Form F-3ASR PRUDENTIAL PLC
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TABLE OF CONTENTS
As filed with the Securities and Exchange Commission on August 11, 2020
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Prudential Public Limited Company
(Exact Name of Registrant as Specified in Its Charter)
| England and Wales (State or Other Jurisdiction of Incorporation or Organization) |
Not applicable (I.R.S. Employer Identification No.) |
1 Angel Court
London EC2R 7AG, England
+(44) 20 7220 7588
(Address and Telephone Number of Registrant's Principal Executive Offices)
Jackson National Life Insurance Company
1 Corporate Way
Lansing, MI 48951
+1 517-381-5500 Attention: General Counsel
(Name, Address and Telephone Number of Agent For Service)
Copies to:
Timothy Corbett
Carter Brod
Morgan Lewis & Bockius UK LLP
Condor House, 5-10 St. Paul's Churchyard
London EC4M 8AL, England
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement as determined by market conditions.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. ý
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is filed as a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ý
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. o
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. o
CALCULATION OF REGISTRATION FEE
|
||||||||
| Title of Each Class Of Securities to be Registered |
Amount to be Registered(1) |
Proposed Maximum Aggregate Price Per Unit(1) |
Proposed Maximum Aggregate Offering Price(1) |
Amount of Registration Fee(1) |
||||
|---|---|---|---|---|---|---|---|---|
Senior Debt Securities |
||||||||
Subordinated Debt Securities |
||||||||
Preference Shares(2)(3) |
||||||||
|
||||||||
- (1)
- An
indeterminate aggregate initial offering price and number or amount of the securities of each identified class is being registered as may from time to time be
sold at indeterminate prices. Separate consideration may or may not be received for securities that are issuable upon conversion of, or in exchange for, or upon exercise of, convertible or
exchangeable securities. In accordance with Rules 456(b) and 457(r), the Registrant is deferring payment of all of the registration fee.
- (2)
- Also
includes such indeterminate amounts of Preference Shares as may be issued upon conversion of or in exchange for any Subordinated Debt Securities that provide
for conversion or exchange into Preference Shares.
- (3)
- The Preference Shares will be represented by American Depositary Shares, each of which represents one Preference Share. American Depositary Shares issuable on deposit of the Preference Shares registered hereby have been registered pursuant to Registration Statement No. 333-117706.
- †
- The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Prospectus
Prudential plc
Senior Debt Securities
Subordinated Debt Securities
Preference Shares
American Depositary Shares
We may from time to time offer to sell:
- •
- Senior Debt Securities;
- •
- Subordinated Debt Securities;
- •
- Preference Shares; and
- •
- American Depositary Shares.
This prospectus describes some of the general terms that may apply to these securities and the general manner in which they may be offered. We will provide the specific terms of the securities that we are offering and the manner in which they are offered in supplements to this prospectus. The prospectus supplements will also contain the names of any underwriters, dealers or agents involved in the sale of the securities, together with any applicable commissions or discounts. You should read this prospectus and any accompanying prospectus supplement carefully before you invest in any of these securities.
This prospectus may not be used to sell any securities unless accompanied by a prospectus supplement.
Investing in the securities involves risks. You should carefully consider the risks discussed under the "Additional Information—Risk Factors" heading of Prudential plc's most recent annual report on Form 20-F filed with the Securities and Exchange Commission, as well as under the "Risk Factors" heading of any subsequent Prudential plc Half Year Financial Report furnished to the Securities and Exchange Commission on Form 6-K and incorporated by reference herein, and in any prospectus supplement accompanying this prospectus before you invest in any of these securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is August 11, 2020.
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This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the "SEC") using the "shelf" registration process under the Securities Act of 1933, as amended (the "Securities Act"). Under the shelf registration process, we may sell the Senior Debt Securities, Subordinated Debt Securities, Preference Shares and American Depositary Shares (collectively, the "securities") described in this prospectus in one or more offerings.
This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of the securities. The prospectus supplement may also add to or update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading "Where You Can Find More Information".
As used in this prospectus and in your prospectus supplement, unless the context otherwise requires, the terms "Prudential," the "Group," "we," "us" and "our" each refer to Prudential plc, together with its subsidiaries, while the terms "Prudential plc," the "Company" or the "parent company" each refer to Prudential plc.
In connection with any issue of securities through this prospectus, a stabilizing manager or any person acting for it may over-allot or effect transactions with a view to supporting the market price of such securities and any associated securities at a level higher than that which might otherwise prevail for a limited period after the issue date. However, there will be no obligation on the stabilizing manager or any of its agents to do this. Such stabilizing, if commenced, may be discontinued at any time, and must be brought to an end after a limited period.
We have derived the financial data set forth in this prospectus from year-end figures in our audited consolidated financial statements and interim figures in our unaudited condensed consolidated interim financial statements. Both the audited consolidated financial statements and unaudited condensed consolidated interim financial statements from which such financial data was derived were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU) ("IFRS"). The condensed financial statement schedule set forth in our most recent annual report on Form 20-F has been prepared in accordance with U.K. generally accepted accounting practice ("U.K. GAAP").
Our consolidated financial statements are published in U.S. dollars. In this prospectus and any prospectus supplement, "U.S. dollars", "US$", "$" or "¢" refers to U.S. currency, "pounds sterling", "£", "pence" or "p" refers to U.K. currency (there are 100 pence to each pound), and "euro" or "€" refers to the single currency adopted by the participating members of the European Union.
LIMITATIONS ON ENFORCEMENT OF U.S. LAWS AGAINST US, OUR MANAGEMENT
AND OTHERS
Prudential plc is a public limited company incorporated and registered in England and Wales. Most of our directors and executive officers (and the experts named in this prospectus or in documents incorporated by reference) are resident outside the United States, and a substantial portion of our assets and the assets of such persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons or to enforce against them or us in U.S. courts judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. We have been advised by our English solicitors, Slaughter and May, that there is doubt as to enforceability in England and Wales, in original actions or in actions to enforce judgments of U.S. courts, of civil liabilities based on U.S. securities laws.
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Under our Articles of Association (the "Articles"), any proceeding, suit or action between a shareholder and Prudential and/or our directors arising out of or in connection with the Articles or otherwise, between Prudential and any of our directors (to the fullest extent permitted by law), between a shareholder and our professional service providers and/or between Prudential and our professional service providers (to the extent such proceeding, suit or action arises in connection with a proceeding, suit or action between a shareholder and such professional service provider) may only be brought in the courts of England and Wales.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports and special reports and other information with the SEC. You may read and copy any document we file with the SEC at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information on the public reference room. Documents that we file with the SEC are also available on the website maintained by the SEC at http://www.sec.gov. The address of the SEC's website is provided solely for the information of prospective investors and is not intended to be an active link.
The SEC allows us to "incorporate by reference" in this prospectus the information in the documents that we file with it, which means we can disclose important information to you by referring you to those documents. The information incorporated by reference in this prospectus is considered to be an integral part of this prospectus. We incorporate by reference in this prospectus the documents listed below:
- •
- our annual report on Form 20-F
for the year ended December 31, 2019;
- •
- our Half Year Financial Report on
Form 6-K furnished to the SEC on August 11, 2020;
- •
- any future annual reports on Form 20-F that we may file with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the termination of any offering contemplated by this prospectus; and
- •
- any future reports on Form 6-K that we may furnish to the SEC under the Exchange Act, including future Half Year Financial Reports, but only to the extent that such reports expressly state that we incorporate them by reference herein.
All information appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents that we incorporate by reference herein. You may request a copy of these documents at no cost to you by writing or telephoning us at our principal executive offices, located at 1 Angel Court, London EC2R 7AG, England, telephone +44 20 7220 7588, Attention: Group Secretariat.
Information in this prospectus may be modified by information included in subsequent Exchange Act filings that we incorporate by reference, the result of which is that only the information as modified will be part of this prospectus. Other information in the prospectus will not be affected by the replacement of this superseded information nor will an investor's ability to rely on such superseded information be affected, to the extent such reliance occurs prior to the delivery of the superseding information.
With effect from October 21, 2019, the Group-wide supervisor of Prudential plc changed to the Hong Kong Insurance Authority (the "HKIA"). On July 24, 2020, the Insurance (Amendment) (No. 2) Ordinance 2020, being the enabling primary legislation providing for the framework for the group-wide supervision of insurance groups by the HKIA (the "GWS Framework"), was enacted. The primary
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legislation (once effective) will be supported by subsidiary legislation and guidance material, which is subject to consultation with the industry and to the Hong Kong legislative process. As such, the timing of finalization and implementation of the GWS Framework remains uncertain, although it is expected to become effective in early 2021. Until then we are being supervised on an interim basis in line with principles agreed with the HKIA. Until the GWS Framework is finalized, we cannot be certain of the nature and extent of differences between the interim principles agreed with the HKIA and the specific regulatory requirements of the GWS Framework. With the agreement of the HKIA, we are applying the Local Capital Summation Method (the "LCSM") to determine our regulatory capital requirements. While we currently expect the capital requirements under the GWS Framework to be largely consistent with these interim supervisory requirements, any differences in the final requirements adopted under the GWS Framework may lead to changes to the way in which capital requirements are calculated and to the eligibility of the capital instruments issued by us to satisfy such capital requirements. Our existing processes and resources may also need to change to comply with the final GWS Framework or any other requirements of the HKIA.
While the HKIA has agreed that the subordinated debt instruments we have in issue as at the date of this prospectus can be included as part of our capital resources for the purposes of satisfying the capital requirements imposed under the LCSM under the interim principles agreed with the HKIA, the grandfathering provisions under the GWS Framework remain subject to the Hong Kong legislative process.
This prospectus, the documents incorporated by reference herein, and any accompanying prospectus supplements may contain "forward-looking statements" with respect to certain of Prudential's plans and its goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements that are not historical facts, including statements about Prudential's beliefs and expectations and including, without limitation, statements containing the words "may", "will", "should", "continue", "aims", "estimates", "pro-jects", "believes", "intends", "expects", "plans", "seeks" and "anticipates", and words of similar meaning, are forward-looking statements. These statements are based on plans, estimates and projections as at the time they are made, and therefore undue reliance should not be placed on them. By their nature, all forward-looking statements involve risk and uncertainty. A number of important factors could cause our actual future financial condition or performance or other indicated results of the entity referred to in any forward-looking statement to differ materially from those indicated in such forward-looking statement. Such factors include, but are not limited to, the impact of the current Covid-19 pandemic, including adverse financial market and liquidity impacts, responses and actions taken by regulators and supervisors, the impact to sales, claims and assumptions and increased product lapses, disruption to Prudential's operations (and those of its suppliers and partners), risks associated with new sales processes and information security risks; future market conditions, including fluctuations in interest rates and exchange rates, the potential for a sustained low-interest rate environment, and the impact of economic uncertainty, asset valuation impacts from the transition to a lower carbon economy, derivative instruments not effectively hedging exposures arising from product guarantees, inflation and deflation and the performance of financial markets generally; global political uncertainties, including the potential for increased friction in cross-border trade and the exercise of executive powers to restrict trade, financial transactions, capital movements and/or investment; the policies and actions of regulatory authorities, including, in particular, the policies and actions of the HKIA, as our Group-wide supervisor, as well as new government initiatives generally; given its designation as an Internationally Active Insurance Group ("IAIG"), the impact on us of systemic risk and other group supervision policy standards adopted by the International Association of Insurance Supervisors; the impact of competition and fast-paced technological change; the effect on our business and results from, in particular, mortality and morbidity trends, lapse rates and policy renewal rates; the physical impacts of climate change and
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global health crises on our business and operations; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; the impact of internal transformation projects and other strategic actions failing to meet their objectives; the ability to complete a potential minority initial public offering of Jackson, or one of its related companies or other strategic options in relation to Jackson, or one of its related companies; the effectiveness of reinsurance for Prudential's businesses; the risk that our operational resilience (or that of our suppliers and partners) may prove to be inadequate, including in relation to operational disruption due to external events; disruption to the availability, confidentiality or integrity of Prudential's information technology, digital systems and data (or those of our suppliers and partners); any ongoing impact on us of the demerger of M&G plc; the impact of changes in capital, solvency standards, accounting standards or relevant regulatory frameworks, and tax and other legislation and regulations in the jurisdictions in which Prudential and its affiliates operate; the impact of legal and regulatory actions, investigations and disputes; and the impact of not adequately responding to environmental, social and governance issues. These and other important factors may, for example, result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits. Further discussion of these and other important factors that could cause Prudential's actual future financial condition or performance or other indicated results of the entity referred to in any forward-looking statements to differ, possibly materially, from those anticipated in Prudential's forward-looking statements can be found under the "Additional Information—Risk Factors" heading of Prudential's most recent annual report on Form 20-F filed with the SEC, as well as under the "Risk Factors" heading of any subsequent Prudential Half Year Financial Report furnished to the SEC on Form 6-K and incorporated by reference herein, and in any prospectus supplement accompanying this prospectus.
