponsor, Michael Klyce, Larry Hutchinson and Gary Coleman, as regular trustees (the "Regular Trustees"), The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee"), The Bank of New York, as property trustee (the "Property Trustee") and the A-1 holders from time to time of undivided beneficial interests in the assets of the Trust. The Preferred Securities are to be guaranteed by the Company with respect to distributions and payments upon liquidation, redemption and otherwise pursuant to and to the extent set forth in the Preferred Securities Guarantee Agreement, dated as of November 2, 2001, between the Company and The Bank of New York, as guarantee trustee (the "Guarantee"). I am familiar with and have examined such documents and records as I deemed necessary to render this opinion, including the Underwriting Agreement, the Indenture, the Declaration, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures. In my examination I have assumed but have not independently verified the genuineness of all signatures on all documents examined by me, the conformity to original documents of all documents submitted to us as certified or facsimile copies and the authenticity of all such documents. Based on the foregoing, and subject to the qualifications hereinafter set forth, I am of the opinion that: (i) the Company (1) has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and (2) is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; (ii) each of Liberty National Life Insurance Company, Globe Life And Accident Insurance Company, United American Insurance Company, United Investors Life Insurance Company and American Income Life Insurance Company (collectively the "Designated Subsidiaries"), (1) has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectuses and (2) is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing A-2 of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each such Designated Subsidiary have been duly and validly authorized and issued, are fully paid and nonassessable and are owned directly or indirectly by the Company free and clear of any all liens, encumbrances, equities or claims; (iii) each Designated Subsidiary is duly qualified and/or licensed to transact the business of insurance and is in good standing in each jurisdiction in which, during either of the last two calendar years, it wrote five percent (5%) or more of the total premiums written by it; (iv) the execution and delivery by the Company of, and the performance by the Company of its obligations under, the Underwriting Agreement, the Indenture, the Declaration, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures and the issuance and sale of the Preferred Securities as contemplated in the Underwriting Agreement, will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or, to my knowledge, any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under the Underwriting Agreement, the Indenture, the Declaration, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures except such as have been obtained or may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Preferred Securities; (v) after due inquiry, I do not know of any legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any property of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or of any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which are not described or to be filed as required; A-3 (vi) the statements (a) in Part I of the Annual Report on Form 10-K of the Company for the year ended December 31, 2000, under the captions "Item 1-- Business--Regulation" and "Item 3--Legal Proceedings" and (b) in Part II of the Quarterly Reports on Form 10-Q of the Company for the quarters ended March 31, 2001 and June 30, 2001, under the caption "Item 1--Legal Proceedings", in each case insofar as such statements constitute summaries of legal matters, documents or proceedings referred to therein, fairly summarize the matters referred to therein in all material respects; and (vii) I am of the opinion that each document incorporated by reference in the Registration Statement and the Prospectus (other than the financial statements, notes, and schedules and other financial data included or incorporated by reference in such documents, as to which I express no opinion) complied as to form when filed with the Securities and Exchange Commission in all material respects with the Securities Act of 1933, as amended, and the rules and the regulations of the Securities and Exchange Commission thereunder. I am licensed to practice law only in the State of Alabama, and, accordingly, I offer no opinion as to the application of decisions or statutory law (including conflict of law rules) of any jurisdiction other than the State of Alabama, the State of Delaware and the United States of America. This opinion is delivered pursuant to Section 3(b) of the Underwriting Agreement at the request of the Company and is intended solely for your use as Underwriters. As such, it may not be relied upon by any other person or for any other purpose other than for the legal conclusions expressed herein. Very truly yours, Carol A. McCoy, Esq. A-4 EXHIBIT B FORM OF OPINION OF MAYNARD, COOPER & GALE, P.C. SPECIAL COUNSEL FOR THE COMPANY [Date] [Names and Addresses of Managers] Dear Ladies and Gentlemen: We have acted as special counsel for Torchmark Corporation, a Delaware corporation (the "Company"), and Torchmark Capital Trust I, a statutory business trust created under the Business Trust Act of the State of Delaware (the "Trust"), in connection with the issuance and sale by the Company to the Several Underwriters named in the Underwriting Agreement, dated October 31, 2001 (the "Underwriting Agreement"), of $110,000,000 in liquidation amount of 7 3/4% Trust Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities") of the Trust to be issued pursuant to the Declaration (as defined below). Terms used in this opinion and not otherwise defined have the same meanings as in the Underwriting Agreement. In connection with the issuance of the Preferred Securities, the Trust is also issuing $3,402,075 in liquidation amount of its Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"), representing undivided beneficial interests in the assets of the Trust. The entire proceeds from the sale of the Preferred Securities and the Common Securities (collectively, the "Trust Securities") are to be used by the Trust to purchase $113,402,075 aggregate principal amount of 7 3/4% Junior Subordinated Debentures due 2041 of the Company (the "Junior Subordinated Debentures"). The Junior Subordinated Debentures are to be issued pursuant to an indenture, dated as of November 2, 2001, between the Company and The Bank of New York, as indenture trustee, and an Officer's Certificate, dated as of such date and issued pursuant thereto, (collectively, the "Indenture"). The Trust Securities are being issued pursuant to the amended and restated declaration of trust of the Trust, dated as of November 2, 2001 (the "Declaration"), among the Company, as sponsor, Michael Klyce, Larry B-1 Hutchinson and Gary Coleman, as regular trustees (the "Regular Trustees"), The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee"), The Bank of New York, as property trustee (the "Property Trustee") and the holders from time to time of undivided beneficial interests in the assets of the Trust. The Preferred Securities are to be guaranteed by the Company with respect to distributions and payments upon liquidation, redemption and otherwise pursuant to and to the extent set forth in the Preferred Securities Guarantee Agreement, dated as of November 2, 2001, between the Company and The Bank of New York, as guarantee trustee (the "Guarantee"). We have participated in the preparation of the Company's Registration Statement on Form S-3 (File No. 333-83411) (other than the documents incorporated by reference in the prospectus included therein (the "Incorporated Documents")) filed with the Securities and Exchange Commission (the "Commission") pursuant to the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Although we did not participate in the preparation of the Incorporated Documents, we have reviewed such documents. In addition, we have reviewed evidence that the Registration Statement was declared effective under the Securities Act and that the Declaration, the Indenture and the Guarantee were qualified under the Trust Indenture Act of 1939, as amended, on November 30, 1999. The registration statement (including the Incorporated Documents and the prospectus supplement dated October 31, 2001 specifically relating to the Preferred Securities (the "Prospectus Supplement")) as amended to the date of the Prospectus Supplement is hereinafter referred to as the "Registration Statement", and the prospectus included in the Registration Statement (the "Basic Prospectus") as supplemented by the Prospectus Supplement is hereinafter referred to as the "Prospectus". As special counsel, we have examined the Underwriting Agreement, the Indenture, the Declaration, the Guarantee, the Debenture Purchase Agreement, the Subscription Agreement and the forms of Preferred Securities and Junior Subordinated Debentures, and originals or copies of certain corporate documents of the Company; certificates and statements of public officials, corporate agents, officers of the Company, and other persons; and such other documents as we have deemed necessary as a basis for our opinions set forth below. In this connection, we have assumed the genuineness of all signatures and the authenticity and correctness of all copies of documents examined. Also, we have relied upon such certificates and statements of public officials, corporate agents, officers of the Company, and other persons with respect to the accuracy of material factual matters that were not independently established. B-2 Based on the foregoing, and subject to the qualifications hereinafter set forth, we are of the opinion that: (i) The Underwriting Agreement has been duly authorized, executed and delivered by the Company; (ii) The Declaration has been duly qualified under the Trust Indenture Act, and has been duly authorized, executed and delivered by the Company and the Regular Trustees and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (iii) The Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended, and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (iv) The Guarantee has been duly qualified under the Trust Indenture Act of 1939, as amended, and has been duly authorized, executed and delivered by the Company, and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as (i) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (v) Each of the Debenture Purchase Agreement and the Subscription Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, B-3 fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (vi) The Junior Subordinated Debentures have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the Underwriting Agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with its terms and entitled to the benefits of the Indenture, except as (i) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (vii) The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Underwriting Agreement, the Indenture, the Declaration, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company; (viii) No consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under the Underwriting Agreement, the Indenture, the Declaration, the Guarantee, the Subscription Agreement, the Debenture Purchase Agreement and the Junior Subordinated Debentures except such as have been obtained or may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Preferred Securities; (ix) Each of the Company and Capital Trust I is not, and after giving effect to the issuance of the Preferred Securities and assuming the application of the proceeds thereof as described in the Prospectus, will not be, required to register as an "investment company" under the Investment Company Act of 1940, as amended; (x) Under current law, Capital Trust I will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation; B-4 (xi) Under current law, the Junior Subordinated Debentures will be classified for United States federal income tax purposes as indebtedness of the Company; (xii) The statements (a) in the Basic Prospectus under the captions "Description of Securities -- Description of the Trust Preferred Securities," "Description of Securities -- Description of Debt Securities" and "Description of Securities -- Description of Trust Preferred Securities Guarantees," (b) in the Prospectus Supplement under the captions "Description of the Trust Preferred Securities", "Description of the Junior Subordinated Debentures", "Description of the Guarantee," "United States Federal Income Tax Consequences", "ERISA Considerations" and "Underwriting" and (c) in the Registration Statement in Item 15, in each case insofar as such statements constitute summaries of legal matters, documents or proceedings referred to therein, fairly summarize the matters referred to therein in all material respects. We have not ourselves checked the accuracy, completeness or fairness of, or otherwise verified, the information furnished with respect to other matters in the Registration Statement or Prospectus. We have generally reviewed and discussed with your representatives and with certain officers and employees of, and counsel and independent public accountants for the Company, the information furnished, whether or not subject to our check and verification. On the basis of such consideration, review and discussion, but without independent check or verification, except as stated, nothing has come to our attention that causes us to believe that (i) the Registration Statement and the Prospectus (except for the financial statements and financial schedules and other financial data included or incorporated by reference therein, as to which we express no belief, and except for that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification of the trustees referred to in the Registration Statement (the "Form T-1")) do not comply as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, (ii) the Registration Statement (except for the financial statements and financial schedules and other financial data included or incorporated by reference therein, as to which we express no belief, and except for the Form T-1), at the time the Registration Statement became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) the Prospectus (except for the financial statements and financial schedules and other financial data included or incorporated by reference therein, as to which we express no belief, and except for the Form T-1), as of its date and as of the date hereof, contained or contains any untrue statement of a material fact or omits B-5 to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. We are members of the Bar of the State of Alabama, and this opinion is limited in all respects to the laws of the State of Alabama, the General Corporation Law of the State of Delaware, and the United States of America. As to all matters governed by the laws of the State of New York with respect to our opinions in paragraphs (iii), (iv), (v) and (vi), we are relying on the opinion dated today of your counsel, Davis Polk & Wardwell. As to all matters governed by the laws of the State of Delaware (other than the General Corporation Law of the State of Delaware) with respect to our opinion in paragraphs (ii), we are relying on the opinion dated today of Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Company and the Trust. This opinion is being delivered to you at the request of the Company and the Trust in connection with the Underwriting Agreement and the transactions contemplated by the Underwriting Agreement, and may not be relied on by any other person or for any other purpose without our prior written consent. Very truly yours, B-6 EXHIBIT C FORM OF OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL, SPECIAL DELAWARE COUNSEL FOR THE COMPANY AND THE TRUST [Date] [Names and Addresses of Managers] Re: Torchmark Capital Trust I Ladies and Gentlemen: We have acted as special Delaware counsel to Torchmark Capital Trust I, a Delaware statutory business trust (the "Trust"), in connection with certain matters of Delaware law relating to the formation of the Trust and the proposed issuance of Preferred Securities by the Trust pursuant to and as described in the Registration Statement (and the Prospectus and the Prospectus Supplement forming a part thereof) on Form S-3 filed with the Securities and Exchange Commission by Torchmark Corporation, a Delaware corporation (the "Company") and the Trust, on July 21, 1999, as amended by Pre-Effective Amendment No. 1 thereto (as amended, the "Registration Statement"). Capitalized terms used herein and not otherwise herein defined are used as defined in the Amended and Restated Declaration of Trust of the Trust dated as of November 2, 2001 (the "Governing Instrument"). In rendering this opinion, we have examined and relied upon copies of the following documents in the forms provided to us: the Certificate of Trust of the Trust as filed in the Office of the Secretary of State of the State of Delaware (the "State Office") on July 21, 1999 (the "Certificate of Trust"); the Declaration of Trust of the Trust dated as of July 21, 1999 (the "Original Governing Instrument"); the Governing Instrument; the Junior Subordinated Indenture dated as of November 2, 2001 between the Company and The Bank of New York, as trustee; the Preferred Securities Guarantee Agreement dated as of November 2, 2001 between the Company and The Bank of New York, as trustee; the Underwriting Agreement dated as of October 31, 2001 relating to the Preferred Securities among the Company, the Trust and the several underwriters named therein (the "Underwriting Agreement"); the Debenture Purchase Agreement dated as of November 2, 2001 between the Trust and the Company (the "Debenture Purchase Agreement"); the Subscription Agreement dated as of November 2, 2001 between the Trust and the Company (the "Subscription Agreement"); the Registration Statement; and a certification of good standing of the Trust obtained as of a recent date from the State Office. In such examinations, C-1 we have assumed the genuineness of all signatures, the conformity to original documents of all documents submitted to us as drafts or copies or forms of documents to be executed and the legal capacity of natural persons to complete the execution of documents. We have further assumed for purposes of this opinion: (i) the due formation or organization, valid existence and good standing of each entity (other than the Trust) that is a party to any of the documents reviewed by us under the laws of the jurisdiction of its respective formation or organization; (ii) except to the extent addressed by our opinion set forth in paragraph 3 below, the due authorization, execution and delivery by, or on behalf of, each of the parties thereto of the above-referenced documents (including, without limitation, the due authorization, execution and delivery of the Governing Instrument and the Underwriting Agreement, the Debenture Purchase Agreement and the Subscription Agreement by the parties thereto prior to the first issuance of the Common Securities and the Preferred Securities); (iii) that no event has occurred subsequent to the filing of the Certificate of Trust that would cause a dissolution or liquidation of the Trust under the Original Governing Instrument or the Governing Instrument, as applicable; (iv) that the activities of the Trust have been and will be conducted in accordance with the Original Governing Instrument or the Governing Instrument, as applicable; (v) that the required consideration for the Preferred Securities and the Common Securities is paid in accordance with the terms and conditions of the Governing Instrument, the Underwriting Agreement, the Subscription Agreement and the Registration Statement and that the Preferred Securities and the Common Securities are otherwise issued and sold in accordance with the terms, conditions, requirements and procedures set forth in the Governing Instrument, the Underwriting Agreement, the Subscription Agreement and the Registration Statement; (vi) that each of the Trust and the Company does not and will not conduct any business or activities in the State of Delaware (other than, with respect to the Trust, activities incidental to its formation and continued existence as a Delaware statutory business trust); (vii) that the Trust is a grantor trust for federal income tax purposes as owners of either all of, or their liquidation and accrued but unpaid share of, the Debentures held by the Trust; (viii) that the Securities and the Debentures are executed and delivered outside the State of Delaware; and (ix) that the documents examined by us are in full force and effect, express the entire understanding of the parties thereto with respect to the subject matter thereof and have not been amended, supplemented or otherwise modified, except as herein referenced. We have not reviewed any documents other than those identified above in connection with this opinion, and we have assumed that there are no other documents that are contrary to or inconsistent with the opinions expressed herein. Further, except to the extent addressed by our opinion set forth in paragraph 10 below, we express no opinion with respect to, and assume no responsibility for the contents of, the Registration Statement or any other offering material relating to the Common Securities or the Preferred Securities. No opinion is expressed herein with respect to the requirements of, or compliance C-2 with, federal or state securities or blue sky laws. As to any fact material to our opinion, other than those assumed, we have relied without independent investigation on the above-referenced documents and certificates and on the accuracy, as of the date hereof, of the matters therein contained. To the extent our opinion in paragraph 4 relates to the violation of any Delaware law, rule, or regulation, or the requirement for consent, approval, authorization or order of, or filing with, any governmental agency or body of the State of Delaware, our opinions relate only to laws, rules, regulations and requirements of law that are of general application and that, in our experience, are likely to have application to transactions of the nature herein referenced (and not to laws, rules, regulations or requirements of law that might be implicated by reason of the specific business activities of any of the above- referenced entities). Based on and subject to the foregoing, and limited in all respects to matters of Delaware law, it is our opinion that: 1. The Trust has been duly formed and is validly existing in good standing as a business trust under the Delaware Business Trust Act, 12 Del. C. (S)(S) 3801 et seq. (the "Delaware Act"). 2. Under the Governing Instrument and the Delaware Act, the Trust has the requisite business trust power and authority to (A) conduct its business as described in the Prospectus, (B) execute and deliver the Underwriting Agreement, the Debenture Purchase Agreement and the Subscription Agreement, and perform its obligations thereunder and (C) issue and perform its obligations under the Preferred Securities and the Common Securities. 3. The execution and delivery by the Trust of the Underwriting Agreement, the Debenture Purchase Agreement and the Subscription Agreement, and the performance of its obligations thereunder, have been duly authorized by all requisite business trust action on the part of the Trust. 4. The issuance and sale by the Trust of the Preferred Securities and the Common Securities, the execution, delivery and performance by the Trust of the Underwriting Agreement, the Debenture Purchase Agreement and the Subscription Agreement and the consummation by the Trust of the transactions contemplated thereby will not violate (A) the Governing Instrument or (B) any applicable Delaware law, rule or regulation. No consent, approval, authorization or order of, or filing with, any governmental agency or body of the State of Delaware that has not C-3 been obtained is required for the execution, delivery and performance by the Trust of its obligations under the Underwriting Agreement, the Debenture Purchase Agreement and the Subscription Agreement or the issuance and sale of the Preferred Securities and the Common Securities by the Trust. 5. Under the Governing Instrument and the Delaware Act, the issuance of the Preferred Securities is not subject to preemptive rights. 6. Assuming that the Trust derives no income from or connected with services provided within the State of Delaware and has no assets, activities (other than maintaining the Delaware Trustee and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, the Holders of the Securities (other than Holders of the Securities, or Persons who are partners or S corporation shareholders for federal income tax purposes in such Holders of the Securities, who reside or are domiciled in the State of Delaware or who are otherwise subject to income taxation in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware. 7. The Governing Instrument constitutes a legal, valid and binding obligation of the Company and the Capital Trustees, enforceable against the Company and the Capital Trustees in accordance with its terms, except to the extent that enforcement thereof may be limited by (A) bankruptcy, insolvency, receivership, liquidation, fraudulent conveyance, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and remedies, (B) general principles of equity (regardless of whether considered and applied in a proceeding in equity or at law) and (C) considerations of public policy and the effect of applicable law relating to fiduciary duties. 8. The Preferred Securities have been duly authorized for issuance by the Governing Instrument and, when issued, executed, authenticated, delivered and paid for in accordance with the Governing Instrument and the Underwriting Agreement, will be fully paid and, subject to the qualifications set forth below, non-assessable undivided beneficial interests in the assets of the Trust. Under the Governing Instrument and the Delaware Act, each Preferred Security Holder of the Trust, in such capacity, will be entitled to the same limitation on personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; C-4 provided, however, that we express no opinion with respect to the liability of any Preferred Security Holder who is, was or may become a named Trustee of the Trust. Notwithstanding the foregoing, we note that, pursuant to the Governing Instrument, Preferred Security Holders may be obligated to make payments or provide indemnity or security under the circumstances set forth therein. 9. The Common Securities have been duly authorized for issuance by the Governing Instrument and, when issued, executed, authenticated, delivered and paid for in accordance with the Governing Instrument and the Subscription Agreement, will be fully paid and, subject to the qualifications set forth below, non-assessable undivided beneficial interests in the assets of the Trust. We note that, pursuant to the Governing Instrument, Common Security Holders may be obligated to make payments or provide indemnity or security under the circumstances set forth therein. 10. The statements in the Prospectus under the caption "The Trusts" and in the Prospectus Supplement under the caption "Prospectus Supplement Summary -- Torchmark Capital Trust I" to the extent such statements address matters of Delaware law are correct statements of such law in all material respects. This opinion speaks only as of the date hereof and is based on our understandings and assumptions as to present facts, and on our review of the above-referenced documents and the application of Delaware law as the same exist as of the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for the benefit of any person or entity with respect to any facts or circumstances that may hereafter come to our attention or any changes in facts or law that may hereafter occur or take effect. We understand that the law firms of Maynard, Cooper & Gale, P.C., and Davis Polk & Wardwell wish to rely as to matters of Delaware law on the opinions set forth above in connection with the rendering of its opinion to you dated on or about the date hereof concerning the Underwriting Agreement, and we hereby consent to such reliance. Except as provided in the preceding sentence, the opinions herein expressed are intended solely for the benefit of the addressees hereof in connection with the transactions contemplated by the Underwriting Agreement and may not be relied upon by any other person or entity, or for any other purpose, without our prior written consent. Very truly yours, MORRIS, NICHOLS, ARSHT & TUNNELL Jonathan I. Lessner C-5 EXHIBIT D FORM OF OPINION OF DAVIS POLK & WARDWELL COUNSEL FOR THE UNDERWRITERS [Date] [Names and Addresses of Managers] Dear Ladies and Gentlemen: We have acted as counsel for you as representatives of the several underwriters (the "Underwriters") named in the Underwriting Agreement dated October 31, 2001 (the "Underwriting Agreement") with Torchmark Corporation, a Delaware corporation (the "Company") and Torchmark Capital Trust I, a Delaware business trust (the "Trust"), in connection with the purchase by the several Underwriters of $110,000,000 in liquidation amount of 7 3/4% Trust Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities") of the Trust to be issued pursuant to the Declaration (as defined below). In connection with the issuance of the Preferred Securities, the Trust is also issuing $3,402,075 in liquidation amount of its Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"), representing undivided beneficial interests in the assets of the Trust. The entire proceeds from the sale of the Preferred Securities and the Common Securities (collectively, the "Trust Securities") are to be used by the Trust to purchase $113,402,075 aggregate principal amount of 7 3/4% Junior Subordinated Debentures due 2041 of the Company (the "Junior Subordinated Debentures"). The Junior Subordinated Debentures are to be issued pursuant to an indenture, dated as of November 2, 2001, between the Company and The Bank of New York, as indenture trustee, and an Officer's Certificate, dated as of such date and issued pursuant thereto, (collectively, the "Indenture"). The Trust Securities are being issued pursuant to the amended and restated declaration of trust of the Trust, dated as of November 2, 2001 (the "Declaration"), among the Company, as sponsor, Michael Klyce, Larry Hutchinson and Gary Coleman, as regular trustees (the "Regular Trustees"), The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee"), The Bank of New York, as property trustee (the "Property Trustee") and the D-1 holders from time to time of undivided beneficial interests in the assets of the Trust. The Preferred Securities are to be guaranteed by the Company with respect to distributions and payments upon liquidation, redemption and otherwise pursuant to and to the extent set forth in the Preferred Securities Guarantee Agreement, dated as of November 2, 2001, between the Company and The Bank of New York, as guarantee trustee (the "Guarantee"). We have examined an executed copy of the Underwriting Agreement, the Declaration, the Guarantee, the Indenture, the Debenture Purchase Agreement, the Subscription Agreement and forms of the Preferred Securities and the Junior Subordinated Debentures. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such other documents, corporate records, certificates of public officials and other instruments as we have deemed necessary or advisable for the purpose of rendering this opinion. We have participated in the preparation of the Company's Registration Statement on Form S-3 (File No. 333-83411) (other than, in each case, the documents incorporated by reference in the prospectus included therein (the "Incorporated Documents")) filed with the Securities and Exchange Commission (the "Commission") pursuant to the provisions of the Securities Act of 1933, as amended (the "Act"). Although we did not participate in the preparation of the Incorporated Documents, we have reviewed such documents. In addition, we have reviewed evidence that the Registration Statement was declared effective under the Act and that the Declaration, the Indenture and the Guarantee were qualified under the Trust Indenture Act of 1939, as amended, on November 30, 1999. The registration statement (including the Incorporated Documents and the prospectus supplement dated October 31, 2001 specifically relating to the Preferred Securities (the "Prospectus Supplement")) as amended to the date of the Prospectus Supplement is hereinafter referred to as the "Registration Statement", and the prospectus included in the Registration Statement (the "Basic Prospectus") as supplemented by the Prospectus Supplement is hereinafter referred to as the "Prospectus". We have assumed the conformity of the documents filed with the Commission via the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"), except for required EDGAR formatting changes, to physical copies of the documents delivered to the Company and submitted for our examination. Capitalized terms used but not otherwise defined herein are used as defined in the Underwriting Agreement. D-2 Upon the basis of the foregoing, we are of the opinion that: (i) the Underwriting Agreement has been duly authorized, executed and delivered by the Company; (ii) the Indenture has been duly qualified under the Trust Indenture Act, has been duly authorized, executed and delivered by the Company, and is a valid and binding agreement of the Company, enforceable in accordance with its terms except (a) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally and (b) as the enforceability thereof is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (iii) the Guarantee has been duly qualified under the Trust Indenture Act, has been duly authorized, executed and delivered by the Company, and is a valid and binding obligation of the Company enforceable in accordance with its terms except (a) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally, (b) as the enforceability thereof is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (iv) the Declaration has been duly qualified under the Trust Indenture Act, has been duly authorized, executed and delivered by the Company, and is a valid and binding obligation of the Company enforceable in accordance with its terms except (a) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally, (b) as the enforceability thereof is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (v) each of the Debenture Purchase Agreement and the Subscription Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium and other similar laws affecting creditors' rights generally and (ii) is subject to D-3 general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; and (vi) the Junior Subordinated Debentures have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered and paid for as described in the Prospectus, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company, enforceable in accordance with their terms except (a) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally and (b) as the enforceability thereof is subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. We have considered the statements relating to legal matters or documents included in (a) the Basic Prospectus under the captions "Description of Securities -- Description of the Trust Preferred Securities," "Description of Securities -- Description of Debt Securities" and "Description of Securities -- Description of Trust Preferred Securities Guarantees," and (b) the Prospectus Supplement under the captions "Description of the Trust Preferred Securities," "Description of the Junior Subordinated Debentures," "Description of the Guarantee" and "Underwriting". In our opinion, such statements fairly summarize in all material respects such legal matters or documents. We have not ourselves checked the accuracy, completeness or fairness of, or otherwise verified, the information furnished with respect to other matters in the Registration Statement or Prospectus. We have generally reviewed and discussed with your representatives and with certain officers and employees of and independent public accountants for the Company, the information furnished, whether or not subject to our check and verification. On the basis of such consideration, review and discussion, but without independent check or verification, except as stated, nothing has come to our attention that causes us to believe that (i) the Registration Statement and the Prospectus (except for the financial statements and financial schedules and other financial data included or incorporated by reference therein, as to which we express no belief, and except for that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification of the trustees referred to in the Registration Statement (the "Form T-1")) do not comply as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, (ii) the Registration Statement (except for the financial statements and financial schedules and other financial data included or incorporated by reference therein, as to which we express no belief, and except for D-4 the Form T-1), at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) the Prospectus (except for the financial statements and financial schedules and other financial data included or incorporated by reference therein, as to which we express no belief, and except for the Form T- 1), as of its date and as of the date hereof, contained or contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. We have examined the opinions of (a) Carol A. McCoy, Esq., Vice President, Associate Counsel and Secretary of the Company, (b) Maynard, Cooper & Gale, P.C., special counsel for the Company and the Trust, and (c) Morris, Nichols, Arsht & Tunnell, special Delaware counsel for the Company and the Trust, each dated the date hereof and delivered to you pursuant to Sections 3(b), 3(c) and 3(d), respectively, of the Underwriting Agreement, and we believe that such opinions are substantially responsive to the requirements therefor. We have also examined the letters dated October 31, 2001, and the date hereof of Deloitte & Touche LLP, independent public accountants for the Company, relating to the financial statements included or incorporated by reference in the Registration Statement and certain other matters referred to in such letters, delivered to you pursuant to Section 3(f) of the Underwriting Agreement. We participated in discussions with representatives of Deloitte & Touche LLP and your representatives relating to the forms of such letters and we believe that they are substantially in the forms agreed to. We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York, the General Corporation Law of the State of Delaware and the Federal laws of the United States. As to all matters governed by the laws of the State of Delaware (other than the General Corporation Law of the State of Delaware), we have relied upon the opinion dated today of Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Company and the Trust. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon or furnished to any other person without our prior written consent, except that Maynard, Cooper & Gale, P.C., special counsel to the Company, may rely on our opinions in paragraphs (ii), (iii), (v) and (vi) as to matters governed by the laws of the State of New York in rendering their opinion to be delivered pursuant to the Underwriting Agreement. Very truly yours, D-5 EX-4.1 4 dex41.txt CERTIFICATE OF AMENDMENT EXHIBIT 4.1 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF TRUST OF TORCHMARK CAPITAL TRUST I This Certificate of Amendment of Certificate of Trust of Torchmark Capital Trust I (the "Trust") is being executed as of November 1, 2001 for the purpose of amending the Certificate of Trust of the Trust filed with the Secretary of State of the State of Delaware on July 21, 1999 (the "Certificate of Trust") pursuant to the Delaware Business Trust Act, 12 Del. C. (S)(S) 3801 ---- -- et seq. (the "Act"). -- ---- The undersigned hereby certifies that Section 2 of the Certificate of Trust is hereby amended in its entirety to read as follows: 2. Delaware Trustee. The name and business address of the Delaware ---------------- resident trustee of the Trust meeting the requirements of Section 3807 of the Act are as follows: The Bank of New York (Delaware) White Clay Center, Route 273 Newark, Delaware 19711 IN WITNESS THEREOF, the undersigned, being a trustee of the Trust, has duly executed this Certificate of Amendment of Certificate of Trust as of the day and year first above written. /s/ Michael J. Klyce -------------------- Name: Michael J. Klyce Title: Regular Trustee EX-4.2 5 dex42.txt DECLARATION OF TRUST DATED 11/02/2001 EXHIBIT 4.2 AMENDED AND RESTATED DECLARATION OF TRUST TORCHMARK CAPITAL TRUST I DATED AS OF NOVEMBER 2, 2001 TABLE OF CONTENTS Page ---- ARTICLE I INTERPRETATION AND DEFINITIONS Section 1.1. Definitions 1 ARTICLE II TRUST INDENTURE ACT Section 2.1. Trust Indenture Act: Application 9 Section 2.2. Lists of Holders of Securities 9 Section 2.3. Reports by the Property Trustee 10 Section 2.4. Periodic Reports to Property Trustee 10 Section 2.5. Evidence of Compliance with Conditions Precedent 10 Section 2.6. Events of Default; Waiver 10 Section 2.7. Event of Default; Notice 12 ARTICLE III ORGANIZATION Section 3.1. Name 13 Section 3.2. Office 13 Section 3.3. Purpose 13 Section 3.4. Authority 13 Section 3.5. Title to Property of the Trust 13 Section 3.6. Powers and Duties of the Regular Trustees 13 Section 3.7. Prohibition of Actions by the Trust and the Trustees 17 Section 3.8. Powers and Duties of the Property Trustee 18 Section 3.9. Certain Duties and Responsibilities of the Property Trustee 20 Section 3.10. Certain Rights of Property Trustee 22 Section 3.11. Delaware Trustee 25 Section 3.12. Execution of Documents 25 Section 3.13. Not Responsible for Recitals or Issuance of Securities 26 Section 3.14. Duration of Trust 26 Section 3.15. Mergers 26 i ARTICLE IV SPONSOR Section 4.1. Sponsor's Purchase of Common Securities 28 Section 4.2. Responsibilities of the Sponsor 28 ARTICLE V TRUSTEES Section 5.1. Number of Trustees 29 Section 5.2. Delaware Trustee 29 Section 5.3. Property Trustee; Eligibility 29 Section 5.4. Certain Qualifications of Regular Trustees and Delaware Trustee Generally 30 Section 5.5. Regular Trustees 30 Section 5.6. Appointment, Removal and Resignation of Trustees 31 Section 5.7. Vacancies among Trustees 32 Section 5.8. Effect of Vacancies 32 Section 5.9. Meetings 33 Section 5.10. Delegation of Power 33 Section 5.11. Merger, Conversion, Consolidation or Succession to Business 33 ARTICLE VI DISTRIBUTIONS Section 6.1. Distributions 34 ARTICLE VII ISSUANCE OF SECURITIES Section 7.1. General Provisions Regarding Securities 34 Section 7.2. Subordination of Common Securities 34 Section 7.3. Execution and Authentication 35 Section 7.4. Form and Dating 35 Section 7.5. Paying Agent 36 ARTICLE VIII DISSOLUTION AND TERMINATION OF TRUST Section 8.1. Dissolution and Termination of Trust 36 Section 8.2. Liquidation Distribution upon Dissolution of the Trust 38 ii ARTICLE IX TRANSFER OF INTERESTS Section 9.1. Transfer of Securities 38 Section 9.2. Transfer of Certificates 39 Section 9.3. Deemed Security Holders 40 Section 9.4. Book Entry Interests 40 Section 9.5. Notices to Clearing Agency 41 Section 9.6. Appointment of Successor Clearing Agency 41 Section 9.7. Definitive Preferred Security Certificates under Certain Circumstances 42 Section 9.8. Mutilated, Destroyed, Lost or Stolen Certificates 43 ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS Section 10.1. Liability 44 Section 10.2. Exculpation 44 Section 10.3. Fiduciary Duty 45 Section 10.4. Indemnification 46 Section 10.5. Outside Business 49 ARTICLE XI ACCOUNTING Section 11.1. Fiscal Year 49 Section 11.2. Certain Accounting Matters 49 Section 11.3. Banking 50 Section 11.4. Withholding 50 ARTICLE XII AMENDMENTS AND MEETINGS Section 12.1. Amendments 51 Section 12.2. Meetings of the Holders of Securities; Action by Written Consent 53 ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE Section 13.1. Representations and Warranties of Property Trustee 55 Section 13.2. Representations and Warranties of Delaware Trustee 56 iii ARTICLE XIV MISCELLANEOUS Section 14.1. Notices 57 Section 14.2. Governing Law 58 Section 14.3. Intention of the Parties 58 Section 14.4. Headings 59 Section 14.5. Successors and Assign 59 Section 14.6. Partial Enforceability 59 Section 14.7. Counterparts 59 iv CROSS-REFERENCE TABLE* Section of Trust Indenture Act Section of of 1939, as amended Declaration 310(b) 5.3(c) & (d) 311(a) 2.2(b) 311(b) 2.2(b) 312(b) 2.2(b) 313 2.3 313(d) 2.3 314 2.4 314(a) 3.6(j) 314(c) 2.5 316(a) 2.6(a)-(c) & (e) 317(b) 3.8(h) * This Cross-Reference table does not constitute part of the Declaration and shall not affect the interpretation of any of its terms or provisions. v AMENDED AND RESTATED DECLARATION OF TRUST OF TORCHMARK CAPITAL TRUST I November 2, 2001 This AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") is dated and effective as of November 2, 2001, by the Trustees (as defined herein), the Sponsor (as defined herein) and by the Holders (as defined herein), from time to time, of undivided beneficial interests in the assets of the Trust to be issued pursuant to this Declaration. WHEREAS, certain of the Trustees and the Sponsor established Torchmark Capital Trust I (the "Trust"), a trust under the Delaware Business Trust Act pursuant to a Declaration of Trust dated as of July 21, 1999 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on July 21, 1999 and amended on November 1, 2001 for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in certain Debt Securities (as defined herein) of the Debt Security Issuer (as defined herein); WHEREAS, as of the date hereof, no interests in the Trust have been issued; and WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration; NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a business trust under the Delaware Business Trust Act and that this Declaration constitutes the governing instrument of such business trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the Holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I INTERPRETATION AND DEFINITIONS Section 1.1. Definitions. ----------- Unless the context otherwise requires: (a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) a term defined anywhere in this Declaration has the same meaning throughout; 1 (c) all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time; (d) all references in this Declaration to "Articles" and "Sections" and "Annexes" and "Exhibits" are to Articles and Sections of and Annexes and Exhibits of or to this Declaration unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "Administrative Action" has the meaning specified in Annex I. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. "Authorized Officer" of a Person means any Person that is authorized to bind such Person. "Book Entry Interest" means a beneficial interest in a Global Certificate, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as described in Section 9.4. "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in the City of New York, New York are permitted or required by law to close. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time, or any successor legislation. "Certificate" means a Common Security Certificate or a Preferred Security Certificate. "Clearing Agency" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary for the Preferred Securities and in whose name or in the name of a nominee of that organization shall be registered a Global Certificate and which shall undertake to effect book entry transfers and pledges of the Preferred Securities. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. 2 "Closing Date" means November 2, 2001. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. "Commission" means the Securities and Exchange Commission. "Common Security" has the meaning specified in Section 7.1. "Common Security Certificate" means a definitive certificate in fully registered form representing a Common Security substantially in the form of Exhibit A-2. "Company Indemnified Person" means (a) any Regular Trustee; (b) any Affiliate of any Regular Trustee; (c) any officer, director, shareholder, member, partner, employee, representative or agent of any Regular Trustee; or (d) any officer, employee or agent of the Trust or its Affiliates. "Corporate Trust Office" means the office of the Property Trustee at which the corporate trust business of the Property Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at The Bank of New York, 101 Barclay Street, New York, NY 10286, Attention: Corporate Trust Administration "Coupon Rate" has the meaning specified in Annex I. "Covered Person" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities. "Debenture Purchase Agreement" means the Debenture Purchase Agreement between the Debt Security Issuer and the Trust dated as of November 2, 2001, pursuant to which the Trust will purchase the Debt Securities from the Debt Security Issuer. "Debt Securities" means the series of Debt Securities to be issued by the Debt Security Issuer under the Indenture to be held by the Property Trustee, a specimen certificate for such series of Debt Securities being attached hereto as Exhibit B. "Debt Security Issuer" means Torchmark Corporation, a Delaware corporation, in its capacity as issuer of the Debt Securities under the Indenture. "Debt Security Trustee" means The Bank of New York, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. 3 "Declaration" has the meaning set forth in the recitals. "Definitive Preferred Security Certificates" has the meaning set forth in Section 9.4. "Delaware Trustee" has the meaning set forth in Section 5.1. "Depositary" has the meaning specified in Annex I. "Direct Action" has the meaning specified in Section 3.8(e). "Distribution" means a distribution payable to Holders of Securities in accordance with Section 6.1. "DTC" means The Depository Trust Company, the initial Clearing Agency. "Event of Default" in respect of the Securities means an Event of Default (as defined in the Indenture) that has occurred and is continuing in respect of the Debt Securities. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Extension Period" has the meaning specified in Annex I. "Fiscal Year" has the meaning set forth in Section 11.1 "Fiduciary Indemnified Person" has the meaning set forth in Section 10.4(b). "Global Certificate" has the meaning set forth in Section 9.4(a). "Holder" means a Person in whose name a Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "Indemnified Person" means each Company Indemnified Person and each Fiduciary Indemnified Person. "Indenture" means the Indenture, dated as of November 2, 2001, between the Debt Security Issuer and The Bank of New York, as trustee, or, if amended or supplemented as provided therein, as so amended or supplemented or both, and shall include the forms and terms of a particular series of securities established as contemplated thereunder. "Investment Company" means an investment company as defined in the Investment Company Act. 4 "Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "Investment Company Event" has the meaning set forth in Annex I hereto. "Legal Action" has the meaning set forth in Section 3.6(g). "Like Amount" means (1) with respect to a redemption of Securities having an aggregate Liquidation Amount equal to that portion of the principal amount of Debt Securities to be contemporaneously redeemed in accordance with the Indenture, allocated to the Common Securities and to the Preferred Securities based upon the then outstanding relative Liquidation Amounts of such classes, and (2) with respect to a distribution of Debt Securities to Holders of Securities in connection with a dissolution or liquidation of the Trust, Debt Securities having an aggregate principal amount equal to the aggregate Liquidation Amount of the Securities of the Holder to whom such Debt Securities are distributed. "Liquidation" has the meaning specified in Section 8.2(a). "Liquidation Amount" means the stated amount of $25 per Security. "Liquidation Distribution" has the meaning specified in Section 8.2(a). "List of Holders" has the meaning set forth in Section 2.2(a). "Majority in liquidation amount of the Securities" means, except as provided in the terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "Ministerial Action" has the meaning set forth in the terms of the Securities as set forth in Annex I. "Officers' Certificate" means, with respect to the Trust, a certificate signed by two of the Regular Trustees, and with respect to Torchmark, a certificate signed by (a) the Chairman, Chief Executive Officer or any Vice President and (b) the Treasurer, Secretary, Assistant Treasurer or Assistant Secretary. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include: (a) a statement that each officer signing the Certificate has read the covenant or condition and the definitions relating thereto; 5 (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the 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. "OID" has the meaning specified in Annex I. "Option Closing Date" means the date of closing of any sale of any securities issued pursuant to an over-allotment option. "Original Declaration" has the meaning set forth in the recitals. "Paying Agent" has the meaning specified in Section 7.5. "Payment Amount" has the meaning set forth in Section 6.1. "Person" means 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. "Preferred Securities Guarantee" means the guarantee agreement to be dated as of November 2, 2001, of the Sponsor in respect of the Preferred Securities. "Preferred Security" has the meaning specified in Section 7.1. "Preferred Security Beneficial Owner" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "Preferred Security Certificate" means a certificate representing a Preferred Security substantially in the form of Exhibit A-1. "Property Trustee" means the Trustee meeting the eligibility requirements set forth in Section 5.3. "Property Trustee Account" has the meaning set forth in Section 3.8(c). 6 "Pro Rata" has the meaning specified in Annex I. "Quorum" means a majority of the Regular Trustees or, if there are only two Regular Trustees, both of them. "Redemption/Distribution Notice" has the meaning specified in Annex I. "Redemption Price" has the meaning specified in Annex I. "Regular Trustee" has the meaning set forth in Section 5.1. "Related Party" means, with respect to the Sponsor, any direct or indirect wholly owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Sponsor. "Responsible Officer" means, with respect to the Property Trustee, any officer within the Corporate Trust Office of the Property Trustee, including any vice president, any assistant vice president, any assistant treasurer or other officer of the Corporate Trust Office of the Property Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Securities" means the Common Securities and the Preferred Securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Special Event" has the meaning set forth in Annex I hereto. "Sponsor" or "Torchmark" means Torchmark Corporation, a Delaware corporation, or any successor entity in a merger, consolidation or amalgamation, in its capacity as sponsor of the Trust. "Subscription Agreement" means the Subscription Agreement between Torchmark Corporation and the Trust dated as of November 2, 2001, pursuant to which the Trust will sell the Common Securities to Torchmark Corporation. "Successor Delaware Trustee" has the meaning set forth in Section 5.6(b) "Successor Entity" has the meaning set forth in Section 3.15(b) "Successor Property Trustee" has the meaning set forth in Section 5.6(c)(i)(A). 7 "Successor Securities" has the meaning set forth in Section 3.15(b) "Super Majority" has the meaning set forth in Section 2.6(a)(ii). "Tax Event" has the meaning set forth in Annex I hereto. "Tax Opinion" has the meaning set forth in Annex I hereto. "Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury. "Trust" has the meaning set forth in the recitals. "Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "Trust Property" means (i) the Debt Securities, (ii) any cash on deposit in, or owing to, the Property Trustee Account and (iii) all proceeds and rights in respect of the foregoing to be held by the Property Trustee pursuant to the terms of this Declaration for the benefit of the Holders. "25% in liquidation amount of the Securities" means, except as provided in the terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of 25% or more of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "Underwriting Agreement" means the Underwriting Agreement for the offering and sale of Preferred Securities in the form of Exhibit C. ARTICLE II TRUST INDENTURE ACT Section 2.1. Trust Indenture Act: Application. -------------------------------- 8 (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act. (c) If, and to the extent that, any provision of this Declaration limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such duties imposed under the Trust Indenture Act shall control. (d) The application of the Trust Indenture Act to this Declaration shall not affect the nature of the Securities as equity securities representing undivided beneficial interests in the assets of the Trust. Section 2.2. Lists of Holders of Securities. ------------------------------ (a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the Property Trustee a list in such form as the Property Trustee may reasonably require of the names and addresses of the Holders of the Securities ("List of Holders") as of such record date, (i) within 14 days after each record date for payment of Distributions and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Property Trustee. The Property Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in the List of Holders given to it or which it receives in the capacity as Paying Agent (if acting in such capacity), PROVIDED THAT, the Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Property Trustee shall comply with its obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. Section 2.3. Reports by The Property Trustee. Within 60 days after May ------------------------------- 15 of each year, the Property Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. Section 2.4. Periodic Reports to Property Trustee. Each of the Sponsor ------------------------------------ and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. 9 Delivery of such reports, information and documents to the Property Trustee is for informational purposes only and the Property Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Sponsor's compliance with any of its covenants hereunder (as to which the Property Trustee is entitled to rely exclusively on Officers' Certificates). Section 2.5. Evidence of Compliance With Conditions Precedent. Each of ------------------------------------------------ the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.6. Events of Default; Waiver. ------------------------- (a) The Holders of a Majority in liquidation amount of Preferred Securities may by vote on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences, PROVIDED THAT, if the underlying Event of Default under the Indenture: (i) is not waivable under the Indenture, the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of greater than a majority in principal amount of the Holders of the Debt Securities (a "Super Majority") to be waived under the Indenture, the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in liquidation amount of the Preferred Securities that the relevant Super Majority represents of the aggregate principal amount of the Debt Securities outstanding. The foregoing provisions of this Section 2.6(a) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or an Event of Default with respect to the Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Preferred Securities of an Event of Default with respect to the Preferred Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities. 10 (b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on behalf of the Holders of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences, PROVIDED THAT, if the underlying Event of Default under the Indenture: (i) is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b), the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of a Super Majority to be waived, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b), the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in liquidation amount of the Common Securities that the relevant Super Majority represents of the aggregate principal amount of the Debt Securities outstanding; PROVIDED FURTHER, that each Holder of Common Securities will be deemed to have waived any such Event of Default and all Events of Default with respect to the Common Securities and its consequences until all Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated, and until such Events of Default have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act in accordance with the terms of the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon such waiver, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon. (c) A waiver of an Event of Default under the Indenture by the Property Trustee at the direction of the Holders of the Preferred Securities, constitutes a waiver of the corresponding Event of Default under this Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Section 2.7. Event of Default; Notice. ------------------------ 11 (a) The Property Trustee shall, within 90 days after the occurrence of an Event of Default actually known to a Responsible Officer of the Property Trustee, transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of all such defaults with respect to the Securities unless such defaults have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 2.7(a) being hereby defined to be an Event of Default as defined in the Indenture, not including any periods of grace provided for therein and irrespective of the giving of any notice provided therein); PROVIDED THAT, except for a default in the payment of principal of (or premium, if any) or interest on any of the Debt Securities or in the payment of any sinking fund installment established for the Debt Securities, the Property Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. Any such notice given pursuant to this Section 2.7(a) shall state that an Event of Default under the Indenture also constitutes an Event of Default under this Declaration. (b) The Property Trustee shall not be deemed to have knowledge of any default except: (i) a default under Sections 5.1(a) and 5.1(b) of the Indenture; or (ii) any default as to which the Property Trustee shall have received written notice or of which a Responsible Officer of the Property Trustee charged with the administration of the Declaration shall have actual knowledge. ARTICLE III ORGANIZATION Section 3.1. Name. The Trust is named "Torchmark Capital Trust I" as such ---- name may be modified from time to time by the Regular Trustees following written notice to the Holders of Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. Section 3.2. Office. The address of the principal office of the Trust is ------ c/o Torchmark Corporation, 2001 Third Avenue South, Birmingham, Alabama 35233. On at least ten Business Days written notice to the Holders of Securities, the Regular Trustees may designate another principal office. Section 3.3. Purpose. The exclusive purposes and functions of the Trust ------- are (a) to issue and sell Securities and use the proceeds from such sale to acquire the Debt Securities, (b) to distribute cash payments it receives from the Debt Security Issuer on the Debt Securities to the Holders of the 12 Securities and (c) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust. Section 3.4. Authority. Subject to the limitations provided in this --------- Declaration and to the specific duties of the Property Trustee and the Sponsor, the Regular Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee or the Sponsor on behalf of the Trust in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees or the Sponsor acting on behalf of the Trust, no person shall be required to inquire into the authority of the Trustees or the Sponsor to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees and the Sponsor as set forth in this Declaration. Section 3.5. Title to Property of the Trust. Except as provided in ------------------------------ Section 3.8 with respect to the Debt Securities and the Property Trustee Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders of Securities shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust. Section 3.6. Powers and Duties of the Regular Trustees. The Regular ----------------------------------------- Trustees shall have the power, duty and authority to cause the Trust to engage in the following activities: (a) to issue and sell the Securities in accordance with this Declaration; PROVIDED, HOWEVER, that the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities, and PROVIDED FURTHER, that there shall be no interests in the Trust other than the Securities, and the issuance of Securities shall be limited to a simultaneous issuance of both Preferred Securities and Common Securities on the Closing Date and Option Closing Date, if any; (b) in connection with the issue and sale of the Securities, at the direction of the Sponsor, to: (i) execute and file with the Commission, at such time as determined by the Sponsor, a registration statement on Form S-3 prepared by the Sponsor, including any amendments thereto in relation to the Preferred Securities; (ii) execute and file an application, prepared by the Sponsor, at such time as determined by the Sponsor, to the New York Stock Exchange or 13 any other national stock exchange for listing, or quotation on an interdealer quotation system, of the Preferred Securities; (iii) execute and deliver letters, documents, or instruments with The Depository Trust Company relating to the Preferred Securities; (iv) execute and file with the Commission, at such time as determined by the Sponsor, a registration statement on Form 8-A, including any amendments thereto, prepared by the Sponsor relating to the registration of the Preferred Securities under Section 12(b) of the Exchange Act; (v) execute and deliver for and on behalf of the Trust the Underwriting Agreement, the Subscription Agreement and other related agreements providing for the sale of the Securities; (vi) execute and file any documents prepared by the Sponsor, or take any acts as determined by the Sponsor to be necessary in order to qualify or register all or part of the Preferred Securities in any State in which the Sponsor has determined to qualify or register such Preferred Securities for sale or resale, as the case may be; and (vii) take all actions and perform such duties as may be required of the Regular Trustees to open checking, deposit or similar banking accounts as may be necessary in connection with the issuance and sale of the Securities; (c) to acquire the Debt Securities with the proceeds of the sale of the Preferred Securities and the Common Securities and in connection therewith, to execute and deliver for and on behalf of the Trust, the Debenture Purchase Agreement and other related agreements; PROVIDED, HOWEVER, that the Regular Trustees shall cause legal title to the Debt Securities to be held of record in the name of the Property Trustee for the benefit of the Holders of the Preferred Securities and the Holders of Common Securities; (d) to give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Special Event; PROVIDED THAT the Regular Trustees shall consult with the Sponsor and the Property Trustee before taking or refraining from taking any Ministerial Action in relation to a Special Event; (e) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including and with respect to, for the purposes of Section 316 (c) of the Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Preferred Securities and Holders of Common Securities as to such actions and applicable record dates; 14 (f) to take all actions and perform such duties as may be required of the Regular Trustees pursuant to the terms of the Securities; (g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has the exclusive power to bring such Legal Action; (h) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors and consultants, and pay reasonable compensation for such services; (i) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (j) to give the certificate required by Section 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Regular Trustee; (k) to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust; (l) to act as, or appoint another Person to act as, registrar, transfer agent, or Paying Agent for the Securities; (m) to give prompt written notice to the Holders of the Securities of any notice received from the Debt Security Issuer of its election (i) to defer payments of interest on the Debt Securities by extending the interest payment period under the Indenture or (ii) to shorten the stated maturity of the Debt Securities pursuant to the Indenture; (n) to execute and deliver all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary or incidental to the foregoing; (o) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; (p) to take any action, not inconsistent with this Declaration or with applicable law, that the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.6, including, but not limited to: (i) causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act; 15 (ii) causing the Trust to be classified for United States federal income tax purposes as a grantor trust; and (iii) cooperating with the Debt Security Issuer to ensure that the Debt Securities will be treated as indebtedness of the Debt Security Issuer for United States federal income tax purposes, PROVIDED THAT such action does not adversely affect the interests of the Holders of the Securities or vary the terms of the Preferred Securities; (q) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of the Trust; (r) to take all actions and perform such duties as may be required of the Regular Trustees pursuant to Section 11.2 herein; and (s) to the extent provided in this Declaration, to wind up the affairs of and liquidate the Trust and to prepare, execute and file the Certificate of Cancellation with the Secretary of State of the State of Delaware. The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular Trustees shall not take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.3. Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.8. Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed by the Sponsor. The Trust initially appoints the Property Trustee as transfer agent and registrar for the Preferred Securities. Section 3.7. Prohibition of Actions by The Trust And The Trustees. ---------------------------------------------------- (a) The Trust shall not, and the Trustees (including the Property Trustee) shall cause the Trust not to engage in any activity other than as required or authorized by this Declaration. In particular the Trust shall not and the Trustees (including the Property Trustee) shall cause the Trust not to: (i) invest any proceeds received by the Trust from holding the Debt Securities, but shall distribute all such proceeds to the Holders of 16 Securities pursuant to the terms of this Declaration and of the Securities; (ii) acquire any assets other than as expressly provided herein; (iii) possess Trust property for other than a Trust purpose; (iv) make any loans or incur any indebtedness or acquire any securities other than the Debt Securities; (v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever, except as permitted by the terms of this Declaration; (vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or (vii) other than as provided in this Declaration or Annex I hereto, (A) direct the time, method and place of exercising any trust or power conferred upon the Property Trustee with respect to the Debt Securities, (B) waive any past default that is not waivable under the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debt Securities shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debt Securities where such consent shall be required, unless the Trust shall have received an opinion of counsel to the effect that such modification will not cause more than an insubstantial risk that (x) the Trust will be deemed an Investment Company required to be registered under the Investment Company Act or (y) the Trust will not be classified as a grantor trust for United States federal income tax purposes. Section 3.8. Powers and Duties of the Property Trustee. ----------------------------------------- (a) The legal title to the Debt Securities shall be owned by and held of record in the name of the Property Trustee (acting in such capacity) for the benefit of the Trust and the Holders of the Securities. The right, title and interest of the Property Trustee to the Debt Securities shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 5.6. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debt Securities have been executed and delivered. (b) The Property Trustee shall not transfer its right, title and interest in the Debt Securities to the Regular Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee). 17 (c) The Property Trustee shall: (i) establish and maintain a segregated non-interest bearing trust account (the "Property Trustee Account") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Debt Securities held by the Property Trustee (which payments include, but are not limited to, distributions made pursuant to the Guarantee), deposit such funds into the Property Trustee Account and make payments to the Holders of the Preferred Securities and Holders of the Common Securities from the Property Trustee Account in accordance with Section 6.1. Funds in the Property Trustee Account shall be held uninvested until disbursed in accordance with this Declaration. The Property Trustee Account shall be an account that is maintained with a banking institution the rating on whose long-term unsecured indebtedness is at least equal to the rating assigned to the Preferred Securities by a "nationally recognized statistical rating organization," as that term is defined for purposes of Rule 436(g)(2) under the Securities Act; (ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Preferred Securities and the Common Securities to the extent the Debt Securities are redeemed or mature; (iii) engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Trust Property in accordance with the terms of this Declaration; and (iv) to the extent provided for in this Declaration, take such ministerial actions as are necessary in connection with the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the Certificate of Cancellation with the Secretary of State of the State of Delaware. (d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of the Securities. (e) The Property Trustee shall take any Legal Action which arises out of or in connection with either an Event of Default of which a Responsible Officer of the Property Trustee has actual knowledge or the Property Trustee's duties and obligations under this Declaration or the Trust Indenture Act; PROVIDED HOWEVER, that if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debt Security Issuer to pay interest or principal on the Debt Securities on the date such interest or principal is otherwise payable (or in the 18 case of redemption, on the redemption date), then a Holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or interest on the Debt Securities having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debt Securities and, PROVIDED, FURTHER, that if the Property Trustee fails to enforce its rights under the Debt Securities, any Holder of Preferred Securities may institute a legal proceeding against any person to enforce the Property Trustee's rights under the Debt Securities. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Debt Security Issuer to such Holder of Preferred Securities in such Direct Action. Except as provided in the preceding sentences, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Debt Securities. (f) The Property Trustee shall continue to serve as a Trustee until either: (i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of Securities pursuant to the terms of the Securities; or (ii) a Successor Entity has been appointed and has accepted the appointment of Property Trustee in accordance with Section 5.6. (g) The Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a Holder of Debt Securities under the Indenture and, if an Event of Default actually known to a Responsible Officer of the Property Trustee occurs and is continuing, the Property Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the Debt Securities subject to the rights of the Holders pursuant to the terms of such Securities. (h) Subject to this Section 3.8, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6. The Property Trustee must exercise the powers set forth in this Section 3.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Property Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.3. Section 3.9. Certain Duties and Responsibilities of the Property Trustee. ----------------------------------------------------------- (a) The Property Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Property Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Property Trustee has actual knowledge, the Property Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 19 (b) No provision of this Declaration shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Declaration and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration, and no implied covenants or obligations shall be read into this Declaration against the Property Trustee; and (B) in the absence of bad faith on the part of the Property Trustee, the Property Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Property Trustee and conforming to the requirements of this Declaration; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Declaration; (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (iii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Declaration; (iv) no provision of this Declaration shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for 20 believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Declaration or indemnity reasonably satisfactory to the Property Trustee against such risk or liability is not reasonably assured to it; (v) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debt Securities and the Property Trustee Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Declaration and the Trust Indenture Act; (vi) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Debt Securities or the payment of any taxes or assessments levied thereon or in connection therewith; (vii) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Sponsor. Money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Trustee Account maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent otherwise required by law; and (viii) the Property Trustee shall not be responsible for monitoring the compliance by the Regular Trustees or the Sponsor with their respective duties under this Declaration, nor shall the Property Trustee be liable for any default or misconduct of the Regular Trustees or the Sponsor. Section 3.10. Certain Rights of Property Trustee. ---------------------------------- (a) Subject to the provisions of Section 3.9: (i) the Property 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 (whether in its original or facsimile form) believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; 21 (ii) any direction or act of the Sponsor or the Regular Trustees acting on behalf of the Trust contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate; (iii) whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Regular Trustees; (iv) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or reregistration thereof; (v) the Property Trustee may consult with counsel of its selection or other experts and the advice or opinion of such counsel and experts with respect to legal matters or advice within the scope of such counsel or experts' area of expertise shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Sponsor or any of its Affiliates, and may include any of its employees. The Property Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; (vi) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holder, unless such Holder shall have provided to the Property Trustee security and indemnity, reasonably satisfactory to the Property Trustee, against the fees, charges, costs, expenses (including attorneys' fees and expenses and the expenses of the Property 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 Property Trustee, PROVIDED that nothing contained in this Section 3.10(a)(vi) shall be taken to (a) require the Holders of Preferred Securities to offer such indemnity in the event such Holders direct the Property Trustee to take any action it is empowered to take under this Declaration following an Event of Default or (b) relieve the Property 22 Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Declaration; (vii) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit but shall incur no additional liability of any kind by reason of such inquiry; (viii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (ix) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Property Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; (x) whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive written instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request written instructions from the Holders of the Securities which instructions may only be given by the Holders of the same proportion in liquidation amount of the Securities as would be entitled to direct the Property Trustee under the terms of the Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions; (xi) except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; 23 (xii) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration; (xiii) the Property Trustee shall not be deemed to have notice of any default or Event of Default unless a Responsible Officer of the Property Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default or Event of Default is received by the Property Trustee at the Corporate Trust Office of the Property Trustee, and such notice references the Preferred Securities and this Declaration; and (xiv) in the event that direction from the Regular Trustees is required hereunder, the Property Trustee, at its option, may make application to the Regular Trustees for written instructions and any such application shall set forth in writing any action proposed to be taken or omitted by the Property Trustee under this Declaration and the date on and/or after which such action shall be taken or such omission shall be effective. The Property Trustee shall not be liable for any action taken by, or omission of, the Property Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any Regular Trustee actually receives such application, unless any such Regular Trustee shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Property Trustee shall have received written instructions in response to such application providing the directions required to be given hereunder. (xv) In the event that the Property Trustee is also acting as authenticating agent, Paying Agent, transfer agent or security registrar, the rights, privileges, immunities, benefits and protections afforded to the Property Trustee pursuant to this Article 3 shall also be afforded to such authenticating agent, Paying Agent, transfer agent or security registrar and to each agent, custodian and other Person employed to act hereunder. (b) No provision of this Declaration shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform 24 any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. Section 3.11. Delaware Trustee. Notwithstanding any other provision of ---------------- this Declaration other than Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Regular Trustees, the Property Trustee or the Trustees generally (except as may be required under the Business Trust Act) described in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807(a) of the Business Trust Act. Section 3.12. Execution of Documents. Unless otherwise determined by the ---------------------- Regular Trustees, and except as otherwise required by the Business Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any documents that the Regular Trustees have the power and authority to execute pursuant to Section 3.6; PROVIDED THAT the registration statement referred to in Section 3.6(b)(i), including any amendments thereto, shall, subject to Section 5.10, be signed by all of the Regular Trustees. Section 3.13. Not Responsible For Recitals or Issuance of Securities. The ------------------------------------------------------ recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration or the Securities. Section 3.14. Duration of Trust. The Trust, unless terminated pursuant to ----------------- the provisions of Article VIII hereof, shall have existence for forty (40) years from November 2, 2001. Section 3.15. Mergers. ------- (a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any corporation or other body, except as described in Section 3.15(b) or (c). (b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a majority of the Regular Trustees and without the consent of the Holders of the Securities, the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any State; PROVIDED that (i) if the Trust is not the Survivor, such successor entity (the "Successor Entity") either: (A) expressly assumes all of the obligations of the Trust under the Securities; or 25 (B) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank with respect to Distributions and payments upon liquidation, redemption and otherwise; (ii) the Sponsor expressly acknowledges a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee as the record holder of the Debt Securities; (iii) the Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or another organization on which the Preferred Securities are then listed; (iv) the Debt Security Issuer expressly acknowledges a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee as the Holder of the Debt Securities; (v) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization; (vi) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the Holders' interest in the Successor Entity); (vii) such Successor Entity has a purpose identical to that of the Trust; (viii) prior to such merger, consolidation, amalgamation or replacement, the Sponsor and the Property Trustee have received an opinion of independent counsel to the Trust experienced in such matters to the effect that: (A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the Holders' interest in the Successor Entity); and 26 (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor the Successor Entity will be required to register as an Investment Company; and (C) following such merger, consolidation, amalgamation or replacement, the Trust (or the Successor Entity) will be classified as a grantor trust for United States federal income tax purposes; and (ix) the Sponsor guarantees the obligations of the Successor Entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee. (c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it, if such consolidation, amalgamation, merger or replacement would cause the Trust or the Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes. ARTICLE IV SPONSOR Section 4.1. Sponsor's Purchase of Common Securities. On the Closing --------------------------------------- Date, the Sponsor will purchase all of the Common Securities issued by the Trust, in an amount at least equal to 3% of the capital of the Trust, at the same time as the Preferred Securities are sold. Section 4.2. Responsibilities of the Sponsor. In connection with the ------------------------------- issue and sale of the Preferred Securities, the Sponsor shall have the right and responsibility to engage in the following activities: (a) prepare for filing by the Trust with the Commission a registration statement on Form S-3 in relation to the Securities, including any amendments thereto; (b) prepare for execution and filing by the Trust of an application, prepared by the Sponsor, at such time as determined by the Sponsor, to the New York Stock Exchange or any other national stock exchange for listing, or quotation on an interdealer quotation system, of the Preferred Securities; (c) prepare for execution and filing by the Trust of documents or instruments to be delivered to The Depository Trust Company relating to the Preferred Securities; 27 (d) prepare for execution and filing by the Trust of a registration statement on Form 8-A, including any amendments thereto, prepared by the Sponsor relating to the registration of the Preferred Securities under Section 12(b) of the Exchange Act; (e) determine the States in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States; and (f) negotiate the terms of the Underwriting Agreement providing for the sale of the Preferred Securities. ARTICLE V TRUSTEES Section 5.1. Number of Trustees. The number of Trustees initially shall ------------------ be five (5), and: (a) at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and (b) after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities; PROVIDED, HOWEVER, that the number of Trustees shall in no event be less than two (2); PROVIDED FURTHER, that (i) one Trustee, in the case of a natural person, shall be a person who is a resident of the State of Delaware or that, if not a natural person, is an entity which has its principal place of business in the State of Delaware (the "Delaware Trustee"); (ii) there shall be at least one Trustee who is any employee of, or is affiliated with the Sponsor (a "Regular Trustee"); and (iii) one Trustee shall be the Property Trustee, and such Trustee may also serve as Delaware Trustee if it meets the applicable requirements. Section 5.2. Delaware Trustee. If required by the Business Trust Act, ---------------- one Trustee shall be: (a) a natural person who is a resident of the State of Delaware; or (b) if not a natural person, an entity which has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law; PROVIDED THAT, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable law, then the Property Trustee shall also be the Delaware Trustee and Sections 3.11 and 6.02 shall have no application. 28 The Initial Delaware Trustee shall be: The Bank of New York (Delaware). Section 5.3. Property Trustee; Eligibility. ----------------------------- (a) There shall at all times be one Trustee which shall act as Property Trustee which shall: (i) not be an Affiliate of the Sponsor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of 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 5.3(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Property Trustee shall cease to be eligible to so act under Section 5.3(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 5.6(c). (c) If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. (d) The Preferred Securities Guarantee shall be deemed to be specifically described in this Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the Trust Indenture Act. (e) The initial Property Trustee shall be: The Bank of New York. Section 5.4. Certain Qualifications of Regular Trustees And Delaware ------------------------------------------------------- Trustee Generally. Each Regular Trustee and the Delaware Trustee (unless the ----------------- Property Trustee also acts as Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers. 29 Section 5.5. Regular Trustees. ---------------- (a) The initial Regular Trustees shall be Michael J. Klyce, Larry M. Hutchison and Gary L. Coleman. (b) Except as expressly set forth in this Declaration and except if a meeting of the Regular Trustees is called with respect to any matter over which the Regular Trustees have power to act, any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular Trustee. Section 5.6. Appointment, Removal And Resignation of Trustees. ------------------------------------------------ (a) Subject to Section 5.6(b), Trustees may be appointed or removed without cause at any time: (i) until the issuance of any Securities, by written instrument executed by the Sponsor; and (ii) after the issuance of any Securities, by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities. (b) (i) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 5.6(a) until a Successor Property Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Regular Trustees and the Sponsor; and (ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Regular Trustees and the Sponsor. (c) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; PROVIDED, HOWEVER, that: (i) No such resignation of the Trustee that acts as the Property Trustee shall be effective: 30 (A) until a successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such successor Property Trustee (a "Successor Property Trustee") and delivered to the Trust, the Sponsor and the resigning Property Trustee; or (B) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the holders of the Securities; and (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. (d) The Holders of the Common Securities shall use their best efforts to promptly appoint a Successor Delaware Trustee or Successor Property Trustee as the case may be if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 5.6. (e) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery of an instrument of resignation or removal, the Property Trustee or Delaware Trustee resigning or being removed, as applicable, at the expense of the Sponsor may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. (f) No Property Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or Successor Delaware Trustee, as the case may be. Section 5.7. Vacancies Among Trustees. If a Trustee ceases to hold office ------------------------ for any reason and the number of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 5.6. Section 5.8. Effect of Vacancies. The death, resignation, retirement, ------------------- removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by the appointment of a Regular Trustee in 31 accordance with Section 5.6, the Regular Trustees in office, regardless of their number, shall have all the powers granted to the Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this Declaration. Section 5.9. Meetings. If there is more than one Regular Trustee, -------- meetings of the Regular Trustees shall be held from time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by resolution of the Regular Trustees. Notice of any in- person meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or without a meeting by the unanimous written consent of the Regular Trustees. In the event there is only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a written consent of such Regular Trustee. Section 5.10. Delegation of Power. A Regular Trustee may, by power of ------------------- attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purposes of executing any documents contemplated in Section 3.6, including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing. The Regular Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. Section 5.11. Merger, Conversion, Consolidation or Succession to Business. ----------------------------------------------------------- Any corporation into which the Property Trustee or the Delaware Trustee, as the case may be, may be merged or converted or with which either may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Property Trustee or the Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Property Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Property Trustee or the Delaware Trustee, as the case may be, hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. 32 ARTICLE VI DISTRIBUTIONS Section 6.1. Distributions. Holders of Securities shall receive ------------- Distributions (as defined herein) in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Preferred Securities and the Common Securities in accordance with the preferences set forth in their respective terms. If and to the extent that the Debt Security Issuer makes a payment of interest (including Compound Interest (as defined in the Indenture, if applicable) and Additional Interest (as defined in the Indenture, if applicable)), premium and/or principal on the Debt Securities held by the Property Trustee (the amount of any such payment being a "Payment Amount"), the Property Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution") of the Payment Amount to Holders. ARTICLE VII ISSUANCE OF SECURITIES Section 7.1. General Provisions Regarding Securities. --------------------------------------- (a) The Regular Trustees shall on behalf of the Trust issue one class of Preferred Securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Preferred Securities") and one class of Common Securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Common Securities"). The Trust shall issue no securities or other interests in the assets of the Trust other than the Preferred Securities and the Common Securities. The issuance of the Preferred Securities and the Common Securities will not be subject to any preemptive rights of any Person. (b) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. (c) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and (subject to Section 10.1) non-assessable. (d) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of and shall be bound by this Declaration and the Preferred Securities Guarantee. Section 7.2. Subordination of Common Securities. Payment of Distributions ---------------------------------- on, and the redemption price of the Preferred Securities and Common Securities, as applicable, will be made Pro Rata based on the liquidation amount of such Preferred Securities and Common Securities. However, if on any date on which a Distribution is to be made, or any Redemption Date, an Event of Default 33 or an event of default under the Preferred Securities Guarantee has occurred and is continuing, no payment of any Distribution on, or Redemption Price of, any of the Common Securities, and no other payment on account of the redemption, liquidation or other acquisition of such Common Securities shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all the outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all the outstanding Preferred Securities then called for redemption, shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions on, or the Redemption Price of, the Preferred Securities then due and payable. Section 7.3. Execution And Authentication. ---------------------------- (a) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to be such Regular Trustee before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be the Regular Trustees of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such a Regular Trustee. (b) One Regular Trustee shall sign the Certificates for the Trust by manual or facsimile signature. A Preferred Security shall not be valid until authenticated by the manual signature of an authorized signatory of the Property Trustee. The signature shall be conclusive evidence that the Preferred Security has been authenticated under this Declaration. Upon a written order of the Trust signed by one Regular Trustee, the Property Trustee shall authenticate the Preferred Securities for original issue. The Property Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Preferred Securities. An authenticating agent may authenticate Preferred Securities whenever the Property Trustee may do so. Each reference in this Declaration to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee to deal with the Trust or an Affiliate. Section 7.4. Form And Dating. The Preferred Securities and the Property --------------- Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 and the Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates may be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof. The Securities may have letters, numbers, notations, other marks of identification or designation or other changes or additions thereto or deletions therefrom 34 as may be required by ordinary usage, custom or practice and such legends or endorsements required by law, stock exchange rule and agreements to which the Trust is subject, if any (provided that any such notation, legend or endorsement is in a form acceptable to the Trust). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the Property Trustee in writing. Each Preferred Security Certificate shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and, to the extent applicable, the Property Trustee and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. Section 7.5. Paying Agent. The Trust shall maintain in the Borough of ------------ Manhattan, City of New York, State of New York, an office or agency where Preferred Securities not held in book-entry only form may be presented for payment ("Paying Agent"). Any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. The Trust may appoint the Paying Agent and may appoint one or more additional paying agents in such other locations as it shall determine. The term "Paying Agent" includes any additional paying agent. The Trust may change any Paying Agent without prior notice to any Holder. The Trust shall notify the Property Trustee in writing of the name and address of any Paying Agent not a party to this Declaration. If the Trust fails to appoint or maintain another entity as Paying Agent, the Property Trustee shall act as such. The Trust or any of its Affiliates may act as Paying Agent. The Property Trustee shall initially act as Paying Agent for the Preferred Securities and the Common Securities. ARTICLE VIII DISSOLUTION AND TERMINATION OF TRUST Section 8.1. Dissolution and Termination of Trust. ------------------------------------ (a) The Trust shall dissolve: (i) upon the bankruptcy of the Sponsor or the Holder of the Common Securities; (ii) upon the filing of a certificate of dissolution or its equivalent with respect to the Sponsor or the Holder of the Common Securities; or the revocation of the Sponsor's charter or the charter of the Holder of the Common Securities and the expiration of 90 days after the date of revocation without a reinstatement thereof; (iii) upon the entry of a decree of judicial dissolution of the Sponsor, the Trust or the Holder of the Common Securities; 35 (iv) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; (v) upon the occurrence and continuation of a Special Event pursuant to which the Trust shall be dissolved in accordance with the terms of the Securities following which all of the Debt Securities held by the Property Trustee shall be distributed to the Holders of Securities in exchange for all of the Securities; (vi) upon the written direction to the Property Trustee from the Holder of the Common Securities at any time to dissolve the Trust and, after satisfaction of liabilities to creditors of the Trust as provided by applicable law (including, without limitation, by paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act), to distribute the Debt Securities to Holders in exchange for the Securities within 90 days after notice, subject to the Property Trustee and the Regular Trustees' receipt of an opinion of independent counsel experienced in such matters to the effect that the Holders of the Common Securities and Preferred Securities will not recognize any income, gain or loss for United States federal income tax purposes as a result of the dissolution of the Trust and such distribution to Holders; (vii) the expiration of the term of the Trust on November 2, 2041; (viii) before the issuance of any Securities, with the consent of all of the Regular Trustees and the Sponsor; or (ix) with the consent of at least a Majority in Liquidation Amount of Preferred Securities, voting together as a single class; provided that, if a claim has been made under the Preferred Securities Guarantee, the Trust shall not dissolve until (x) such claim has been satisfied and the proceeds therefrom have been distributed to the Holders of the Preferred Securities or (y) the Debt Securities have been distributed to the Holders pursuant to Section 8.2. hereof. (b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a) and the liquidation of the Trust, the Regular Trustees shall file a Certificate of Cancellation with the Secretary of State of the State of Delaware. 