Any forward-looking statements contained in this prospectus, the documents incorporated by reference herein, and any accompanying prospectus supplements speak only as of the date on which they are made. Prudential expressly disclaims any obligation to update any of the forward-looking statements contained in this prospectus, the documents incorporated by reference herein, and any accompanying prospectus supplements or any other forward-looking statements it may make, whether as a result of future events, new information or otherwise except as required pursuant to the U.K. Prospectus Rules, the U.K. Listing Rules, the U.K. Disclosure and Transparency Rules, the Hong Kong Listing Rules, the SGX-ST listing rules or other applicable laws and regulations. Prudential may also make or disclose written and/or oral forward-looking statements in reports filed with or furnished to the SEC, and the U.K. Financial Conduct Authority (the "FCA") or other regulatory authorities, as well as in its annual re-port and accounts to shareholders, periodic financial reports to shareholders, proxy statements, offering circulars, registration statements, prospectuses and, prospectus supplements, press releases and other written materials and in oral statements made by directors, officers or employees of Prudential to third parties, including financial analysts. All such forward-looking statements are qualified in their entirety by reference to the factors discussed under the "Additional Information—Risk Factors" heading of Prudential's most recent annual report on Form 20-F filed with the SEC, as well as under the "Risk Factors" heading of any subsequent Prudential Half Year Financial Report furnished to the SEC on Form 6-K and incorporated by reference herein, and in any prospectus supplement accompanying this prospectus. These risk factors are not exhaustive as Prudential operates in a continually changing business environment with new risks emerging from time to time that it may be unable to predict or that it currently does not expect to have a material adverse effect on its business.
Prudential plc is an Asia-led portfolio of businesses focused on structural growth markets and has 20 million customers. The business helps people get the most out of life through life and health insurance, and retirement and asset management solutions. Prudential plc is incorporated in England and Wales. Prudential ordinary shares are listed on the Premium Listing segment of the Official List of
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the UK Listing Authority and traded on the London Stock Exchange under the symbol "PRU." Since 2010, Prudential ordinary shares have been listed on the Main Board of the Hong Kong Stock Exchange with the short name "PRU" and as a secondary listing on the Singapore Stock Exchange with the abbreviated name "PRU 500." Prudential's ADSs (as defined below) have been listed for trading on the New York Stock Exchange since 2000 under the symbol "PUK."
On October 21, 2019, Prudential completed the demerger of M&G plc (the Group's former UK and Europe savings and investments business) (the "Demerger"). Following the Demerger, Prudential is focused on structural growth markets in Asia, Africa and the United States.
Prudential is not affiliated in any manner with Prudential Financial, Inc. or its subsidiary, The Prudential Insurance Company of America, whose principal place of business is in the US, nor with The Prudential Assurance Company Limited, a subsidiary of M&G plc, a company incorporated in the UK.
Except as otherwise specified in any prospectus supplement, the net proceeds from the sale of the securities described in this prospectus will be used for our operations or for other general corporate purposes.
DESCRIPTION OF THE SENIOR DEBT SECURITIES
As required by U.S. federal law for all bonds and notes of companies that are publicly offered, our senior debt securities (the "Senior Debt Securities") will be issued under and governed by a document called an indenture. The senior indenture relating to the Senior Debt Securities is a contract between us, as issuer, and Citibank, N.A., as senior trustee. The senior trustee has two main roles:
- •
- first, the senior trustee can enforce the rights of holders of the Senior Debt Securities against us if we default. There are some limitations
on the extent to which the senior trustee acts on behalf of holders of the Senior Debt Securities, described under "—Defaults, Remedies and Waivers of Default"; and
- •
- second, the senior trustee performs administrative duties for us, such as sending interest payments and notices to the holders of the Senior Debt Securities.
The senior indenture and its associated documents, including any supplemental indenture relating to a particular series of Senior Debt Securities and the Senior Debt Securities in question, contain the full text of the matters summarized in this section and in your prospectus supplement. The senior indenture has been incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part, and any supplemental indentures relating thereto will be filed as exhibits to future filings with the SEC from time to time. See "Where You Can Find More Information" above for information on how to obtain copies.
The statements and descriptions in this prospectus or in any prospectus supplement regarding the provisions of the senior indenture and the Senior Debt Securities are summaries, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the senior indenture (together with any related amendments or supplements thereto) and the Senior Debt Securities themselves, including the definitions therein of certain terms. Although we will include in a supplement to this prospectus the specific terms of each series of Senior Debt Securities being offered, the senior indenture (together with any related amendments or supplements thereto) and the Senior Debt Securities themselves, and not any summary of the terms thereof, will govern the rights of holders of the Senior Debt Securities.
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General
The senior indenture does not limit the aggregate principal amount of Senior Debt Securities that we may issue thereunder. We may issue such securities from time to time in one or more series. All Senior Debt Securities of any one series need not be issued at the same time.
Your prospectus supplement will describe the specific terms of the series of Senior Debt Securities to which it relates, including some or all of the following terms:
- •
- the designation, authorized denominations and aggregate principal amount of the series of Senior Debt Securities;
- •
- the stated maturity of the series of Senior Debt Securities;
- •
- the price or prices at which the Senior Debt Securities will be originally issued, expressed as a percentage or percentages of the principal
amount of the Senior Debt Securities of the same series, and the original issue date or dates or periods during which the Senior Debt Securities may be issued;
- •
- the date or dates on which (or, if applicable, the range of dates within which) any payment of principal, interest or premium on the Senior
Debt Securities will be payable (or the manner of determining the same), and the record date for any such payment;
- •
- the place or places at which any payments on the Senior Debt Securities will be payable, where any transfer, conversion or exchange will occur
and where notice or demands to or upon us may be served;
- •
- if interest is payable, the interest rate or rates, or how the interest rate or rates may be determined;
- •
- the terms and conditions of any mandatory or optional redemption, repayment or repurchase of the Senior Debt Securities, including, if
applicable, notice requirements, legal and regulatory requirements, redemption, repayment or repurchase dates, periods and prices or amounts;
- •
- the manner in which the amount of any payments on the Senior Debt Securities may be determined by reference to an index or formula, or other
reference asset or factors;
- •
- the amount, or how to determine the amount, that we will pay if the Senior Debt Securities are redeemed before their stated maturity or
accelerated;
- •
- provisions, if any, for the satisfaction or discharge of the Senior Debt Securities, or a statement that no such provisions apply;
- •
- any mandatory or optional sinking funds or analogous provisions;
- •
- the terms and conditions, if any, under which the Senior Debt Securities may or will be converted into or exchanged for other specified
securities, whether issued by Prudential or otherwise;
- •
- if applicable, the circumstances under which we will pay additional amounts on any Senior Debt Securities as a result of deduction or
withholding of tax and under which we may redeem the Senior Debt Securities of the series if we have to pay additional amounts;
- •
- any other terms or conditions applicable to payment of any principal, interest or premium on the Senior Debt Securities;
- •
- any notices to legal or regulatory authorities or consents from legal and regulatory authorities that comprise part of, or are required in order to give effect to, the terms of the Senior Debt Securities of the series;
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- •
- any addition to, elimination of or other change in the events of default or other events permitting remedies that apply to the Senior Debt
Securities, and the remedies available following the occurrence thereof;
- •
- whether the Senior Debt Securities of the series will be issued in whole or in part as one or more global securities and, if so issued, the
conditions that must be satisfied before we will issue the Senior Debt Securities in definitive form;
- •
- any listing of the Senior Debt Securities on a securities exchange;
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- the form of the Senior Debt Securities of the series (including the terms and conditions of such Senior Debt Securities);
- •
- any restrictions applicable to the offer, sale and delivery of the Senior Debt Securities;
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- the material tax consequences of acquiring, owning and disposing of the Senior Debt Securities under U.S. federal and U.K. income tax laws; and
- •
- any other terms of the series of Senior Debt Securities, including any addition to, elimination of or other change to the definitions or covenants or to any other terms or conditions set forth in the senior indenture.
Unless otherwise indicated in your prospectus supplement, holders of the Senior Debt Securities will not be entitled to any voting rights except as otherwise described herein.
Unless otherwise indicated in your prospectus supplement, the provisions of the senior indenture (together with any related amendments or supplements thereto) and the Senior Debt Securities themselves do not afford holders of the Senior Debt Securities protection in the event of a highly leveraged or other transaction involving us that might adversely affect them.
Legal Ownership and Form
Unless the applicable prospectus supplement provides otherwise, we will issue Senior Debt Securities registered in the name of holders as set out in the books of a security registrar (i.e., in "registered form"). Our obligations, as well as the obligations of the senior trustee and those of any third parties employed by us or the senior trustee, run only to persons who are registered as holders of the Senior Debt Securities.
Investors who hold Senior Debt Securities in accounts with banks or brokers will generally not be recognized by us as legal holders of the Senior Debt Securities. This is called holding in "street name". Instead, we would recognize only the bank or broker, or the financial institution the bank or broker uses to hold its Senior Debt Securities, as legal holders. These intermediary banks, brokers and other financial institutions pass along principal, interest and other payments, either because they agree to do so in their customer agreements or because they are legally required to do so. As noted above, we do not have obligations to an investor who holds in street name or other indirect means, either because the investor chooses to hold Senior Debt Securities in that manner or because the Senior Debt Securities are issued in the form of global securities as described below. For example, once we make payment to the registered holder, we have no further responsibility for the payment even if that holder is legally required to pass the payment along to the investor as a street name customer but does not do so.
A global security is a special type of indirectly held security. If Senior Debt Securities in registered form are represented by one or more global securities, we will require that such global securities be registered in the name of a financial institution we select and not be transferred to the name of any other direct holder unless certain special circumstances described in the section "Global Securities" occur. The financial institution that acts as the sole direct holder of the global security is called the
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depositary. Any person wishing to own a beneficial interest in a global security must do so indirectly by virtue of an account with a broker, bank or other financial institution that in turn has an account with the depositary. The rights of these indirect owners will be governed solely by the applicable procedures of the depositary and its participants. Unless the applicable prospectus supplement provides otherwise, Senior Debt Securities in registered form will be represented by interests in one or more global securities.
Global securities are further discussed in the section "Global Securities" in this prospectus.
Please note that when we refer to "holders" in this "Description of the Senior Debt Securities", we mean direct holders of the Senior Debt Securities and not street name or other indirect holders of the Senior Debt Securities. When we refer to "you" in this "Description of the Senior Debt Securities", we mean those who invest in the Senior Debt Securities being offered, whether they are the holders or only indirect owners of those securities.
Status of the Senior Debt Securities
The Senior Debt Securities will constitute our direct unsubordinated and (subject to the provisions set forth under "—Senior Debt Securities—Negative Pledge" below) unsecured obligations. In each case, these obligations shall be without any preference among themselves and will rank at least equally with all of our other unsecured and unsubordinated obligations. This will be subject to such exceptions as are from time to time applicable under the laws of the United Kingdom and to laws or legal procedures of general applicability relating to or affecting creditors' rights. Other unsecured and unsubordinated indebtedness may contain covenants, events of default and other provisions that are different from or which are not contained in the Senior Debt Securities.
Senior Debt Securities—Negative Pledge
So long as any Senior Debt Securities remain outstanding, we will not create or permit to exist any mortgage or charge upon the whole or any part of our undertaking or assets (other than assets representing the fund or funds we maintain in respect of long-term business (as defined in the Financial Services and Markets Act 2000 of the United Kingdom)), present or future, to secure payment of any of our present or future Relevant indebtedness (as defined below), or the present or future Relevant indebtedness (as defined below) of any of our Subsidiaries (as defined below), or to secure any guarantee or indemnity in respect thereof, without at the same time securing such outstanding Senior Debt Securities and all amounts payable under the senior indenture in respect thereof equally and ratably with the same security as is created or subsisting to secure any such Relevant indebtedness, guarantee or indemnity, or such other security as shall be approved by the holders of at least 75% in principal amount of the outstanding Senior Debt Securities of that series.
"Subsidiary" means, for the purposes of this "—Senior Debt Securities—Negative Pledge" section, a company that is a subsidiary of Prudential, within the meaning of Section 1159 of the Companies Act 2006 of the United Kingdom (the "Companies Act 2006") ("Section 1159"). Section 1159 provides that a company will be our subsidiary where:
- •
- we hold the majority of its voting rights,
- •
- we are a member of it and have the right to appoint or remove a majority of its board of directors,
- •
- we are a member of it and control alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it, or
- •
- such company is a subsidiary of a company that is our subsidiary.
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"Relevant indebtedness" means any indebtedness for borrowed money (other than indebtedness in the form of sterling debenture stock (as defined in the senior indenture) or indebtedness that has a stated maturity not exceeding one year) which is in the form of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities that, with our agreement or the agreement of any relevant Subsidiary (as defined above), as the case may be, are quoted, listed, dealt in or traded on a stock exchange or over the counter or other recognized securities market (whether or not distributed by way of private placement), excluding any indebtedness for borrowed money in respect of which the person to whom such indebtedness is owed has no recourse whatsoever to us , as the case may be, for repayment other than recourse for amounts limited to the cash flow or net cash flow (other than historic cash flow or historic net cash flow) from such asset.
Defaults, Remedies and Waivers of Default
Defaults and Remedies
Unless the applicable prospectus supplement provides otherwise, an "event of default" with respect to each series of Senior Debt Securities shall result if:
- 1.
- we
do not pay any principal (or premium, if any) on any Senior Debt Securities of that series on the due date for payment, or default is made on the payment of
interest, and, in each case, such default continues for a period of 14 days from the due date for payment;
- 2.
- any
covenant or warranty in the senior indenture (other than as stated above with respect to payments when due) has been breached in any material respect and that
breach has not been remedied within 30 days of receipt by us of a written notice from the senior trustee, or receipt by us and the senior trustee of written notice of such breach from holders
of at least 25% in aggregate principal amount of the outstanding Senior Debt Securities of that series, requiring that the breach be remedied;
- 3.
- either
a court of competent jurisdiction issues an order that is not successfully appealed within 30 days, or an effective shareholders' resolution is validly
adopted, for our winding up;
- 4.
- we
stop or threaten to stop payments to creditors generally or we cease or threaten to cease to carry on our business or substantially the whole of our business
(except for the purposes of, or in connection with, a reconstruction or amalgamation the terms of which have previously been approved in writing by the holders of at least 75% in aggregate principal
amount of the outstanding Senior Debt Securities of that series);
- 5.
- an
encumbrancer takes possession or an administrative or other receiver or an administrator is appointed of the whole or any substantial part of our undertaking,
property and assets, or if a distress or execution is levied or enforced upon or sued out against the whole or any substantial part of our chattels and, in the case of any of the foregoing events, is
not discharged within 60 days;
- 6.
- we
are unable to pay debts within the meaning of Section 123(2) of the Insolvency Act 1986 of the United Kingdom; or
- 7.
- our indebtedness for moneys borrowed (as defined below), which indebtedness in respect of any single company has an outstanding aggregate principal amount of at least £30,000,000 (or its equivalent in any other currency or currencies) is not paid on its due date as extended by any applicable grace period and following a demand therefor, or is declared to be or automatically becomes, due and payable prior to its stated maturity by reason of default or if any guarantee or indemnity in respect of indebtedness for moneys borrowed of any third party that we have given (having in respect of any single company an outstanding aggregate
9
principal amount as aforesaid) is not honored when due and called upon and, in any such case, our liability to make payment is not being contested in good faith.
"Indebtedness for moneys borrowed" means the principal amount of (i) all moneys borrowed and (ii) all debentures (together in each case with any fixed or minimum premium payable on final redemption or repayment) that neither we nor any of our Subsidiaries beneficially owns for the time being.
If an event of default occurs and is continuing, the senior trustee or the holders of at least 25% of the aggregate principal amount of the outstanding Senior Debt Securities of that series may declare by a notice in writing to us (and to the senior trustee if given by the holders of the Senior Debt Securities):
- •
- the entire principal amount of (including premium, if any, on) (or, in the case of discounted securities, a lesser amount specified in your
prospectus supplement) of all such Senior Debt Securities; and
- •
- if specified in your prospectus supplement, any accrued but unpaid interest payments thereon,
to be due and payable immediately. This is called an acceleration of the maturity. If the maturity of any Senior Debt Securities has been accelerated, but a judgment for payment has not yet been obtained, the holders of a majority in aggregate principal amount of the outstanding Senior Debt Securities of the affected series may, under certain circumstances, cancel the acceleration.
If an event of default occurs, the senior trustee will have certain additional duties. In that situation, the senior trustee will be obligated to use its rights and powers under the senior indenture, and to use the same degree of care and skill in its exercise of the rights and powers vested in it by the senior indenture, as a prudent person would exercise under the circumstances in the conduct of such person's own affairs.
The senior trustee will be under no obligation to exercise any of its rights or powers under the senior indenture at the request of any holder of Senior Debt Securities, unless such holder shall have offered to the senior trustee indemnity and/or security satisfactory to the senior trustee against any loss, liability or expense, and then only to the extent required by the terms of the senior indenture. Subject to these senior indenture provisions for the indemnification of the senior trustee, the holder(s) of a majority in aggregate principal amount of the outstanding Senior Debt Securities of any series will, subject to certain limitations, have the right to direct the time, method and place of conducting any proceeding seeking any remedy available to the senior trustee.
Unless the applicable prospectus supplement provides otherwise, before holders are allowed to bypass the senior trustee and bring their own lawsuit or other formal legal action or take other steps to enforce their rights or protect their interests relating to the Senior Debt Securities, all of the following must generally occur:
- •
- such holders must give the senior trustee written notice that an event of default has occurred, and the event of default must not have been
cured or waived;
- •
- holders of at least 25% of the aggregate principal amount of the outstanding Senior Debt Securities of that series must make a written request
that the senior trustee take action because of the event of default, and they or other holders must offer to the senior trustee indemnity and/or security satisfactory to the senior trustee against the
cost and other liabilities of taking that action;
- •
- the senior trustee must not have taken action for 60 days after the above steps have been taken; and
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- •
- during those 60 days, the holders of a majority of the aggregate principal amount of the outstanding Senior Debt Securities of that series must not have given the senior trustee directions that are inconsistent with the written request of the holders of at least 25% of the aggregate principal amount of the outstanding Senior Debt Securities of that series.
Notwithstanding these limitations, nothing will impair the right of a holder of the Senior Debt Securities to institute suit for the enforcement of payment of the principal of (and premium, if any, on) and interest, if any, on such Senior Debt Securities on or after the respective stated maturities, if any, thereof, as provided in the senior indenture or the Senior Debt Securities.
The senior trustee will, within 90 days of a default with respect to the Senior Debt Securities of any series, give to each holder of the Senior Debt Securities of the affected series notice of any default it knows about, unless the default has been cured or waived. However, except in the case of a default in the payment of the principal of (or premium, if any), or interest, if any, on the affected Senior Debt Securities, the senior trustee will be entitled to withhold such notice if it determines in good faith that withholding of the notice is in the interest of the holder(s) of such series.
We Will Give the Senior Trustee Information about Defaults Annually
We will furnish the senior trustee with an annual certificate of certain of our officers certifying, to the best of their knowledge, whether we are, or have been, in default and specifying the nature and status of any such default. In addition, we are required to provide the senior trustee with written notice within five days of our becoming aware of any event of default, or event that could mature into an event of default, under the senior indenture.
Waivers of Certain Defaults
The holders of not less than a majority in aggregate principal amount of the outstanding Senior Debt Securities of a particular affected series may generally also waive any events of default. If this happens, the relevant event of default will be treated as if it had not occurred. No one, however, can waive defaults by us in the payment of the principal of (and premium, if any, on) and interest, if any, on any such Senior Debt Securities or in respect of a covenant or a provision that under the senior indenture (together with any related amendments or supplements thereto) cannot be modified or amended without the consent of each holder of the outstanding Senior Debt Securities of such a series.
Consolidation, Merger and Sale or Lease of Assets
Unless otherwise indicated in your prospectus supplement, we may, without the consent of the holders of any Senior Debt Securities, consolidate with or merge into or transfer or lease our properties and assets substantially as an entirety, provided that any successor corporation formed by any such consolidation or merger or any such transferee or lessee of our assets is a corporation or other person organized and validly existing under the laws of a member country of the Organisation for Economic Co-operation and Development that assumes our obligations on the Senior Debt Securities and the senior indenture, and a number of other conditions are met.
Note that any such conditions will apply only if we wish to merge or consolidate with another entity or sell our assets substantially as an entirety to another entity. We will not need to satisfy these conditions if we enter into other types of transactions, including any transaction in which we acquire the securities or assets or another entity, any transaction that involves a change of control of Prudential but in which we do not merge or consolidate, and any transaction in which we sell less than substantially all our assets.
11
Modifications
Under certain circumstances, we can make changes to the senior indenture and the Senior Debt Securities. The following three types of changes are possible.
Changes Requiring Approval by each Holder
The first type of change comprises changes that cannot be made without the specific approval of each holder of each affected series of Senior Debt Securities. These include changes that:
- •
- change the stated maturity of the principal, any installment of principal or any interest on any Senior Debt Security;
- •
- reduce the rate or amount of any interest;
- •
- reduce the principal or any premium payable on redemption;
- •
- change the place of payment;
- •
- change the right of holders to waive an existing default by majority vote;
- •
- impair the right to sue for payment;
- •
- reduce the percentage of holders who must consent to a waiver or amendment of the senior indenture or the waiver of defaults; and
- •
- make any change to the list of changes that requires the approval of each holder, including the foregoing.
Changes Requiring Majority Approval
The second type of change comprises changes that require approval by the holders of more than 50% of the aggregate principal amount of the outstanding Senior Debt Securities of each affected series. Most changes fall into this category, except for those described under "—Changes Requiring Approval by each Holder" above and "—Changes Not Requiring Approval" below.
Changes Not Requiring Approval
The third type of change does not require any approval by holders of Senior Debt Securities. This type is limited to clarifications and other changes that would not adversely affect holders of the Senior Debt Securities in any material respect.
Waivers of Certain Covenants
Our obligations to comply with certain restrictive covenants in the senior indenture pertaining to corporate existence and maintenance of certain agencies or as pertain to the negative pledge covenant described under "—Senior Debt Securities—Negative Pledge" above may be waived by holders of not less than a majority in aggregate principal amount (or any greater requisite amount, as the case may be) of the outstanding Senior Debt Securities of each affected series. See also the discussion in "—Defaults, Remedies and Waivers of Default—Waivers of Certain Defaults" with respect to the ability of holders to waive events of default.
Further Issuances
We may from time to time, without notice to or the consent of the holders of the outstanding Senior Debt Securities of a series, create and issue under the applicable indenture (together with any related amendments or supplements thereto) further Senior Debt Securities of such series ranking pari passu with such outstanding Senior Debt Securities in all respects (or in all respects except for the
12
payment of interest accruing prior to the issue date of such further Senior Debt Securities or except for the first payment of interest following the issue date of such further Senior Debt Securities) and so that any further Senior Debt Securities of such series shall be consolidated and form a single series with the outstanding Senior Debt Securities of such series and shall have the same terms as to status, redemption or otherwise as such outstanding Senior Debt Securities.