36 (c) The provisions of Sections 3.9 and 3.10 and Article X shall survive the termination of the Trust. Section 8.2. Liquidation Distribution upon Dissolution of the Trust. ------------------------------------------------------ (a) In the event of any voluntary or involuntary dissolution of the Trust (a "Liquidation"), the Holders of the Securities on the date of the Liquidation will be entitled to receive out of the assets of the Trust available for distribution to Holders of Securities after satisfaction of liabilities to creditors of the Trust (including, without limitation, by paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act), an amount equal to the Liquidation Amount of $25 per Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, in connection with such Liquidation after satisfaction of liabilities to creditors of the Trust (including, without limitation, by paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act), Debt Securities in an aggregate stated principal amount equal to the Liquidation Amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accumulated and unpaid interest in an amount equal to the accumulated and unpaid Distributions on, such Securities, shall have been distributed on a Pro Rata basis (subject to Section 8.2(b) below) to the Holders of the Securities in exchange for such Securities. If, upon any such Liquidation, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis. (b) The Holders of the Common Securities will be entitled to receive distributions upon any such Liquidation Pro Rata with the Holders of the Preferred Securities except that upon the occurrence and during the continuance of an Event of Default or an event of default under the Preferred Securities Guarantee, the Preferred Securities shall have a preference over the Common Securities with regard to such distributions. ARTICLE IX TRANSFER OF INTERESTS Section 9.1. Transfer of Securities. ---------------------- (a) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration and in the terms of the Securities. Any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void. (b) Subject to this Article IX, Preferred Securities shall be transferable. 37 (c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common Securities to the Sponsor or a Related Party of the Sponsor; PROVIDED THAT, any such transfer shall not violate the Securities Act and is subject to the condition precedent that the transferor obtain the written opinion of independent counsel experienced in such matters that such transfer would not cause more than an insubstantial risk that: (i) the Trust would not be classified for United States federal income tax purposes as a grantor trust; and (ii) the Trust would be an Investment Company required to register under the Investment Company Act or the transferee would become an Investment Company required to register under the Investment Company Act. (d) Each Common Security that bears or is required to bear the legend set forth in this Section 9.1(d) shall be subject to the restrictions on transfer provided in the legend set forth in this Section 9.1(d), unless such restrictions on transfer shall be waived by the written consent of the Regular Trustees, and the Holder of each such Common Security, by such security holder's acceptance thereof, agrees to be bound by such restrictions on transfer. As used in this Section 9.1(d), the term "transfer" encompasses any sale, pledge, transfer or other disposition (by operation of law or otherwise) of any such Common Security. Any certificate evidencing a Common Security shall bear a legend in substantially the following form, unless otherwise agreed by the Regular Trustees (with written notice thereof to the Property Trustee): THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT. THE TRANSFER OF THE SECURITY EVIDENCED HEREBY IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW. Section 9.2. Transfer of Certificates. The Regular Trustees shall provide ------------------------ for the registration of Certificates and of transfers of Certificates, which will be effected without charge, but only upon payment in respect of any tax or other government charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name of the designated transferee or transferees. Every Certificate surrendered for registration of transfer shall be accompanied by a written instrument of transfer in a form satisfactory to the Regular Trustees duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Certificate surrendered for registration of transfer shall be canceled by the Regular Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such 38 transferee of a Certificate. By acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this Declaration. Section 9.3. Deemed Security Holders. The Trustees may treat the Person ----------------------- in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust shall have actual or other notice thereof. Section 9.4. Book Entry Interests. -------------------- (a) So long as Preferred Securities are eligible for book-entry settlement with the Clearing Agency or unless otherwise required by law, all Preferred Securities that are so eligible may be represented by one or more fully registered Preferred Security Certificates (each, a "Global Certificate") in global form to be delivered to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will receive a definitive Preferred Security Certificate representing such Preferred Security Beneficial Owner's interests in such Global Certificates, except as provided in Section 9.7 below. The transfer and exchange of beneficial interests in any such Security in global form shall be effected through the Clearing Agency in accordance with this Declaration and the procedures of the Clearing Agency therefor. (b) Except as provided below, beneficial owners of a Preferred Security in global form shall not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered Holders of such Preferred Security in global form. (c) Any Global Certificate may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Declaration as may be required by the Clearing Agency, by any national securities exchange or by the National Association of Securities Dealers, Inc. as may be required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or interdealer quotation system upon which the Preferred Securities may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Preferred Securities are subject. (d) Unless and until definitive, fully registered Preferred Security Certificates (the "Definitive Preferred Security Certificates") have been issued to the Preferred Security Beneficial Owners of a Preferred Security in global form pursuant to Section 9.7: 39 (i) the provisions of this Section 9.4 shall be in full force and effect with respect to such Preferred Securities; (ii) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Declaration (including the payment of Distributions on the Global Certificates and receiving approvals, votes or consents hereunder) as the Holder of such Preferred Securities and the sole holder of the Global Certificates and shall have no obligation to the Preferred Security Beneficial Owners of such Preferred Securities; (iii) to the extent that the provisions of this Section 9.4 conflict with any other provisions of this Declaration, the provisions of this Section 9.4 shall control; and (iv) the rights of the Preferred Security Beneficial Owners of Preferred Securities in global form shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. The Clearing Agency will make book-entry transfers among Clearing Agency Participants and receive and transmit payments of Distributions on the Global Certificates to such Clearing Agency Participants. DTC will make book entry transfers among the Clearing Agency Participants, PROVIDED, that solely for the purposes of determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Declaration, so long as Definitive Preferred Security Certificates have not been issued, the Trustees may conclusively rely on, and shall be protected in relying on, any written instrument (including a proxy) delivered to the Trustees by the Clearing Agency setting forth the Preferred Securities Beneficial Owners' votes or assigning the right to vote on any matter to any other Persons either in whole or in part. (e) Notwithstanding any other provisions of this Declaration (other than the provisions set forth in this Section 9.4(e)), a Preferred Security in global form may not be transferred as a whole except by the Clearing Agency to a nominee of the Clearing Agency or by a nominee of the Clearing Agency to the Clearing Agency or another nominee or by the Clearing Agency or a nominee of the Clearing Agency to a successor Clearing Agency or a nominee of such successor Clearing Agency. Section 9.5. Notices to Clearing Agency. Whenever a notice or other -------------------------- communication to the Preferred Security Holders is required under this Declaration, unless and until Definitive Preferred Security Certificates shall have been issued to the Preferred Security Beneficial Owners 40 pursuant to Section 9.7, the Regular Trustees shall give all such notices and communications specified herein to be given to the Preferred Security Holders to the Clearing Agency, and shall have no notice obligations to the Preferred Security Beneficial Owners. Section 9.6. Appointment of Successor Clearing Agency. If any Clearing ---------------------------------------- Agency notifies the Trust that it is unwilling or unable to continue its services as securities depositary with respect to the Preferred Securities, if such Clearing Agency ceases to perform such services, or if at any time such Clearing Agency ceases to be a clearing agency registered as such under the Exchange Act when such Clearing Agency is required to be so registered to act as such depositary, then the Regular Trustees may, in their sole discretion, appoint a successor Clearing Agency with respect to such Preferred Securities. Section 9.7. Definitive Preferred Security Certificates Under Certain -------------------------------------------------------- Circumstances. ------------- If: (a) a Clearing Agency notifies the Trust that it is unwilling or unable to continue its services as securities depositary with respect to the Preferred Securities, or if at any time such Clearing Agency ceases to be a clearing agency registered as such under the Exchange Act when such Clearing Agency is required to be so registered to act as such depositary and no successor Clearing Agency shall have been appointed pursuant to Section 9.6 within 90 days of such notification; (b) the Regular Trustees (with the consent of the Sponsor), in their sole discretion, determine that the Preferred Securities in global form shall be exchanged for certificated Preferred Securities; or (c) there shall have occurred and be continuing an Event of Default; then: (i) Definitive Preferred Security Certificates shall be prepared by the Regular Trustees on behalf of the Trust with respect to such Preferred Securities; and (ii) upon surrender of the Global Certificates by the Clearing Agency, accompanied by registration instructions, the Regular Trustees shall cause Definitive Preferred Security Certificates to be delivered to Preferred Security Beneficial Owners of such Preferred Securities in accordance with the instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions and each of them may conclusively rely on and shall be protected in relying on, said instructions of the Clearing Agency. The Definitive Preferred Security Certificates shall be printed, 41 lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Preferred Securities may be listed, or to conform to usage. At such time as all interests in a Preferred Security in global form have been redeemed, exchanged, repurchased or canceled, such Preferred Security in global form shall be, upon receipt thereof, canceled by the Trust in accordance with standing procedures and instructions of the Clearing Agency. Section 9.8. Mutilated, Destroyed, Lost or Stolen Certificates. If: ------------------------------------------------- (a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of any Certificate; and (b) there shall be delivered to the Property Trustee or the Regular Trustees such security or indemnity as may be required by them to keep each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for, or in lieu of, any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this Section 9.8, the Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. 42 ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS Section 10.1. Liability. --------- (a) Except as expressly set forth in this Declaration, the Preferred Securities Guarantee and the terms of the Securities, the Sponsor shall not be: (i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; or (ii) required to pay to the Trust or to any Holder of Securities any deficit upon dissolution of the Trust or otherwise. (b) The Holder of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets. (c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the Preferred Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. Section 10.2. Exculpation. ----------- (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence (or, in the case of the Property Trustee, except as otherwise set forth in Section 3.9) or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid. 43 Section 10.3. Fiduciary Duty. -------------- (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between any Covered Persons; or (ii) whenever this Declaration or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Declaration an Indemnified Person is permitted or required to make a decision: (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law. 44 Section 10.4. Indemnification. --------------- (a) (i) The Debt Security Issuer shall indemnify, to the fullest extent permitted by law, any Company Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that he is or was a Company Indemnified Person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the Company Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. (ii) The Debt Security Issuer shall indemnify, to the fullest extent permitted by law, any Company Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that he is or was a Company Indemnified Person against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Company Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper. 45 (iii) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless ordered by a court) shall be made by the Debt Security Issuer only as authorized in the specific case upon a determination that indemnification of the Company Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) or (ii). Such determination shall be made (1) by the Regular Trustees by a majority vote of a quorum consisting of such Regular Trustees who were not parties to such action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Common Security Holder of the Trust. (iv) Expenses (including attorneys' fees) incurred by a Company Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the Debt Security Issuer in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Debt Security Issuer as authorized in this Section 10.4(a). Notwithstanding the foregoing, no advance shall be made by the Debt Security Issuer if a determination is reasonably and promptly made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion or (iii) by the Common Security Holder of the Trust, that, based upon the facts known to the Regular Trustees, counsel or the Common Security Holder at the time such determination is made, such Company Indemnified Person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Company Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Regular Trustees, independent legal counsel or Common Security Holder reasonably determine that such person deliberately breached his duty to the Trust or its Common or Preferred Security Holders. (v) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other rights to which those seeking 46 indemnification and advancement of expenses may be entitled under any agreement, vote of shareholders or disinterested directors of the Debt Security Issuer or Preferred Security Holders of the Trust or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 10.4(a) shall be deemed to be provided by a contract between the Debt Security Issuer and each Company Indemnified Person who serves in such capacity at any time while this Section 10.4(a) is in effect. Any repeal or modification of this Section 10.4(a) shall not affect any rights or obligations then existing. (vi) The Debt Security Issuer or the Trust may purchase and maintain insurance on behalf of any person who is or was a Company Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Debt Security Issuer would have the power to indemnify him against such liability under the provisions of this Section 10.4(a); (vii) For purposes of this Section 10.4(a), references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 10.4(a) with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued; (viii) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Company Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a person. (b) The Debt Security Issuer agrees to indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Property Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without negligence or 47 bad faith on its part, arising out of or in connection with the acceptance or administration or the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 10.4(b) shall survive the satisfaction and discharge of this Declaration or the resignation or removal of the Property Trustee or the Delaware Trustee, as the case may be. Section 10.5. Outside Business. Any Covered Person, the Sponsor, the ---------------- Delaware Trustee and the Property Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee nor the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates. ARTICLE XI ACCOUNTING Section 11.1. Fiscal Year. The fiscal year ("Fiscal Year") of the Trust ----------- shall be the same as the fiscal year of the Sponsor, unless another fiscal year is required by the Code or Treasury regulations promulgated thereunder. Section 11.2. Certain Accounting Matters. -------------------------- (a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in compliance with generally accepted accounting principles, consistently applied. The Trust shall use the accrual method of accounting for the United States federal income tax purposes. The books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Regular Trustees. (b) The Sponsor shall cause to be prepared and delivered to each of the Holders of Securities, within 90 days after the end of each Fiscal Year of the Sponsor, annual financial 48 statements of the Sponsor, including a balance sheet of the Sponsor as of the end of such Fiscal Year, and the related statements of income or loss. (c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders of Securities, any annual United States federal income tax information statement, required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust. (d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States federal income tax return, on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing authority. Section 11.3. Banking. The Trust shall maintain one or more bank ------- accounts in the name and for the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds in respect of the Debt Securities held by the Property Trustee shall be made directly to the Property Trustee Account and no other funds of the Trust shall be deposited in the Property Trustee Account. The sole signatories for such accounts shall be designated by the Regular Trustees; PROVIDED, HOWEVER, that the Property Trustee shall designate the signatories for the Property Trustee Account. Section 11.4. Withholding. The Trust and the Regular Trustees shall ----------- comply with all withholding requirements under United States federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Regular Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In the event of any claimed over-withholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the amount of such withholding. Furthermore, if withholding is imposed on payments of interest on the Debt Securities, to the extent such withholding is attributable to ownership by a specific Holder of Preferred Securities, the amount withheld shall be deemed a distribution in the amount of the withholding to such specific Holder. 49 ARTICLE XII AMENDMENTS AND MEETINGS Section 12.1. Amendments. Except as otherwise provided in this ---------- Declaration or by any applicable terms of the Securities, (a) this Declaration may only be amended by a written instrument approved and executed by the Regular Trustees (or, if there are more than two Regular Trustees a majority of the Regular Trustees) and: (i) if the amendment affects the rights, powers, duties, obligations or immunities of the Property Trustee, also by the Property Trustee; and (ii) if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, also by the Delaware Trustee; (b) no amendment shall be made, and any such purported amendment shall be void and ineffective: (i) unless, in the case of any proposed amendment, the Property Trustee and the Delaware Trustee shall have first received an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); (ii) unless, in the case of any proposed amendment which affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee shall have first received an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and (iii) to the extent the result of such amendment would be to: (A) cause the Trust to fail to continue to be classified for purposes of United States federal income taxation as a grantor trust; (B) reduce or otherwise adversely affect the powers of the Property Trustee, unless approved by the Property Trustee; or (C) cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act; (c) at such time after the Trust has issued any Securities that remain outstanding, any amendment that would (i) adversely affect the powers, preferences or special rights of the 50 Securities whether by way of amendment to this Declaration or otherwise or (ii) provide for the dissolution, winding up or termination of the Trust other than pursuant to the terms of this Declaration, may be effected only with the approval of the Holders of at least a Majority in liquidation amount of the Securities affected thereby; provided, that if any amendment or proposal referred to in clause (i) hereof would adversely affect only the Preferred Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a Majority in liquidation amount of such class of Securities; (d) Section 9.1(c), Section 10.1(c) and this Section 12.1 shall not be amended without the consent of all of the Holders of the Securities; (e) Article IV shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities; (f) the rights of the holders of the Common Securities under Article V to increase or decrease the number of, and appoint and remove Trustees shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities; (g) notwithstanding Section 12.1(c), this Declaration may be amended from time to time by the Holders of a Majority in liquidation amount of the Common Securities and the Property Trustee, without the consent of the Holders of the Preferred Securities to: (i) cure any ambiguity, correct or supplement any provision in this Declaration that may be defective or inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under this Declaration, which shall not be inconsistent with the other provisions of this Declaration; (ii) add to the covenants, restrictions or obligations of the Sponsor; or (iii) to modify, eliminate or add to any provisions of this Declaration to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Securities are outstanding or to ensure that the Trust will not be an Investment Company required to register under the Investment Company Act; PROVIDED, HOWEVER, such action specified in this Section 12.1(g) shall not adversely affect in any material respect the interests of any Holder of Securities; and (h) this Declaration may be amended by the Holders of a Majority in liquidation amount of the Common Securities and the Property Trustee if: 51 (i) the Holders of a Majority in liquidation amount of the Preferred Securities consent to such amendment; and (ii) the Property Trustee and the Regular Trustees have received an opinion of independent counsel experienced in such matters to the effect that such amendment or the exercise of any power granted to the Regular Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status as an Investment Company required to register under the Investment Company Act, PROVIDED, that without the consent of each Holder of Securities, this Declaration may not be amended to: (x) change the amount or timing of any Distribution on the Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Securities as of a specified date; or (y) restrict the right of a Holder of Securities to institute suit for the enforcement of any such payment on or after such date. (i) Any amendments of this Declaration shall become effective when notice thereof is given to Holders of Securities. Section 12.2. Meetings of the Holders of Securities; Action by Written -------------------------------------------------------- Consent. ------- (a) Meetings of the Holders of any class of Securities may be called at any time by the Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 25% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of Securities calling a meeting shall specify in writing the Security Certificates held by the Holders of Securities exercising the right to call a meeting and only those Securities specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of Securities: 52 (i) notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions of the delivery of proxies or consents. Whenever a vote, consent or approval of the Holders of Securities is permitted or required under this Declaration or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of the Holders of Securities. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of Securities owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Securities entitled to vote who have not consented in writing. The Regular Trustees may specify that any written ballot submitted to the Security Holder for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Regular Trustees; (ii) each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders of the Securities were stockholders of a Delaware corporation; (iii) each meeting of the Holders of the Securities shall be conducted by the Regular Trustees or by such other Person that the Regular Trustees may designate; 53 (iv) unless the Business Trust Act, this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Preferred Securities are then listed or trading, otherwise provides, the Regular Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote; and (v) any Preferred Securities that are owned by the Debt Security Issuer or any entity directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Debt Security Issuer shall not be entitled to vote or consent and shall, for purposes of any vote or consent, be treated as if such Preferred Securities were not issued and outstanding. ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE Section 13.1. Representations and Warranties of Property Trustee. The -------------------------------------------------- Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Property Trustee represents and warrants, as applicable, to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that: (a) the Property Trustee is a New York banking corporation with trust powers, duly organized, validly existing and in good standing, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration; (b) the execution, delivery and performance by the Property Trustee of the Declaration has been duly authorized by all necessary corporate action on the part of the Property Trustee. The Declaration has been duly executed and delivered by the Property Trustee, and it constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); 54 (c) the execution, delivery and performance of the Declaration by the Property Trustee does not conflict with or constitute a breach of the charter or by-laws of the Property Trustee; and (d) no consent, approval or authorization of, or registration with or notice to, any state or federal banking authority is required for the execution, delivery or performance by the Property Trustee, of the Declaration. Section 13.2. Representations and Warranties of Delaware Trustee. The -------------------------------------------------- Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that: (a) The Delaware Trustee is a Delaware corporation, duly organized, validly existing and in good standing, with corporate power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration. (b) The Delaware Trustee has been authorized to perform its obligations under the Certificate of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law). (c) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking authority is required for the execution, delivery or performance by the Delaware Trustee, of the Declaration. (d) The Delaware Trustee is a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. ARTICLE XIV MISCELLANEOUS Section 14.1. Notices. All notices provided for in this Declaration shall ------- be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows: 55 (a) if given to the Trust, in care of the Regular Trustees at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders of the Securities): Torchmark Capital Trust I c/o Torchmark Corporation, 2001 Third Avenue South, Birmingham, Alabama 35233 Attention: General Counsel (b) if given to the Delaware Trustee, at the mailing address set forth below (or such other address as Delaware Trustee may give notice of to the Holders of the Securities): DELAWARE TRUSTEE ---------------- The Bank of New York (Delaware), White Clay Center, Route 273, Newark, DE 19711 Attention: Corporate Trust Administration (c) if given to the Property Trustee, at its Corporate Trust Office's mailing address set forth below (or such other address as the Property Trustee may give notice of to the Holders of the Securities). PROPERTY TRUSTEE ---------------- The Bank of New York, 101 Barclay Street, Floor 21 West, New York, NY 10286, Attention: Corporate Trust Administration (d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice to the Trust): Torchmark Corporation, 2001 Third Avenue South, Birmingham, Alabama 35233, Attention: General Counsel (e) if given to any other Holder, at the address set forth on the books and records of the Trust. With respect to the Trust, the Delaware Trustee, the Property Trustee and the Holder of the Common Securities, all notices shall be deemed to have been given when received. With respect to any other Holder, all notices shall be deemed to have been given when mailed by first class mail, postage prepaid. Section 14.2. Governing Law. THIS DECLARATION AND THE RIGHTS OF THE ------------- PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW 56 OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT THERE SHALL NOT BE APPLICABLE TO THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE LAWS (STATUTORY OR COMMON) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF, (A) THE FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE LIMITATIONS OR LIABILITIES OR AUTHORITIES AND POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS DECLARATION. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST. Section 14.3. Intention of the Parties. It is the intention of the ------------------------ parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties. Section 14.4. Headings. Headings contained in this Declaration are -------- inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. Section 14.5. Successors and Assign. Whenever in this Declaration any of --------------------- the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. Section 14.6. Partial Enforceability. If any provision of this ---------------------- Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. Section 14.7. Counterparts. This Declaration may contain more than one ------------ counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of 57 the Trustees to one 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. (signature page follows) 58 IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the day and year first above written. By: /s/ Michael J. Klyce ------------------------------------- Michael J. Klyce, as Regular Trustee Solely as trustee and not in an individual capacity By: /s/ Larry M. Hutchison ------------------------------------- Larry M. Hutchison, as Regular Trustee Solely as trustee and not in an individual capacity By: /s/ Gary L. Coleman ------------------------------------- Gary L. Coleman, as Regular Trustee Solely as trustee and not in an individual capacity THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee By: /s/ Patrick Burns ------------------- Name: Patrick Burns Title: SVP THE BANK OF NEW YORK, as Property Trustee By: /s/ Robert A. Massimillo -------------------------- Name: Robert A. Massimillo Title: Vice President TORCHMARK CORPORATION, as Sponsor By: /s/ Michael J. Klyce ----------------------------------- Name: Michael J. Klyce Title: Vice President and Treasurer ANNEX I TERMS OF 7 3/4% TRUST PREFERRED SECURITIES 7 3/4% COMMON SECURITIES Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of November 2, 2001 (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration): 1. DESIGNATION AND NUMBER. (a) PREFERRED SECURITIES. 4,400,000 Preferred Securities of the Trust (5,060,000 Preferred Securities if the Underwriters' over-allotment option is exercised in full) with an aggregate liquidation amount with respect to the assets of the Trust of One Hundred Ten Million Dollars ($110,000,000)(One Hundred Twenty-Six Million Five Hundred Thousand Dollars ($126,500,000) if the Underwriters' over-allotment option is exercised in full), and a liquidation amount with respect to the assets of $25 per Preferred Security, are hereby designated for the purposes of identification only as "7 3/4% Trust Preferred Securities" (the "Preferred Securities"). The Preferred Security Certificates evidencing the Preferred Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such letters, numbers, notations, other means of identification or designation or other changes or additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice and such legends or endorsements required by law, state exchange rule and agreements to which the Trust is subject, if any (provided that any such notation, legend or endorsement is in a form acceptable to the Trust). (b) COMMON SECURITIES. 136,083 Common Securities of the Trust (156,496 Common Securities if the Underwriters' over-allotment option is exercised in full) with an aggregate liquidation amount with respect to the assets of the Trust of Three Million Four Hundred and Two Thousand and Seventy-Five Dollars ($3,402,075)(Three Million Nine Hundred and Twelve Thousand Four Hundred Dollars ($3,912,400) if the underwriters' over-allotment option is exercised in full), and a liquidation amount with respect to the assets of the Trust of $25 per Common Security, are hereby designated for the purposes of identification only as "7 3/4% Common Securities" (the "Common Securities"). The Common Securities Certificates evidencing the Common Securities shall be in the form of Exhibit A- 2 to the Declaration, with such letters, numbers, notations, other means of identification or designation or other changes or additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice and such legends or endorsements required by law, state exchange rule and agreements to which the Trust is subject, if any (provided that any such notation, legend or endorsement is in a form acceptable to the Trust). 2. DISTRIBUTIONS. I-1 (a) Distributions payable on each Security will be fixed at a rate per annum of 7 3/4% (the "Coupon Rate") of the stated liquidation amount of $25 per Security, such rate being the rate of interest payable on the Debt Securities to be held by the Property Trustee. Distributions in arrears for more than one quarter will bear interest thereon compounded quarterly at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debt Securities held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 30-day month. (b) Distributions on the Securities will be cumulative, will accumulate from November 2, 2001 and will be payable quarterly in arrears, on February 1, May 1, August 1 and November 1 of each year, commencing on February 1, 2002, except as otherwise described below. So long as the Debt Security Issuer shall not be in default in the payment of interest on the Debt Securities, the Debt Security Issuer has the right under the Indenture to defer payments of interest on the Debt Securities by extending the interest payment period from time to time on the Debt Securities for a period not exceeding 20 consecutive quarters (each an "Extension Period"), during which Extension Period no interest shall be due and payable on the Debt Securities, PROVIDED THAT no Extension Period shall last beyond the date of maturity of the Debt Securities. As a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accumulate with interest thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during any such Extension Period. Prior to the termination of any such Extension Period, the Debt Security Issuer may further extend such Extension Period; PROVIDED THAT such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the maturity of the Debt Securities. Payments of accumulated Distributions and, to the extent permitted by applicable law, accumulated interest thereon shall be payable on the Distribution payment date on which the relevant Extension Period terminates and shall be payable to Holders as they appear on the books and records of the Trust at the close of business on the record date next preceding such Distribution payment date. Upon the termination of any Extension Period and the payment of all amounts then due, the Debt Security Issuer may commence a new Extension Period, subject to the above requirements. Each Extension Period, if any, will end on an interest payment date for the Debt Securities; such date will also be a Distribution payment date for the Securities. In the event that the Debt Security Issuer exercises its right to defer payment of interest, then during such Extension Period the Debt Security Issuer shall not (a) declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of its capital stock, or (b) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Debt Security Issuer (including other junior subordinated debt securities) that rank PARI PASSU with or junior in interest to the Debt Securities or make any guarantee payments with respect to the foregoing or with respect to any guarantee by I-2 the Debt Security Issuer of the debt securities of any subsidiary of the Debt Security Issuer if such guarantee ranks PARI PASSU with or junior in interest to the Debt Securities (other than (i) as a result of the exchange, redemption or conversion of one class or series of the capital stock of the Debt Security Issuer (or any capital stock of a subsidiary thereof) for another class or series of the capital stock of the Debt Security Issuer or any class or series of the indebtedness of the Debt Security Issuer for any class or series of the capital stock of the Debt Security Issuer, (ii) the purchase of fractional interests in shares of the capital stock of the Debt Security Issuer pursuant to the conversion or exchange provisions of such capital stock or the security being converted into or exchanged for such capital stock, (iii) 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, (iv) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of rights, stock or other property under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (v) payments under the Preferred Securities Guarantee or under any similar guarantee by the Debt Security Issuer with respect to any trust common or trust preferred securities of its subsidiaries, and (vi) repurchases, redemptions or other acquisitions of shares of the capital stock of the Debt Security Issuer in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of an one or more employees, officers, directors or consultants, (2) a dividend reinvestment or shareholder stock purchase plan or (3) the issuance of capital stock of the Debt Security Issuer (or securities convertible or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to such Extension Period). (c) Distributions on the Preferred Securities will be payable to the Holders thereof as they appear on the books and records of the Trust on the relevant record dates. While the Preferred Securities remain in book-entry only form, the relevant record dates shall be one Business Day prior to the relevant payment dates which payment dates correspond to the interest payments dates on the Debt Securities. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment in respect of the Preferred Securities will be made as described under the heading "Book-Entry Only Issuance - The Depository Trust Company" in the Prospectus Supplement dated October 31, 2001, to the Prospectus dated November 30, 1999, (together, the "PROSPECTUS") included in the Registration Statement on Form S-3 of the Sponsor, the Debt Security Issuer and the Trust. If the Preferred Securities shall not continue to remain in book-entry only form, the relevant record dates for the Preferred Securities, shall conform to the rules of any securities exchange on which the securities are listed and, if none, shall be fifteen days prior to the relevant payment dates, which payment dates correspond to the record and interest payment dates on the Debt Securities. The relevant record dates for the Common Securities shall be the same record dates as for the Preferred Securities. Distributions payable on any Securities that are not punctually paid on any Distribution payment date, as a result of the Debt Security Issuer having failed to make a payment under the Debt Securities, will cease to be payable to the Person in whose name such Securities are registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person in whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture. If any date on which Distributions are payable on the Securities is not a Business Day, then payment of the Distributions payable on such date will be I-3 made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (d) In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among the Holders of the Securities. 3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. The Debt Security Issuer will have the right at any time to cause the Trust to be dissolved with the result that, after satisfaction of liabilities to creditors of the Trust (including, without limitation, by paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act), a Like Amount of Debt Securities will be distributed on a Pro Rata basis to the Holders of the Preferred Securities and the Common Securities in liquidation of such Holders' interests in the Trust, within 90 days following notice given to the Holders of the Preferred Securities, subject to the Regular Trustees' receipt of an opinion of independent counsel experienced in such matters to the effect that the Holders will not recognize any income, gain or loss for United States federal income tax purposes as a result of the dissolution of the Trust and such distribution to Holders of Preferred Securities. In the event of any voluntary or involuntary dissolution of the Trust (each a "Liquidation"), the Holders of the Securities on the date of the Liquidation will be entitled to receive out of the assets of the Trust available for distribution to Holders of Securities after satisfaction of liabilities to creditors of the Trust (including, without limitation, by paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act), an amount equal to the aggregate of the stated Liquidation Amount of $25 per Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, in connection with such Liquidation after satisfaction of liabilities to creditors of the Trust (including, without limitation, by paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act), Debt Securities in an aggregate stated principal amount equal to the aggregate stated Liquidation Amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accumulated and unpaid interest in an amount equal to the accumulated and unpaid Distributions on, such Securities, shall have been distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities. If, upon any such Liquidation, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis. If the Debt Securities are distributed to the Holders of the Securities, pursuant to the terms of the Indenture, the Debt Security Issuer will use its best efforts to have the Debt Securities listed I-4 on the New York Stock Exchange or on such other exchange as the Preferred Securities were listed on immediately prior to the distribution of the Debt Securities. 4. REDEMPTION AND DISTRIBUTION. (a) The Debt Securities will mature on November 2, 2041, and may be redeemed, in whole or in part, at any time on or after November 2, 2006. Upon the repayment of the Debt Securities in whole or in part, whether at maturity, upon redemption or otherwise, the proceeds from such repayment or payment shall be simultaneously applied to redeem a Like Amount of Securities at a redemption price per Security equal to the redemption price of the Debt Securities, together with accumulated and unpaid Distributions thereon to, but excluding, the date of the redemption, payable in cash (the "Redemption Price"). Holders and the Property Trustee will be given not less than 30 nor more than 60 days' notice of such redemption. (b) If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Preferred Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed will be as described in Section 4(f) below. (c) If, at any time prior to November 2, 2006, a Tax Event or an Investment Company Event (each, as defined below, a "Special Event") shall occur and be continuing, the Debt Security Issuer shall have the right, upon not less than 30 nor more than 60 days' notice, to redeem the Debt Securities in whole (not in part) at a redemption price equal to 100% of the principal amount thereof plus accumulated and unpaid interest thereon, for cash within 90 days following the occurrence of such Special Event, provided such event is then continuing. Following such redemption, a Like Amount of Securities shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; PROVIDED, HOWEVER, that if at the time there is available to the Debt Security Issuer or the Trust the opportunity to eliminate, within such 90 day period, the Special Event by taking some ministerial action, such as filing a form, making an election or pursuing some other similar reasonable measure that has no material adverse effect on the Trust, the Debt Security Issuer, the Sponsor or the Holders of the Securities (each, a "Ministerial Action"), then the Debt Security Issuer or the Trust shall pursue such measure in lieu of a redemption. If the Debt Securities are not redeeemed or distributed to the Holders of the Securities in liquidation of the Trust, the Securities shall remain outstanding. "Tax Event" means that the Regular Trustees shall have received an opinion of independent tax counsel experienced in such matters (a "Tax Opinion") to the effect that as a result of (a) any amendment to, clarification of, 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 affecting taxation, (b) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action") or (c) any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, I-5 irrespective of the manner in which such amendment, clarification, change or Administrative Action is made known, which amendment, clarification, change or Administrative Action is effective or which pronouncement or decision is announced, in each case, on or after, October 31, 2001, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date thereof, subject to United States federal income tax with respect to income accrued or received on the Debt Securities, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of taxes (other than withholding taxes), duties or other governmental charges, or (iii) interest paid in cash by the Debt Security Issuer to the Trust on the Debt Securities is not, or within 90 days of the date thereof will not be, deductible, in whole or in part, by the Debt Security Issuer for United States federal income tax purposes. Notwithstanding the foregoing, a Tax Event shall not include any change in tax law that requires the Debt Security Issuer for United States federal income tax purposes to defer taking a deduction for any original issue discount ("OID") that accumulates with respect to the Debt Securities until the interest payment related to such OID is paid by the Debt Security Issuer in cash; PROVIDED, that such change in tax law does not create more than an insubstantial risk that the Debt Security Issuer will be prevented from taking a deduction for OID accruing with respect to the Debt Securities at a date that is no later than the date the interest payment related to such OID is actually paid by the Debt Security Issuer in cash. "Investment Company Event" means that the Regular Trustees shall have received an opinion of independent counsel experienced in such matters to the effect that, as a result of the occurrence of a change (including any announced prospective change) in law or regulation or a written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority on or after October 31, 2001, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended. After the date fixed by the Regular Trustees for any distribution of Debt Securities upon dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) The Depository Trust Company (the "Depositary") or its nominee (or any successor Clearing Agency or its nominee), as the record Holder of the Preferred Securities held in global form, will receive a registered certificate or certificates representing the Debt Securities held in global form to be delivered upon such distribution, and (iii) certificates representing Securities held in definitive form, except for certificates representing Preferred Securities held by the Depositary or its nominee (or any successor Clearing Agency or its nominee), will be deemed to represent Debt Securities having an aggregate principal amount equal to the aggregate stated Liquidation Amount of, with an interest rate identical to the Coupon Rate of, and accumulated and unpaid interest (including Compound Interest and Additional Interest (as defined in the Indenture)) equal to accumulated and unpaid Distributions on such Securities until such certificates are presented to the Debt Security Issuer or its agent for transfer or reissue. (d) The Trust may not redeem fewer than all the outstanding Securities unless all accumulated and unpaid Distributions have been paid on all Securities for all quarterly Distribution periods terminating on or prior to the date of redemption. I-6 (e) (i) Notice of any redemption of, or notice of distribution of Debt Securities in exchange for, the Securities (a "Redemption/Distribution Notice") will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Debt Securities. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 4(e), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, or by such other means suitable to assure delivery of such written notice, to Holders of Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder of Securities shall affect the validity of the redemption or exchange proceedings with respect to any other Holder of Securities. (ii) In addition to the Redemption/Distribution Notice to be provided to the Holders of Securities pursuant to clause (i) of this Section 4(e), the Debt Security Issuer or the Trust shall give public notice of any such redemption by the issuance of a press release through the services of the Dow Jones Broad Tape, Reuters News Service and Bloomberg News Service. (f) In the event that fewer than all the outstanding Securities are to be redeemed, the particular Preferred Securities to be redeemed shall be selected on a Pro Rata basis not more than 60 days prior to the Redemption Date from the outstanding Preferred Securities not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate, or if the Preferred Securities are then held in book-entry form, in accordance with the Depositary's customary procedures, it being understood that, in respect of Preferred Securities registered in the name of and held of record by the Depositary or its nominee (or any successor Clearing Agency or its nominee) or any nominee, the distribution of the proceeds of such redemption will be made to each Clearing Agency Participant (or Person on whose behalf such nominee holds such securities) in accordance with the procedures applied by such agency or nominee. The Property Trustee shall promptly notify the securities registrar for the Securities in writing of the Preferred Securities selected for redemption. (g) If Securities are to be redeemed and the Trust gives a Redemption/Distribution Notice, which notice may only be issued for a redemption if the Debt Securities are redeemed as set out in the Indenture (which notice will be irrevocable), then (i) with respect to Preferred Securities held in book-entry form, by 12:00 noon, New York City time, on the redemption date, provided that the Debt Security Issuer has paid the Property Trustee a sufficient amount of cash in connection with I-7 the related redemption of the Debt Securities, the Property Trustee will deposit irrevocably with the Depositary or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the applicable Redemption Price with respect to such Preferred Securities and will give the Depository irrevocable instructions and authority to pay the Redemption Price to the Holders of such Preferred Securities, and (ii) with respect to Preferred Securities issued in definitive form and Common Securities, provided that the Debt Security Issuer has paid the Property Trustee a sufficient amount of cash in connection with the related redemption of the Debt Securities, the Property Trustee will deposit irrevocably with the Paying Agent for such Securities funds sufficient to pay the applicable Redemption Price with respect to such Securities and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders of such Securities upon surrender of their certificates evidencing such Securities. If a Redemption/Distribution Notice shall have been given in connection with a redemption and funds deposited as required, then from and after the required date of such deposit, distributions will cease to accumulate on the Securities so called for redemption and all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the Redemption Price, but without interest on such Redemption Price. If any date fixed for redemption of Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Property Trustee or by the Sponsor as guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities will continue to accumulate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. Neither the Regular Trustees nor the Trust shall be required (i) in the event of any redemption in part, to issue, register the transfer of or exchange any Securities during a period beginning at the opening of business 15 days before any selection for redemption of Securities and ending at the close of business on the earliest date in which the relevant Redemption/Distribution Notice is deemed to have been given to all holders of Securities to be so redeemed or (ii) to register the transfer of or exchange any Securities selected for redemption, in whole or in part, except for the unredeemed portion of any Securities being redeemed in part. (h) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of the Trust to (i) in respect of Preferred Securities held in global form, the Depositary or its nominee (or any successor Clearing Agency or its nominee), (ii) with respect to Preferred Securities held in definitive form, to the Holders thereof, and (iii) in respect of the Common Securities, to the Holders thereof. (i) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or otherwise. I-8 5. VOTING AND OTHER RIGHTS - PREFERRED SECURITIES. (a) Except as provided under Sections 5(b) and 7 of this Annex I to the Declaration and as otherwise required by law, the Preferred Securities Guarantee and the Declaration, the Holders of the Preferred Securities will not have voting rights. (b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in liquidation amount of the Preferred Securities then outstanding, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee, or may direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee, as holder of the Debt Securities, to (i) exercise the remedies available under the Indenture with respect to the Debt Securities, (ii) waive any past default and its consequences that are waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debt Securities shall be due and payable, or (iv) in accordance with Section 8 hereof, consent to any amendment, modification or termination of the Indenture where consent is required, PROVIDED, HOWEVER, that if an Event of Default under the Indenture has occurred and is continuing then the holders of 25% of the aggregate liquidation amount of the Preferred Securities then outstanding may direct the Property Trustee to declare the principal of and interest on the Debt Securities immediately due and payable; and PROVIDED, FURTHER, that, where a consent under the Indenture would require the consent or act of the Holders of greater than a majority of the Holders in principal amount of Debt Securities then outstanding (a "Super Majority") affected thereby, the Property Trustee may only give such consent or take such action at the written direction of the Holders of at least the proportion in liquidation amount of the Preferred Securities which the relevant Super Majority represents of the aggregate principal amount of the Debt Securities then outstanding. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Property Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Preferred Securities under this paragraph unless the Property Trustee has obtained an opinion of independent tax counsel experienced in such matters to the effect that for United States federal income tax purposes, such action will not cause the Trust to be classified as other than a grantor trust. If the Property Trustee fails to enforce its rights under the Debt Securities, any Holder of Preferred Securities may institute a legal proceeding against any person to enforce the Property Trustee's rights under the Debt Securities. If an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debt Security Issuer to pay interest or principal on the Debt Securities on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or interest on the Debt Securities having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debt Securities. In connection with such Direct Action, the rights of the Holders of Common Securities will be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Issuer to such Holder of Preferred Securities in such Direct Action. Except as provided in the preceding sentences, the Holders of I-9 Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Debt Securities. The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received from the trustee under the Indenture with respect to the Debt Securities. Such notice shall state that such event of default also constitutes an Event of Default under the Declaration. Any approval or direction of Holders of Preferred Securities may be given at a separate meeting of Holders of Preferred Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities or to distribute the Debt Securities in accordance with the Declaration and the terms of the Securities. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. 6. VOTING RIGHTS - COMMON SECURITIES. (a) Except as provided under Sections 6(b), 6(c) and 7 of this Annex I of the Declaration and as otherwise required by law and the Declaration, the Holders of the Common Securities will not have voting rights. (b) The Holders of the Common Securities are entitled, in accordance with Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or decrease the number of Trustees. (c) Subject to Section 2.6 of the Declaration and only after any Event of Default with respect to the Preferred Securities has been cured, waived, or otherwise eliminated and subject to the requirements of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under the Declaration, I-10 including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Debt Security Trustee, or exercising any trust or power conferred on the Debt Security Trustee with respect to the Debt Securities, (ii) waive any past default and its consequences that are waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debt Securities shall be due and payable, PROVIDED THAT, where a consent or action under the Indenture would require the consent or act of the relevant Super Majority, the Property Trustee may only give such consent or take such action at the written direction of the Holders of at least the proportion in liquidation amount of the Common Securities which the relevant Super Majority represents of the aggregate principal amount of the Debt Securities outstanding. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Property Trustee or the Debt Security Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Common Securities under this paragraph unless the Property Trustee has obtained an opinion of independent tax counsel experienced in such matters to the effect that for United States federal income tax purposes, such action will not cause the Trust to be classified as other than a grantor trust. If the Property Trustee fails to enforce its rights under the Declaration, any Holder of Common Securities may institute a legal proceeding directly against any Person to enforce the Property Trustee's rights under the Declaration, without first instituting a legal proceeding against the Property Trustee or any other Person. Any approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute the Debt Securities in accordance with the Declaration and the terms of the Securities. 7. AMENDMENTS TO DECLARATION AND INDENTURE. (a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than as described in Section 8.1 of the Declaration, then the Holders of outstanding Securities voting together as a single class, will be entitled to vote I-11 on such amendment or proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in liquidation amount of the Securities then outstanding affected thereby; PROVIDED, HOWEVER, if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or only the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a Majority in liquidation amount of such class of Securities then outstanding. (b) In the event the consent of the Property Trustee as the holder of the Debt Securities is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debt Securities, the Property Trustee shall request the written direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities then outstanding, voting together as a single class; PROVIDED, HOWEVER, that where a consent under the Indenture would require the consent of the relevant Super Majority, the Property Trustee may only give such consent at the direction of the Holders of at least the proportion in liquidation amount of the Securities then outstanding, voting together as a single class, which the relevant Super Majority represents of the aggregate principal amount of the Debt Securities then outstanding; PROVIDED, FURTHER, that the Property Trustee shall not take any action in accordance with the directions of the Holders of the Securities under this Section 7(b) unless the Property Trustee has obtained an opinion of independent tax counsel experienced in such matters to the effect that for United States federal income tax purposes, such action will not cause the Trust to be classified as other than a grantor trust. 8. PRO RATA. A reference in these terms of the Securities to any distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder of Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default under the Declaration has occurred and is continuing, in which case any funds available to make such payment shall be paid first in cash to each Holder of the Preferred Securities pro rata according to the aggregate liquidation amount of Preferred Securities held by the relevant Holder relative to the aggregate liquidation amount of all Preferred Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Preferred Securities, to each Holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding. 9. RANKING. The Preferred Securities rank PARI PASSU and payment thereon shall be made Pro Rata with the Common Securities except that, where an Event of Default occurs and is continuing, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of the Preferred Securities. I-12 10. LISTING. The Regular Trustees shall use their best efforts to cause the Preferred Securities to be listed on the New York Stock Exchange. 11. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE. Each Holder of Preferred Securities and Common Securities, by the acceptance thereof, agrees to the provisions of the Preferred Securities Guarantee, including the subordination provisions therein and to the provisions of the Indenture. 12. NO PREEMPTIVE RIGHTS. The Holders of the Securities shall have no preemptive rights to subscribe for any additional securities. 13. MISCELLANEOUS. These terms constitute a part of the Declaration. The Sponsor will provide a copy of the Declaration, the Preferred Securities Guarantee, and the Indenture to a Holder without charge on written request to the Sponsor at its principal place of business. 14. GOVERNING LAW. These terms and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principals of conflict of laws. I-13 EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE {IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - THIS PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.} A1-1 Certificate Number: Number of Preferred Securities: 4,400,000 Cusip No.: 89102Q 20 1 Certificate Evidencing Preferred Securities of Torchmark Capital Trust I 7 3/4% Trust Preferred Securities (liquidation amount $25 per Trust Preferred Security) Torchmark Capital Trust I, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of Preferred Securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the 7 3/4% Trust Preferred Securities (liquidation amount $25 per Trust Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust, dated as of November 2, 2001, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Preferred Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Preferred Securities Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Preferred Securities Guarantee and the Indenture to the Holder without charge upon written request to the Trust at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Declaration and the Preferred Securities Guarantee and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debt Securities as indebtedness and the Preferred Securities as evidence of indirect beneficial ownership in the Debt Securities. Unless the Property Trustee's Certificate of Authentication hereon has been properly executed, these Preferred Securities shall not be entitled to any benefit under the Declaration or be valid or obligatory for any purpose. A1-2 IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day of __________, _____. Torchmark Capital Trust I By:___________________________________________ Name:___________________________________ Title: Regular Trustee solely as trustee and not in his individual capacity A1-3 FORM OF CERTIFICATE OF AUTHENTICATION PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Declaration. Dated: _____________ ____, _____ The Bank of New York, as Property Trustee or as Authentication Agent By:________________________________ By:_______________________________________ Authorized Signatory Authorized Signatory A1-4 FORM OF REVERSE OF SECURITY Distributions payable on each Preferred Security will be fixed at a rate per annum of 7 3/4% (the "Coupon Rate") of the stated liquidation amount of $25 per Preferred Security, such rate being the rate of interest payable on the Debt Securities to be held by the Property Trustee. Distributions in arrears for more than one quarter will bear interest thereon compounded quarterly at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debt Securities held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 30-day month. Except as otherwise described below, Distributions on the Preferred Securities will be cumulative, will accumulate from November 2, 2001 and will be payable quarterly in arrears, on February 1, May 1, August 1 and November 1 of each year, commencing on February 1, 2002, which payment dates shall correspond to the interest payment dates on the Debt Securities, to Holders of record one (1) Business Day prior to such payment dates; PROVIDED, HOWEVER, that if the Preferred Securities are not then in book in book-entry only form, such Distributions shall be paid to Holders of record on the date that is fifteen days prior to the relevant payment dates, unless otherwise provided in the Declaration. The Debt Security Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debt Securities for a period not exceeding 20 consecutive quarters (each an "Extension Period"); PROVIDED THAT no Extension Period shall last beyond the date of the maturity of the Debt Securities and, as a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accumulate with interest thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during any such Extension Period. Prior to the termination of any such Extension Period, the Debt Security Issuer may further extend such Extension Period; PROVIDED THAT such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the maturity date of the Debt Securities. Upon the termination of any Extension Period and the payment of all amounts then due, the Debt Security Issuer may commence a new Extension Period, subject to the above requirements. The Preferred Securities shall be redeemable as provided in the Declaration. A1-5 FORM OF ASSIGNMENT FOR DEFINITIVE PREFERRED SECURITY For value received ___________________________________________ hereby sell(s), assign(s) and transfer(s) unto____________________________________ (Please insert social security or other taxpayer identification number of assignee.) the within security and hereby irrevocably constitutes and appoints ___________ attorney to transfer the said security on the books of the Company, with full power of substitution in the premises. Dated:_______________________ Signature(s): _________________________ Signature Guarantee* NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of this Security in every particular without alteration or enlargement or any change whatever. * (Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Paying Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Paying Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A1-6 SCHEDULE I CHANGES TO NUMBER OF PREFERRED SECURITIES IN GLOBAL SECURITY Number of Capital Securities by which this Global Security Is To Be Remaining Capital Reduced or Increased, Securities Represented and Reason for by this Date Reduction or Increase Global Security Notation Made By ---- --------------------- ---------------------- ---------------- A1-7 EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT. THE TRANSFER OF THE SECURITY EVIDENCED HEREBY IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW. The Common Securities may only be transferred by the Sponsor and any Related Party to the Sponsor or a Related Party of the Sponsor; PROVIDED THAT, any such transfer shall not violate the Securities Act and is subject to the condition precedent that the transferor obtain the written opinion of independent counsel experienced in such matters that such transfer would not cause more than an insubstantial risk that: (i) the Trust would not be classified for United States federal income tax purposes as a grantor trust; and (ii) the Trust would be an Investment Company required to register under the Investment Company Act or the transferee would become an Investment Company required to register under the Investment Company Act. Certificate Number: Number of Common Securities: 136,083 Certificate Evidencing Common Securities of Torchmark Capital Trust I 7 3/4% Common Securities (liquidation amount $25 per Common Security) Torchmark Capital Trust I, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Torchmark Corporation (the "Holder") is the registered owner of common securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the 7 3/4% Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"). The Common Securities are transferable on the books and records of A2-1 the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of November 2, 2001, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Sponsor will provide a copy of the Declaration and the Indenture to a Holder without charge upon written request to the Trust at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debt Securities as indebtedness and the Common Securities as evidence of indirect beneficial ownership in the Debt Securities. IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day of ________, 2001. Torchmark Capital Trust I By:______________________________________________ Name:______________________________________ Title: Regular Trustee solely as trustee and not in his individual capacity A2-2 {FORM OF REVERSE OF SECURITY} Distributions payable on each Common Security will be fixed at a rate per annum of 7 3/4% (the "Coupon Rate") of the stated liquidation amount of $25 per Common Security, such rate being the rate of interest payable on the Debt Securities to be held by the Property Trustee. Distributions in arrears for more than one quarter will bear interest thereon compounded quarterly at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debt Securities held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 30-day month. Except as otherwise described below, Distributions on the Common Securities will be cumulative, will accumulate from November 2, 2001 and will be payable quarterly in arrears, on February 1, May 1, August 1 and November 1 of each year, commencing on February 1, 2002, which payment dates shall correspond to the interest payment dates on the Debt Securities, to Holders of record one (1) Business Day prior to such payment dates; PROVIDED, HOWEVER, that if the Preferred Securities are not then in book-entry only form, such Distributions shall be paid to Holders of record on the date that is fifteen days prior to the relevant payment dates, unless otherwise provided in the Declaration. The Debt Security Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debt Securities for a period not exceeding 20 consecutive quarters (each an "Extension Period"), PROVIDED THAT no Extension Period shall last beyond the date of maturity of the Debt Securities and, as a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accumulate with interest thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during any such Extension Period. Prior to the termination of any such Extension Period, the Debt Security Issuer may further extend such Extension Period; PROVIDED THAT such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the date of maturity of the Debt Securities. Upon the termination of any Extension Period and the payment of all amounts then due, the Debt Security Issuer may commence a new Extension Period, subject to the above requirements. The Common Securities shall be redeemable as provided in the Declaration. A2-3 FORM OF ASSIGNMENT FOR SECURITY THEREOF For value received ________________________________________ hereby sell(s), assign(s) and transfer(s) unto _______________________________________________ (Please insert social security or other taxpayer identification number of assignee.) the within security and hereby irrevocably constitutes and appoints ___________ attorney to transfer the said security on the books of ____________, with full power of substitution in the premises. Dated:__________________ Signature(s):_______________________ Signature Guarantee* NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of this Security in every particular without alteration or enlargement or any change whatever. * (Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Paying Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Paying Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A2-4 EXHIBIT B SPECIMEN OF DEBT SECURITY B-1 EXHIBIT C UNDERWRITING AGREEMENT C-1 EX-4.3 6 dex43.txt JUNIOR SUBORDINATED INDENTURE 11/02/2001 EXHIBIT 4.3 JUNIOR SUBORDINATED INDENTURE BETWEEN TORCHMARK CORPORATION AND THE BANK OF NEW YORK DATED AS OF NOVEMBER 2, 2001 CROSS REFERENCE SHEET* Provisions of Trust Indenture Act (as defined herein) and Junior Subordinated Indenture dated as of November 2, 2001 between TORCHMARK CORPORATION and THE BANK OF NEW YORK, a New York banking corporation, as Trustee:
SECTION OF THE ACT SECTION OF INDENTURE ----------------------------- ------------------------------------ 310(a)(1) and (2) 6.9 310(a)(3) and (4) Inapplicable 310(b) 6.8 and 6.10(a), (b) and (d) 310(c) Inapplicable 311(a) 6.14 311(b) 6.14 311(c) Inapplicable 312(a) 4.1 and 4.2 312(b) 4.2 312(c) 4.2 313(a) 4.3 313(b)(1) Inapplicable 313(b)(2) 4.3 313(c) 4.3, 5.11, 6.10, 6.11, 8.2 and 12.2 313(d) 4.3 314(a) 3.5 and 4.2 314(b) Inapplicable 314(c)(1) and (2) 11.5 314(c)(3) Inapplicable 314(d) Inapplicable 314(e) 11.5 314(f) Inapplicable 315(a), (c) and (d) 6.1 315(b) 5.11 315(e) 5.12 316(a)(1) 5.9 and 5.10 316(a)(2) Not required 316(a) (last sentence) 7.4 316(b) 5.7 317(a) 5.2 317(b) 3.4(a) and (b) 318(a) 11.7
*This Cross Reference Sheet is not part of the Indenture. i TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS 1 Section 1.1 Certain Terms Defined 1 ARTICLE II SECURITIES 8 Section 2.1 Forms Generally 8 Section 2.2 Form of Trustee's Certificate of Authentication 8 Section 2.3 Amount Unlimited; Issuable in Series 9 Section 2.4 Authentication and Delivery of Securities 12 Section 2.5 Execution of Securities 15 Section 2.6 Certificate of Authentication 15 Section 2.7 Denomination and Date of Securities; Payment of Interest 15 Section 2.8 Registration, Transfer and Exchange 16 Section 2.9 Mutilated, Defaced, Destroyed, Lost And Stolen Securities 19 Section 2.10 Cancellation of Securities; Destruction Thereof 20 Section 2.11 Temporary Securities 20 Section 2.12 CUSIP Numbers 21 ARTICLE III COVENANTS OF THE ISSUER 21 Section 3.1 Payment of Principal and Interest 21 Section 3.2 Offices for Payments, Etc. 22 Section 3.3 Appointment to Fill a Vacancy in Office of Trustee 23 Section 3.4 Paying Agents 23 Section 3.5 Compliance Certificates 24 Section 3.6 Corporate Existence 24 Section 3.7 Maintenance of Properties 24 Section 3.8 Payment of Taxes and Other Claims 25 Section 3.9 Calculation of Original Issue Discount 25 ARTICLE IV SECURITYHOLDER LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE 25 Section 4.1 Issuer to Furnish Trustee Information As to Names and Addresses of Securityholders 25 Section 4.2 Reports by the Issuer 25 Section 4.3 Reports by the Trustee 26
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Page ---- ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT 27 Section 5.1 Event of Default Defined, Acceleration of Maturity; Waiver of Default 27 Section 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt 31 Section 5.3 Application of Proceeds 33 Section 5.4 Suits for Enforcement 34 Section 5.5 Restoration of Rights on Abandonment of Proceedings 34 Section 5.6 Limitations on Suits by Security Holders 34 Section 5.7 Unconditional Right of Securityholders to Institute Certain Suits 34 Section 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver Of Default 35 Section 5.9 Control by Holders of Securities 35 Section 5.10 Waiver of Past Defaults 36 Section 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances 36 Section 5.12 Right of Court to Require Filing of Undertaking to Pay Costs 36 ARTICLE VI CONCERNING THE TRUSTEE 37 Section 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default 37 Section 6.2 Certain Rights of the Trustee 38 Section 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof 39 Section 6.4 Trustee and Agents May Hold Securities or Coupons; Collections, Etc. 40 Section 6.5 Monies Held by Trustee 40 Section 6.6 Compensation and Indemnification of Trustee and its Prior Claim 40 Section 6.7 Right of Trustee to Rely on Officer's Certificate, Etc. 41 Section 6.8 Indentures Not Creating Potential Conflicting Interests for the Trustee 41 Section 6.9 Qualification of Trustee: Conflicting Interests 41 Section 6.10 Persons Eligible for Appointment as Trustee 41 Section 6.11 Resignation and Removal; Appointment of Successor Trustee 41 Section 6.12 Acceptance of Appointment by Successor Trustee 43 Section 6.13 Merger, Conversion, Consolidation Or Succession to Business of Trustee 44 Section 6.14 Preferential Collection of Claims Against the Issuer 44 Section 6.15 Appointment of Authenticating Agent 45 ARTICLE VII CONCERNING THE SECURITYHOLDERS 46 Section 7.1 Evidence of Action Taken by Securityholders 46 Section 7.2 Proof of Execution of Instruments And of Holding of Securities 46 Section 7.3 Holders to Be Treated as Owners 46
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Page ---- Section 7.4 Securities Owned by Issuer Deemed Not Outstanding 46 Section 7.5 Right of Revocation of Action Taken 47 ARTICLE VIII SUPPLEMENTAL INDENTURES 47 Section 8.1 Supplemental Indentures Without Consent of Securityholders 47 Section 8.2 Supplemental Indentures with Consent of Securityholders 49 Section 8.3 Effect of Supplemental Indenture 50 Section 8.4 Documents to Be Given to Trustee 50 Section 8.5 Notation on Securities in Respect of Supplemental Indentures 50 ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE 51 Section 9.1 Issuer May Consolidate, Etc., Only On Certain Terms 51 Section 9.2 Successor Corporation Substituted 51 Section 9.3 Opinion of Counsel to Be Given Trustee 52 ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONIES 52 Section 10.1 Satisfaction and Discharge of Indenture 52 Section 10.2 Application by Trustee of Funds Deposited for Payment of Securities 57 Section 10.3 Repayment of Monies Held by Paying Agent 57 Section 10.4 Return of Monies Held by Trustee And Paying Agent Unclaimed For Two Years 57 Section 10.5 Indemnity for U.S. Government Obligations 58 ARTICLE XI MISCELLANEOUS PROVISIONS 58 Section 11.1 Incorporators, Shareholders, Officers and Directors of Issuer Exempt from Individual Liability 58 Section 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities and Coupons 58 Section 11.3 Successors and Assigns of Issuer Bound by Indenture 58 Section 11.4 Notices and Demands on Issuer, Trustee and Holders of Securities And Coupons 58 Section 11.5 Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein 59 Section 11.6 Payments Due on Saturdays, Sundays And Holidays 60 Section 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act 60 Section 11.8 New York Law to Govern 61
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Page ---- Section 11.9 Counterparts 61 Section 11.10 Effect of Headings 61 Section 11.11 Securities in a Composite Currency, Currency Unit, or Foreign Currency 61 Section 11.12 Judgment Currency 61 ARTICLE XII REDEMPTION OF SECURITIES AND SINKING FUNDS 62 Section 12.1 Applicability of Article 62 Section 12.2 Notice of Redemption; Partial Redemptions 62 Section 12.3 Payment of Securities Called for Redemption 64 Section 12.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption 64 Section 12.5 Mandatory and Optional Sinking Funds 65 ARTICLE XIII SUBORDINATION OF SECURITIES 67 Section 13.1 Securities Subordinate to Senior Indebtedness 67 Section 13.2 No Payment When Senior Indebtedness in Default; Payment over of Proceeds Upon Dissolution, Etc. 67 Section 13.3 Payment Permitted If No Default 69 Section 13.4 Subrogation to Rights of Holders of Senior Indebtedness 69 Section 13.5 Provisions Solely to Define Relative Rights 69 Section 13.6 Trustee to Effectuate Subordination 70 Section 13.7 No Waiver of Subordination Provisions 70 Section 13.8 Notice to Trustee 70 Section 13.9 Reliance on Judicial Order or Certificate of Liquidation Agent 71 Section 13.10 Trustee Not Fiduciary for Holders of Senior Indebtedness 71 Section 13.11 Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights 71 Section 13.12 Article Applicable to Paying Agents 71
v THIS JUNIOR SUBORDINATED INDENTURE (this "Indenture") is dated as of November 2, 2001, by and between TORCHMARK CORPORATION, a Delaware corporation (the "Issuer"), and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"). W I T N E S S E T H: WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured junior subordinated debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture, including Securities issued to evidence loans made to the Issuer of the proceeds from the issuance from time to time by one or more business trusts (each an "Issuer Trust") of undivided preferred beneficial interests in the assets of such Issuer Trusts (the "Preferred Securities") and undivided common beneficial interests in the assets of such Issuer Trusts (and together with the Preferred Securities, the "Trust Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of the Securities; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the coupons, if any, appertaining thereto as follows: ARTICLE I DEFINITIONS Section 1.1 Certain Terms Defined. The terms set forth in this Section --------------------- 1.1 (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or the definitions of which in the Securities Act of 1933, as amended (the "Securities Act"), are referred to in the Trust Indenture Act, including terms defined therein by reference to the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meaning assigned to such terms in the Trust Indenture Act and in the Securities Act as in effect from time to time. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with 1 generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation unless a different time shall be specified with respect to such series of Securities as provided for in Section 2.3. 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. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor provision. "Authenticating Agent" shall have the meaning set forth in Section 6.15. "Authorized Newspaper" means a newspaper (which, in the case of The City of New York, will, if practicable, be THE WALL STREET JOURNAL (Eastern Edition), and in the case of the United Kingdom of Great Britain and Northern Ireland (the "United Kingdom"), will, if practicable, be THE FINANCIAL TIMES (London Edition)) published in an official or common language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in The City of New York or the United Kingdom, as applicable. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. "Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act on its behalf. "Board Resolution" means a copy of one or more resolutions, certified by the secretary or an assistant secretary of the Issuer to have been duly adopted or consented to by the Board of Directors and to be in full force and effect, and delivered to the Trustee. "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in The City of New York, New York are permitted or required by law to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, as of the date of this Indenture, located at 101 Barclay Street, Floor 21 West, New York, NY 10286, Attention: Corporate Trust Administration. "Coupon" means any interest coupon appertaining to an Unregistered Security. 2 "Covenant Defeasance" shall have the meaning set forth in Section 10.1(c). "Debt" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) every obligation of the type referred to in clauses (i) through (v) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and all obligations of the type referred to in clauses (i) through (vi) of another person and all dividends of another Person the payment of which, in either case, is secured by any lien on any of such Person's properties or assets, whether or not such Person has assumed such obligations. "Depositary" means, with respect to the Securities of any series issuable or issued in the form of one or more Registered Global Securities, the Person designated as Depositary by the Issuer pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series. "Distributions" means, with respect to the Trust Securities issued by an Issuer Trust, amounts payable in respect of such Trust Securities as provided in the related trust agreement or declaration of trust and referred to therein as "Distributions." "Dollar" or "$" means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. "Event of Default" means any event or condition specified as such in Section 5.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Value" when used with respect to any Voting Stock means the fair value as determined in good faith by the Board of Directors of the Issuer. "Foreign Currency" means a currency issued by the government of a country other than the United States of America. "Holder," "Holder of Securities," "Securityholder" or any other similar term means (a) in the case of any Registered Security, the person in whose name such Security is registered in the security 3 register kept by the Issuer for that purpose in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the bearer of such Security, or any Coupon appertaining thereto, as the case may be. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. "Interest Payment Date" means, as to each series of Securities, the Stated Maturity of an installment of interest on such Securities. "IRS" means the Internal Revenue Service of the United States Department of the Treasury, or any successor entity. "Issuer" means (except as otherwise provided in Article IX) Torchmark Corporation, a Delaware corporation, and, subject to Article IX, its successors and assigns. "Issuer Order" means a written statement, request or order of the Issuer signed in its name by the chairman of the Board of Directors, the president, any vice president or the treasurer of the Issuer. "Issuer Trust" has the meaning specified in the first recital of this Indenture. "Judgment Currency" has the meaning set forth in Section 11.12. "Non-U.S. Person" means any person that is not a "U.S. person" as such term is defined in Rule 902 of the Securities Act. "Officer's Certificate" means a certificate signed by the chairman of the Board of Directors, the president or any vice president or the treasurer of the Issuer and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act and include the statements provided for in Section 11.5. "Opinion of Counsel" means an opinion in writing signed by legal counsel who may be an employee of the Issuer or other counsel satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the statements provided for in Section 11.5. "Original Issue Date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. 4 "Outstanding" (except as otherwise provided in Section 7.4), when used with reference to Securities, means, subject to the provisions of Section 7.4, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except: (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for the payment or redemption of which monies or U.S. Government Obligations (as provided for in Section 10.1) in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the Holders of such Securities (if the Issuer shall act as its own paying agent), PROVIDED, that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provisions satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities which shall have been paid or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer). In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Periodic Offering" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Issuer or its agents upon the issuance of such Securities. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Securities" has the meaning specified in the first recital of this Indenture. "Principal" whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include "and premium, if any," PROVIDED, HOWEVER, that such inclusion of premium, if any, shall under no circumstances result in the double counting of such premium for the purpose of any calculation required hereunder. 5 "Record date" shall have the meaning set forth in Section 2.7. "Registered Global Security" means a Security evidencing all or a part of a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.4, and bearing the legend prescribed in Section 2.4 and any other legend required by the Depositary for such series. "Registered Security" means any Security registered on the Security register of the Issuer. "Required Currency" shall have the meaning set forth in Section 11.12. "Responsible Officer" when used with respect to the Trustee, means any vice president, any assistant vice president, any senior trust officer or assistant trust officer, any trust officer, or any other officer associated with the corporate trust department 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 such person's knowledge of and familiarity with the particular subject. "Rights Plan" means a plan of the Issuer providing for the issuance by the Issuer to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of any class or series of capital stock of the Issuer which rights (i) are deemed to be transferred with such shares of such Common Stock, and (ii) are also issued in respect of future issuance of such Common Stock, in each case until the occurrence of a specified event or events. "Security" or "Securities" (except as otherwise provided in Section 7.4) has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Issuer whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Issuer, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless 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 in right of payment to the Securities or to other Debt that is pari passu with, or subordinated to, the Securities; provided, however, that Senior Indebtedness shall not be deemed to include (a) any Debt of the Issuer or an obligor of the Securities or its affiliates, including all other debt securities and any guarantees in respect of such debt securities, to (i) Torchmark Capital Trust II, or a trustee thereof or (ii) any other trust, or a trustee thereof, a partnership or other entity affiliated with the Issuer that is a financing vehicle of the Issuer and that will issue preferred securities or other securities that rank pari passu with, or junior to, the Preferred Securities, (b) any Debt of the Issuer to any of its Subsidiaries, (c) any Debt of the Issuer to any employee of the Issuer, or (d) trade accounts payable and accrued liabilities of the Issuer arising in the ordinary course of business of the Issuer. 6 "Stated Maturity" means, when used with respect to any Security or any installment of principal thereof (or premium, if any) or interest (including any additional interest payable pursuant to the terms of any Security) thereon, the date specified pursuant to the terms of such Security as the fixed date on which the principal of such Security or such installment of principal (or premium, if any) or interest (including any additional interest payable pursuant to the terms of any Security) is due and payable, subject, in the case of the stated maturity of the principal on any security, to acceleration or extension as provided pursuant to the terms of such Security and this Indenture. "Subsidiary" means any corporation of which at least a majority of the outstanding stock having the voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time of determination directly or indirectly owned by the Issuer, or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries. "Trust Securities" has the meaning specified in the first recital of this Indenture. "Trustee" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article VI, shall also include any successor trustee. "Trustee" shall also mean or include each Person who is then a trustee hereunder, and, if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the trustee with respect to the Securities of such series. "Unregistered Security" means any Security other than a Registered Security. "U.S. Government Obligations" shall have the meaning set forth in Section 10.1(a). "Voting Stock" means stock of any class or classes having general voting power under ordinary circumstances to elect a majority of the board of directors, managers or trustees of the corporation in question, PROVIDED, that, for the purposes hereof, stock which carries only the right to vote conditionally on the happening of an event shall not be considered voting stock whether or not such event shall have happened. "Yield to Maturity" means the yield to maturity on a series of securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. ARTICLE II SECURITIES Section 2.1 Forms Generally. The Securities of each series and the --------------- Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to but not set forth in a Board Resolution, an Officer's 7 Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons. The definitive Securities and Coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons, if any. Section 2.2 Form of Trustee's Certificate of Authentication. The ----------------------------------------------- Trustee's certificate of authentication on all Securities shall be in substantially the following form: "This is one of the Securities referred to in the within-mentioned Junior Subordinated Indenture. The Bank of New York, as Trustee Dated:____________________________ By:_____________________________________ Authorized Signatory" If at any time there shall be an Authenticating Agent appointed with respect to any series of Securities, then the Trustee's Certificate of Authentication to be borne by the Securities of each such series shall be substantially as follows: 8 "This is one of the Securities referred to in the within-mentioned Junior Subordinated Indenture. [______________________________________________] as Authenticating Agent Dated:____________________________ By:______________________________________ Authorized Signatory" Section 2.3 Amount Unlimited; Issuable in Series. The aggregate ------------------------------------ principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to but not set forth in a Board Resolution, in an Officer's Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series, (1) the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series, and which may be part of a series of Securities previously issued; (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3); (3) if other than Dollars, the coin, currency or currencies in which the Securities of the series are denominated (including, but not limited to, any composite currency, currency units or Foreign Currency); (4) the Stated Maturity or Maturities on which the principal of the Securities of such series is payable or the method of determination thereof, and any dates on which or circumstances under which, the Issuer shall have the right to extend or shorten such Stated Maturity or Maturities; (5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue and on which such interest shall be payable, the terms and conditions of any deferral of interest and additional interest, if any, thereon, the right, if any, of the Issuer to extend the interest payment periods and the duration of the extensions and (in the case of Registered Securities) the date or dates on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined; 9 (6) the place or places where and the manner in which, the principal of and any interest on Securities of the series shall be payable, the place or places where the Securities of the series may be presented for registration of transfer or exchange and the place or places where notices and demands to or upon the Issuer in respect of the Securities of the series may be made, if other than as provided in Section 3.2; (7) the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, or the date or dates on which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise; (8) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof, and the price or prices at which and the period or periods within which or the date or dates on which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (9) subject to Section 13.1, the relative degree, if any, to which the Securities of the series shall be senior to or be subordinated to other series of Securities in right of payment, whether such other series of Securities are Outstanding or not; (10) if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, the denominations in which Securities of the series shall be issuable; (11) the percentage of the principal amount at which the Securities will be issued, and, if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof; (12) if other than the coin, currency or currencies in which the Securities of the series are denominated, the coin, currency or currencies in which payment of the principal of or interest on the Securities of such series shall be payable, including composite currencies or currency units; (13) if the principal of or interest on the Securities of the series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than that in which the Securities are denominated, the period or periods 10 within which, and the terms and conditions upon which, such election may be made; (14) if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index or formula based on a coin, currency, composite currency or currency unit other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined; (15) whether the Securities of the series will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa; (16) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem the Securities of the series rather than pay such additional amounts; (17) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (18) any trustees, depositories, authenticating or paying agents, transfer agents or registrars of any other agents with respect to the Securities of such series; (19) any deletion from, modification of or addition to the Events of Default or covenants with respect to the Securities of such series; (20) if the Securities of the series are to be convertible into or exchangeable for any other security or property of the Issuer, including, without limitation, securities of another Person held by the Issuer or its Affiliates and, if so, the terms thereof; (21) any securities exchange or quotation system on which the Securities of the series may be listed or quoted, as applicable; and 11 (22) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series and Coupons, if any, appertaining thereto shall be substantially identical, except in the case of Registered Securities as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any indenture supplemental hereto. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution, such Officer's Certificate or in any indenture supplemental hereto. Section 2.4 Authentication and Delivery of Securities. The Issuer may ----------------------------------------- deliver Securities of any series having attached thereto appropriate Coupons, if any, executed by the Issuer to the Trustee for authentication together with the applicable documents referred to below in this Section 2.4, and the Trustee shall thereupon authenticate and deliver such Securities and Coupons, if any, to or upon the order of the Issuer (contained in the Issuer Order referred to below in this Section) or pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by an Issuer Order. The maturity date, original issue date, interest rate and any other terms of the Securities of such series and Coupons, if any, appertaining thereto shall be determined by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Issuer or its duly authorized agent or agents, which instructions, if oral, shall be promptly confirmed in writing. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive (in the case of subparagraphs (2), (3) and (4) below only at or before the time of the first request of the Issuer to the Trustee to authenticate Securities of such series) and (subject to Section 6.1) shall be fully protected in relying upon, the following enumerated documents unless and until such documents have been superseded or revoked: (1) an Issuer Order requesting such authentication and setting forth delivery instructions if the Securities and Coupons, if any, are not to be delivered to the Issuer, PROVIDED that, with respect to Securities of a series subject to a Periodic Offering, (a) such Issuer Order may be delivered by the Issuer to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (b) the Trustee shall authenticate and deliver Securities of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount established for such series, pursuant to an Issuer Order or pursuant to procedures acceptable to the Trustee as may be specified from time to time by an Issuer Order and (c) the maturity date or dates, original issue date or dates, interest rate or rates and any other terms of Securities of such series shall be determined by an Issuer Order or pursuant to such procedures; 12 (2) any Board Resolution, Officer's Certificate and/or executed supplemental indenture referred to in Section 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities and Coupons, if any, were established; (3) an Officer's Certificate setting forth the form or forms and terms of the Securities and Coupons, if any, stating that the form or forms and terms of the Securities and Coupons, if any, have been established pursuant to Sections 2.1 and 2.3 and comply with this Indenture, and covering such other matters as the Trustee may reasonably request; and (4) at the option of the Issuer, either one or more Opinions of Counsel, or a letter addressed to the Trustee permitting it to rely on one or more Opinions of Counsel, substantially to the effect that: (a) the form or forms of the Securities and Coupons, if any, have been duly authorized and established in conformity with the provisions of this Indenture; (b) in the case of an underwritten offering, the terms of the Securities have been duly authorized and established in conformity with the provisions of this Indenture, and, in the case of an offering that is not underwritten, certain terms of the Securities have been established pursuant to a Board Resolution, an Officer's Certificate or a supplemental indenture in accordance with this Indenture, and when such other terms as are to be established pursuant to procedures set forth in an Issuer Order shall have been established, all such terms will have been duly authorized by the Issuer and will have been established in conformity with the provisions of this Indenture; (c) such Securities and Coupons, if any, when executed by the Issuer and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered to and duly paid for by the purchasers thereof, and subject to any conditions specified in such Opinion of Counsel, will have been duly issued under this Indenture, will be entitled to the benefits of this Indenture; (d) such Securities will be valid and binding obligations of the Issuer, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent transfer or similar laws affecting creditors' rights generally, (ii) rights of acceleration, if any, and (iii) the availability of equitable remedies may be limited by equitable principles of general applicability and such counsel need express no opinion with regard to the enforceability of Section 6.6 or of a judgment denominated in a currency other than Dollars; and 13 (e) that all laws and requirements in respect of the execution and delivery by the Company of such Securities have been complied with. In rendering such opinions, any counsel may qualify any opinions as to enforceability by stating that such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent transfer and other similar laws affecting the rights and remedies of creditors and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Such counsel may rely upon opinions of other counsel (copies of which shall be delivered to the Trustee) reasonably satisfactory to the Trustee, in which case the opinion shall state that such counsel believes he and the Trustee are entitled so to rely. Such counsel may also state that, insofar as such opinion involves factual matters, he has relied, to the extent he deems proper, upon certificates of officers of the Issuer and its subsidiaries and certificates of public officials. The Trustee shall have the right to decline to authenticate and deliver any Securities under this section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise. If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in the form of one or more Registered Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section and the Issuer Order with respect to such series, authenticate and deliver one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued and not yet cancelled, (ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or delivered or held pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." Each Depositary designated pursuant to Section 2.3 must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation. Section 2.5 Execution of Securities. The Securities and each Coupon ----------------------- appertaining thereto, if any, shall be signed on behalf of the Issuer by the chairman or vice chairman of its Board 14 of Directors, its chief executive officer, any vice president or its treasurer, which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. Typographical and other minor errors or defects in any such reproduction of any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities or Coupons, if any, shall cease to be such officer before the Security or Coupon so signed (or the Security to which the Coupon so signed appertains) shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security or Coupon had not ceased to be such officer of the Issuer; and any Security or Coupon may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security or Coupon, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. Section 2.6 Certificate of Authentication. Only such Securities as ----------------------------- shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. No Coupon shall be entitled to the benefits of this Indenture or shall be valid and obligatory for any purpose until the certificate of authentication on the Security to which such Coupon appertains shall have been duly executed by the Trustee. The execution of such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. Section 2.7 Denomination and Date of Securities; Payment of Interest. -------------------------------------------------------- The Securities of each series shall be issuable as Registered Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, with respect to the Registered Securities of any series, if not so established, in denominations of $1,000 and any integral multiple thereof. If denominations of Unregistered Securities of any series are not so established, such Securities shall be issuable in denominations of $1,000 and $5,000. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee, as evidenced by the execution and authentication thereof. Each Registered Security shall be dated the date of its authentication. Each Unregistered Security shall be dated as provided in the Board Resolution referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3. The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date 15 and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names Outstanding Registered Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the Holders of Registered Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, if such interest payment date is the first day of a calendar month, the fifteenth day of the preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. Section 2.8 Registration, Transfer and Exchange. The Issuer will keep ----------------------------------- at each office or agency to be maintained for the purpose as provided in Section 3.2 for each series of Securities a register or registers in which, subject to such reasonable regulations as the Issuer may prescribe, it will provide for the registration of Registered Securities of such series and the registration of transfer of Registered Securities of such series. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. Upon due presentation for registration of transfer of any Registered Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Registered Securities of the same series, maturity date, interest rate and original issue date in authorized denominations for a like aggregate principal amount. Unregistered Securities (except for any temporary global Unregistered Securities) and Coupons (except for Coupons attached to any temporary global Unregistered Securities) shall be transferable by delivery. At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 and upon payment, if the Issuer shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, at the option of the Holder thereof, except as otherwise specified pursuant to Section 2.3, Unregistered Securities of any series may be exchanged for Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured 16 Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series unless (1) otherwise specified pursuant to Section 2.3 and (2) the Issuer has delivered to the Trustee an Opinion of Counsel that (x) the Issuer has received from the IRS a ruling or (y) since the date hereof, there has been a change in the applicable United States federal income tax law, in either case to the effect that the inclusion of terms permitting Registered Securities to be exchanged for Unregistered Securities would result in no United States federal income tax effect adverse to the Issuer or to any Holder. Whenever any Securities are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities and Coupons, if any, surrendered upon any exchange or transfer provided for in this Indenture shall be promptly cancelled and disposed of by the Trustee, and the Trustee shall deliver a certificate of disposition thereof to the Issuer. All Registered Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed, by the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days preceding the first mailing of notice of redemption of Securities of such series to be redeemed or (b) any Securities selected, called or being called for redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed. Notwithstanding any other provision of this Section 2.8, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. 17 If at any time the Depositary for any Registered Securities of a series represented by one or more Registered Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Registered Securities or if at any time the Depositary for such Registered Securities shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary eligible under Section 2.4 with respect to such Registered Securities. If a successor Depositary eligible under Section 2.4 for such Registered Securities is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3 that such Registered Securities be represented by one or more Registered Global Securities shall no longer be effective and the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities in exchange for such Registered Global Security or Securities. The Issuer may at any time and in its sole discretion determine that the Registered Securities of any series issued in the form of one or more Registered Global Securities shall no longer be represented by a Registered Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon receipt of any Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities, in exchange for such Registered Global Security or Securities. If specified by the Issuer pursuant to Section 2.3 with respect to Securities represented by a Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Securities of the same series in definitive registered form on such terms as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and deliver, without service charge, (i) to the Person specified by such Depositary a new Registered Security or Securities of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and (ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities authenticated and delivered pursuant to clause (i) above. Upon the exchange of a Registered Global Security for Securities in definitive registered form without coupons, in authorized denominations, such Registered Global Security shall be cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities in definitive registered form without coupons issued in exchange for a Registered Global Security pursuant to this Section 2.8 18 shall be registered in such names and in such authorized denominations as the Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered. All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Notwithstanding anything herein or in the terms of any series of Securities to the contrary, none of the Issuer, the Trustee or any agent of the Issuer or the Trustee (any of which, other than the Issuer, shall rely on an Officer's Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in United States federal income tax consequences adverse to the Issuer (such as, for example, the inability of the Issuer to deduct from its income, as computed for United States federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States federal income tax laws. Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. --------------------------------------------------------- In case any temporary or definitive Security or any Coupon appertaining to any Security shall be mutilated, defaced, destroyed, lost or stolen, the Issuer in its discretion may execute and, upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Security of the same series, maturity date, interest rate and original issue date, bearing a number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining to the Securities so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen. In every case, the applicant for a substitute Security or Coupon shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof, and in the case of mutilation or defacement shall surrender the Security and related Coupons to the Trustee or such agent. Upon the issuance of any substitute Security or Coupon, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) of its agent connected therewith. In case any Security or Coupon which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may, instead of issuing a substitute Security, pay or authorize the payment of the same or the relevant Coupon (without surrender thereof except in the case of a mutilated or defaced Security or Coupon), if the applicant for such payment shall furnish to the Issuer and to the Trustee 19 and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or Coupons and of the ownership thereof. Every substitute Security or Coupon of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security or Coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security or Coupon shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities or Coupons of such series duly authenticated and delivered hereunder. All Securities and Coupons shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and Coupons 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 2.10 Cancellation of Securities; Destruction Thereof. All ----------------------------------------------- Securities and Coupons surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if any, if surrendered to the Issuer or any agent of the Issuer or the Trustee or any agent of the Trustee, shall be delivered to the Trustee or its agent for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities or Coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee or its agent shall dispose of cancelled Securities and Coupons held by it in accordance with its customary procedures. If the Issuer or its agent shall acquire any of the Securities or Coupons, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities or Coupons unless and until the same are delivered to the Trustee or its agent for cancellation. Section 2.11 Temporary Securities. Pending the preparation of definitive -------------------- Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without coupons, or as Unregistered Securities with or without coupons attached thereto, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Securities may contain such references to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered Securities of such series may be surrendered in exchange therefor without charge at each 20 office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and, in the case of Unregistered Securities, at any agency maintained by the Issuer for such purpose as specified pursuant to Section 2.3, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series an equal aggregate principal amount of definitive Securities of the same series having authorized denominations and, in the case of Unregistered Securities, having attached thereto any appropriate Coupons. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series, unless otherwise established pursuant to Section 2.3. The provisions of this Section are subject to any restrictions or limitations on the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a depositary or agency located outside the United States and the procedures pursuant to which definitive or global Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security). Section 2.12 CUSIP Numbers. The Issuer in issuing the Securities may use ------------- "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE III COVENANTS OF THE ISSUER Section 3.1 Payment of Principal and Interest. The Issuer covenants and --------------------------------- agrees for the benefit of each series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, if any, each of the Securities of such series (together with any additional amounts payable pursuant to the terms of such Securities) at the place or places, at the respective time or times and in the manner provided in such Securities and in the Coupons, if any, appertaining thereto and in this Indenture. The interest on Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. If any temporary Unregistered Security provides that interest thereon may be paid while such Security is in temporary form, the interest on any such temporary Unregistered Security (together with any additional amounts payable pursuant to the terms of such Security) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest, in each case subject to any restrictions that may be established pursuant to Section 2.3. The interest, if any, on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to or upon the written order of the Holders thereof and, at 21 the option of the Issuer, may be paid by wire transfer or by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the Securities register of the Issuer. Section 3.2 Offices for Payments, Etc. So long as any Registered -------------------------- Securities are authorized for issuance pursuant to this Indenture or are outstanding hereunder, the Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where the Registered Securities of each series may be presented for payment, where the Securities of each series may be presented for exchange as is provided in this Indenture and, if applicable, pursuant to Section 2.3 and where the Registered Securities of each series may be presented for registration of transfer as in this Indenture provided. The Issuer will maintain one or more offices or agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of such series are listed) where the Unregistered Securities, if any, of each series and Coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect such payment can be made without tax consequences adverse to the Issuer. Notwithstanding the foregoing, payments in Dollars of Unregistered Securities of any series and Coupons appertaining thereto which are payable in Dollars may be made at an agency of the Issuer maintained in the Borough of Manhattan, The City of New York if such payment in Dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions. The Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where notices and demands to or upon the Issuer in respect of the Securities of any series, the Coupons appertaining thereto or this Indenture may be served. The Issuer will give to the Trustee written notice of the location of each such office or agency and of any change of location thereof. In case the Issuer shall fail to maintain any agency required by this Section to be located in the Borough of Manhattan, The City of New York, or shall fail to give such notice of the location or for any change in the location of any of the above agencies, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. The Issuer may from time to time designate one or more additional offices or agencies where the Securities of a series and any Coupons appertaining thereto may be presented for payment, where the Securities of that series may be presented for exchange as provided in this Indenture and pursuant to Section 2.3 and where the Registered Securities of that series may be presented for registration of transfer as in this Indenture provided, and the Issuer may from time to time rescind any such designation, as the Issuer may deem desirable or expedient; PROVIDED, that no such designation or rescission shall in any manner relieve the Issuer of its obligations to maintain the agencies 22 provided for in this Section. The Issuer shall give to the Trustee prompt written notice of any such designation or rescission thereof. Section 3.3 Appointment to Fill a Vacancy in Office of Trustee. The -------------------------------------------------- Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. Section 3.4 Paying Agents. Whenever the Issuer shall appoint a paying ------------- agent other than the Trustee with respect to the Securities of any series, 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 provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the Holders of the Securities of such series, or Coupons appertaining thereto, if any, or of the Trustee; (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable; and (c) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee's written request at any time during the continuance of the failure referred to in the foregoing clause (b). The Issuer will, prior to 10:00 a.m. on each due date of the principal of or interest on the Securities of such series, deposit with the paying agent a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the Holders of the Securities of such series or the Coupons appertaining thereto a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of any failure to take such action. Anything in this Section to the contrary notwithstanding, but subject to Section 10.1, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4. 23 Section 3.5 Compliance Certificates. The Issuer will furnish to the ----------------------- Trustee on or before January 31 in each year (beginning with 2002) a brief certificate (which need not comply with Section 11.5) from the principal executive, financial or accounting officer of the Issuer stating that, in the course of the performance by the signer of his or her duties as an officer of the Issuer, he or she would normally have knowledge of any default or non- compliance by the Issuer in the performance of any covenants or conditions contained in this Indenture, stating whether or not he or she has knowledge of any such default or non-compliance and, if so, describing each such default or non-compliance of which the signer has knowledge and the nature thereof. Section 3.6 Corporate Existence. Subject to Article IX, the Issuer will ------------------- do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the rights (charter and statutory), licenses and franchises of the Issuer and its Subsidiaries; PROVIDED, that the Issuer shall not be required to preserve any such right, license or franchise, if, in the judgment of the Issuer, the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Subsidiaries taken as a whole and the loss thereof is not disadvantageous in any material respect to the Securityholders. Section 3.7 Maintenance of Properties. The Issuer will cause all ------------------------- properties used in or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Issuer may be necessary, so that the business carried on in connection therewith may be properly and advantageously conducted at all times, except to the extent that the Issuer may be prevented from so doing by circumstances beyond its control; PROVIDED, that nothing in this Section shall prevent the Issuer from discontinuing the operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Issuer desirable in the conduct of the business of the Issuer or any Subsidiary and not disadvantageous in any material respect to the Securityholders. Section 3.8 Payment of Taxes and Other Claims. The Issuer will pay or --------------------------------- discharge or cause to be paid or discharged, before the same shall become delinquent: (a) all taxes, assessments and governmental charges levied or imposed upon the Issuer or any Subsidiary or upon the income, profits or property of the Issuer or any Subsidiary; and (b) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Issuer or any Subsidiary; PROVIDED, that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and PROVIDED FURTHER that the Issuer shall not be required to cause to be paid or discharged any such tax, assessment, charge or claim if the Issuer shall determine that such payment is not advantageous to the conduct of the business of the Issuer and its Subsidiaries taken as a whole and that the failure so to pay or discharge is not disadvantageous in any material respect to the Securityholders. Section 3.9 Calculation of Original Issue Discount. If the securities -------------------------------------- are Original Issue Discount Securities, the Issuer shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual 24 periods) accrued on Outstanding Securities as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time. ARTICLE IV SECURITYHOLDER LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE Section 4.1 Issuer to Furnish Trustee Information as to Names and ----------------------------------------------------- Addresses of Securityholders. If and so long as the Trustee shall not be the ---------------------------- Security registrar for the Securities of any series, the Issuer and any other obligor on the Securities will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Registered Securities of such series pursuant to Section 312 of the Trust Indenture Act: (a) semi-annually not more than 5 days after each record date for the payment of interest on such Registered Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing Registered Securities in each year; and (b) at such other times as the Trustee may reasonably request in writing, within thirty days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished. Section 4.2 Reports by the Issuer. The Issuer covenants to file with --------------------- the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports that the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act or pursuant to Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Trustee is for informational purposes only, and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). Section 4.3 Reports by the Trustee. ---------------------- (a) On or before the first July 15 which occurs not less than 60 days after the earliest date of issuance of any Securities and on or before July 15 in each year thereafter, so long as any Securities are Outstanding hereunder, the Trustee shall transmit by mail as provided below to the Securityholders of each series of outstanding Securities, as hereinafter in this Section provided, a brief report dated as of the preceding May 15 with respect to: (i) its eligibility under Section 6.10 and its qualification under Section 6.9, or in lieu thereof, if to the best of its knowledge it has continued 25 to be eligible and qualified under such Sections, a written statement to such effect; (ii) the character and amount of any advances (and if the Trustee elects to so state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities of such series, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 0.5% of the principal of the Securities of such series outstanding on the date of such report; (iii) the amount, interest rate and maturity date of all other indebtedness owing by the Issuer (or any other obligor on the Securities of such series) to the Trustee in its individual capacity on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship; (iv) any change to the property and funds, if any, physically in the possession of the Trustee (as such) in respect of the Securities of such series on the date of such report; (v) any additional issue of Securities of such series which the Trustee has not previously reported; and (vi) any action taken by the Trustee in the performance of its duties under this Indenture which the Trustee has not previously reported and which in the Trustee's opinion materially affects the Securities of such series, except action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 5.11. (b) The Trustee shall transmit to the Securityholders of each series, as provided in subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) in respect of the Securities of such series since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of this Indenture) for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of such series on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances 26 remaining unpaid at any time aggregate 10% or less of the principal amount of Securities of such series outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section shall be transmitted by mail to all Holders of Securities of such series, as the names and addresses of such Holders appear upon the Securities register as of a date not more than 15 days prior to the mailing thereof. (d) A copy of each such report shall, at the time of such transmission to Securityholders, be furnished to the Issuer and be filed by the Trustee with each stock exchange upon which the Securities of such series are listed and also with the Commission. The Issuer agrees to notify the Trustee when and as Securities of any series become listed on any national securities exchange. ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT Section 5.1 Event of Default Defined; Acceleration of Maturity; Waiver ---------------------------------------------------------- of Default. "Event of Default" with respect to Securities of any series, ---------- wherever used herein, means any one of the following events which shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; provided that, a valid extension of an interest payment period by the Issuer in accordance with the terms of such Securities shall not constitute a default in the payment of interest for this purpose; or (b) default in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon any redemption, by declaration or otherwise; or (c) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of the Securities of such series; or (d) failure on the part of the Issuer duly to observe or perform any other of the covenants or agreements on the part of the Issuer in the Securities of such series or contained in this Indenture (other than a covenant or agreement included in this Indenture solely for the benefit of a series of Securities other than such series) for a period of 60 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Issuer remedy the same, shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the holders 27 of at least 25% in aggregate principal amount of the Outstanding Securities of the series to which such covenant or agreement relates; or (e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer for any substantial part of its or their property or ordering the winding up or liquidation of its or their affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (f) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or for any substantial part of its or their property, or make any general assignment for the benefit of creditors; or (g) failure by the Issuer to make any payment at maturity, including any applicable grace period, in respect of indebtedness, which term as used herein means obligations (other than the Securities of such series or non- recourse obligations) of, or guaranteed or assumed by, the Issuer for borrowed money or evidenced by bonds, debentures, notes or other similar instruments ("Indebtedness") in an amount in excess of $10,000,000 or the equivalent thereof in any other currency or composite currency and such failure shall have continued for a period of thirty days after written notice thereof shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding (treated as one class); or (h) a default with respect to any Indebtedness, which default results in the acceleration of Indebtedness in an amount in excess of $10,000,000 or the equivalent thereof in any other currency or composite currency without such Indebtedness having been discharged or such acceleration having been cured, waived, rescinded or annulled for a period of thirty days after written notice thereof shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding (treated as one class); or (i) any other Event of Default provided in the supplemental indenture or Board Resolution under which such series of Securities is issued or in the form of Security for such series; provided that if any such failure, default or acceleration referred to in clause (g) or (h) above shall cease or be cured, waived, rescinded or annulled, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon cured. If an Event of Default described in clause (a), (b) or (c) occurs and is continuing, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate 28 principal amount of the Securities of each such affected series then Outstanding hereunder (each such series voting as a separate class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of such series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration, the same shall become immediately due and payable. Except as otherwise provided in the terms of any series of Securities pursuant to Section 2.3, if an Event of Default described in clause (d), (g), (h) or (i) above with respect to all series of Securities then Outstanding, occurs and is continuing, then, and in each and every such case, unless the Principal of all of the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all of the Securities then Outstanding hereunder (treated as one class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all of the Securities then Outstanding, and the interest accrued thereon, if any, to be due and payable immediately, and upon such declaration, the same shall become immediately due and payable. If an Event of Default described in clause (e) or (f) above occurs and is continuing, then the principal amount of all of the Securities then Outstanding, and the interest accrued thereon, if any, shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. If an Event of Default described in clause (d), (g), (h) or (i) occurs and is continuing, which Event of Default is with respect to less than all series of Securities then Outstanding, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of each such affected series then Outstanding hereunder (each such series voting as a separate class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of such series, and the interest accrued 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 are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, (A) the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay (i) all matured installments of interest upon all the Securities of such series (or all the Securities, as the case may be); and 29 (ii) the principal of any and all Securities of such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration; and (iii) interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series (or at the respective rates of interest or Yields to Maturity of all the Securities, as the case may be) to the date of such payment or deposit; and (iv) all amounts payable to the Trustee pursuant to Section 6.6; and (B) all Events of Default under the Indenture, other than the non- payment of the principal of 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 all the Securities of such series voting as a separate class (or all the Securities, as the case may be, voting as a single class), then Outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to such series (or with respect to all the Securities, as the case may be) 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. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. Section 5.2 Collection of Indebtedness by Trustee; Trustee May Prove -------------------------------------------------------- Debt. The Issuer covenants that (a) in case default shall be made in the ---- payment of any installment of interest on any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days, or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise, then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series, and such Coupons, for principal and interest, as the case may be (with interest to the date of such payment upon the overdue principal 30 and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and such other amount due the Trustee under Section 6.6 in respect of Securities of such series. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered Holders, whether or not the Securities of such series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon the Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Securities, wherever situated, all the monies adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts payable to the Trustee under Section 6.6) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor; and (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a receiver, assignee, trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings, custodian or other person performing similar functions in respect of any such proceedings; and (c) to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the 31 Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official performing similar functions in respect of any such proceedings is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee its costs and expenses of collection and all other amounts due to it pursuant to Section 6.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series 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, except as aforesaid in clause (b). All rights of action and of asserting claims under this Indenture, or under any of the Securities of any series or Coupons appertaining to such Securities, may be enforced by the Trustee without the possession of any of the Securities of such series or Coupons appertaining to such Securities or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be awarded to the Trustee for ratable distribution to the Holders of the Securities or Coupons appertaining to such Securities in respect of which such action was taken, after payment of all sums due to the Trustee under Section 6.6 in respect of such 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 Securities or Coupons appertaining to such Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities or Coupons appertaining to such Securities parties to any such proceedings. Section 5.3 Application of Proceeds. Any monies collected by the ----------------------- Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such monies on account of principal or interest, upon presentation of the several Securities and Coupons appertaining to such Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series of Securities in respect of which monies have been collected, including all amounts due to the Trustee and each predecessor Trustee pursuant to Section 6.6 in respect to such series of Securities; SECOND: In case the principal of the Securities of such series in respect of which monies have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee and is permitted by applicable law) upon the overdue installments of interest 32 at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Securities of such series in respect of which monies have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee and is permitted by applicable law) upon the overdue installations of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such monies shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. Section 5.4 Suits for Enforcement. In case an Event of Default has --------------------- occurred, has not been waived and is continuing, 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 at law or in equity or 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 5.5 Restoration of Rights on Abandonment of Proceedings. In --------------------------------------------------- case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken. Section 5.6 Limitations on Suits by Security Holders. No Holder of any ---------------------------------------- Security of any series or of any Coupon appertaining thereto shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture or such Security, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder or thereunder, unless (a) such Holder previously shall have given to the Trustee written notice of an Event of Default with respect to Securities of such series and of the continuance thereof, as hereinbefore provided, and (b) the Holders of not less than 25% in aggregate principal amount of the 33 Securities of such series then Outstanding (treated as a single class) shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and (c) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding, and (d) no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security or Coupon with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series or Coupons appertaining to such Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture or any Security to affect, disturb or prejudice the rights of any other such taker or Holder of Securities or Coupons appertaining to such Securities, or to obtain or seek to obtain priority over or preference to any other such taker or Holder or to enforce any right under this Indenture or any Security, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series and Coupons appertaining to such Securities. 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 5.7 Unconditional Right of Securityholders to Institute Certain ----------------------------------------------------------- Suits. Notwithstanding any other provision in this Indenture and any provision ----- of any Security, the right of any Holder of any Security or Coupon to receive payment of the principal of and interest on such Security or Coupon on or after the respective due dates expressed in such Security or Coupon or the applicable redemption dates provided for in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver ------------------------------------------------------------ of Default. Except as provided in Section 5.6, no right or remedy herein ---------- conferred upon or reserved to the Trustee or to the Holders of Securities or Coupons is intended to be exclusive of any other right or remedy and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Holder of Securities or Coupons to exercise any right or power accruing upon any 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 Event of Default or an acquiescence therein. Every power and remedy given by this Indenture, any Security or law to the Trustee or to the Holders of Securities or Coupons may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or, subject to Section 5.6, by the Holders of Securities or Coupons. Section 5.9 Control by Holders of Securities. The Holders of a majority -------------------------------- in aggregate principal amount of the Securities of each series affected (with each such series voting as a separate 34 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 the Securities of such series by this Indenture; PROVIDED, that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture; and PROVIDED, FURTHER, that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if (a) the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken; or (b) if the Trustee by its board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee shall determine in good faith that the action or proceedings so directed would involve the Trustee in personal liability; or (c) if the Trustee in good faith shall so determine that the actions or forbearance specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all affected series not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearance are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders. Section 5.10 Waiver of Past Defaults. Prior to the declaration of ----------------------- acceleration of the maturity of the Securities of any series as provided in Section 5.1, the Holders of a majority in aggregate principal amount of the Securities of such series at the time Outstanding (voting as a single class) may on behalf of the Holders of all such Securities waive any past default or Event of Default described in Section 5.1 and its consequences, except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of all such Securities shall be restored to their former positions and rights hereunder, respectively, and such default shall cease to exist and be deemed to have been cured and not to have occurred for purposes of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Section 5.11 Trustee to Give Notice of Default, but May Withhold in ------------------------------------------------------ Certain Circumstances. The Trustee shall, within ninety days after the --------------------- occurrence of a default with respect to the Securities of any series, give notice of all defaults with respect to that series known to the Trustee (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, unless in each case such defaults shall have been cured before the mailing or publication of such notice (the term "default" for the purpose of this Section being hereby defined 35 to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); PROVIDED, that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series, or in the payment of any sinking fund installment on such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series. Section 5.12 Right of Court to Require Filing of Undertaking to Pay ------------------------------------------------------ Costs. All parties to this Indenture agree, and each Holder of any Security or ----- Coupon by his 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, suffered 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, 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 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such series, or, in the case of any suit relating to or arising under clause (d), (g), (h) or (i) of Section 5.1 (if the suit relates to Securities of more than one but less than all series), 10% in aggregate principal amount of Securities then Outstanding and affected thereby, or in the case of any suit relating to or arising under clause (d), (g), (h) or (i) (if the suit under clause (d), (g), (h) or (i) relates to all the Securities then Outstanding) or (e) or (f) of Section 5.1, 10% in aggregate principal amount of all Securities then Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security or any date fixed for redemption. ARTICLE VI CONCERNING THE TRUSTEE Section 6.1 Duties and Responsibilities of the Trustee; During Default; ----------------------------------------------------------- Prior to Default. Prior to the occurrence of an Event of Default with respect ---------------- to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture with respect to such series of Securities. In case an Event of Default with respect to the Securities of a series has occurred and has not been cured or waived, the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture with respect to such series of Securities, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 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 36 (a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations 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 statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, 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 to the requirements of this Indenture (but need not conform or investigate the accuracy of mathematical calculations or other facts stated therein); (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (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 Holders pursuant to Section 5.9 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. 