Notices
Notices to holders of Senior Debt Securities in registered form will be given by mail to the addresses of such holders as they appear in the security register, or, in the case of Senior Debt Securities held by a depositary, in accordance with the applicable procedures of the depositary, or in any other permitted manner specified in your prospectus supplement.
Title
We, the senior trustee and any of our agents or any agents of the senior trustee may treat the registered owner of any Senior Debt Security in registered form as the absolute owner thereof (whether or not such security shall be overdue and notwithstanding any notice to the contrary) for the purpose of making payment and for all other purposes.
Consent to Service; Jurisdiction
We have appointed Jackson National Life Insurance Company at 1 Corporate Way, Lansing, Michigan 48951, as our authorized agent for service of process in any suit or proceeding to which we are party arising out of or relating to the Senior Debt Securities or the senior indenture that may be instituted in any federal or state court in the Borough of Manhattan in New York City and have submitted to the jurisdiction of those courts. Notwithstanding the foregoing, actions relating to the Senior Debt Securities or the senior indenture may (subject to the limitations on enforcement described in this prospectus and, if applicable, in your prospectus supplement) be instituted by the holder of any Senior Debt Security in any competent court in England and Wales.
Governing Law
The senior indenture and the Senior Debt Securities will be governed by and construed in accordance with the laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
As required by U.S. federal law for all bonds and notes of companies that are publicly offered, our subordinated debt securities (the "Subordinated Debt Securities") will be issued under and governed by a document called an indenture. The subordinated indenture relating to the Subordinated Debt Securities is a contract between us, as issuer, and Citibank, N.A., as subordinated trustee. The subordinated trustee has two main roles:
- •
- first, the subordinated trustee can enforce the rights of holders of the Subordinated Debt Securities against us if we default. There are some
limitations on the extent to which the subordinated trustee acts on behalf of holders of the Subordinated Debt Securities, described under "—Defaults, Remedies and Waivers of Default"; and
- •
- second, the subordinated trustee performs administrative duties for us, such as sending interest payments and notices to holders of the Subordinated Debt Securities.
The subordinated indenture and its associated documents, including any supplemental indenture relating to a particular series of Subordinated Debt Securities and the Subordinated Debt Securities themselves, contain the full text of the matters summarized in this section and your prospectus
13
supplement. The subordinated indenture has been incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part, and any supplemental indentures relating thereto will be filed as exhibits to future filings with the SEC from time to time. See "Where You Can Find More Information" above for information on how to obtain copies.
The statements and descriptions in this prospectus or in any prospectus supplement regarding provisions of the subordinated indenture and the Subordinated Debt Securities are summaries, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the subordinated indenture (together with any related amendments or supplements thereto) and the Subordinated Debt Securities themselves, including the definitions therein of certain terms. Although we will include in a supplement to this prospectus the specific terms of each series of Subordinated Debt Securities being offered, the subordinated indenture (together with any related amendments or supplements thereto) and the Subordinated Debt Securities themselves, and not any summary of the terms thereof, will govern the rights of holders of the Subordinated Debt Securities.
General
The subordinated indenture does not limit the aggregate principal amount of Subordinated Debt Securities that we may issue thereunder. We may issue such securities from time to time in one or more series. All Subordinated Debt Securities of any one series need not be issued at the same time.
Your prospectus supplement will describe the specific terms of the series of Subordinated Debt Securities to which it relates, including some or all of the following terms:
- •
- the designation, authorized denominations and aggregate principal amount of the series of Subordinated Debt Securities;
- •
- the subordination provisions applicable to the Subordinated Debt Securities and the ranking of the Subordinated Debt Securities in relation to
other senior and subordinated debt securities of Prudential;
- •
- the price or prices at which the Subordinated Debt Securities will be originally issued, expressed as a percentage or percentages of the
principal amount of the Subordinated Debt Securities of the same series, and the original issue date or dates or periods during which the Subordinated Debt Securities may be issued;
- •
- the date or dates on which (or, if applicable, the range of dates within which) any payment of principal, interest or premium on the
Subordinated Debt Securities will be payable (or the manner of determining the same), and the record date for any such payment;
- •
- the place or places at which any payments on the Subordinated Debt Securities will be payable, where any transfer, conversion or exchange will
occur and where notice or demands to or upon us may be served;
- •
- if interest is payable, the interest rate or rates, or how the interest rate or rates may be determined;
- •
- the terms and conditions, if any, under which interest or other payments may or will be deferred or cancelled;
- •
- the terms and conditions, if any, under which interest or other payments may or will be paid through the direct issuance or grant of other specified securities, whether issued by Prudential or
whether the Subordinated Debt Securities are dated securities, with a stated maturity or date fixed for redemption (and, if applicable, that stated maturity or date fixed for redemption), or perpetual securities, with no stated maturity or date fixed for redemption;
14
- •
- the terms and conditions of any mandatory or optional redemption, repayment or repurchase of the Subordinated Debt Securities, including, if
applicable, notice requirements, legal and regulatory requirements, redemption, repayment or repurchase dates, periods and prices or amounts;
- •
- if applicable, the circumstances in which we will not be able to redeem or purchase any Subordinated Debt Securities as a result of the fact we
are not in compliance with an applicable regulatory capital requirement, minimum capital requirement and/or solvency capital requirement or a solvency requirement;
- •
- the manner in which the amount of any payments on the Subordinated Debt Securities may be determined by reference to an index or formula, or
other reference asset or factors;
- •
- the amount, or how to determine the amount, that we will pay if the Subordinated Debt Securities are redeemed before their stated maturity or
accelerated;
- •
- provisions, if any, for the satisfaction or discharge of the Subordinated Debt Securities, or a statement that no such provisions apply;
- •
- any mandatory or optional sinking funds or analogous provisions;
- •
- the terms and conditions, if any, under which the Subordinated Debt Securities may or will be converted into or exchanged for Preference Shares
or other specified securities, whether issued by Prudential or otherwise;
- •
- the terms and conditions, if any, under which we may elect to vary the terms of the Subordinated Debt Securities;
- •
- any mechanism to effect a temporary or permanent reduction in the principal amount outstanding of the Subordinated Debt Securities of that
series;
- •
- if applicable, the circumstances under which we will pay additional amounts on any Subordinated Debt Securities as a result of deduction or
withholding of tax and under which we may redeem the Subordinated Debt Securities of the series if we have to pay additional amounts;
- •
- any other terms or conditions applicable to payment of any principal, interest or premium on the Subordinated Debt Securities;
- •
- any notices to legal or regulatory authorities or consents from legal and regulatory authorities that comprise part of, or are required in
order to give effect to, the terms of the Subordinated Debt Securities of the series;
- •
- any events of default, defaults, solvency events or other events permitting remedies that apply to the Subordinated Debt Securities of the
series, and the remedies available following the occurrence thereof;
- •
- whether the Subordinated Debt Securities of the series will be issued in whole or in part as one or more global securities and, if so issued,
the conditions that must be satisfied before we will issue the Subordinated Debt Securities in definitive form;
- •
- any listing of the Subordinated Debt Securities on a securities exchange;
- •
- the form of the Subordinated Debt Securities of the series (including the terms and conditions of such Subordinated Debt Securities);
otherwise, or by using funds raised through the issuance of Prudential's ordinary shares or other specified securities;
15
- •
- any restrictions applicable to the offer, sale and delivery of the Subordinated Debt Securities;
- •
- the material tax consequences of acquiring, owning and disposing of the Subordinated Debt Securities under U.S. federal and U.K. income tax
laws;
- •
- any limitations on the payment of principal, interest or premium imposed by legal or regulatory requirements and/or any legal or regulatory
approvals that may be required for any such payment; and
- •
- any other terms of the series of Subordinated Debt Securities, including any addition to, elimination of or other change to the definitions or covenants or to any other terms or conditions set forth in the subordinated indenture.
Unless otherwise indicated in your prospectus supplement, holders of the Subordinated Debt Securities will not be entitled to any voting rights except as otherwise described herein.
Unless otherwise indicated in your prospectus supplement, the provisions of the subordinated indenture (together with any related amendments or supplements thereto) and the Subordinated Debt Securities themselves do not afford holders of the Subordinated Debt Securities protection in the event of a highly leveraged or other transaction involving us that might adversely affect them.
Legal Ownership and Form
Unless the applicable prospectus supplement provides otherwise, we will issue Subordinated Debt Securities registered in the name of holders as set out in the books of a security registrar (i.e., in "registered form"). Our obligations, as well as the obligations of the subordinated trustee and those of any third parties employed by us or the subordinated trustee, run only to persons who are registered as holders of the Subordinated Debt Securities.
Investors who hold Subordinated Debt Securities in accounts with banks or brokers will generally not be recognized by us as legal holders of the Subordinated Debt Securities. This is called holding in "street name". Instead, we would recognize only the bank or broker, or the financial institution the bank or broker uses to hold its Subordinated Debt Securities, as legal holders. These intermediary banks, brokers and other financial institutions pass along principal, interest and other payments, either because they agree to do so in their customer agreements or because they are legally required to do so. As noted above, we do not have obligations to an investor who holds in street name or other indirect means, either because the investor chooses to hold Subordinated Debt Securities in that manner or because the Subordinated Debt Securities are issued in the form of global securities as described below. For example, once we make payment to the registered holder, we have no further responsibility for the payment even if that holder is legally required to pass the payment along to the investor as a street name customer but does not do so.
A global security is a special type of indirectly held security. If Subordinated Debt Securities in registered form are represented by one or more global securities, we will require that such global securities be registered in the name of a financial institution we select, and not be transferred to the name of any other direct holder unless certain special circumstances described in the section "Global Securities" occur. The financial institution that acts as the sole direct holder of the global security is called the depositary. Any person wishing to own a beneficial interest in a global security must do so indirectly by virtue of an account with a broker, bank or other financial institution that in turn has an account with the depositary. The rights of these indirect owners will be governed solely by the applicable procedures of the depositary and its participants. Unless the applicable prospectus supplement provides otherwise, Subordinated Debt Securities in registered form will be represented by interests in one or more global securities.
Global securities are further discussed in the section "Global Securities" in this prospectus.
16
Please note that when we refer to "holders" in this "Description of the Subordinated Debt Securities", we mean direct holders of the Subordinated Debt Securities and not street name or other indirect holders of the Subordinated Debt Securities. When we refer to "you" in this "Description of the Subordinated Debt Securities", we mean those who invest in the Subordinated Debt Securities being offered, whether they are the holders or only indirect owners of those securities.
Status of the Subordinated Debt Securities
The Subordinated Debt Securities will constitute our direct, subordinated and unsecured obligations. If we become bankrupt or are wound-up or liquidated in England and Wales, the rights of the holders of Subordinated Debt Securities of a particular series will be subordinate in right of payment to the prior payment in full of all claims of "senior creditors" in respect of that series. Unless otherwise specified in your prospectus supplement, the Subordinated Debt Securities do not have the benefit of any negative pledge covenant.
The term "senior creditors" includes all holders of our unsubordinated obligations or the unsubordinated obligations of any Subsidiary or other entity that under IFRS is treated as a member of the insurance group to which we belong (including holders of all our or such Subsidiary's or other entity's Senior Debt Securities, policyholders, policyholder claims and policy beneficiaries). It may also include holders of Subordinated Debt Securities of different series, holders of our other subordinated obligations (whether actual of contingent) and holders of certain classes of our share capital. Your prospectus supplement will define "senior creditors" for the series of Subordinated Debt Securities to which it relates.
As a result of the foregoing, in the event of any such bankruptcy, winding up or liquidation in England and Wales, our claimants who hold the more senior claims described above may recover more, ratably, than holders of the Subordinated Debt Securities. You should be aware that there are currently no limitations on our ability to issue or guarantee indebtedness that would constitute claims of "senior creditors".