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, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. The provisions of this Section 6.1 are in furtherance of and subject to Section 315 of the Trust Indenture Act. Section 6.2 Certain Rights of the Trustee. In furtherance of and ----------------------------- subject to the Trust Indenture Act, and subject to Section 6.1: 37 (a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it 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 Issuer mentioned herein shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof is specifically prescribed herein or in the terms established in respect of any series); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel of its selection and any advice or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts 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 might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, 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, appraisal, bond, debenture, note, coupon, security or other paper or document unless (i) requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding (treated as one class) or (ii) otherwise provided in the terms of any series of Securities pursuant to Section 2.3; PROVIDED, 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 expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer upon demand; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and 38 the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder; (h) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; and (i) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. Section 6.3 Trustee Not Responsible for Recitals, Disposition of ---------------------------------------------------- Securities or Application of Proceeds Thereof. The recitals contained herein --------------------------------------------- and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities or Coupons. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. Section 6.4 Trustee and Agents May Hold Securities or Coupons; -------------------------------------------------- Collections, Etc. The Trustee or any agent of the Issuer or of the Trustee, in ---------------- its individual or any other capacity, may become the owner or pledgee of Securities or Coupons with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. Section 6.5 Monies Held by Trustee. Subject to the provisions of ---------------------- Section 10.4 hereof, all monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any monies received by it hereunder. Section 6.6 Compensation and Indemnification of Trustee and its Prior --------------------------------------------------------- Claim. The Issuer will pay to the Trustee from time to time, such compensation ----- for all services rendered by it hereunder as the parties shall agree from time to time (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Issuer will pay or reimburse the Trustee and each predecessor trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor trustee for, and to hold it harmless against, any and all loss, liability or expense, including taxes (other than taxes based upon the 39 income of the Trustee), incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim (whether asserted by the Issuer, any Securityholder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each predecessor trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee. Such additional indebtedness shall be a senior claim to that of the 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 Securities or Coupons, and the Securities are hereby subordinated to such senior claim. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(e) or Section 5.1(f), the expenses (including the reasonable charges and expenses of 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. Section 6.7 Right of Trustee to Rely on Officer's Certificate, Etc. ------------------------------------------------------- Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering 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 Officer's 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, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. Section 6.8 Indentures Not Creating Potential Conflicting Interests for ----------------------------------------------------------- the Trustee. The following indentures are hereby specifically described for the ----------- purposes of Section 310(b)(1) of the Trust Indenture Act: this Indenture with respect to series of Securities of any other series. Section 6.9 Qualification of Trustee: Conflicting Interests. The ----------------------------------------------- Trustee shall comply with Section 310(b) of the Trust Indenture Act. Section 6.10 Persons Eligible for Appointment as Trustee. The Trustee ------------------------------------------- for each series of Securities hereunder shall at all times be a corporation or banking association organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, state or District of Columbia authority. If such corporation 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, 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. In case at any time the Trustee shall cease to be eligible in accordance with 40 the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.11.80 The provisions of this Section 6.10 are in furtherance of and subject to Section 310(a) of the Trust Indenture Act. Section 6.11 Resignation and Removal; Appointment of Successor Trustee. --------------------------------------------------------- (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and (i) if any Unregistered Securities of a series affected are then Outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York, and at least once in an Authorized Newspaper in London, (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as were so furnished to the Trustee and (iii) by mailing notice of such resignation to the Holders of then Outstanding Registered Securities of each series affected at their addresses as they shall appear on the registry books. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee at the expense of the Issuer 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 Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself 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 Section 310(b) of the Trust Indenture Act with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.10 and Section 310(a) of the Trust Indenture Act and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or 41 (iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged bankrupt or insolvent, or a receiver or liquidator 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 Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, 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 315(e) of the Trust Indenture Act, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and so prescribe, remove the Trustee and appoint a successor trustee. If no successor trustee shall have been appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of removal, the trustee being removed, at the expense of the Issuer, may petition any court of competent jurisdiction for such appointment of a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.11 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.12. Section 6.12 Acceptance of Appointment by Successor Trustee. Any ---------------------------------------------- successor trustee appointed as provided in Section 6.11 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all monies at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer 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 42 to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6.0 If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor trustee and each successor trustee with respect to the Securities of any applicable series 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 predecessor trustee with respect to the Securities of any series 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 trusts 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 under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.12 unless at the time of such acceptance such successor trustee shall be qualified under Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 6.10. Upon acceptance of appointment by any successor trustee as provided in this Section 6.12, the Issuer shall give notice thereof (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London, (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act, by mailing such notice to such Holders at such addresses as were so furnished to the Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) to the Holders of Registered Securities of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the registry books. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.11. If the Issuer fails to give such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Issuer. Section 6.13 Merger, Conversion, Consolidation or Succession to Business ----------------------------------------------------------- of Trustee. 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 the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED, that such corporation shall be qualified under Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 6.10, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any 43 such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any such successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate of authentication shall have the full force which under this Indenture or the Securities of such series it is provided that the certificate of authentication of the Trustee shall have; PROVIDED, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Securities of any series in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 6.14 Preferential Collection of Claims Against the Issuer. The ---------------------------------------------------- Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated. Section 6.15 Appointment of Authenticating Agent. As long as any ----------------------------------- Securities of a series remain Outstanding, the Trustee may, by an instrument in writing, appoint with the approval of the Issuer an authenticating agent (the "Authenticating Agent") which shall be authorized to act on behalf of the Trustee to authenticate Securities, including Securities issued upon exchange, registration of transfer, partial redemption or pursuant to Section 2.9. Securities of each such series authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee. Whenever reference is made in this Indenture to the authentication and delivery of Securities of any series by the Trustee or to the Trustee's Certificate of Authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent for such series and a Certificate of Authentication executed on behalf of the Trustee by such Authenticating Agent. Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 (determined as provided in Section 6.10 with respect to the Trustee) and subject to supervision or examination by federal or state authority. 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, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent with respect to all series of Securities for which it served as Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Issuer. 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 in accordance with the provisions of this Section 6.15 with respect to one or more series of Securities, the Trustee shall upon receipt of an Issuer Order appoint a successor Authenticating Agent and the Issuer shall provide notice of such appointment 44 to all Holders of Securities of such series in the manner and to the extent provided in Section 11.4. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for such series from time to time reasonable compensation. The Authenticating Agent for the Securities of any series shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any Authenticating Agent. ARTICLE VII CONCERNING THE SECURITYHOLDERS Section 7.1 Evidence of Action Taken by Securityholders. Any request, ------------------------------------------- demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. Section 7.2 Proof of Execution of Instruments and of Holding of --------------------------------------------------- Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument by ---------- a Securityholder or his agent or proxy may be proved 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 holding of Registered Securities shall be proved by the Security register or by a certificate of the registrar thereof. Section 7.3 Holders to Be Treated as Owners. The Issuer, the Trustee ------------------------------- and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his 45 order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for monies payable upon any such Unregistered Security or Coupon. Section 7.4 Securities Owned by Issuer Deemed Not Outstanding. In ------------------------------------------------- determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any request, demand, authorization, direction, notice, consent, waiver or other action by Securityholders under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such action only Securities which a Responsible Officer of the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officer's Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above- described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. Section 7.5 Right of Revocation of Action Taken. At any time prior to ----------------------------------- (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid, any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities 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 any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. ARTICLE VIII SUPPLEMENTAL INDENTURES 46 Section 8.1 Supplemental Indentures Without Consent of Securityholders. ---------------------------------------------------------- The Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets; (b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article IX; (c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as the Issuer and the Trustee shall consider to be for the protection of the Holders of Securities or Coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; PROVIDED, that in respect of any such additional covenant, restriction, condition or provision 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 an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; (d) 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 any other provisions as the Issuer may deem necessary or desirable, PROVIDED, that no such action shall adversely affect the interests of the Holders of the Securities or Coupons; (e) to establish the forms or terms of Securities of any series or of the Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3; and (f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series 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 6.12. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any 47 property thereunder, but the Trustee shall not be obligated to 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 may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. Section 8.2 Supplemental Indentures with Consent of Securityholders. ------------------------------------------------------- (a) Except as set forth in paragraph (b) below, with the consent (evidenced as provided in Article VII) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series of Securities affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), 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 as in force and effect at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating or modifying 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 Securities of each such series or of the Coupons appertaining to such Securities. (b) No such supplemental indenture shall (i) extend the final maturity of any Security, or reduce the principal amount thereof, 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 (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities and Coupons or in accordance with the terms thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or alter the provisions of Section 11.11 or 11.12 or impair or affect the right of any Securityholder to institute suit for the payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder, in each case without the consent of the Holder of each Security so affected, or (ii) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. (c) A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series, or of Coupons appertaining to such Securities, with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or of the Coupons appertaining to such Securities. 48 Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order) certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders of the Securities as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer 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. It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give notice thereof (i) to the Holders of then Outstanding Registered Securities of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Security register, (ii) if any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act, by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London, and in each case such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 8.3 Effect of Supplemental Indenture. Upon the execution of any -------------------------------- supplemental indenture pursuant to the provisions hereof, 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 Issuer and the Holders of Securities of each series affected thereby 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 8.4 Documents to Be Given to Trustee. The Trustee, subject to -------------------------------- the provisions of Sections 6.1 and 6.2, shall receive an Officer's Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. 49 Section 8.5 Notation on Securities in Respect of Supplemental ------------------------------------------------- Indentures. Securities of any series authenticated and delivered after the ---------- execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding. ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE Section 9.1 Issuer May Consolidate, Etc., Only on Certain Terms. The ---------------------------------------------------- Issuer shall not consolidate with or merge into any other Person or transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer shall not permit any other Person to consolidate with or merge into the Issuer, unless: (a) either the Issuer shall be the continuing corporation, or the successor corporation (if other than the Issuer) formed by such consolidation or into which the Issuer is merged or to which the properties and assets of the Issuer substantially as an entirety are transferred or leased shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Issuer under the Securities and this Indenture; and (b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Issuer or a Subsidiary as a result of such transaction as having been incurred by the Issuer or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. Section 9.2 Successor Corporation Substituted. In case of any such --------------------------------- consolidation, merger, sale, lease or conveyance, and following such an assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Issuer, with the same effect as if it had been named herein. Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Issuer prior to such succession any or all of the Securities issuable hereunder which together with any Coupons appertaining thereto theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such successor corporation, instead of the Issuer, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities together with any Coupons appertaining thereto which previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of 50 the Securities so issued together with any Coupons appertaining thereto shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, lease or conveyance such changes in phrasing and form (but not in substance) may be made in the Securities and Coupons thereafter to be issued as may be appropriate. In the event of any such sale or conveyance (other than a conveyance by way of lease) the Issuer or any successor corporation which shall theretofore have become such in the manner described in this Article shall be discharged from all obligations and covenants under this Indenture and the Securities and may be liquidated and dissolved. Section 9.3 Opinion of Counsel to Be Given Trustee. The Trustee, -------------------------------------- subject to the provisions of Sections 6.1 and 6.2, shall receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Article IX. ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONIES Section 10.1 Satisfaction and Discharge of Indenture. --------------------------------------- (a) If at any time (i) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities of any series Outstanding hereunder and all unmatured Coupons appertaining thereto (other than Securities of such series and Coupons appertaining thereto which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (ii) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated and all unmatured Coupons appertaining thereto (other than any Securities of such series and Coupons appertaining thereto which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (iii) in the case of any series of Securities where the exact amount (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (b) below, (a) all the Securities of such series and all unmatured Coupons appertaining thereto not theretofore 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 (b) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust the entire amount in (i) cash (other than monies repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4), (ii) in the case of any series of Securities the payments on which may only be made in Dollars, direct obligations of the United States of America, backed by its full faith and credit ("U.S. Government 51 Obligations"), maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, at such maturity or upon such redemption, as the case may be, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (x) the principal and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal or interest is due and payable and (y) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Securities of such Series and of Coupons appertaining thereto pursuant to Section 2.8 and the Issuer's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of holders of Securities and Coupons appertaining thereto pursuant to Section 2.8 to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) any optional redemption rights of such series of Securities to the extent to be exercised to make such call for redemption within one year, (v) the rights, obligations, duties and immunities of the Trustee hereunder, including those under Section 6.6, (vi) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vii) the obligations of the Issuer under Section 3.2) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; PROVIDED, that the rights of Holders of the Securities and Coupons to receive amounts in respect of principal of and interest on the Securities and Coupons held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series. (b) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a Board Resolution, Officer's Certificate or indenture supplemental hereto provided pursuant to Section 2.3. In addition to discharge of the Indenture pursuant to the next preceding paragraph, in the case of any series of Securities the exact amounts (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in subparagraph (i) below, the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series and the Coupons appertaining thereto on the date of the deposit referred to in subparagraph (i) below, and the provisions of this Indenture with respect to the Securities of such series and Coupons appertaining thereto shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and of Coupons appertaining thereto pursuant to Section 2.8 and the Issuer's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due 52 dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) any optional redemption rights of such series of Securities to the extent to be exercised to make such call for redemption within one year, (v) the rights, obligations, duties and immunities of the Trustee hereunder, (vi) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vii) the obligations of the Issuer under Section 3.2) and the Trustee, at the expense of the Issuer, shall at the Issuer's request, execute proper instruments acknowledging the same, if (i) with reference to this provision the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series and Coupons appertaining thereto (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (ii) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer is a party or by which it is bound; (iii) the Issuer has delivered to the Trustee an opinion of counsel from a law firm experienced in such matters based on the fact that (x) the Issuer has received from, or there has been published by, the IRS a ruling or (y) since the date hereof, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for United States federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to United States federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; 53 (iv) the Issuer has delivered to the Trustee an Opinion of Counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to avoidance as a preferential transfer under Section 547(b) of the United States Bankruptcy Code (except with respect to any Holder that is an "insider" of the Issuer within the meaning of the United States Bankruptcy Code); (v) the Issuer has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with; and (vi) no event or condition shall exist that, pursuant to the provisions of Section 13.2, would prevent the Issuer from making payments of the principal of or interest on the Securities of such series and Coupons appertaining thereto on the date of such deposit or at any time during the period ending on the 61/st/ day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period). (c) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a Board Resolution, Officer's Certificate or indenture supplemental hereto provided pursuant to Section 2.3. In the case of any series of Securities the exact amounts (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (i) below, the Issuer shall be released from its obligations under Sections 3.6, 3.7 and 9.1 with respect to such series of Securities, and any Coupons appertaining thereto, outstanding on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of any series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 5.1, but the remainder of this Indenture and such Securities and Coupons shall be unaffected thereby. The following shall be the conditions to application of this subsection (c) of this Section 10.1: (i) The Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities of such series and coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, 54 sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series and Coupons appertaining thereof and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (ii) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as subsections 5.1(e) and 5.1(f) are concerned, at any time during the period ending on the 61/st/ day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period ); (iii) Such covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 6.9 and for purposes of the Trust Indenture Act with respect to any securities of the Issuer; (iv) Such covenant defeasance shall not result in a breach or violation of, or constitute a default under any agreement or instrument to which the Issuer is a party or by which it is bound; (v) Such covenant defeasance shall not cause any Securities then listed on any registered national securities exchange under the Exchange Act to be delisted; (vi) The Issuer shall have delivered to the Trustee an Officer's Certificate and an opinion of counsel from a law firm experienced in such matters to the effect that the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for United States federal income tax purposes as a result of such covenant defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (vii) The Issuer has delivered to the Trustee an Opinion of Counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to avoidance as a preferential transfer under Section 547(b) of the United States Bankruptcy Code (except with respect to any Holder that is an "insider" of the Issuer within the meaning of the United States Bankruptcy Code); 55 (viii) The Issuer shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with; and (ix) No event or condition shall exist that, pursuant to the provisions of Section 13.2, would prevent the Issuer from making payments of the principal of or interest on the Securities of such series and Coupons appertaining thereto on the date of such deposit or at any time during the period ending on the 61/st/ day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period). Section 10.2 Application by Trustee of Funds Deposited for Payment of -------------------------------------------------------- Securities. Subject to Section 10.4, all monies deposited with the Trustee (or ---------- other trustee) pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (other than the Issuer), to the Holders of the particular Securities of such series and of Coupons appertaining thereto for the payment or redemption of which such monies have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. Section 10.3 Repayment of Monies Held by Paying Agent. In connection ---------------------------------------- with the satisfaction and discharge of this Indenture with respect to Securities of any series, all monies then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such monies. Section 10.4 Return of Monies Held by Trustee and Paying Agent Unclaimed ----------------------------------------------------------- for Two Years. Any monies deposited with or paid to the Trustee or any paying ------------- agent for the payment of the principal of or interest on any Security of any series and of any Coupons attached thereto and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Securities of such series and of any Coupons appertaining thereto shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such monies shall thereupon cease; PROVIDED, that the Trustee or such paying agent, before being required to make any such repayment with respect to monies deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first- class mail to Holders of such Securities at their addresses as they shall appear on the Security register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to the published once, in an Authorized Newspaper in the Borough of Manhattan, The City of New York and once in an Authorized Newspaper in London, notice, that such monies remain and that, after a date specified therein, which 56 shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. Section 10.5 Indemnity for U.S. Government Obligations. The Issuer shall ----------------------------------------- pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 10.1 or the principal or interest received in respect of such obligations. ARTICLE XI MISCELLANEOUS PROVISIONS Section 11.1 Incorporators, Shareholders, Officers and Directors of ------------------------------------------------------ Issuer Exempt from Individual Liability. No recourse under or upon any --------------------------------------- obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the Coupons, if any, appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the Coupons appertaining thereto. Section 11.2 Provisions of Indenture for the Sole Benefit of Parties and ----------------------------------------------------------- Holders of Securities and Coupons. Nothing in this Indenture, in the Securities --------------------------------- or in the Coupons appertaining thereto, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties thereto and their successors and the Holders of the Securities or Coupons, if any, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities or Coupons, if any. Section 11.3 Successors and Assigns of Issuer Bound by Indenture. All --------------------------------------------------- the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. Section 11.4 Notices and Demands on Issuer, Trustee and Holders of ----------------------------------------------------- Securities and Coupons. 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 Holders of Securities or Coupons, if any, to or on the Issuer may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to Torchmark Corporation, 2001 Third Avenue South, Birmingham, Alabama 35233, Attention: General Counsel. Any notice, direction, request or demand by the Issuer or any Holder of Securities or Coupons, if any, to or upon the Trustee shall be deemed to have been sufficiently given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Trustee is filed by the Trustee 57 with the Issuer) to The Bank of New York, 101 Barclay Street, Floor 21 West, New York New York 10286, Attention: Corporate Trust Administration. Where this Indenture provides for notice to Holders of Registered Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class mail, postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. Where this Indenture provides for notice to holders of Unregistered Securities, such notice shall be sufficiently given (unless otherwise expressly provided herein) by giving notice to such Holders (a) by publication of such notice at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York, and at least once in an Authorized Newspaper in London, and (ii) by mailing such notice to the Holders of Unregistered Securities who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as were so furnished to the Trustee. In any case where notice to such Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Section 11.5 Officer's Certificates and Opinions of Counsel; Statements ---------------------------------------------------------- to Be Contained Therein. Upon any application or demand by the Issuer to the ------------------------ Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent 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 in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. 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 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 has made such examination or investigation as is necessary to enable him 58 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. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters or information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion of or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent. Section 11.6 Payments Due on Saturdays, Sundays and Holidays. If the ----------------------------------------------- date of maturity of interest on or principal of the Securities of any series or any Coupons appertaining thereto or the date fixed for redemption or repayment of any such Security or Coupon shall not be a Business Day, then payment of interest or principal 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 maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. Section 11.7 Conflict of Any Provision of Indenture with Trust Indenture ----------------------------------------------------------- Act. If any provision of this Indenture limits, qualifies or conflicts with the --- duties imposed by any of Sections 310 to 318, inclusive, of the Trust Indenture Act through operation of Section 318(c) thereof, such imposed duties shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 11.8 New York Law to Govern. THIS INDENTURE AND EACH SECURITY ----------------------- AND COUPON SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE 59 GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE. Section 11.9 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 11.10 Effect of Headings. The Article and Section headings herein ------------------ and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 11.11 Securities in a Composite Currency, Currency Unit or Foreign ------------------------------------------------------------ Currency. Unless otherwise specified in an Officer's Certificate delivered -------- pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series which are denominated in a coin, currency or currencies other than Dollars (including, but not limited to, any composite currency, currency units or Foreign Currency), then the principal amount of Securities of such series which shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate in The City of New York for cable transfers of such currency or currencies as published by the Federal Reserve Bank of New York as of the most recent available date. If such Market Exchange Rate is not so available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York, or quotations from one or more major banks in The City of New York or in the country of issue of the currency in question, or such other quotations as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture. All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Issuer and all Holders. Section 11.12 Judgment Currency. The Issuer agrees, to the fullest extent ----------------- that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the 60 Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or required by law or executive order to close. ARTICLE XII REDEMPTION OF SECURITIES AND SINKING FUNDS Section 12.1 Applicability of Article. The provisions of this Article ------------------------ shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. Section 12.2 Notice of Redemption; Partial Redemptions. Notice of ----------------------------------------- redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the registry books. Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other Holders of Unregistered Securities shall be published in an Authorized Newspaper in the Borough of Manhattan, The City of New York and in an Authorized Newspaper in London, in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 nor more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of such Security of such series. 61 The notice of redemption to each such Registered Holder shall specify the principal amount of each Security of such series held by such Registered Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only, the notice of redemption to Registered Holders of Securities of the series 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 Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. Before 10:00 a.m. on the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. The Issuer will deliver to the Trustee at least 70 days prior to the date fixed for redemption, or such shorter period as shall be acceptable to the Trustee, an Officer's Certificate stating the aggregate principal amount of Securities to be redeemed. In case of a redemption at the election of the Issuer prior to the expiration of any restriction on such redemption, the Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officer's Certificate stating that such restriction has been complied with. If fewer than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, in its sole discretion, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. Section 12.3 Payment of Securities Called for Redemption. If notice of ------------------------------------------- redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable 62 redemption price, together with interest accrued to, but excluding, the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; PROVIDED, that payment of interest becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with Coupons attached thereto, to the Holders of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holder of such Registered Securities registered as such on the relevant record date, subject to the terms and provisions of Section 2.3 and 2.7 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security. If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. Section 12.4 Exclusion of Certain Securities from Eligibility for ---------------------------------------------------- Selection for Redemption. Securities shall be excluded from eligibility for ------------------------ selection for redemption if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Issuer or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. Section 12.5 Mandatory and Optional Sinking Funds. The minimum amount of ------------------------------------ any sinking fund payment provided for by the terms of the Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount 63 provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment." The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date." In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. On or before the 60th day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee an Officer's Certificate (which need not contain the statements required by Section 11.5) (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series and the basis for such credit, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officer's Certificate shall be irrevocable and upon its receipt by the Trustee, the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or the equivalent thereof in any composite currency, currency units or Foreign Currency) or a lesser sum in Dollars (or the equivalent thereof in any composite currency, currency units or Foreign Currency) if the Issuer shall so request with 64 respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 (or the equivalent thereof in any composite currency, currency units or Foreign Currency) or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 (or the equivalent thereof in any composite currency, currency units or Foreign Currency) is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Issuer or (b) an entity specifically identified in such Officer's Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund monies held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other monies, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity. On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund monies or give any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the giving of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any monies in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any monies thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such monies shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. 65 ARTICLE XIII SUBORDINATION OF SECURITIES Section 13.1 Securities Subordinate to Senior Indebtedness. The Issuer --------------------------------------------- covenants and agrees, and each Holder of Securities, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest on each and all of the Securities of each and every series is hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. Section 13.2 No Payment When Senior Indebtedness in Default; Payment over ------------------------------------------------------------ of Proceeds Upon Dissolution, Etc. If the Issuer shall default in the payment ---------------------------------- of any principal of (or premium, if any) or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, after expiration of any applicable grace period, then, upon written notice of such default to the Issuer by the holders of Senior Indebtedness or any trustee therefore, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any) or interest on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities. In the event of (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceedings relating to the Issuer, its creditors or its property, (b) any proceeding for the liquidation, dissolution, or other winding up of the Issuer, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (c) any assignment by the Issuer for the benefit of creditors or (d) any other marshalling of the assets of the Issuer (each such event, if any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property (other than securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities of any series shall be paid or delivered directly to the Holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full. In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holders of Securities, together with the holders of any obligations of the Issuer ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Issuer the amounts at the time due and owing on account of unpaid principal of (and premium, if any) and interest on the Securities and such other obligations before any payment or other 66 distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Issuer ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Indebtedness shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same. The Trustee and the Holders shall take such action (including, without limitation, the delivery of this Indenture to an agent for the holders of Senior Indebtedness or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Indebtedness at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions. The provisions of this Section 13.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Issuer in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Issuer, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities. Section 13.3 Payment Permitted If No Default. Nothing contained in this ------------------------------- Article or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Issuer, at any time, except during the pendency of the conditions described in the first paragraph of Section 13.2 or of any Proceeding referred to in Section 13.2, from making payments at any time of principal of (and premium, if any) or interest on the Securities, or (b) the application by the Trustee of any monies deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. Section 13.4 Subrogation to Rights of Holders of Senior Indebtedness. ------------------------------------------------------- Subject to the payment in full of all amounts due or to become due on all Senior Indebtedness, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of 67 Senior Indebtedness, the Holders of Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Issuer that by its express terms is subordinated to Senior Indebtedness of the Issuer that to substantially the same extent as the Securities are subordinated to the Senior Indebtedness and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of Securities or the Trustee would be entitled except for the provisions of this Article, and no payment over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Issuer, its creditors other than holders of Senior Indebtedness, and the Holders of Securities, be deemed to be a payment or distribution by the Issuer to or on account of the Senior Indebtedness; and no payments or distributions to the Holders of Securities of any cash, property or securities pursuant to the provisions of this Article, which would otherwise have been paid to the holders of Senior Indebtedness shall be deemed to be a payment by the Issuer to or for the account of the Securities. Section 13.5 Provisions Solely to Define Relative Rights. The provisions ------------------------------------------- of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Issuer and the Holders of Securities, the obligations of the Issuer, which are absolute and unconditional, to pay to the Holders of Securities the principal of (and premium, if any) and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Issuer of the Holders of Securities and creditors of the Issuer other than their rights in relation to the holders of Senior Indebtedness, or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. Section 13.6 Trustee to Effectuate Subordination. Each Holder of a ----------------------------------- Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. Section 13.7 No Waiver of Subordination Provisions. No right of any ------------------------------------- present or future holder of any Senior Indebtedness 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 Issuer or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Issuer with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. 68 Without in any way limiting the generality of the immediately preceding paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of Securities of any series, without incurring responsibility to such Holders of Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of such Holders of Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness , or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Issuer and any other Person. Section 13.8 Notice to Trustee. The Issuer shall give prompt written ----------------- notice to the Trustee of any fact known to the Issuer that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Issuer or a holder of Senior Indebtedness or from any trustee, agent or representative therefor; provided, however, that if the Trustee shall not have received the notice provided for in this Section at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of (and premium, if any, on) or interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose 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. Subject to the provisions of Section 6.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Indebtedness (or a trustee of attorney-in- fact therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact thereof). 