Defaults, Remedies and Waivers of Default
Defaults and Remedies
If any "event of default" that applies to a series of Subordinated Debt Securities occurs and is continuing, the subordinated trustee or the holders of at least 25% of the aggregate principal amount of the outstanding Subordinated Debt Securities of that series may declare:
- •
- the entire principal amount of (including premium, if any, on) (or, in the case of Discounted Securities, a lesser amount specified in your
prospectus supplement) of all such Subordinated Debt Securities; and
- •
- if specified in your prospectus supplement, any accrued but unpaid interest payments (including, if so specified, any deferred interest) thereon,
to be due and payable immediately. This is called an acceleration of the maturity. If the maturity of any Subordinated Debt Securities has been accelerated, but a judgment for payment has not yet been obtained, the holders of a majority in aggregate principal amount of the outstanding Subordinated Debt Securities of the affected series may, under certain circumstances, cancel the acceleration.
Unless otherwise indicated in your prospectus supplement, no event or circumstance relating to our payment obligations on a series of Subordinated Debt Securities, including any failure or inability on our part to make such payments when due and payable, will constitute an "event of default" or permit the subordinated trustee or any holders thereof to accelerate the maturity of the Subordinated Debt Securities of that series in the manner discussed above. Your prospectus supplement will specify
17
whether one or more events of default apply to the Subordinated Debt Securities to which it relates and describe those events of default, if any.
Events or circumstances relating to our payment obligations on any series of Subordinated Debt Securities that may permit the subordinated trustee to exercise remedies against us will be referred to in the related prospectus supplement using a term or terms other than "event of default". In general, we expect that such events or circumstances will fall into one of two categories:
- •
- those which may, if specified conditions are met, permit the subordinated trustee to commence a proceeding in England and Wales (but not
elsewhere) for our winding up and/or a proceeding for the collection of the sums due and unpaid; or
- •
- those which may, if specified conditions are met, permit the subordinated trustee to commence a proceeding in England and Wales (but not elsewhere) for our winding up, but to exercise no other legal remedy.
In this prospectus, we refer to the first type of event or circumstance as a "default" and to the second type of event or circumstance as a "solvency event". We may use different terms to describe defaults and solvency events in your prospectus supplement, including, in the case of defaults, "payment defaults", "dated security defaults", "perpetual security defaults", "capital defaults" or "capital security defaults", or other like terms, and, in the case of solvency events, "payment events", "capital events" or "subordinated capital events", or other like terms.
Your prospectus supplement will specify whether one more defaults or solvency events apply to the Subordinated Debt Securities to which it relates and describe those defaults and/or solvency events, if any, as well as the remedies available following the occurrence thereof.
Notwithstanding the above, it will not be a default or solvency event in respect of a series of Subordinated Debt Securities if a payment of principal or interest is not made:
- •
- in order to comply with a statute, regulation or order of any court of competent jurisdiction; or
- •
- where there is doubt as to the validity or applicability of any such statute, regulation or order, if we act on the advice given to us and to the subordinated trustee, in the form of a legal opinion acceptable to the subordinated trustee.
In the second case, however, the subordinated trustee may, by notice to us, require us to take action, including proceedings for a court declaration, to resolve the doubt, if counsel advises that the action is appropriate and reasonable. In this case, we will proceed with the action promptly and be bound by any final resolution of the doubt. If the action results in a determination that we can make the relevant payment without violating any statute, regulation or order then the payment shall become due and payable immediately after the subordinated trustee gives us written notice informing it of the determination.
In addition, your prospectus supplement will describe the manner in and the extent to which proceedings may be instituted or other actions taken to enforce any of our "performance obligations" in respect of any series of Subordinated Debt Securities or the subordinated indenture if we fail to perform or observe such performance obligations for a specified period of time; provided that we shall not as a consequence of any such proceedings or other actions be obliged to pay any sum or sums representing or measured by reference to the principal or interest in respect of the Subordinated Debt Securities of the applicable series sooner than the same would otherwise have been due and payable. When we refer to "performance obligations" in this context, we mean any of our obligations or covenants under the applicable series of Subordinated Debt Securities or the subordinated indenture other than any obligation or covenant (i) with respect to the payment of any principal or interest on the Subordinated Debt Securities of such series or (ii) which has expressly been included in the subordinated indenture solely for the benefit of Subordinated Debt Securities other than the
18
Subordinated Debt Securities of such series, for a specified period of time. Your prospectus supplement will also specify any notifications or other steps that may be required before any proceedings may be instituted or other actions taken, as well as any other applicable limitations on remedies, in respect of Subordinated Debt Securities of the applicable series.
If an event of default, default, solvency event or breach of a performance obligation occurs, the subordinated trustee will have certain additional duties. In those situations, the subordinated trustee will be obligated to use its rights and powers under the subordinated indenture, and to use the same degree of care and skill in its exercise of the rights and powers vested in it by the subordinated indenture, as a prudent person would exercise under the circumstances in the conduct of such person's own affairs.
The subordinated trustee will be under no obligation to exercise any of its rights or powers under the subordinated indenture at the request of any holder of Subordinated Debt Securities, unless such holder shall have offered to the subordinated trustee indemnity and/or security satisfactory to the subordinated trustee against any loss, liability or expense, and then only to the extent required by the terms of the subordinated indenture. Subject to these subordinated indenture provisions for the indemnification of the subordinated trustee, the holder(s) of a majority in aggregate principal amount of the outstanding Subordinated Debt Securities of any series will, subject to certain limitations, have the right to direct the time, method and place of conducting any proceeding seeking any remedy available to the subordinated trustee.
Unless the applicable prospectus supplement provides otherwise, before holders are allowed to bypass the subordinated trustee and bring their own lawsuit or other formal legal action or take other steps to enforce their rights or protect their interests relating to the Subordinated Debt Securities, all of the following must generally occur:
- •
- such holders must give the subordinated trustee written notice that an event of default, default or solvency event or breach of a performance
obligation has occurred, and such event of default, default, solvency event or breach of a performance obligation must not have been cured or waived;
- •
- holders of at least 25% of the aggregate principal amount of the outstanding Subordinated Debt Securities of that series must make a written
request that the subordinated trustee take action because of the event of default, default, solvency event or breach of a performance obligation and they or other holders must offer to the
subordinated trustee indemnity and/or security satisfactory to the subordinated trustee against the cost and other liabilities of taking that action;
- •
- the subordinated trustee must not have taken action for 60 days after the above steps have been taken; and
- •
- during those 60 days, the holders of a majority of the aggregate principal amount of the outstanding Subordinated Debt Securities of that series must not have given the subordinated trustee directions that are inconsistent with the written request of the holders of at least 25% of the aggregate principal amount of the outstanding Subordinated Debt Securities of that series.
Notwithstanding these limitations, nothing will impair the right of a holder of the Subordinated Debt Securities to institute suit for the enforcement of payment of the principal of (and premium, if any, on) and interest, if any, on such Subordinated Debt Securities on or after the respective stated maturities, if any, thereof, or on the date any such payment is otherwise due and payable as provided in the subordinated indenture or the Subordinated Debt Securities.
In the event, however, that payment of the principal of (and premium, if any, on) and interest, if any, on any series of Subordinated Debt Securities is deferred or cancelled in accordance with any deferral or cancellation provisions described in your prospectus supplement, such amounts will not be
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due and payable, and we will not have to make the relevant payments, on the dates that such amounts would otherwise have been due and payable.
The subordinated trustee will, within 90 days of an event of default, default, solvency event or breach of a performance obligation with respect to Subordinated Debt Securities of any series, give to each holder of the Subordinated Debt Securities of the affected series notice of any such event of default, default or solvency event it knows about, unless such event of default, default or solvency event has been cured or waived. However, except in the case of a default in the payment of the principal of (or premium, if any), or interest, if any, on the affected Subordinated Debt Securities, the subordinated trustee will be entitled to withhold such notice if it determines in good faith that withholding of the notice is in the interest of the holder(s) of such series.
No Set-off or Counterclaim
By acceptance of the Subordinated Debt Securities, holders of the Subordinated Debt Securities and the subordinated trustee, on behalf of such holders, will be deemed to have waived any right of set-off or counterclaim that such holders might otherwise have against us whether prior to or in any bankruptcy or winding up. Notwithstanding the preceding sentence, if any of the rights and claims of any holder of Subordinated Debt Securities are discharged by set-off, such holder will immediately pay an amount equal to the amount of such discharge to us or, if applicable, the liquidator or subordinated trustee or receiver in our bankruptcy and, until such time as payment is made, will hold a sum equal to such amount in trust for us or, if applicable, the liquidator or subordinated trustee or receiver in our bankruptcy. Accordingly, such discharge will be deemed not to have taken place.
We Will Give the Subordinated Trustee Information about Defaults Annually
We will furnish the subordinated trustee with an annual certificate of certain of our officers certifying, to the best of their knowledge, whether we are, or have been, in default and specifying the nature and status of any such default. In addition, we are required to provide the subordinated trustee with written notice within five days of our becoming aware of any event of default, or event that could mature into an event of default, under the subordinated indenture.
Waivers of Certain Defaults
The holders of not less than a majority in aggregate principal amount of the outstanding Subordinated Debt Securities of a particular affected series may generally also waive any events of default, defaults, solvency events and breaches of performance obligations. If this happens, the relevant event of default, default, solvency event or breach of performance obligations will be treated as if it had not occurred. No one, however, can waive defaults by us in the payment of the principal of (and premium, if any, on) and interest, if any, on any such Subordinated Debt Securities or in respect of a covenant or a provision that under the subordinated indenture (together with any related amendments or supplements thereto) cannot be modified or amended without the consent of each holder of the outstanding Subordinated Debt Securities of such a series.
Consolidation, Merger and Sale or Lease of Assets
Unless otherwise indicated in your prospectus supplement, we may, without the consent of the holders of any Subordinated Debt Securities, consolidate with or merge into or transfer or lease our properties and assets substantially as an entirety, provided, however, that any successor corporation formed by any such consolidation or merger or any such transferee or lessee of our assets is a corporation or other person organized and validly existing under the laws of a member country of the Organisation for Economic Co-operation and Development that assumes our obligations on the
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Subordinated Debt Securities and the subordinated indenture, and a number of other conditions are met.
Note that any such conditions will apply only if we wish to merge or consolidate with another entity or sell our assets substantially as an entirety to another entity. We will not need to satisfy these conditions if we enter into other types of transactions, including any transaction in which we acquire the securities or assets or another entity, any transaction that involves a change of control of Prudential but in which we do not merge or consolidate, and any transaction in which we sell less than substantially all our assets.
Modifications
Under certain circumstances, we can make changes to the subordinated indenture and the Subordinated Debt Securities. The following three types of changes are possible.
Changes Requiring Approval by each Holder
The first type of change comprises changes that cannot be made without the specific approval of each holder of each affected series of Subordinated Debt Securities. Unless your prospectus supplement provides otherwise, these include changes that:
- •
- change the stated maturity of the principal or any interest on any Subordinated Debt Security;
- •
- add a stated maturity to perpetual Subordinated Debt Securities with no stated maturity;
- •
- reduce the rate or amount of any interest;
- •
- reduce the principal or any premium payable on redemption;
- •
- change redemption dates to the detriment of any holder;
- •
- change the place of payment;
- •
- change the right of holders to waive an existing default by majority vote;
- •
- impair the right to sue for payment;
- •
- reduce the percentage of holders who must consent to a waiver or amendment of the subordinated indenture or the waiver of defaults;
- •
- modify the provisions of the subordinated indenture with respect to the subordination of the Subordinated Debt Securities in a manner adverse
to any holder; and
- •
- make any change to the list of changes that requires the approval of each holder, including the foregoing.
Changes Requiring 50% Approval
The second type of change comprises changes that require approval by the holders of at least 50% of the aggregate principal amount of the outstanding Subordinated Debt Securities of each affected series. Most changes fall into this category, except for those described under "—Changes Requiring Approval by each Holder" above and "—Changes Not Requiring Approval" below.
Changes Not Requiring Approval
The third type of change does not require any approval by holders of Subordinated Debt Securities. This type is generally limited to clarifications and other changes that would not adversely affect holders of the debt securities in any material respect. We may, however, be permitted to materially vary the terms of the Subordinated Debt Securities without any requirement for the consent or approval of any holder in certain circumstances. If we have such an option, your prospectus supplement will include the relevant terms and conditions applicable thereto.
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HKIA Approvals
In addition to the foregoing, a variation in the terms and conditions of the Subordinated Debt Securities of any series, which may include modifications relating to the status, subordination, redemption, repurchase, events of default, defaults or solvency events, with respect to such Subordinated Debt Securities, may require prior notice of the proposed modification to, and the consent or approval (including consent in the form of the grant of a waiver) of, the HKIA.
Waivers of Certain Covenants
Our obligations to comply with certain restrictive covenants in the subordinated indenture pertaining to corporate existence and maintenance of certain agencies may be waived by holders of not less than a majority in aggregate principal amount of the outstanding Subordinated Debt Securities of each affected series. See also the discussion in "—Defaults, Remedies and Waivers of Default—Waivers of Certain Defaults" with respect to the ability of holders to waive events of default, defaults, solvency events and breaches of performance obligations.
Further Issuances
We may from time to time, without notice to or the consent of the holders of the outstanding Subordinated Debt Securities of a series, create and issue under the applicable indenture (together with any related amendments or supplements thereto) further Subordinated Debt Securities of such series ranking pari passu with such outstanding Subordinated Debt Securities in all respects (or in all respects except for the payment of interest accruing prior to the issue date of such further Subordinated Debt Securities or except for the first payment of interest following the issue date of such further Subordinated Debt Securities) and so that any further Subordinated Debt Securities of such series shall be consolidated and form a single series with the outstanding Subordinated Debt Securities of such series and shall have the same terms as to status, redemption or otherwise as such outstanding Subordinated Debt Securities.
Notices
Notices to holders of Subordinated Debt Securities in registered form will be given by mail to the addresses of such holders as they appear in the security register, or, in the case of Subordinated Debt Securities held by a depositary, in accordance with the applicable procedures of the depositary, or in any other permitted manner specified in your prospectus supplement.
Title
We, the subordinated trustee and any of our agents or any agents of the subordinated trustee may treat the registered owner of any Subordinated Debt Security in registered form as the absolute owner thereof (whether or not such security shall be overdue and notwithstanding any notice to the contrary) for the purpose of making payment and for all other purposes.
Consent to Service; Jurisdiction
We have appointed Jackson National Life Insurance Company at 1 Corporate Way, Lansing, Michigan 48951, as our authorized agent for service of process in any suit or proceeding to which we are party arising out of or relating to the Subordinated Debt Securities or the subordinated indenture that may be instituted in any federal or state court in the Borough of Manhattan in New York City and have submitted to the jurisdiction of those courts. Notwithstanding the foregoing, actions relating to the Subordinated Debt Securities or the subordinated indenture may (subject to the limitations on enforcement described in this prospectus and, if applicable, in your prospectus supplement) be instituted by the holder of any Subordinated Debt Security in any competent court in England and Wales.
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Governing Law
The subordination provisions in the subordinated indenture and with respect to the Subordinated Debt Securities will be governed by and construed in accordance with English law, with the intention that such provisions be given full effect in any insolvency proceeding relating to us in England and Wales. All other provisions in the subordinated indenture and the Subordinated Debt Securities will be governed by and construed in accordance with the laws of the State of New York.
DESCRIPTION OF THE PREFERENCE SHARES
The following is a summary of the general terms of the preference shares of any series that may be offered pursuant to this prospectus, including any preference shares that may be issuable upon conversion or exchange of a class of Subordinated Debt Securities (any such preference shares, the "Preference Shares"). The Preference Shares will be offered in the form of American depositary shares ("ADSs"). The general terms of a particular series of Preference Shares will be summarized in the prospectus supplement relating to the series of Preference Shares or the Subordinated Debt Securities that are convertible or exchangeable into Preference Shares of that series. The general terms of a particular series of Preference Shares may differ from the terms stated below, which will be indicated in the relevant prospectus supplement. This summary does not purport to be complete and is subject to, and qualified by, our Articles and any resolutions passed by our board of directors or a committee thereof in connection with an issuance of Preference Shares. A copy of the Articles has been filed as an exhibit to the registration statement and copies of the relevant resolutions will be filed in connection with the applicable prospectus supplement. Currently, we do not have outstanding any series of Preference Shares.
General
Under our Articles, our board of directors or a committee authorized by it can authorize the issuance of one or more series of Preference Shares with such dividend rights, liquidation value per share, redemption provisions, voting rights and other rights, preferences, privileges, limitations and restrictions as it sees fit, including dollar-denominated Preference Shares with a nominal value of $0.01 per share (the "dollar Preference Shares"), pounds sterling-denominated Preference Shares with a nominal value of £0.01 per share (the "sterling Preference Shares") or euro-denominated Preference Shares with a nominal value of €0.01 per share (the "euro Preference Shares"), subject to the limitations set out in our Articles. For each Preference Share of a particular series that is issued, an amount equal to the share's nominal value will be credited to our issued share capital account, and an amount equal to the difference, if any, between the share's issue price and its nominal value in general will be credited to our share premium account.
Unless otherwise provided in the applicable prospectus supplement, the Preference Shares of a series will be dollar Preference Shares with a nominal value per share, dividend rights, redemption price and liquidation value per share stated in U.S. dollar-denominated terms, and will be issued only in fully paid form.
Unless otherwise provided in the applicable prospectus supplement, the Preference Shares of any series will initially be issued in bearer form and deposited with Citibank, N.A. (the "depositary bank"), against the issuance of ADSs, upon receipt of payment for the Preference Shares. The Preference Shares of a particular series deposited under the deposit agreement will be represented by ADSs of a corresponding series. Preference Shares of any series withdrawn from deposit under the deposit agreement will be represented by share certificates in registered form without dividend coupons. These share certificates will be delivered at the time of withdrawal. The certificate will be delivered at the time of withdrawal and may be exchanged by the holder for separate share certificates in registered form, without dividend coupons, representing the Preference Shares of that series. Preference Shares of
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each series that are withdrawn from deposit will be transferable separately. See "Description of the American Depositary Shares."
The holder may transfer title to Preference Shares of any series in registered form only by transfer and registration on the register for the Preference Shares of the relevant series. Preference Shares of any series in registered form may not be exchanged, in whole or in part, for Preference Shares of the series in bearer form. The registration of transfer of Preference Shares of any series may be made only on the register for the Preference Shares of the series kept by the registrar at its office in the United Kingdom. See "—Registrar and Paying Agent" below. The registrar will not charge the person requesting the registration a fee. However, the person requesting registration will be liable for any taxes, stamp duties or other governmental charges that must be paid in connection with the registration. English law does not currently limit the right of non-resident or foreign owners to acquire freely Preference Shares of any series or, when entitled to vote Preference Shares of a particular series, vote freely the Preference Shares. There are currently no English laws or regulations that would restrict the remittance of dividends or other payments to non-resident holders of Preference Shares of any series.
The Preference Shares of any series will have the dividend rights, rights upon liquidation, redemption provisions and voting rights summarized below, unless the prospectus supplement relating to the Preference Shares of a particular series states otherwise. The holder of the Preference Shares should pay particular attention to the following specific terms relating to his or her particular series of shares, including:
- •
- the designation of the Preference Shares of the series and number of shares offered in the form of ADSs;
- •
- the liquidation value per share of the Preference Shares of the series;
- •
- the price at which the Preference Shares of the series will be issued;
- •
- the dividend rate (or method of calculation of the dividend), if any, and the dates on which dividends, if any, will be payable;
- •
- any redemption provisions; and
- •
- any other rights, preferences, privileges, limitations and restrictions related to the Preference Shares of the series.
Dividends
If specified in the prospectus supplement relating to the series, holders of the Preference Shares of a particular series will be entitled to receive any cash dividends declared by us out of the profits available for distribution (which will be determined in accordance with the Articles and the Companies Act 2006) on the dates and at the rates or amounts stated, or as specified by the method of determining such dates, rates or amounts described in the prospectus supplement relating to that series.
The prospectus supplement relating to each series of Preference Shares in respect of which dividends are payable (or, in the case of Subordinated Debt Securities convertible or exchangeable into such Preference Shares, the prospectus supplement relating to such Subordinated Debt Securities) shall designate whether dividends on the Preference Shares to be issued, either directly or upon conversion or exchange, are cumulative or non-cumulative.
Unless the prospectus supplement relating to the Preference Shares of a particular series in respect of which dividends are payable states otherwise, if the profits available to us to distribute as dividends are, in our board of directors' opinion, not sufficient to enable us to pay in full on the same date both dividends on the Preference Shares of the series and the dividends on any other shares that have an
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equal right to dividends as the Preference Shares of that series, we are required first, to pay in full, or to set aside an amount equal to, all dividends scheduled to be paid on or before that dividend payment date on any shares with a right to dividends ranking in priority to that of the Preference Shares, and second, to pay dividends on the Preference Shares of the series and any other shares ranking equally with the Preference Shares of that series as to participation in profits pro rata to the amount of the cash dividend scheduled to be paid to them. The amount scheduled to be paid will include the amount of any dividend payable on that date and, in the event that we issue cumulative Preference Shares, any arrears on past cumulative dividends on any shares ranking equally in the right to dividends with the Preference Shares of that series. In accordance with the Companies Act 2006, the profits available to us for distribution are, in general and with some adjustments, equal to our accumulated, realized profits less our accumulated, realized losses.
The dividend will be calculated by annualizing the applicable dividend amount or rate and dividing by the number of dividend periods in a year. Unless the prospectus supplement relating to the Preference Shares of a particular series in respect of which dividends are payable states otherwise, the dividends to be paid will be computed on the basis of a 360-day year of twelve 30-day months for any dividend period that is shorter or longer than a full dividend period and on the basis of the actual number of days elapsed for any partial month.
In the case of Preference Shares of any series in respect of which dividends are payable that we designate as non-cumulative, if a dividend, or a portion of it, on the Preference Shares of such series is not required to be paid and is not paid on the relevant date scheduled for payment, then holders of Preference Shares of such series will lose the right they had to a dividend and will not earn any interest on the unpaid amount, regardless of whether dividends on the Preference Shares of such series are paid for any future dividend period.
We will fix a date to pay dividends on the Preference Shares of any series in respect of which dividends are payable to the record holders who are listed on the register as the holders of the Preference Shares on the relevant record date. The relevant record date will be between 15 and 60 days prior to the relevant dates for dividend payment fixed by us. Unless the law requires otherwise, we will pay the dividend in the form of a U.S. dollar check drawn on a bank in London or New York City and mailed to the holder at the address that appears on the register for the Preference Shares. If the date we have scheduled to pay dividends on the Preference Shares of any series is not a day on which banks in London and New York City are open for business and on which foreign exchange dealings can be conducted in London and in New York City, then the dividend will be paid on the following business day, and we will not be required to pay any interest or other payment because of the delay. Dividends declared but not yet paid do not bear interest. For a description of how dividends will be distributed to holders of ADSs, see "Description of the American Depositary Shares—Dividends and Distributions."
Unless the prospectus supplement relating to the Preference Shares of a particular series in respect of which dividends are payable states otherwise, if we have not paid the dividend payable, if any, on our Preference Shares of any series in full on the most recent date scheduled for dividend payment in respect of a dividend period, we will not be permitted to declare or pay dividends or distributions on any class of our shares ranking junior to, or pari passu with, in the right to dividends our Preference Shares of any series, unless we pay in full, or set aside an amount to provide for payment in full of, the dividends payable, if any, on our Preference Shares of such series and those ranking equally as to dividends with the Preference Shares of such series for the same dividend period or for such other additional periods as may be specified in the prospectus supplement relating to the Preference Shares of that series.
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Except as provided in this prospectus and in the prospectus supplement relating to the Preference Shares of a particular series, the holders of the Preference Shares of any series do not have the right to share in our profits.