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 Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of 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, 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 13.9 Reliance on Judicial Order or Certificate of Liquidating -------------------------------------------------------- Agent. Upon any payment or distribution of assets of the Issuer referred to in ----- this Article, the Trustee, subject to the provisions of Section 6.1, and the Holders of Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a 69 certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Issuer, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. Section 13.10 Trustee Not Fiduciary for Holders of Senior Indebtedness. -------------------------------------------------------- The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Issuer or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. Section 13.11 Rights of Trustee as Holder of Senior Indebtedness; --------------------------------------------------- Preservation of Trustee's Rights. The Trustee in its individual capacity shall -------------------------------- be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness that may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Section 13.12 Article Applicable to Paying Agents. If at any time any ----------------------------------- paying agent other than the Trustee shall have been appointed by the Issuer and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such paying agent within its meaning as fully for all intents and purposes as if such paying agent were named in this Article in addition to or in place of the Trustee. (signature page follows) 70 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested as of the date first written above. TORCHMARK CORPORATION By: /s/ Michael J. Klyce -------------------------------------- Name: Michael J. Klyce ------------------------------ Title: Vice President and Treasurer ----------------------------- THE BANK OF NEW YORK as Trustee By: /s/ Robert A Massimillo -------------------------------------- Name: Robert A. Massimillo ------------------------------ Title: Vice President ----------------------------- 71 EX-4.4 7 dex44.txt OFFICERS CERTIFICATE EXHIBIT 4.4 TORCHMARK CORPORATION Officer's Certificate Pursuant to Sections 2.1, 2.3, 2.4 and 11.5 of the Indenture ========================= Torchmark Capital Trust I, a Delaware statutory business trust ("Capital Trust I"), offered to the public $110,000,000 aggregate liquidation amount of its 7 3/4% Trust Preferred Securities (the "Preferred Securities"), representing undivided beneficial interest in the assets of Capital Trust I, pursuant to an Underwriting Agreement dated as of October 31, 2001 (the "Underwriting Agreement") among Capital Trust I, the Issuer (as defined below) and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc., as representatives of the several underwriters named therein (the "Underwriters") and proposes to invest the proceeds from such offering, together with the proceeds of the issuance and sale by Capital Trust I to Torchmark Corporation, a Delaware corporation (the "Issuer") of $3,402,075 aggregate liquidation amount of its 7 3/4% Common Securities (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities"), in $113,402,075 aggregate principal amount of Junior Subordinated Debentures referred to below. The Preferred Securities will be issued pursuant to the terms of an Amended and Restated Declaration of Trust of Capital Trust I, dated as of November 2, 2001 (the "Declaration"), among the Regular Trustees (as defined therein), the Delaware Trustee (as defined therein), the Property Trustee (as defined therein), the Issuer and the holders from time to time of the Trust Securities. Capitalized terms used but not otherwise defined herein shall have the meanings specified in the Indenture dated as of November 2, 2001 (the "Indenture"), by and between the Issuer, as issuer, and The Bank of New York, a New York banking corporation, as trustee (the "Indenture Trustee"). The undersigned, Michael J. Klyce, Vice President and Treasurer of the Issuer, hereby certifies as of November 2, 2001, pursuant to Sections 2.1, 2.3, 2.4 and 11.5 of the Indenture as follows: A. I have read Sections 2.1, 2.3, 2.4 and 11.5 of the Indenture, and have made such other examination and investigation as is necessary to enable me to express an informed opinion as to whether all conditions precedent provided for in the Indenture relating to the issuance of the Junior Subordinated Debentures has been complied with. B. In my opinion, all conditions precedent provided for in the Indenture relating to the issuance of the Junior Subordinated Debentures have been complied with. C. The form and terms of the Junior Subordinated Debentures have been established pursuant to Sections 2.1 and 2.3 of the Indenture and comply with the Indenture. D. Pursuant to the resolutions adopted by the Board of Directors of the Issuer (the "Board of Directors") dated July 20, 1999 and October 17, 2001 and by the Finance Committee of the Board of Directors dated October 31, 2001, the following terms of the Issuer's 7 3/4% Junior Subordinated Debentures due 2041 have been duly approved and authorized by the Issuer in accordance with the provisions of the Indenture: 1. Designation. The designation of the securities is "7 3/4% Junior ----------- Subordinated Debentures due 2041" the ("Junior Subordinated Debentures"). 2. Aggregate Principal Amount. The Junior Subordinated Debentures shall -------------------------- be limited in aggregate principal amount to $113,402,075, or up to $130,412,400 if the Underwriters exercise their overallotment option under the Underwriting Agreement (except for Junior Subordinated Debentures authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Junior Subordinated Debentures pursuant to Sections 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 3. Registered Securities in Book-Entry Form. Except as provided in ---------------------------------------- paragraph 14 below, the Junior Subordinated Debentures will be issued in fully registered certificated form without interest coupons. Pursuant to paragraph 14 below, the Junior Subordinated Debentures may be issued in book-entry only form ("Book-Entry Debentures") and represented by one or more global Junior Subordinated Debentures (the "Global Debentures") in fully registered form, without coupons. The initial Depositary with respect to the Global Debentures will be The Depository Trust Company, as Depositary for the accounts of its participants. So long as the Depositary for a Global Debenture, or its nominee, is the registered owner of the Global Debenture, the Depositary or its nominee, as the case may be, will be considered the sole owner or holder of the Junior Subordinated Debentures in book-entry form represented by such Global Debentures for all purposes under the Indenture. Book-Entry Debentures will not be exchangeable for Junior Subordinated Debentures in definitive form ("Definitive Debentures") except that, if the Depositary with respect to any Global Debenture or Debentures is at any time unwilling or unable to continue as Depositary or no longer eligible under Section 2.4 of the Indenture and a successor Depositary is not appointed by the Issuer within 90 days, the Issuer will issue Definitive Debentures in exchange for the Book-Entry Debentures represented by any such Global Debenture or Debentures. In addition, if (a) the Issuer at any time and in its sole discretion determines not to have a Global Debenture or Debentures or (b) there shall have occurred and be continuing an Event of Default, then, in each such event, the Issuer will issue Definitive Debentures in exchange for the Book-Entry Debentures represented by such Global Debenture or Debentures in accordance with the provisions of Section 2.8 of the Indenture. 4. Stated Maturity. The date on which the principal of the Junior --------------- Subordinated 2 Debentures is payable is November 2, 2041. 5. Rate of Interest: Interest Payment Dates: Regular Record Dates. Each -------------------------------------------------------------- Junior Subordinated Debenture will bear interest from November 2, 2001 or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, quarterly in arrears on February 1, May 1, August 1 and November 1 of each year (each, an "Interest Payment Date") (subject to extension as provided below), commencing on February 1, 2002 at the rate of 7 3/4% per annum until the principal thereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 7 3/4% per annum, compounded quarterly, on any overdue principal and on any overdue installment of interest. Interest payments on the Junior Subordinated Debentures will include interest accrued to but excluding each Interest Payment Date. Interest so payable shall be paid to the person in whose name such Junior Subordinated Debenture is registered at the close of business on the Business Day next preceding such Interest Payment Date. In the event the Junior Subordinated Debentures do not remain in book-entry only form, the record dates will be 15 calendar days (whether or not a Business Day) prior to the Interest Payment Date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and, for any period shorter than a quarter, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Junior Subordinated Debentures is not a Business Day, then payment of interest payable on such date will be made on the next succeeding Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. 6. Additional Interest. If at any time while the Property Trustee is the ------------------- holder of the Junior Subordinated Debentures, the Issuer shall be required to deduct or withhold on payments to Capital Trust I, or Capital Trust I shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes on payments to holders of Preferred Securities) imposed by the United States or any other taxing authority, then in any such case, the Issuer will pay as additional interest on the Junior Subordinated Debentures such additional amounts ("Additional Interest") as shall be required so that the net amounts received and retained by Capital Trust I after paying any such taxes, duties, assessments or other governmental charges will be not less than the amounts Capital Trust I would have received had no such taxes, duties, assessment or governmental charges been imposed. 7. Extension of Interest Payment Period. ------------------------------------ (a) Option to Extend. So long as the Issuer is not in default in the ---------------- 3 payment of interest on the Junior Subordinated Debentures, the Issuer shall have the right, at any time, and from time to time, during the term of the Junior Subordinated Debentures, to defer payments of interest by extending the interest payment period of such Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters (each, an "Extension Period"); provided that no Extension Period may extend beyond the maturity date of the Junior Subordinated Debentures. At the end of each such period, the Issuer shall pay all interest then accrued and unpaid (together with interest thereon at the rate of 7 3/4% per annum compounded quarterly to the extent permitted by applicable law ("Compound Interest") plus any Additional Interest). Prior to the termination of any Extension Period, the Issuer may further defer payments of interest by extending the interest payment period; provided that the Extension Period, including all such previous and further extensions, may not exceed 20 consecutive quarters or extend beyond the maturity date of the Junior Subordinated Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, the Issuer may commence a new Extension Period, subject to the above requirements. (b) Notice of Extension. If the Property Trustee is the sole holder of ------------------- the Junior Subordinated Debentures, the Issuer shall give the Regular Trustees and the Property Trustee notice of its selection of an Extension Period one Business Day prior to the earlier of (i) the next date distributions on the Preferred Securities are payable or (ii) the date the Regular Trustees are required to give notice to the New York Stock Exchange (or other applicable self-regulatory organization) or to the holders of record of the Preferred Securities. The Regular Trustees shall give notice of the Issuer's selection of such Extension Period to the holders of the Preferred Securities. If the Property Trustee is not the sole holder of the Junior Subordinated Debentures, the Issuer shall give the holders of the Junior Subordinated Debentures notice of its selection of an Extension Period ten Business Days prior to the earlier of (i) the next interest payment date or (ii) the date upon which the Issuer is required to give notice to the New York Stock Exchange (or other applicable self-regulatory organization) or to holders of the Junior Subordinated Debentures of the record or payment date of such related interest payment. The quarter in which such notice is given pursuant to this section shall be counted as one of the 20 quarters permitted in the maximum Extension Period permitted under the first paragraph of this section. 8. Limitation of Transactions. If Junior Subordinated Debentures are -------------------------- issued to Capital Trust I or a trustee of Capital Trust I and (i) there shall have occurred any event 4 that would constitute an Event of Default or (ii) the Issuer shall be in default with respect to its payment or other obligations under the Preferred Securities Guarantee Agreement relating to the Preferred Securities, dated as of November 2, 2001, between the Issuer and The Bank of New York, as guarantee trustee, dated as of the date hereof (the "Guarantee") or (iii) the Issuer shall have given notice of its election to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period as provided in paragraph 7 above, then: (a) Restrictions on Distributions. The Issuer may not declare or pay ----------------------------- dividends on, make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock; and (b) Restrictions on Payments. The Issuer may not make any payment of ------------------------ interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Issuer that rank pari passu with or junior in interest to the Junior Subordinated Debentures or make any guarantee payments with respect to the foregoing or with respect to any guarantee by the Issuer of the debt securities of any subsidiary of the Issuer if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures; provided, however, that the foregoing restrictions in a. and b. above do not apply to: (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Issuer in connection with (A) any employment contract, benefit plan or, other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, (B) a dividend reinvestment or shareholder stock purchase plan or (C) the issuance of capital stock of the Issuer (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to such Extension Period; (ii) an exchange, redemption or conversion of any class or series of the Issuer's capital stock (or any capital stock of a subsidiary of the Issuer) for any class or series of the Issuer's capital stock or of any class or series of the Issuer's indebtedness for any class or series of the Issuer's capital stock; (iii) the purchase of fractional interests in shares of the Issuer's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted into or exchanged for such capital stock; (iv) any declaration of a dividend in connection with the 5 implementation of a shareholder's rights plan, or the issuance of rights, stock or other property under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (v) 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; or (vi) payments by the Issuer under the Guarantee, or under any similar guarantee by the Issuer with respect to any trust common or trust preferred securities of its subsidiaries. 9. Place of Payment. Principal and interest on the Junior Subordinated ---------------- Debentures will be payable, the transfer of such Junior Subordinated Debentures will be registrable and such Junior Subordinated Debentures will be exchangeable for Junior Subordinated Debentures bearing identical terms and provisions at the office or agency of the Issuer maintained for that purpose in the Borough of Manhattan, The City and State of New York; provided, however, that, at the option of the Issuer, payments of interest may be made by check mailed to the registered holder at such address as shall appear in the Security Register and that the payment of principal with respect to any Junior Subordinated Debenture will only be made upon surrender of such Junior Subordinated Debenture to the Indenture Trustee. Notwithstanding the foregoing, so long as the owner and record holder of this Junior Subordinated Debenture is Capital Trust I, the payment of the principal of and interest (including Compound Interest and Additional Interest, if any) on this Junior Subordinated Debenture will be made at such place and to such account of Capital Trust I as may be designated by the Property Trustee. 10. Redemption. ---------- (a) Optional. The Issuer shall have the right to redeem the Junior -------- Subordinated Debentures on or after November 2, 2006 in whole at any time or in part from time to time at 100% of the principal amount per Junior Subordinated Debenture to be redeemed, plus accrued and unpaid interest thereon, including any Compound Interest and any Additional Interest, if any, to, but excluding, the date of redemption (the "Redemption Date"), such amount, the "Redemption Price." (b) Special Event. at any time before November 2, 2006, the Issuer shall ------------- have the right to redeem the Junior Subordinated Debentures in whole (but not in part) at any time within 90 days following the occurrence of a Tax Event (as defined below) or an Investment Company Event (as defined below), provided such event if then continuing, at the Redemption Price; provided, however, that if 6 at the time there is available to the Issuer or Capital Trust I the opportunity to eliminate, within such 90 day period, the Tax Event by taking some ministerial action, such as filing a form, making an election or pursuing some other similar reasonable measure that has no adverse effect on Capital Trust I, the Issuer or the holders of the Trust Securities, then the Issuer or Capital Trust I shall pursue such measure in lieu of a redemption. (i) "Tax Event" means that the Regular Trustees shall have received an opinion of independent tax counsel experienced in such matters to the effect that, as a result of: (A) any amendment to, clarification of, 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 affecting taxation; (B) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action"); or (C) any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment, clarification, change or Administrative Action is made known, which amendment, clarification, change or Administrative Action is effective or which pronouncement or decision is announced in each case, on or after October 31, 2001, there is more than an insubstantial risk that (1) Capital Trust I is, or will be within 90 days of the date thereof, subject to United States federal income tax with respect to income accrued or received on the Junior Subordinated Debentures, (2) Capital Trust I is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of taxes (other than withholdings taxes), duties or other governmental charges or (3) interest paid in cash by the Issuer to Capital Trust I on the Junior Subordinated Debentures is not, or within 90 days of the date there, will not be, deductible, in whole or in part, by the Issuer for United States federal income tax purposes. Notwithstanding the foregoing, a Tax Event shall not include any change in tax law that requires the Issuer for United States federal income tax purposes to defer taking a deduction for any original issue discount ("OID") that accrues with respect to the Junior Subordinated 7 Debentures until the interest payment related to such OID is paid by the Issuer in cash; provided that such change in tax law does not create more than an insubstantial risk that the Issuer will be prevented from taking a deduction for OID accruing with respect to the Junior Subordinated Debentures at a date that is no later than the date the interest payment related to such OID is actually paid by the Issuer in cash. If an event described in clause (A) or (B) of the definition of "Tax Event" above has occurred and is continuing and Capital Trust I is the holder of all the Junior Subordinated Debentures, the Issuer will pay Additional Interest, if any, on the Junior Subordinated Debentures. (ii) "Investment Company Event" means that the Regular Trustees shall have received an opinion of independent counsel experienced in such matters to the effect that, as a result of the occurrence of a change (including any announced prospective change) in law or regulation or a written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority on or after October 31, 2001, there is more than an insubstantial risk that Capital Trust I is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended. (c) Additional Provisions. --------------------- (i) Notice of any redemption will be mailed at least 30 but not more than 60 days before the redemption date to each Holder of Junior Subordinated Debentures to be redeemed. (ii) Unless the Issuer defaults in payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Junior Subordinated Debentures or portions thereof called for redemption. (iii) If fewer than all of the Junior Subordinated Debentures are to be redeemed, the Junior Subordinated Debentures (or portions thereof) to be redeemed shall be selected by the Indenture Trustee by such method as the Indenture Trustee shall deem fair and appropriate, provided that if, at the time of redemption, the Junior Subordinated Debentures are registered as a Global Debenture, the Depositary shall determine the principal amount of such Junior Subordinated Debentures held by each holder to be redeemed in accordance with its procedures. (iv) If a partial redemption of the Preferred Securities resulting from a partial redemption of the Junior Subordinated Debentures would result in the delisting of the Preferred Securities, the Issuer may only 8 redeem the Junior Subordinated Debentures in whole. (v) the Issuer may not redeem fewer than all of the Junior Subordinated Debentures unless all accrued and unpaid interest has been paid on all Junior Subordinated Debentures for all quarterly interest payment periods terminating on or prior to the Redemption Date. 11. Acceleration of Maturity Date. ----------------------------- (a) Acceleration. If a Tax Event described in clause (C) of the ------------ definition of "Tax Event" occurs, the Issuer will have the right, prior to a dissolution of Capital Trust I, to accelerate the stated maturity of the Junior Subordinated Debentures to the minimum extent required so that interest on the Junior Subordinated Debentures will be deductible for United States federal income tax purposes, but in no event may the resulting maturity of the Junior Subordinated Debentures be less than 15 years from the date of original issuance. (b) Opinion of Counsel. The stated maturity may be accelerated only if the ------------------ Issuer shall have received an opinion of independent counsel experienced in such matters to the effect that: (i) following such acceleration, interest paid on the Junior Subordinated Debentures will be deductible for Untied States federal income tax purposes; (ii) the holders of Preferred Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such acceleration, and will be subject to United States federal income tax in the same amount, in the manner and at the same times as would have been the case of such acceleration had not occurred; and (iii) such acceleration will not cause Capital Trust I to be classified as other than a grantor trust for United States federal income tax purposes. 12. Mandatory Redemption. The Junior Subordinated Debentures will contain -------------------- no provision for mandatory redemption, a sinking fund or any analogous provisions. 13. Subordination. Junior Subordinated Debentures shall be subordinated ------------- and junior in right of payment to all Senior Indebtedness of the Issuer pursuant to Article XIII of the Indenture. 14. Dissolution Event. "Dissolution Event" means that as a result of any ----------------- 9 election by the Issuer, Capital Trust I is to be dissolved in accordance with the Declaration, and the Junior Subordinated Debentures held by the Property Trustee are to be distributed to the holders of the Trust Securities pro rata in accordance with the Declaration. In connection with a Dissolution Event: (a) Global Debenture. Definitive Debentures may be presented to the ---------------- Indenture Trustee by the Property Trustee in exchange for a Global Debenture in an aggregate principal amount equal to all Definitive Debentures outstanding to be registered in the name of the Depositary, or its nominee, and delivered by the Indenture Trustee to the Depositary for crediting to the accounts of its participants pursuant to the instructions of the Regular Trustees. The Issuer upon any such presentation shall execute a Global Debenture in such aggregate principal amount and deliver the same to the Indenture Trustee for authentication and delivery in accordance with the Indenture and this Officer's Certificate. Payments on the Junior Subordinated Debentures issued as a Global Debenture will be made to the Depositary. (b) Non Book-Entry Preferred Securities. If any Preferred Securities are ----------------------------------- held in non book-entry certificated form, Definitive Debentures may be presented to the Indenture Trustee by the Property Trustee and any Preferred Security certificate which represents Preferred Securities other than Preferred Securities held by the Depositary or its nominee ("Non Book-Entry Preferred Securities") will be deemed to represent beneficial interests in Junior Subordinated Debentures presented to the Indenture Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate liquidation amount of the Non Book-Entry Preferred Securities until such Preferred Security certificates are presented to the Security Registrar for transfer or reissuance at which time such Preferred Security certificates will be cancelled and a Debenture registered in the name of the holder of the Preferred Security certificates or the transferee of the holder of such Preferred Security certificates, as the case may be, with an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Security certificates cancelled will be executed by the Issuer and delivered to the Indenture Trustee for authentication and delivery in accordance with the Indenture and this Officer's Certificate. On issue of such Junior Subordinated Debentures, Junior Subordinated Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Indenture Trustee will be deemed to have been cancelled. 15. Denominations. The Junior Subordinated Debentures will be issuable in ------------- denominations of $25 and integral multiples thereof. 16. Issue Price. The Junior Subordinated Debentures will be issued at a ----------- price equal to the principal amount thereof. 10 17. Currency. The Junior Subordinated Debentures will be denominated in -------- Dollars. The principal of and interest on the Junior Subordinated Debentures shall be payable in Dollars. 18. Payment Currency. The principal of and interest on the Junior ---------------- Subordinated Debentures shall not be payable in a currency other than Dollars. The principal of and interest on the Junior Subordinated Debentures shall not be determined with reference to an index based on a coin or currency. 19. Registered Securities. The Junior Subordinated Debentures shall be --------------------- issuable as Registered Securities. The Junior Subordinated Debentures may be issued as Registered Global Securities. 20. Additional Amounts. The Issuer will not pay additional amounts on the ------------------ Junior Subordinated Debentures held by a Person that is not a U.S. Person in respect of taxes or similar charges withheld or deducted. 21. Definitive Certificates. Section 2.8 of the Indenture will govern the ----------------------- transferability and exchange of Junior Subordinated Debentures in definitive form. 22. Agents. The Indenture Trustee shall initially serve as the Registrar ------ and the Paying Agent for the Junior Subordinated Debentures. The Depository Trust Company shall initially serve as the Depositary for the Registered Global Security representing Junior Subordinated Debentures. 23. Events of Default; Covenants. There shall be no deletions from, ---------------------------- modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture or covenants of the Issuer set forth in Article III with respect to the Junior Subordinated Debentures. There shall be no deletions from or modifications to the covenants of the Issuer set forth in Article III of the Indenture, other than any additional covenants of the Issuer set forth herein. 24. Conversion. The Junior Subordinated Debentures will not be convertible ---------- into any other security of the Issuer. 25. Listed on Exchanges. If the Junior Subordinate Debentures are to be ------------------- issued as a Global Debenture in connection with the distribution of the Junior Subordinated Debentures to the holders of the Preferred Securities upon a Dissolution Event, the Issuer will use all its reasonable best efforts to list such Junior Subordinated Debentures on the New York Stock Exchange or on such other exchange as the Preferred Securities are then listed. 11 26. Direct Action. The Issuer and the Indenture Trustee acknowledge that ------------- pursuant to the Declaration, the holders of Preferred Securities are entitled, in the circumstances and subject to the limitations set forth therein, to commence a Direct Action (as defined therein) with respect to any Event of Default under the Indenture. 27. Payment of Expenses. In connection with the offering, sale and ------------------- issuance of the Junior Subordinated Debentures to the Property Trustee and in connection with the sales of the Trust Securities by Capital Trust I, the Issuer, in its capacity as borrower with respect to the Junior Subordinated Debentures, shall: (a) pay all costs and expenses relating to the offering, sale and issuance of the Junior Subordinated Debentures, including commissions to the underwriters payable pursuant to an underwriting agreement and compensation of the Indenture Trustee in accordance with the provisions of Section 6.6 of the Indenture. (b) pay all costs and expenses of Capital Trust I (including, but not limited to, costs and expenses relating to the organization of Capital Trust I, the offering, sale and issuance of the Trust Securities (including commissions to the underwriters in connection therewith), the fees and expenses of the Property Trustee and the Delaware Trustee, the costs and expenses relating to the operation of Capital Trust I, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of Capital Trust I's assets); and (c) be primarily and fully liable for any indemnification obligations arising with respect to the declaration of trust of Capital Trust I. 28. Indebtedness. The Issuer and, by its acceptance of a Junior ------------ Subordinated Debenture or an interest therein, the holder of, and any Person that acquires a beneficial interest in, this Junior Subordinated Debenture agree to treat this Junior Subordinated Debenture as indebtedness for United States federal, state and local tax purposes. 29. Other Terms. The Junior Subordinated Debentures shall have the other ----------- terms and shall be substantially in the form set forth in the form of Junior Subordinated Debentures attached hereto as Exhibit A. In case of any conflict between this certificate and the Junior Subordinated Debentures in the form attached hereto as Exhibit A, the form of the Junior Subordinated Debentures shall control. 12 IN WITNESS WHEREOF, the undersigned has hereunto signed this Certificate on behalf of the Issuer as of the day and year first above written. TORCHMARK CORPORATION By: /s/ Michael J. Klyce ---------------------------------- Name: Michael J. Klyce Title: Vice President and Treasurer EXHIBIT A FORM OF JUNIOR SUBORDINATED DEBENTURE THIS CERTIFICATE IS A REGISTERED GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR JUNIOR SUBORDINATED DEBENTURES IN DEFINITIVE FORM, THIS JUNIOR SUBORDINATED DEBENTURE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. A-1 REGISTERED REGISTERED TORCHMARK CORPORATION 7 3/4% JUNIOR SUBORDINATED DEBENTURE DUE 2041 NO. R-1 PRINCIPAL AMOUNT: U.S.$113,402,075 ORIGINAL ISSUE DATE: November 2, 2001 MATURITY DATE: November 2, 2041 ISSUE PRICE: 100% INTEREST RATE: 7 3/4% INTEREST PAYMENT DATES: February 1, May 1, August 1 and November 1, commencing February 1, 2002. REGULAR RECORD DATES: See Further Provisions Set Forth Herein REDEMPTION DATE/PRICE: See Further Provisions Set Forth Herein TORCHMARK CORPORATION, a corporation duly organized and existing under the laws the State of Delaware (herein referred to as the "Company"), for value received, hereby promises to pay to The Bank of New York, as property trustee (the "Property Trustee") of Torchmark Capital Trust I (the "Trust"), or registered assigns, the Principal Amount specified above on the Maturity Date specified above (unless and except to the extent earlier redeemed or repaid prior to such Maturity Date), and to pay interest thereon from November 2, 2001, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on February 1, May 1, August 1 and November 1 of each year, commencing February 1, 2002, at the rate per annum specified above, until the principal hereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the rate per annum specified above, compounded quarterly, on any overdue principal and on any overdue installment of interest. Interest payments for this Junior Subordinated Debenture will include interest accrued to, but excluding, each Interest Payment Date. Interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture (as defined below), be paid to the Person in whose name this Junior Subordinated Debenture is registered at the close of business on the Regular Record Date, which shall be the close of business on the Business Day next preceding such Interest Payment Date unless otherwise provided for in the Indenture, except that if this Junior Subordinated Debenture is held by the Property Trustee and the Preferred Securities are no longer in book-entry only form, such Regular Record Date shall be the close of business on the 15/th/ day (whether or not a Business Day) next preceding such Interest Payment Date. If any Interest Payment Date or Maturity Date with respect to this Junior Subordinated Debenture falls on a day that is not a Business Day, then payment due on such Interest Payment Date or Maturity Date will be made on the following day that is a Business Day as if it were made on the date such payment was due and no interest shall accrue on the amount A-2 so payable for the period from and after such Interest Payment Date or Maturity Date, as the case may be, 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. Payment of the principal of and interest, if any, on this Junior Subordinated Debenture will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, and at any other office or agency maintained by the Company for such purpose, in Dollars; provided, however, that at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the security register; and provided further that the Holder of this Junior Subordinated Debenture shall be entitled to receive payments of principal of and interest, if any, on this Junior Subordinated Debenture by wire transfer of immediately available funds if appropriate wire transfer instructions have been received in writing by the Trustee not less than 15 days prior to the applicable payment date. Notwithstanding the foregoing, so long as the Holder of this Junior Subordinated Debenture is the Property Trustee, the payment of the principal of and interest on this Junior Subordinated Debenture will be made at such place and to such account as may be designated by the Property Trustee. All undefined terms used in this Junior Subordinated Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The indebtedness evidenced by this Junior Subordinated Debenture 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 of the Company, and this Junior Subordinated Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Junior Subordinated Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in- fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notices 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. Unless the certificate of authentication hereon has been executed by the Trustee or its duly appointed co-authenticating agent by manual or facsimile signature, this Junior Subordinated Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Junior Subordinated Debenture is one of a duly authorized issue of securities (herein called the "Securities") of the Company (which term includes any successor under the Indenture hereinafter referred to) issued and to be issued pursuant to such Indenture. This Junior Subordinated Debenture is one of a series designated by the Company as its 7 3/4% Junior Subordinated Debentures due 2041 (the "Junior Subordinated Debentures"), limited in aggregate principal amount to $113,402,075 (or up to $130,412,400 if the Underwriters' overallotment option is exercised in full). The Indenture does not limit the aggregate principal amount of other debt securities that may be issued thereunder. A-3 The Company issued this Junior Subordinated Debenture pursuant to an Indenture, dated as of November 2,2001 (herein called the "Indenture" which term, for the purposes of this Junior Subordinated Debenture, shall include the Officer's Certificate dated November 2, 2001, delivered pursuant to Sections 2.1 and 2.3 of the Indenture), between the Company and The Bank of New York, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and Holders of the Junior Subordinated Debentures and of the terms upon which the Junior Subordinated Debentures are, and are to be, authenticated and delivered. Except as otherwise provided in the Indenture, the Junior Subordinated Debentures are issuable as Registered Securities, without coupons, in denominations of $25 and any amount in excess thereof which is an integral multiple of $25. As provided in the Indenture and subject to certain limitations therein set forth, Junior Subordinated Debentures are exchangeable for a like aggregate principal amount of Junior Subordinated Debentures of like tenor of any authorized denomination, as requested by the Holder surrendering the same, upon surrender of the Junior Subordinated Debenture or Junior Subordinated Debentures to be exchanged at any office or agency described below where Junior Subordinated Debentures may be presented for registration of transfer. As provided in the Indenture and subject to certain limitations therein set forth, the Junior Subordinated Debentures are redeemable, without penalty, at the option of the Company (i) in whole before November 2, 2006, within 90 days of the occurrence of a Tax Event or an Investment Company Event, provided such event is then continuing, and (ii) in whole or in part on or after November 2, 2006, at a redemption price (the "Redemption Price") equal to 100% of the principal amount per Junior Subordinated Debenture, plus, in each case, any accrued and unpaid interest thereon, including any Compound Interest and Additional Interest, if any, to, but excluding, the date of such redemption (the "Redemption Date"). Notwithstanding the foregoing, installments of interest becoming due and payable prior to the date fixed for redemption of any Junior Subordinated Debenture will be payable to the Holder of such Junior Subordinated Debenture of record at the close of business on the relevant Regular Record Date referred to above, all as provided in the Indenture. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of the Junior Subordinated Debentures to be redeemed. The notice of redemption to each such Holder shall specify the principal amount of each Junior Subordinated Debenture held by such Holder to be redeemed, the date fixed for redemption, the Redemption Price, the place or places of payment, that payment will be made upon presentation and surrender of the Junior Subordinated Debentures, that interest accrued to, but excluding, the date fixed for redemption will be paid as specified in such notice and that on and after said date, interest thereon or on the portions thereof to be redeemed will cease to accrue. In case the Junior Subordinated Debentures are to be redeemed in part only, the notice of redemption to registered Holders of the Junior Subordinated Debentures shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for A-4 redemption, upon surrender of such Junior Subordinated Debenture, a new Junior Subordinated Debenture or Junior Subordinated Debentures in principal amount equal to the unredeemed portion thereof will be issued. For all purposes of this Junior Subordinated Debenture and the Indenture, unless the context otherwise requires, all provisions relating to the redemption by the Company of this Junior Subordinated Debenture shall relate, in the case that this Junior Subordinated Debenture is redeemed or to be redeemed by the Company only in part, to that portion of the principal amount of this Junior Subordinated Debenture that has been or is to be redeemed. As provided in the Indenture and subject to certain limitations therein set forth, if certain Tax Events described therein occur, the Company will have the right, prior to a dissolution of the Trust, to accelerate the principal amount of this Junior Subordinated Debenture to the minimum extent required so that interest on this Junior Subordinated Debenture will be deductible for United States federal income tax purposes, but in no event may the resulting maturity of this Junior Subordinated Debenture be less than 15 years from the date of original issuance. If an Event of Default with respect to the Junior Subordinated Debentures shall occur and be continuing, the principal of the Junior Subordinated Debentures may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, in certain circumstances therein specified, the amendment thereof without the consent of the Holders of the Securities. The Indenture also permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations under the Indenture of the Company and the rights of Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all the Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Junior Subordinated Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Junior Subordinated Debenture and of any Junior Subordinated Debenture issued upon the registration of transfer hereof or in exchange herefor, or in lieu hereof, whether or not notation of such consent or waiver is made upon this Junior Subordinated Debenture. No reference herein to the Indenture and no provision of this Junior Subordinated Debenture or the Indenture, subject to the provisions for satisfaction and discharge in Article X of the Indenture, shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Junior Subordinated Debenture at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, so long as the Company is not in default in the payment of interest on the Junior Subordinated Debentures, A-5 it shall have the right at any time, and from time to time, during the term of the Junior Subordinated Debentures to defer payments of interest by extending the interest payment period of such Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters (an "Extension Period"), provided that no Extension Period may extend beyond the Maturity Date. At the end of an Extension Period, the Company shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Junior Subordinated Debentures to the extent that payment of such interest is enforceable under applicable law). Before the termination of any such Extension Period, the Company may further extend such Extension Period, provided, however, that such Extension Period together with all such further extensions thereof shall not exceed 20 consecutive quarterly periods. At the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may select a new Extension Period. The Indenture permits the Company, by irrevocably depositing, in amounts and maturities sufficient to pay and discharge at the Stated Maturity or on the Redemption Date, as the case may be, the entire indebtedness on all Outstanding Junior Subordinated Debentures, cash or U.S. Government Obligations with the Trustee in trust solely for the benefit of the Holders of all Outstanding Junior Subordinated Debentures, to defease the Indenture with respect to such Junior Subordinated Debentures, and upon such deposit the Company shall be deemed to have paid and discharged its entire indebtedness on such Junior Subordinated Debentures. Thereafter, Holders would be able to look only to such trust fund for payment of principal and interest at the Stated Maturity or on the Redemption Date, as the case may be. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of Junior Subordinated Debentures is registrable in the security register, upon surrender of a Junior Subordinated Debenture for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the security registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Junior Subordinated Debentures of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made by the Company, the Trustee or the security registrar for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Junior Subordinated Debenture for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Junior Subordinated Debenture is registered as the owner hereof for all purposes, whether or not this Junior Subordinated Debenture be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. THIS JUNIOR SUBORDINATED DEBENTURE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. A-6 IN WITNESS WHEREOF, Torchmark Corporation has caused this instrument to be executed. TORCHMARK CORPORATION Dated:___________________ By:___________________________ Name: Title: A-7 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee Dated:___________________ By:_________________________ Authorized Signatory A-8 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT____Custodian______ (Cust.) (Minor) TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivor- Under Uniform Gifts to Minor Act ship and not as tenants in common ____________________________ (State)