Liquidation Rights
On a return of capital on a winding up or otherwise (but not, unless otherwise specified in the prospectus supplement relating to the Preference Shares of a particular series, on a redemption, purchase by us or reduction of any of our share capital), the holders of the dollar Preference Shares of a particular series that are outstanding at the time and the holders of any other of our shares ranking equal to or in priority to the series will be entitled to receive payment in U.S. dollars out of any assets available for distribution to shareholders. This distribution will be made in priority to any distribution of assets to holders of any class of our shares ranking below the Preference Shares of the series. Preference Shareholders will be entitled to a payment equal to the amount paid up (or credited as paid up) on each Preference Share together with any premium on such share as may be determined in accordance with the prospectus supplement relating to such Preference Share plus, in the case of any series of cumulative Preference Shares, if any, accrued dividends unless there are insufficient assets available for distribution in which case Preference Shareholders will be entitled to share ratably in any distribution of our assets in proportion to the full respective amounts to which they are entitled. Preference Shareholders will have no further right to participate in a return of capital.
Redemption and Purchase
Unless the relevant prospectus supplement specifies otherwise and subject to the Companies Act 2006, we will have the right, at our option, to redeem the whole or any part of any series of Preference Shares at certain times determined in accordance with our Articles and specified in the relevant prospectus supplement. In respect of each dollar Preference Share redeemed, we shall pay in U.S. dollars the aggregate of the nominal value of such Preference Share and any premium credited as paid up on such share at the time it was issued, together with accrued dividends as at the date of redemption and a redemption premium calculated pursuant to a formula set forth in the applicable prospectus supplement, which formula shall be chosen by us from among several possible formulas set forth in our Articles.
If we wish to redeem Preference Shares of any series, we must provide notice to the depositary bank and each record holder of the Preference Shares to be redeemed, at least 60 days prior to the date fixed for redemption. The notice of redemption must state:
- •
- the redemption date,
- •
- the particular Preference Shares to be redeemed,
- •
- the redemption price (including, in the case of any series of cumulative Preference Shares, if any, details of any accrued dividends to be
included and stating that dividends on the Preference Shares will cease to accrue on redemption), and
- •
- the place or places where documents of title relating to the Preference Shares are to be presented for redemption and payment for them will be made.
The redemption process will not be considered invalid due to a defect in the notice of redemption or in the mailing. The dividend on the Preference Shares due for redemption, if any, will cease accruing on the relevant redemption date. Subject to any applicable fiscal or other laws and regulations, we will make the redemption payment by a U.S. dollar check drawn on, or, if the holder requests, by transfer to a dollar account maintained by the person to be paid with, a bank in London or New York City. The holder of the Preference Shares to be redeemed must deliver to us the relevant share certificates at the place specified in the notice of redemption. In the event that any date on which any
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payment relating to the redemption of Preference Shares of any series is to be made is not a business day, then payment of the redemption price payable on that date will be made on the following business day, with no interest or other additional payment payable in these circumstances. Preference Shares will only be treated as redeemed when, and dividends, if any, will continue to accrue until, all redemption payments together with all accrued dividends have been paid. For information regarding redemption of Preference Shares represented by ADSs, see "Description of the American Depositary Shares—Redemption."
We may, unless the relevant prospectus supplement specifies otherwise, at any time purchase outstanding Preference Shares of any series in the open market, by tender to all holders of Preference Shares of that series alike or by private agreement. These purchases will be made in accordance with the Articles, applicable law (including the Companies Act 2006 and U.S. federal securities laws) and applicable regulations of the FCA. Any Preference Shares of any series purchased or redeemed by us for our own account (other than in the ordinary course of the business of dealing in securities) will be cancelled by us and will no longer be issued and outstanding.
Voting Rights
The holders of the Preference Shares having a registered address within the United Kingdom will be entitled to receive notice of our general meetings but will not be entitled to attend or vote at those meetings, except as otherwise set forth in the prospectus supplement relating to any particular series of Preference Shares.
Holders of the Preference Shares may have the right to vote separately as a class in the circumstances described below under the heading "—Variation of Rights."
Variation of Rights
The rights, preferences or restrictions attached to the Preference Shares may be varied by the consent in writing of the holders of at least three-quarters of the Preference Shares of all series in issue or by the sanction of a special resolution passed at a separate general meeting of the holders of Preference Shares as a single class regardless of series.
The rights, preferences or restrictions of any particular series of Preference Shares may be varied on a different basis to other series of Preference Shares by the consent in writing of the holders of at least three-quarters of the Preference Shares of that particular series or by the sanction of a special resolution passed at a separate general meeting of the holders of Preference Shares of that series.
We may create or issue any shares of any class, or any securities convertible or exchangeable into shares of any class, that rank equally with the Preference Shares of any series in the right to share in our profits or assets, whether the rights attaching to such shares are identical to or differ in any respect from the Preference Shares, without the rights of the Preference Shares of any series being deemed to be varied or abrogated.
The rights attached to the Preference Shares will not be deemed to be varied or abrogated by any purchase by us or redemption of any of our share capital in each case ranking as regards participation in the profits and assets of the company in priority to or equally with or after such Preference Shares.
Registrar and Paying Agent
Our registrar, Equiniti, presently located at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom, will act as registrar and paying agent for the Preference Shares of each series.
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DESCRIPTION OF THE AMERICAN DEPOSITARY SHARES
Citibank, N.A. ("Citibank") has agreed to act as the depositary bank for the American Depositary Shares. Citibank's depositary offices are located at 388 Greenwich Street, 14th Floor, New York, New York 10013. American Depositary Shares are frequently referred to as "ADSs" and represent ownership interests in securities that are on deposit with the depositary bank. ADSs may be represented by certificates that are commonly known as "American Depositary Receipts" or "ADRs." The depositary bank typically appoints a custodian to safekeep the securities on deposit. In this case, the custodian is Citibank, N.A. London, located at Citigroup Centre, Canada Square, Canary Wharf, London, E14 5LB.
We appointed Citibank as depositary bank pursuant to a deposit agreement. A copy of the deposit agreement is on file with the SEC under cover of a Registration Statement on Form F-6. You may obtain a copy of the deposit agreement from the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and from the SEC's website (www.sec.gov). Please refer to Registration Number 333-117706 when retrieving such copy.
This is a summary description of the material terms of the ADSs and of the material rights of an owner of ADSs. Summaries by their nature lack the precision of the information summarized, and a holder's rights and obligations as an owner of ADSs will be determined by reference to the terms of the deposit agreement and not by this summary. We urge you to review the deposit agreement in its entirety.
Each ADS represents the right to receive one Preference Share on deposit with the custodian. An ADS will also represent the right to receive any other property received by the depositary bank or the custodian on behalf of the owner of the ADS but that has not been distributed to the owners of ADSs because of legal restrictions or practical considerations.
If you become an owner of ADSs, you will become a party to the deposit agreement and therefore will be bound by its terms and by the terms of the ADR that represents your ADSs. The deposit agreement and the ADR specify our rights and obligations as well as your rights and obligations as owner of ADSs and those of the depositary bank. As an owner of ADSs you appoint the depositary bank to act on your behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York law. However, our obligations to the holders of Preference Shares will continue to be governed by the laws of England and Wales, which may be different from the laws in the United States.
As an owner of ADSs, you may hold your ADSs either by means of an ADR registered in your name, through a brokerage or safekeeping account, or through an account established by the depositary bank in your name reflecting the registration of uncertificated ADSs directly on the books of the depositary bank (commonly referred to as the "direct registration system" or "DRS"). The direct registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the depositary bank. Under the direct registration system, ownership of ADSs is evidenced by periodic statements issued by the depositary bank to the holders of the ADSs. The direct registration system includes automated transfers between the depositary bank and the Depository Trust Company ("DTC"), the central book-entry clearing and settlement system for equity securities in the United States. If you decide to hold your ADSs through your brokerage or safekeeping account, you must rely on the procedures of your broker or bank to assert your rights as ADS owner. Banks and brokers typically hold securities such as the ADSs through clearing and settlement systems such as DTC. The procedures of such clearing and settlement systems may limit your ability to exercise your rights as an owner of ADSs. Please consult with your broker or bank if you have any questions concerning these limitations and procedures. This summary description assumes you have opted to own the ADSs directly by means of an ADS registered in your name and, as such, we will refer to you as the "holder." When we refer to "you," we assume the reader owns ADSs and will own ADSs at the relevant time.
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Dividends and Distributions
As a holder, you generally have the right to receive the distributions, if any, that we make on the securities deposited with the custodian bank. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders will receive such distributions under the terms of the deposit agreement in proportion to the number of ADSs held as of a specified record date.
Distributions of Cash
Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the Custodian. Upon receipt of confirmation of the deposit of the requisite funds, the depositary bank will arrange for the funds to be converted into U.S. dollars and for the distribution of the U.S. dollars to the holders, subject to the laws and regulations of England and Wales.
The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the United States. The amounts distributed to holders will be net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. The depositary will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the custodian in respect of securities on deposit.
The distribution of cash will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement.
Distributions of Shares
Whenever we make a free distribution of Preference Shares for the securities on deposit with the custodian, we will deposit the applicable number of Preference Shares with the custodian. Upon receipt of confirmation of such deposit, the depositary bank will either distribute to holders new ADSs representing the Preference Shares deposited or modify the ADS-to-Preference Shares ratio, in which case each ADS you hold will represent rights and interests in the additional Preference Shares so deposited. Only whole new ADSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.
The distribution of new ADSs or the modification of the ADS-to-Preference Shares ratio upon a distribution of Preference Shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes or governmental charges, the depositary bank may sell all or a portion of the new Preference Shares so distributed.
No such distribution of new ADSs will be made if it would violate a law (e.g., the U.S. securities laws) or if it is not operationally practicable. If the depositary bank does not distribute new ADSs as described above, it may sell the Preference Shares received upon the terms described in the deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash.
Distribution of Rights
Whenever we intend to distribute rights to purchase additional Preference Shares, we will give prior notice to the depositary bank and we will assist the depositary bank in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional ADSs to holders.
The depositary bank will establish procedures to distribute rights to purchase additional ADSs to holders and to enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of ADSs, and if we provide all of the documentation contemplated
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in the deposit agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new ADSs upon the exercise of your rights. The depositary bank is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to purchase new Preference Shares other than in the form of ADSs.
The depositary bank will not distribute the rights to you if:
- •
- we do not timely request that the rights be distributed to you or we request that the rights not be distributed to you; or
- •
- we fail to deliver satisfactory documents to the depositary bank; or
- •
- it is not reasonably practicable to distribute the rights.
The depositary bank will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary bank is unable to sell the rights, it will allow the rights to lapse.
Elective Distributions
Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we will give prior notice thereof to the depositary bank and will indicate whether we wish the elective distribution to be made available to you. In such case, we will assist the depositary bank in determining whether such distribution is lawful and reasonably practicable.
The depositary bank will make the election available to you only if it is reasonably practical and if we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary bank will establish procedures to enable you to elect to receive either cash or additional ADSs, in each case as described in the deposit agreement.
If the election is not made available to you, you will receive either cash of additional ADSs, depending on what a shareholder in England would receive upon failing to make an election, as more fully described in the deposit agreement.
Other Distributions
Whenever we intend to distribute property other than cash, Preference Shares or rights to purchase additional Preference Shares, we will notify the depositary bank in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the depositary bank in determining whether such distribution to holders is lawful and reasonably practicable.
If it is reasonably practicable to distribute such property to you and if we provide all of the documentation contemplated in the deposit agreement, the depositary bank will distribute the property to the holders in a manner it deems practicable.
The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary bank may sell all or a portion of the property received.
The depositary bank will not distribute the property to you and will sell the property if:
- •
- we do not request that the property be distributed to you or if we ask that the property not be distributed to you; or
- •
- we do not deliver satisfactory documents to the depositary bank; or
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- •
- the depositary bank determines that all or a portion of the distribution to you is not reasonably practicable.
The proceeds of such sale will be distributed to holders as in the case of a cash distribution.
Redemption
Whenever we decide to redeem any of the securities on deposit with the custodian, we will notify the depositary bank. If it is reasonably practicable and if we provide all of the documentation contemplated in the deposit agreement, the depositary bank will mail notice of the redemption to the holders.
The custodian will be instructed to surrender the shares being redeemed against payment of the applicable redemption price. The depositary bank will convert the redemption funds received into U.S. dollars upon the terms of the deposit agreement and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their ADSs to the depositary bank. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your ADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the depositary bank may determine.