Additional abbreviations may also be used though not in the above list. ---------------------------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Employer Identification Number of Assignee _________________________ -- -- _________________________ -------------------------------------------------------------------------------- Please Print or Typewrite Name and Address Including Postal Zip Code of Assignee -------------------------------------------------------------------------------- the within Security and all rights thereunder, hereby irrevocably constituting and appointing __________________________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. Dated: _________________________________ ____________________________________ Signature NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Junior Subordinated Debenture in every particular, without alteration or enlargement or any change whatever. A-9 EX-4.5 8 dex45.txt PREFERRED SECURITIES GUARANTEE AGREEMENT EXHIBIT 4.5 PREFERRED SECURITIES GUARANTEE AGREEMENT TORCHMARK CAPITAL TRUST I DATED AS OF NOVEMBER 2, 2001 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.1 Definitions and Interpretation 1 ARTICLE II TRUST INDENTURE ACT Section 2.1 Trust Indenture Act; Application 4 Section 2.2 Lists of Holders 4 Section 2.3 Reports by The Preferred Guarantee Trustee 5 Section 2.4 Periodic Reports to Preferred Guarantee Trustee 5 Section 2.5 Evidence of Compliance With Conditions Precedent 5 Section 2.6 Events of Default; Waiver 5 Section 2.7 Event of Default; Notice 5 Section 2.8 Conflicting Interests 6 ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE Section 3.1 Powers And Duties of The Preferred Guarantee Trustee 6 Section 3.2 Certain Rights of Preferred Guarantee Trustee 8 Section 3.3 Not Responsible For Recitals or Issuance of Preferred Securities Guarantee 10 ARTICLE IV PREFERRED GUARANTEE TRUSTEE Section 4.1 Preferred Guarantee Trustee: Eligibility 11 Section 4.2 Appointment, Removal And Resignation of Preferred Guarantee Trustee 11 ARTICLE V GUARANTEE Section 5.1 Guarantee 12 Section 5.2 Waiver of Notice and Demand 12 Section 5.3 Obligations Not Affected 13 Section 5.4 Rights of Holders 14 Section 5.5 Guarantee of Payment 14 Section 5.6 Subrogation 14 Section 5.7 Independent Obligations 14 i Page ---- Section 5.8 Taxes 14 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION Section 6.1 Limitation of Transactions 15 Section 6.2 Subordination 16 ARTICLE VII TERMINATION Section 7.1 Termination 16 ARTICLE VIII INDEMNIFICATION Section 8.1 Exculpation 16 Section 8.2 Indemnification 17 ARTICLE IX MISCELLANEOUS Section 9.1 Successors and Assigns 17 Section 9.2 Amendments 18 Section 9.3 Notices 18 Section 9.4 Benefit 18 Section 9.5 Governing Law 19 PREFERRED SECURITIES GUARANTEE AGREEMENT This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated as of November 2, 2001, is executed and delivered by Torchmark Corporation, a Delaware corporation (the "Guarantor"), and The Bank of New York, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of Torchmark Capital Trust I, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of November 2, 2001, among the trustees of the Issuer named therein, the Guarantor, 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 4,400,000 preferred securities (and up to an additional 660,000 preferred securities if the underwriters exercise their overallotment option in full), having an aggregate liquidation amount of $110,000,000 (and up to an additional aggregate liquidation amount of $16,500,000 if the underwriters exercise their overallotment option in full), designated the 7 3/4% Trust Preferred Securities (the "Preferred Securities"). WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Preferred Securities Guarantee, to pay to the Holders of the Preferred 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 Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Preferred Securities Guarantee for the benefit of the Holders. ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.1 Definitions and Interpretation. In this Preferred ------------------------------ Securities Guarantee, unless the context otherwise requires: (a) capitalized terms used in this Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) terms defined in the Declaration as at the date of execution of this Preferred Securities Guarantee have the same meaning when used in this Preferred Securities Guarantee unless otherwise defined in this Preferred Securities Guarantee; (c) a term defined anywhere in this Preferred Securities Guarantee has the same meaning throughout; (d) all references to "the Preferred Securities Guarantee" or "this Preferred Securities Guarantee" are to this Preferred Securities Guarantee as modified, supplemented or amended from time to time; (e) all references in this Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Preferred Securities Guarantee, unless otherwise specified; a term defined in the Trust Indenture Act has the same meaning when used in this Preferred Securities Guarantee, unless otherwise defined in this Preferred Securities Guarantee or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "AUTHORIZED OFFICER" of a Person means any Person that is authorized to legally bind such Person; provided, however, that the Authorized Officer signing -------- ------- an Officers' Certificate given pursuant to Section 314(a)(4) of the Trust Indenture Act shall be the principal executive, financial or accounting officer of such Person. "CORPORATE TRUST OFFICE" means the office of the Preferred Guarantee Trustee at which the corporate trust business of the Preferred Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at, The Bank of New York, 101 Barclay Street, Floor 21 West, New York, NY 10286 Attention: Corporate Trust Administration. "COVERED PERSON" means any Holder or beneficial owner of Preferred Securities. "DECLARATION" has the meaning assigned thereto in the recitals hereto. "EVENT OF DEFAULT" means a failure by the Guarantor to perform any of its payment or other obligations under this Preferred Securities Guarantee. "GUARANTEE PAYMENTS" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Declaration) that are required to be paid on such Preferred Securities to the extent the Issuer shall have funds available therefor, (ii) the redemption price (the "Redemption Price"), and all accumulated and unpaid Distributions to the date of redemption, to the extent the Issuer has funds available therefor, with respect to any Preferred Securities called for redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the redemption of all of the Preferred Securities or the distribution of the Debt Securities to the Holders in exchange for Preferred Securities as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders of Preferred Securities then outstanding upon the liquidation of the Issuer (in either case, the "Liquidation Distribution"). 2 "GUARANTOR" has the meaning assigned thereto in the recitals hereto. "HOLDER" shall mean any holder, as registered on the books and records of the Issuer, of any Preferred Securities; provided, however, that, in determining -------- ------- whether the holders of the requisite percentage of Preferred 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 Preferred Guarantee Trustee, any Affiliate of the Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Preferred Guarantee Trustee. "INDENTURE" means the Junior Subordinated Indenture dated as of November 2, 2001 between the Guarantor and The Bank of New York, as trustee, or, if amended or supplemented as provided herein, as so amended or supplemented or both, and shall include the forms and terms of a particular series of securities established as contemplated thereunder. "ISSUER" has the meaning assigned thereto in the recitals hereto. "LIST OF HOLDERS" shall have the meaning set forth in Section 2.2. "MAJORITY IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means, except as provided in the terms of the Preferred Securities, or except as provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a class, of more than 50% of the liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of all Preferred Securities. "PERSON" means any individual, corporation, estate, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated association or government or any agency or political subdivision thereof, or any other entity of whatever nature. "PREFERRED GUARANTEE TRUSTEE" means The Bank of New York, until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Preferred Securities Guarantee and thereafter means each such Successor Preferred Guarantee Trustee. "PREFERRED SECURITIES" has the meaning assigned thereto in the recitals hereto. "PREFERRED SECURITIES GUARANTEE" has the meaning assigned thereto in the recitals hereto. "RELEVANT JURISDICTION" means the United States. 3 "RELEVANT TAX" means any present or future taxes, duties, assessments or governmental charges of whatever nature, imposed or levied by or on behalf of any Relevant Jurisdiction or any authority therein or thereof having the power to tax. "RESPONSIBLE OFFICER" means, with respect to the Preferred Guarantee Trustee, any officer within the Corporate Trust Office of the Preferred Guarantee Trustee, including any vice president, any assistant vice president, any assistant treasurer or other officer of the Corporate Trust Office of the Preferred 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 PREFERRED GUARANTEE TRUSTEE" means a successor Preferred Guarantee Trustee possessing the qualifications to act as Preferred Guarantee Trustee under Section 4.1. ARTICLE II TRUST INDENTURE ACT Section 2.1 Trust Indenture Act; Application. -------------------------------- (a) This Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions; and (b) If and to the extent that any provision of this Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. Section 2.2 Lists of Holders. ---------------- (a) The Guarantor shall provide the Preferred Guarantee Trustee with a list, in such form as the Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holders ("List of Holders") (i) within 14 days after each record date for payment of Distributions, as of such record date, and (ii) at any other time, within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Preferred Guarantee Trustee. The Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Preferred Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. 4 Section 2.3 Reports by The Preferred Guarantee Trustee. Within 60 days ------------------------------------------ after May 15 of each year, the Preferred Guarantee Trustee shall provide to the Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. Section 2.4 Periodic Reports to Preferred Guarantee Trustee. The ----------------------------------------------- Guarantor shall provide to the Preferred Guarantee Trustee such documents, reports and information (if any) as are required by Section 314 and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Preferred Guarantee Trustee is for informational purposes only and the Preferred Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Preferred Guarantee Trustee is entitled to rely exclusively on Officers' Certificates). Section 2.5 Evidence of Compliance with Conditions Precedent. The ------------------------------------------------ Guarantor shall provide to the Preferred Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.6 Events of Default; Waiver. The Holders of a Majority in ------------------------- liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default and its consequences except an Event of Default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of each Holder of Preferred Securities. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Section 2.7 Event of Default; Notice. ------------------------ (a) The Preferred Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, transmit by mail, first class postage prepaid, to the Holders of the Preferred Securities, notices of all such Events of Default unless such defaults have been cured before the giving of such notice, provided that the Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Preferred Securities. 5 (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless a Responsible Officer of the Preferred Guarantee Trustee shall have obtained actual knowledge thereof or shall have received written notice of such Event of Default. Section 2.8 Conflicting Interests. The Declaration shall be deemed to --------------------- be specifically described in this Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE Section 3.1 Powers and Duties of the Preferred Guarantee Trustee. ---------------------------------------------------- (a) This Preferred Securities Guarantee shall be held by the Preferred Guarantee Trustee for the benefit of the Holders and the Preferred Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any Person except a Holder exercising his or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The right, title and interest of the Preferred Guarantee Trustee shall automatically vest in any Successor Preferred Guarantee Trustee, and such vesting and succession of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Preferred Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee for the benefit of the Holders. (c) The Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing or waiver of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Preferred Securities Guarantee, and shall 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 Preferred Securities Guarantee shall be construed to relieve the Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: 6 (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Preferred Guarantee Trustee shall be determined solely by the express provisions of this Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee; and (B) in the absence of bad faith on the part of the Preferred Guarantee Trustee, the Preferred 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 Preferred Guarantee Trustee and conforming to the requirements of this Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Preferred Securities Guarantee (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein); (ii) the Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Preferred Guarantee Trustee, unless it shall be proved that the Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Preferred 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 direction of the Holders of not less than a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee; and (iv) no provision of this Preferred Securities Guarantee shall require the Preferred Guarantee Trustee to expend or risk its own funds or 7 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 Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against such risk or liability is not reasonably assured to it. Section 3.2 Certain Rights of Preferred Guarantee Trustee. --------------------------------------------- (a) Subject to the provisions of Section 3.1: (i) The Preferred 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 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 Preferred Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Preferred Securities Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Preferred 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 Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or re-registration thereof). (v) The Preferred Guarantee Trustee may at the expense of the Guarantor 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 8 any of its Affiliates and may include any of its employees. The Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Preferred Securities Guarantee from any court of competent jurisdiction. (vi) The Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Preferred Guarantee Trustee such security and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Preferred 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 Preferred Guarantee Trustee; PROVIDED that nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Preferred Securities Guarantee. (vii) The Preferred 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 Preferred Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit but shall incur no liability of any kind by reason of such inquiry or investigation. (viii) The Preferred 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 Preferred 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 Preferred Guarantee Trustee or its agents hereunder shall bind the Holders of the Preferred Securities and the signature of the Preferred 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 Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Preferred Securities Guarantee, both of 9 which shall be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's taking such action. (x) Whenever in the administration of this Preferred Securities Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Preferred Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Preferred Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such written instructions are received and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions. (xi) The Preferred Securities 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 Preferred Securities Guarantee. (xii) The rights, privileges, protections, immunities and benefits given to the Preferred Guarantee Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Preferred Guarantee Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. (b) No provision of this Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Preferred 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 Preferred 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 Preferred Guarantee Trustee shall be construed to be a duty. Section 3.3 Not Responsible for Recitals or Issuance of Preferred ----------------------------------------------------- Securities Guarantee. The recitals contained in this Preferred Securities -------------------- Guarantee shall be taken as the statements of the Guarantor, and the Preferred Guarantee Trustee does not assume any responsibility for their correctness. The Preferred Guarantee Trustee makes no representations as to the validity or sufficiency of this Preferred Securities Guarantee. 10 ARTICLE IV PREFERRED GUARANTEE TRUSTEE Section 4.1 Preferred Guarantee Trustee: Eligibility. ---------------------------------------- (a) There shall at all times be a Preferred Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of 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 4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. Section 4.2 Appointment, Removal and Resignation of Preferred Guarantee ----------------------------------------------------------- Trustee. -------- (a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Preferred Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor. (c) The Preferred Guarantee Trustee appointed to office shall hold office until a Successor Preferred Guarantee Trustee shall have been appointed or until its removal or resignation. The Preferred Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Preferred Guarantee Trustee and delivered 11 to the Guarantor, which resignation shall not take effect until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Preferred Guarantee Trustee. (d) If no Successor Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery of an instrument of resignation or removal, the Preferred Guarantee Trustee resigning or being removed may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee. (e) No Preferred Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Preferred Guarantee Trustee. (f) Upon termination of this Preferred Securities Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all amounts to which it is entitled to the date of such termination, removal or resignation. ARTICLE V GUARANTEE Section 5.1 Guarantee. 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, right of set-off or counterclaim that the Issuer may have or assert. The Guarantor's obligation to make a 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. Section 5.2 Waiver of Notice and Demand. The Guarantor hereby waives --------------------------- notice of acceptance of this Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right or remedy to require a proceeding first against the Issuer or any other Person before proceeding directly against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 5.3 Obligations Not Affected. The obligations, covenants, ------------------------ agreements and duties of the Guarantor under this Preferred Securities 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 Preferred Securities to be performed or observed by the Issuer; 12 (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debt Securities 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 Preferred 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 Preferred Securities; (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 5.3 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 5.4 Rights of Holders. ----------------- (a) The Holders of a Majority in liquidation amount of the Preferred Securities then outstanding have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of this Preferred Securities Guarantee or to direct the exercise of any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee. (b) If the Preferred Guarantee Trustee fails to enforce this Preferred Securities Guarantee, any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce the Preferred Guarantee Trustee's rights under this Preferred Securities Guarantee, without first instituting a legal proceeding against the Issuer, the Preferred Guarantee 13 Trustee or any other Person. The Guarantor waives any right or remedy to require that any action be brought first against the Issuer or any other person or entity before proceeding directly against the Guarantor. Notwithstanding the foregoing, if the Guarantor has failed to make a Guarantee Payment, a Holder of Preferred Securities may directly institute a proceeding against the Guarantor for enforcement of this Preferred Securities Guarantee for such payment. Section 5.5 Guarantee of Payment. This Preferred Securities Guarantee -------------------- creates a guarantee of payment and not of collection. Section 5.6 Subrogation. The Guarantor shall be subrogated to all (if ----------- any) rights of the Holders of Preferred Securities against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to -------- ------- the extent required by mandatory 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 Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Preferred Securities 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. Section 5.7 Independent Obligations. The Guarantor acknowledges that ----------------------- its obligations hereunder are independent of the obligations of the Issuer with respect to the Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. Section 5.8 Taxes. All payments in respect of the Guarantee Payments ----- (including interest accrued thereon, if any) by the Guarantor shall be made without withholding or deduction for or on account of any Relevant Tax, unless the withholding or deduction of such Relevant Tax is required by law. In that event, the Guarantor shall pay, as further Guarantee Payments, such additional amounts as may be necessary in order that the net amounts received by a Holder (or a third party on its behalf) after such withholding or deduction will equal the amount which would have been received in respect of the Guarantee Payments (including interest accrued thereon, if any) in the absence of such withholding or deduction ("Guarantee Additional Amounts"), except that no such Guarantee Additional Amounts shall be payable to a Holder (or a third party on its behalf) with respect to any Guarantee Payments (including interest accrued thereon, if any) (i) to the extent that such Relevant Tax is imposed or levied by virtue of such Holder (or the beneficial owner of Preferred Securities to which such Guarantee Payments relate) having some connection with the Relevant Jurisdiction, other than being a Holder (or beneficial owner of Preferred Securities) or (ii) to the extent that such the Relevant Tax is imposed or levied by virtue of such Holder (or beneficial owner) not having made a declaration of non-residence in, or other lack of connection with, the Relevant Jurisdiction of any similar claim for exemption, if the Guarantor or its agent has provided the beneficial owner of such Preferred Securities or its nominee with at least 60 days' prior written notice of any opportunity to make such a declaration or claim. 14 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION Section 6.1 Limitation of Transactions. So long as any Preferred -------------------------- Securities remain outstanding, if (i) the Guarantor has exercised its option to defer interest payments on the Debt Securities by extending the interest payment period and such extension period, or any extension thereof, shall be continuing, (ii) the Guarantor shall be in default with respect to its payment or other obligations under this Preferred Securities Guarantee or (iii) there shall have occurred and be continuing an Event of Default under the Declaration or any event that, with the giving of notice or lapse of time or both, would constitute an Event of Default under the Declaration, then the Guarantor shall not (a) declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire, or make any liquidation payment with respect to, any of its capital stock or (b) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities of the Guarantor that rank PARI PASSU with or junior in interest to the Debt Securities or make any guarantee payment with respect to any guarantee by the Guarantor of the debt securities of any subsidiary of the Guarantor if such guarantee ranks PARI PASSU with or junior in interest to the Debt Securities (other than (i) as a result of the exchange, redemption or conversion of one class or series of the capital stock of the Guarantor (or any capital stock of a subsidiary thereof) for another class or series of the capital stock of the Guarantor or any class or series of the indebtedness of the Guarantor for any class or series of the capital stock of the Guarantor, (ii) the purchase of fractional interests in shares of the capital stock of the Guarantor pursuant to the conversion or exchange provisions of such capital stock or the security being converted into or exchanged for such capital stock, (iii) dividends or distributions in common stock of the Guarantor, (iv) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of rights, stock or other property under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (v) payments under this Preferred Securities Guarantee or under any similar guarantee by the Guarantor with respect to any trust common or trust preferred securities of its subsidiaries and (vi) repurchases, redemptions or other acquisitions of shares of the capital stock of the Guarantor in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, (2) a dividend reinvestment or shareholder stock purchase plan or (3) the issuance of capital stock of the Guarantor (or securities convertible or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to such extension period). Section 6.2 Subordination. This Preferred Securities Guarantee will ------------- constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor (except any liabilities that may be PARI PASSU or junior expressly by their terms), (ii) PARI PASSU with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any guaranty now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor and (iii) senior to the Guarantor's common stock. 15 ARTICLE VII TERMINATION Section 7.1 Termination. This Preferred Securities Guarantee shall ----------- terminate as to each Holder upon, and be of no force and effect from the earlier of (i) full payment of the Redemption Price and accumulated and unpaid Distributions with respect to all Preferred Securities, (ii) the distribution of the Debt Securities to the Holders of the Preferred Securities or (iii) full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. This Preferred Securities Guarantee shall terminate completely upon full payment of the amounts payable in accordance with the Declaration. Notwithstanding the foregoing, this Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid under the Preferred Securities or under this Preferred Securities Guarantee. ARTICLE VIII INDEMNIFICATION Section 8.1 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, liability, expense or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Preferred Securities 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 Preferred Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage, liability, expense 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 Guarantor and upon such information, opinions, reports or statements presented to 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 has been selected with reasonable care by or on behalf of the Guarantor, 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 Preferred Securities might properly be paid. Section 8.2 Indemnification. The Guarantor agrees to indemnify each --------------- Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability or expense, including taxes (other than taxes based upon the income of the Preferred Guarantee Trustee), incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses 16 (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 8.2 shall survive the termination of this Preferred Securities Guarantee or the resignation or removal of the Preferred Guarantee Trustee. When the Preferred Guarantee Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(e) or Section 5.1(f) of the Indenture, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. ARTICLE IX MISCELLANEOUS Section 9.1 Successors and Assigns. All guarantees and agreements ---------------------- contained in this Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with any merger or consolidation of the Guarantor with or into another entity permitted by Section 9.1 of the Indenture or any sale, transfer or lease of the Guarantor's assets to another entity permitted by Section 9.1 of the Indenture, the Guarantor may not assign its rights or delegate its obligations under this Preferred Securities Guarantee without the prior approval of the holders of at least a Majority in liquidation amount of the Preferred Securities then outstanding. Section 9.2 Amendments. Except with respect to any changes that do not ---------- adversely affect the rights of Holders (in which case no consent of Holders will be required), this Preferred Securities Guarantee may only be amended with the prior approval of the Holders of at least a Majority in liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of the Preferred Securities then outstanding. The provisions of the Declaration with respect to meetings of Holders apply to the giving of such approval. Section 9.3 Notices. All notices provided for in this Preferred ------- Securities 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 Preferred Guarantee Trustee, at the Preferred Guarantee Trustee's mailing address set forth below (or such other address as the Preferred Guarantee Trustee may give notice of to the Holders of the Preferred Securities): The Bank of New York 101 Barclay Street, Floor 21 West New York, NY 10286 Attention: Corporate Trust Administration 17 (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 Preferred Securities): Torchmark Corporation 2001 Third Avenue South Birmingham, Alabama 35233 Attention: General Counsel (c) If given to any Holder of Preferred Securities, at the address set forth on the books and records of the Issuer. With respect to the Preferred Guarantee Trustee and the Guarantor, all notices shall be deemed to have been given when received. With respect to any Holder of Preferred Securities, all notices shall be deemed to have been given when mailed by first class mail, postage prepaid. Section 9.4 Benefit. This Preferred Securities Guarantee is solely for ------- the benefit of the Holders of the Preferred Securities and, subject to Section 3.1(a), is not separately transferable from the Preferred Securities. Section 9.5 Governing Law. THIS PREFERRED SECURITIES GUARANTEE SHALL ------------- BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. (signature page follows) 18 THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first above written. TORCHMARK CORPORATION as Guarantor By: /s/ Michael J. Klyce -------------------------------------- Name: Michael J. Klyce ------------------------------ Title: Vice President and Treasurer ----------------------------- THE BANK OF NEW YORK as Preferred Guarantee Trustee By: /s/ Robert A Massimillo -------------------------------------- Name: Robert A. Massimillo ------------------------------ Title: Vice President ----------------------------- 19 EX-8.1 9 dex81.txt FEDERAL INCOME TAX OPINION MAYNARD COOPER & GALE EXHIBIT 8.1 [Letterhead of Maynard, Cooper & Gale, P.C.] November 2, 2001 Torchmark Corporation 2001 Third Avenue South Birmingham, AL 35233 Torchmark Capital Trust I c/o Torchmark Corporation 2001 Third Avenue South Birmingham, AL 35233 Re: Trust Preferred Securities of Torchmark Capital Trust I Ladies and Gentlemen: We have acted as special tax counsel for Torchmark Corporation, a Delaware corporation (the "Company"), and Torchmark Capital Trust I, a statutory business trust organized under the Business Trust Act of the State of Delaware (12 Del. Code Ann., Title 12, Section 3801, et seq.) (the "Trust"), in connection with the sale pursuant to an Underwriting Agreement to be entered into among the Company, the Trust, and the underwriters (the "Underwriters") named therein (the "Underwriting Agreement") of trust preferred securities (liquidation amount $25 per capital security) of the Trust (the "Trust Preferred Securities"), which will represent undivided beneficial interests in the assets of the Trust. The Trust Preferred Securities will be guaranteed by the Company with respect to distributions and payments upon liquidation, redemption, and otherwise pursuant to the Guarantee Agreement, to be entered into (the "Guarantee Agreement"), between the Company and The Bank of New York, as trustee, for the benefit of the holders of the Trust Preferred Securities. In connection with the issuance of the Trust Preferred Securities, the Trust will also issue common securities (liquidation amount $25 per common security) (the "Common Securities"), which will represent undivided beneficial interests in the assets of the Trust. The proceeds from the sale of the Trust Preferred Securities and the Common Securities are to be used by the Trust to purchase junior subordinated debentures (the "Debentures"), to be issued by the Company. The Trust Preferred Securities and the Common Securities are to be issued pursuant to the Amended and Restated Declaration of Trust, to be entered into (the "Declaration"), 2 among the Company, as sponsor, The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee"), The Bank of New York, as property trustee (the "Property Trustee"), and Michael J. Klyce, Larry M. Hatchison and Gary L. Coleman, as regular trustees (the "Regular Trustees"). The Debentures are to be issued pursuant to an indenture, to be entered into (the "Indenture"), between the Company and The Bank of New York, as debt trustee. In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Prospectus Supplement dated October 31, 2001, (including the Prospectus dated November 30, 1999); (ii) the Certificate of Trust filed with the Secretary of State of the State of Delaware as of July 21, 1999, by the Regular Trustees, and the Delaware Trustee, as amended on November 1, 2001; (iii) the Declaration including the designation of the terms of the Trust Preferred Securities; (iv) the form of the Trust Preferred Securities; (v) the Guarantee Agreement; (vi) the Indenture; (vii) the form of Debentures; (viii) the form of Common Securities; and (ix) the Underwriting Agreement. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and the Trust and such agreements, certificates of public officials, certificates of officers, trustees or other representatives of the Company, the Trust and others, as applicable, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals of such latter documents. In making our examination of documents executed, or to be executed by parties other than the Company or the Trust, we have assumed that such parties had, or will have, the power, corporate or other, to enter into and perform all obligations thereunder, and we have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and that such documents constitute, or will constitute, valid and binding obligations of such parties. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers, trustees and other representatives of the Company, the Trust and others. In rendering our opinion, we have participated in the preparation of the preliminary Prospectus Supplement. Our opinion is conditioned on, among other things, the initial and continuing accuracy of the facts, information, covenants, representations, and assumptions set forth in the documents referred to above and the statements and representations made by the Company and the Trust. In rendering our opinion, we have considered the provisions of the Internal Revenue Code of 1986, as amended, Treasury regulations (proposed, temporary, and final) promulgated thereunder, judicial decisions, and Internal Revenue Service rulings all as of the date hereof, and all of which are 3 subject to change, which changes may be retroactively applied. A change in the authorities upon which our opinion is based could affect our conclusions. There can be no assurance, moreover, that any of the opinions expressed herein will be accepted by the Internal Revenue Service or, if challenged, by a court. Based solely upon the foregoing, we are of the opinion that under current United States federal income tax law: (1) The Trust will be classified as a grantor trust and not as an association taxable as a corporation. Accordingly, each holder (defined in the Prospectus Supplement as a "U.S. Holder") of Trust Preferred Securities will generally be treated as the owner of an undivided interest in the Debentures. (2) The Debentures will be classified as indebtedness of the Company. (3) Assuming that the likelihood of the exercise by the Company of the election to defer the payment of interest on the Debentures is remote, the Debentures will not be deemed to be issued with original issue discount. Accordingly, stated interest payments on the Debentures will be includible in a holder's income at the time those payments are paid or accrued in accordance with a holder's regular method of accounting. A determination as to the remoteness of a contingency under United States federal income tax law is inherently a factual determination, and thus, no opinion is expressed herein regarding the remoteness of the likelihood of the exercise of the Company's election to defer the payment of interest on the Debentures. (4) If the Company exercises its option to defer the payment of stated interest, (i) solely for purposes of the original issue discount rules, the Debentures would be treated as being "reissued", (ii) the amount of interest income includible in the taxable income of a holder of the Debentures would be determined on the basis of a constant yield method over the remaining term of the Debentures, (iii) the actual receipt of future payments of stated interest on the Debentures would no longer be separately reported as taxable income, (iv) any original issue discount included in income would increase the holder's adjusted tax basis in the Trust Preferred Securities or the Debentures, as the case may be, and (v) the holder's actual receipt of interest payments would reduce the holder's adjusted tax basis. (5) Because interest paid on the Trust Preferred Securities will constitute interest income for United States federal income tax purposes, corporate holders of Trust Preferred Securities will not be entitled to claim a dividends received deduction. (6) If the Company exercises its right to liquidate the Trust and cause the Debentures to be distributed to the holders on a basis proportionate to a holder's ownership in the Trust Preferred Securities, such a distribution will be treated as a nontaxable event to a holder, provided that the Trust is classified, for United States federal income tax purposes, as a grantor trust and not an 4 association taxable as a corporation at the time of the liquidation. In such event, a holder will have an adjusted tax basis in the Debentures received in the liquidation of the Trust equal to such holder's adjusted tax basis in the Trust Preferred Securities surrendered and the holding period of the Debentures will include the period during which the holder held the Trust Preferred Securities. (7) If the Trust is characterized, for United States federal income tax purposes, as an association taxable as a corporation at the time of the liquidation of the Trust, the distribution of Debentures would be taxable to holders. (8) Upon the sale or redemption for cash of Trust Preferred Securities, a holder will recognize gain or loss in an amount equal to the difference between (i) the holder's adjusted tax basis in the Trust Preferred Securities and (ii) the amount realized in the sale, except for any amount received for accrued but unpaid interest not previously included in income. (9) The gain or loss on the sale or redemption for cash of Trust Preferred Securities will be long term capital gain or loss if a holder held the Trust Preferred Securities as capital assets for United States federal income tax purposes for more than one year, provided that the holder will be required to include in ordinary income any portion of the amount realized in the sale that is attributable to accrued but unpaid interest to the extent not previously included income (the amount of such accrued interest is required to be added to the adjusted tax basis in the Trust Preferred Securities disposed of). (10) Capital losses generally cannot be applied to offset ordinary income; however, individuals may apply up to $3,000 of capital losses to offset ordinary income. (11) Generally, income on the Trust Preferred Securities and proceeds from the disposition of Trust Preferred Securities will be reported on IRS Form 1099, which should be mailed by January 31 following each calendar year. Backup withholding at rates specified in the Internal Revenue Code of 1986, as amended, will apply to payments of interest if the payee is a non-exempt holder, unless the payee (A) furnishes a taxpayer identification number in the manner prescribed in the applicable Treasury regulations, (B) certifies that such number and that he or she is not subject to backup withholding, and (C) meets certain other conditions. Amounts withheld due to the application of the backup withholding rules may be allowed as a credit or refund against U.S. federal income tax liability, provided that required information is furnished to the IRS. (12) Payments made to non-U.S. Holders (as defined in the Prospectus Supplement) will generally not be subject to withholding of United States federal income tax if (A) the beneficial owner of the Trust Preferred Securities does not actually or constructively own 10% or more of the total combined voting power of all classes of the stock of the Company entitled to vote and (B) either (i) the beneficial owner of the Trust Preferred Securities certifies to the Trust or its agent, under penalties of perjury, that it is not a United States person by filing the required Internal Revenue Service form certification with the Trust and providing his name, address, and other information 5 required to be reported on such form(s) and/or in accordance with the Internal Revenue Code or (ii) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business ("Financial Institution"), and holds the Trust Preferred Securities in that capacity, certifies to the Trust or its agent, under penalties of perjury, that such certification has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and furnishes the Trust or its agent with a copy of the certification. Except as set forth above, we express no opinion to any party as to the tax consequences, whether United States federal, state, local or foreign, of the issuance of the Debentures, the Trust Preferred Securities, the Common Securities, or any transactions related to or contemplated by such issuance. In connection with the sale of the Trust Preferred Securities pursuant to the Registration Statement of the Company dated November 30, 1999, as filed with the Securities and Exchange Commission on July 21, 1999, as amended (the "Registration Statement"), we are furnishing this opinion to you solely for your benefit and the benefit of investors purchasing the Trust Preferred Securities upon original issuance. This opinion is not to be used, circulated, quoted, or otherwise referred to for any other purpose without our written permission. The opinions expressed herein are subject to, and conditioned upon, reconfirmation and delivery of these opinions at the time of the closing of the offering of Trust Preferred Securities. This opinion is expressed as of the date hereof, and we disclaim any undertaking to advise you of changes of the facts stated or assumed herein or any subsequent changes in applicable law. We consent to the filing of this opinion as Exhibit 8.1 to the Registration Statement and to the reference to Maynard, Cooper & Gale, P.C. therein under the caption "Legal Matters." In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules or regulations of the Securities and Exchange Commission promulgated thereunder. Very truly yours, Maynard, Cooper & Gale, P.C. By: /s/ C. Mark Strength -------------------------- C. Mark Strength EX-23.1 10 dex231.txt INDEPENDENT AUDITORS CONSENT EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement No. 333-83411 of Torchmark Corporation on Form S-3 of our report dated January 30, 2001, appearing in the Annual Report on Form 10-K of Torchmark Corporation for the year ended December 31, 2000, and to the reference to use under the heading "Experts" in the Prospectus Supplement, which is part of such Registration Statement. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Dallas, Texas October 31, 2001 EX-23.2 11 dex232.txt CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT EXHIBIT 23.2 Consent of Independent Certified Public Accountants The Board of Directors Torchmark Corporation: We consent to incorporation by reference in the Registration Statement (No. 333- 83411) on Form S-3 dated October 31, 2001, of our report dated January 29, 1999, except for note 18 which is as of February 10, 1999 relating to the consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows and related schedules of Torchmark Corporation and Subsidiaries for the year ended December 31, 1998, which appears in the December 31, 2000 Annual Report on Form 10-K of Torchmark Corporation and to the reference of our firm under the heading "Experts" in the prospectus. /s/ KPMG LLP Birmingham, Alabama October 31, 2001 EX-25.1 12 dex251.txt FORM T-1 UNDER THE INDENTURE (TORCHMARK) EXHIBIT 25.1 ======================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) Torchmark Corporation (Exact name of obligor as specified in its charter) Delaware 63-0780404 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2001 Third Avenue South Birmingham, Alabama 35233 (Address of principal executive offices) (Zip code) _____________ Debt Securities (Title of the indenture securities) ======================================================================== 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject.
---------------------------------------------------------------------------------- Name Address ---------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 1st day of November, 2001. THE BANK OF NEW YORK By: /s/ MING SHIANG ------------------------- Name: MING SHIANG Title: VICE PRESIDENT -3- EXHIBIT 7 --------- -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin........................................... $ 2,811,275 Interest-bearing balances....................... 3,133,222 Securities: Held-to-maturity securities..................... 147,185 Available-for-sale securities................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell...................... 3,378,526 Loans and lease financing receivables: Loans and leases held for sale.................. 74,702 Loans and leases, net of unearned income........ 37,471,621 LESS: Allowance for loan and lease losses....... 599,061 Loans and leases, net of unearned income and allowance....................................... 36,872,560 Trading Assets................................... 11,757,036 Premises and fixed assets (including capitalized leases)......................................... 768,795 Other real estate owned.......................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................ 193,126 Customers' liability to this bank on acceptances outstanding..................................... 592,118 Intangible assets................................ Goodwill...................................... 1,300,295 Other intangible assets....................... 122,143 Other assets..................................... 3,676,375 ----------- Total assets..................................... $70,232,359 =========== Dollar Amounts ASSETS In Thousands LIABILITIES Deposits: In domestic offices............................. $25,962,242 Noninterest-bearing............................. 10,586,346 Interest-bearing................................ 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs......................... 24,862,377 Noninterest-bearing............................. 373,085 Interest-bearing................................ 24,489,292 Federal funds purchased and securities sold under agreements to repurchase.................. 1,446,874 Trading liabilities.............................. 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....................... 1,381,512 Bank's liability on acceptances executed and outstanding..................................... 592,804 Subordinated notes and debentures................ 1,646,000 Other liabilities................................ 5,373,065 ----------- Total liabilities................................ $63,658,235 =========== EQUITY CAPITAL Common stock..................................... 1,135,284 Surplus.......................................... 1,008,773 Retained earnings................................ 4,426,033 Accumulated other comprehensive income........... 4,034 Other equity capital components.................. 0 ----------- Total equity capital............................. 6,574,124 ----------- Total liabilities and equity capital............. $70,232,359 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi Gerald L. Hassell Directors Alan R. Griffith -------------------------------------------------------------------------------- EX-25.2 13 dex252.txt FORM T-1 AMENDED AND RESTATED-CAPITAL TRUST EXHIBIT 25.2 ======================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) Torchmark Capital Trust I (Exact name of obligor as specified in its charter) Delaware 74-6507320 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2001 Third Avenue South Birmingham, Alabama 35233 (Address of principal executive offices) (Zip code) _____________ Preferred Securities (Title of the indenture securities) ======================================================================== 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject.
---------------------------------------------------------------------------------- Name Address ---------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 1st day of November, 2001. THE BANK OF NEW YORK By: /s/ MING SHIANG --------------------- Name: MING SHIANG Title: VICE PRESIDENT -3- EXHIBIT 7 --------- -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin........................................... $ 2,811,275 Interest-bearing balances....................... 3,133,222 Securities: Held-to-maturity securities..................... 147,185 Available-for-sale securities................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell...................... 3,378,526 Loans and lease financing receivables: Loans and leases held for sale.................. 74,702 Loans and leases, net of unearned income........ 37,471,621 LESS: Allowance for loan and lease losses....... 599,061 Loans and leases, net of unearned income and allowance....................................... 36,872,560 Trading Assets................................... 11,757,036 Premises and fixed assets (including capitalized leases)......................................... 768,795 Other real estate owned.......................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................ 193,126 Customers' liability to this bank on acceptances outstanding..................................... 592,118 Intangible assets................................ Goodwill...................................... 1,300,295 Other intangible assets....................... 122,143 Other assets..................................... 3,676,375 =========== Total assets..................................... $70,232,359 =========== Dollar Amounts ASSETS In Thousands LIABILITIES Deposits: In domestic offices............................. $25,962,242 Noninterest-bearing............................. 10,586,346 Interest-bearing................................ 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs......................... 24,862,377 Noninterest-bearing............................. 373,085 Interest-bearing................................ 24,489,292 Federal funds purchased and securities sold under agreements to repurchase.................. 1,446,874 Trading liabilities.............................. 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....................... 1,381,512 Bank's liability on acceptances executed and outstanding..................................... 592,804 Subordinated notes and debentures................ 1,646,000 Other liabilities................................ 5,373,065 ----------- Total liabilities................................ $63,658,235 =========== EQUITY CAPITAL Common stock..................................... 1,135,284 Surplus.......................................... 1,008,773 Retained earnings................................ 4,426,033 Accumulated other comprehensive income........... 4,034 Other equity capital components.................. 0 ----------- Total equity capital............................. 6,574,124 ----------- Total liabilities and equity capital............. $70,232,359 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi Gerald L. Hassell Directors Alan R. Griffith -------------------------------------------------------------------------------- EX-25.3 14 dex253.txt FORM T-1 PREFERRED SECURITIES GUARANTEE AGREEMENT EXHIBIT 25.3 ======================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) Torchmark Corporation (Exact name of obligor as specified in its charter) Delaware 63-0780404 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2001 Third Avenue South Birmingham, Alabama 35233 (Address of principal executive offices) (Zip code) _____________ Guarantee of Preferred Securities of Torchmark Capital Trust I (Title of the indenture securities) ======================================================================== 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject.
---------------------------------------------------------------------------------- Name Address ---------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 1st day of November, 2001. THE BANK OF NEW YORK By: /s/ MING SHIANG -------------------------------- Name: MING SHIANG Title: VICE PRESIDENT -3- EXHIBIT 7 --------- -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin........................................... $ 2,811,275 Interest-bearing balances....................... 3,133,222 Securities: Held-to-maturity securities..................... 147,185 Available-for-sale securities................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell...................... 3,378,526 Loans and lease financing receivables: Loans and leases held for sale.................. 74,702 Loans and leases, net of unearned income........ 37,471,621 LESS: Allowance for loan and lease losses....... 599,061 Loans and leases, net of unearned income and allowance....................................... 36,872,560 Trading Assets................................... 11,757,036 Premises and fixed assets (including capitalized leases)......................................... 768,795 Other real estate owned.......................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................ 193,126 Customers' liability to this bank on acceptances outstanding..................................... 592,118 Intangible assets................................ Goodwill...................................... 1,300,295 Other intangible assets....................... 122,143 Other assets..................................... 3,676,375 =========== Total assets..................................... $70,232,359 =========== Dollar Amounts ASSETS In Thousands LIABILITIES Deposits: In domestic offices............................. $25,962,242 Noninterest-bearing............................. 10,586,346 Interest-bearing................................ 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs......................... 24,862,377 Noninterest-bearing............................. 373,085 Interest-bearing................................ 24,489,292 Federal funds purchased and securities sold under agreements to repurchase.................. 1,446,874 Trading liabilities.............................. 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....................... 1,381,512 Bank's liability on acceptances executed and outstanding..................................... 592,804 Subordinated notes and debentures................ 1,646,000 Other liabilities................................ 5,373,065 ----------- Total liabilities................................ $63,658,235 =========== EQUITY CAPITAL Common stock..................................... 1,135,284 Surplus.......................................... 1,008,773 Retained earnings................................ 4,426,033 Accumulated other comprehensive income........... 4,034 Other equity capital components.................. 0 ----------- Total equity capital............................. 6,574,124 ----------- Total liabilities and equity capital............. $70,232,359 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi Gerald L. Hassell Directors Alan R. Griffith --------------------------------------------------------------------------------