Changes Affecting Preference Shares
The Preference Shares held on deposit for your ADSs may change from time to time. For example, there may be a change in nominal or par value, a split-up, cancellation, consolidation or reclassification of such Preference Shares or a recapitalization, reorganization, merger, consolidation or sale of assets.
If any such change were to occur, your ADSs would, to the extent permitted by law, represent the right to receive the property received or exchanged in respect of the Preference Shares held on deposit. The depositary bank may in such circumstances deliver new ADSs to you or call for the exchange of your existing ADSs for new ADSs. If the depositary bank may not lawfully distribute such property to you, the depositary bank may sell such property and distribute the net proceeds to you as in the case of a cash distribution.
Issuance of ADSs upon Deposit of Preference Shares
The depositary bank may create ADSs on your behalf if you or your broker deposit Preference Shares with the custodian. The depositary bank will deliver these ADSs to the person you indicate only after you pay any applicable issuance fees and any charges and taxes payable for the transfer of the Preference Shares to the custodian. Your ability to deposit Preference Shares and receive ADSs may be limited by legal considerations in the United States and England and Wales applicable at the time of deposit.
The issuance of ADSs may be delayed until the depositary bank or the custodian receives confirmation that all required approvals have been given and that the Preference Shares have been duly transferred to the custodian. The depositary bank will only issue ADSs in whole numbers.
When you make a deposit of Preference Shares, you will be responsible for transferring good and valid title to the depositary bank. As such, you will be deemed to represent and warrant that:
- •
- the Preference Shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained;
- •
- all preemptive (and similar) rights, if any, with respect to such Preference Shares have been validly waived or exercised;
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- •
- you are duly authorized to deposit the Preference Shares;
- •
- the Preference Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim,
and are not, and the ADSs issuable upon such deposit will not be, "restricted securities" (as defined in the deposit agreement); and
- •
- the Preference Shares presented for deposit have not been stripped of any rights or entitlements.
If any of the representations or warranties are incorrect in any way, we and the depositary bank may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations.
Transfer, Combination and Split Up of ADRs
As an ADR holder, you will be entitled to transfer, combine or split up your ADRs and the ADSs evidenced thereby. For transfer of ADRs, you will have to surrender the ADRs to be transferred to the depositary bank and also must:
- •
- ensure that the surrendered ADR certificate is properly endorsed or otherwise in proper form for transfer;
- •
- provide such proof of identity and genuineness of signatures as the depositary bank deems appropriate;
- •
- provide any transfer stamps required by the State of New York or the United States; and
- •
- pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders pursuant to the terms of the deposit agreement, upon the transfer of ADRs.
To have your ADRs either combined or split up, you must surrender the ADRs in question to the depositary bank with your request to have them combined or split up, and you must pay all applicable fees, charges and expenses payable by ADR holders, pursuant to the terms of the deposit agreement, upon a combination or split up of ADRs.
Withdrawal of Shares Upon Cancellation of ADSs
As a holder, you will be entitled to present your ADSs to the depositary bank for cancellation and then receive the corresponding number of underlying Preference Shares at the custodian's offices. Your ability to withdraw the Preference Shares may be limited by U.S. and English and Welsh considerations applicable at the time of withdrawal. In order to withdraw the Preference Shares represented by your ADSs, you will be required to pay to the depositary the fees for cancellation of ADSs and any charges and taxes payable upon the transfer of the Preference Shares being withdrawn. You assume the risk for delivery of all funds and securities upon withdrawal. Once cancelled, the ADSs will not have any rights under the deposit agreement.
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If you hold ADSs registered in your name, the depositary bank may ask you to provide proof of identity and genuineness of any signature and such other documents as the depositary bank may deem appropriate before it will cancel your ADSs. The withdrawal of the Preference Shares represented by your ADSs may be delayed until the depositary bank receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the depositary bank will only accept ADSs for cancellation that represent a whole number of securities on deposit.
You will have the right to withdraw the securities represented by your ADSs at any time except for:
- •
- temporary delays that may arise because (i) the transfer books for the Preference Shares or ADSs are closed, or (ii) Preference
Shares are immobilized on account of a shareholders' meeting or a payment of dividends;
- •
- obligations to pay fees, taxes and similar charges; and
- •
- restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of securities on deposit.
The deposit agreement may not be modified to impair your right to withdraw the securities represented by your ADSs except to comply with mandatory provisions of law.
Voting Rights
As a holder, you generally have the right under the deposit agreement to instruct the depositary bank to exercise the voting rights for the Preference Shares represented by your ADSs. The voting rights of holders of Preference Shares are described in "Description of the Preference Shares—Voting Rights".
At our request, the depositary bank will distribute to you any notice of shareholders' meeting received from us together with information explaining how to instruct the depositary bank to exercise the voting rights of the securities represented by the ADSs.
If the depositary bank timely receives voting instructions from a holder of ADSs, it will endeavor to vote the securities represented by the holder's ADSs in accordance with such voting instructions.
Please note that the ability of the depositary bank to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary bank in a timely manner. Securities for which no voting instructions have been received will not be voted.
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Fees and Charges
As an ADS holder, you will be required to pay the following service fees to the depositary bank:
| Service | Fees | |
|---|---|---|
• Issuance of ADSs |
Up to U.S. 5¢ per ADS issued | |
• Cancellation of ADSs |
Up to U.S. 5¢ per ADS cancelled | |
• Exercise of rights to purchase additional ADSs |
Up to U.S. 5¢ per ADS issued | |
• Distribution of cash dividends |
Up to U.S. 2¢ per ADS held | |
• Distribution of ADSs pursuant to stock dividend or other free stock distributions |
Up to U.S. 5¢ per ADS issued | |
• Distributions of cash proceeds (i.e., upon sale of rights or other entitlements) |
Up to U.S. 2¢ per ADS held | |
• Distribution of securities other than ADSs or rights to purchase additional ADSs |
Up to U.S. 5¢ per share (or share equivalent) distributed | |
• Annual Depositary Services Fee |
Annually up to U.S. 2¢ per ADS held at the end of each calendar year, except to the extent of any cash dividend fee(s) charged during such calendar year |
As an ADS holder you will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges such as:
- •
- fees for the transfer and registration of Preference Shares charged by the registrar and transfer agent for the Preference Shares in England
(i.e., upon deposit and withdrawal of Preference Shares);
- •
- expenses incurred for converting foreign currency into U.S. dollars;
- •
- expenses for the cable, telex and fax transmissions for delivery of securities;
- •
- taxes and duties upon the transfer of securities (i.e., when Preference Shares are deposited or
withdrawn from deposit); and
- •
- fees and expenses incurred in connection with the delivery or servicing of Preference Shares on deposit.
We have agreed to pay certain other charges and expenses of the depositary bank. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary bank. You will receive prior notice of such changes.
Amendments and Termination
We may agree with the depositary bank to modify the deposit agreement at any time without your consent. We undertake to give holders 30 days' prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit agreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.
You will be bound by the modifications to the deposit agreement if you continue to hold your ADSs after the modifications to the deposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the Preference Shares represented by your ADSs (except as required by law).
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We have the right to direct the depositary bank to terminate the deposit agreement. Similarly, the depositary bank may in certain circumstances on its own initiative terminate the deposit agreement. In either case, the depositary bank must give notice to the holders at least 30 days before termination.
Upon termination, the following will occur under the deposit agreement:
- •
- for a period of six months after termination, you will be able to request the cancellation of
your ADSs and the withdrawal of the Preference Shares represented by your ADSs and the delivery of all other property held by the depositary bank in respect of those Preference Shares on the same
terms as prior to the termination. During such six-month period the depositary bank will continue to collect all distributions received on the Preference Shares on deposit
(i.e., dividends) but will not distribute any such property to you until you request the cancellation of your ADSs; and
- •
- after the expiration of such six months' period, the depositary bank may sell the securities held on deposit. The depositary bank will hold the proceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the depositary bank will have no further obligations to holders other than to account for the funds then held for the holders of ADSs still outstanding.
Books of Depositary
The depositary bank will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs and the deposit agreement.
The depositary bank will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADRs. These facilities may be closed from time to time, to the extent not prohibited by law.
Limitations on Obligations and Liabilities
The deposit agreement limits our obligations and the depositary bank's obligations to you. Please note the following:
- •
- we and the depositary bank are obligated only to take the actions specifically stated in the depositary agreement without negligence or bad
faith;
- •
- the depositary bank disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the
effect of any vote, provided it acts in good faith and in accordance with the terms of the deposit agreement;
- •
- the depositary bank disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any
document forwarded to you on our behalf or for the accuracy of any translation of such a document, for the investment risks associated with investing in Preference Shares, for the validity or worth of
the Preference Shares, for any tax consequences that result from the ownership of ADSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the deposit
agreement, for the timeliness of any of our notices or for our failure to give notice;
- •
- we and the depositary bank will not be obligated to perform any act that is inconsistent with the terms of the deposit agreement;
- •
- we and the depositary bank disclaim any liability if we are prevented or forbidden from acting on account of any law or regulation, any provision of our Memorandum and Articles, any
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- •
- we and the depositary bank disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for in the
deposit agreement or in our Memorandum and Articles or in any provisions of securities on deposit;
- •
- we and the depositary bank further disclaim any liability for any action or inaction in reliance on the advice or information received from
legal counsel, accountants, any person presenting Preference Shares for deposit, any holder of ADSs or authorized representatives thereof, or any other person believed by either of us in good faith to
be competent to give such advice or information;
- •
- we and the depositary bank also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other
benefit which is made available to holders of Preference Shares but is not, under the terms of the deposit agreement, made available to you;
- •
- we and the depositary bank may rely without any liability upon any written notice, request or other document believed to be genuine and to have
been signed or presented by the proper parties; and
- •
- we and the depositary bank also disclaim any liability for any consequential or punitive damages for any breach of the terms of the deposit agreement.
provision of any securities on deposit or by reason of any act of God or war or other circumstances beyond our control;
Pre-Release Transactions
The depositary bank may, in certain circumstances, issue ADSs before receiving a deposit of Preference Shares or release Preference Shares before receiving ADSs for cancellation. These transactions are commonly referred to as "pre-release transactions." The deposit agreement limits the aggregate size of pre-release transactions and imposes a number of conditions on such transactions (i.e., the need to receive collateral, the type of collateral required, the representations required from brokers, etc.). The depositary bank may retain the compensation received from the pre-release transactions.
Taxes
You will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the ADSs. We, the depositary bank and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.
The depositary bank may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit until all taxes and charges are paid by the applicable holder. The depositary bank and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the depositary bank and to the custodian proof of taxpayer status and residence and such other information as the depositary bank and the custodian may require to fulfill legal obligations. You are required to indemnify us, the depositary bank and the custodian for any claims with respect to taxes based on any tax benefit obtained for you.
Foreign Currency Conversion
The depositary bank will arrange for the conversion of all foreign currency received into U.S. dollars if such conversion is practical, and it will distribute the U.S. dollars in accordance with the
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terms of the deposit agreement. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.
If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the depositary bank may take the following actions in its discretion:
- •
- convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom the conversion and
distribution is lawful and practical;
- •
- distribute the foreign currency to holders for whom the distribution is lawful and practical; or
- •
- hold the foreign currency (without liability for interest) for the applicable holders.
What is a Global Security?
A global security may represent one or any other number of individual securities. Generally, all securities represented by the same global security will have the same terms. We may, however, issue a global security that represents multiple securities of the same kind, such as, for example, Subordinated Debt Securities, that have different terms and are issued at different times. We call this kind of global security a master global security. Your prospectus supplement will not indicate whether the securities to which it relates are represented by a master global security.
A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under "—Special Situations When a Global Security Will Be Terminated."
As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all securities represented by a global security, and investors will be permitted to own only indirect interests in a global security. Indirect interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor whose security is represented by a global security will not be a holder of the security, but only an indirect owner of an interest in the global security. If the prospectus supplement for a particular security indicates that the security will be issued in global form only, then the security will be represented by a global security at all times unless and until the global security is terminated. We describe the situations in which this can occur below under "—Special Situations When a Global Security Will Be Terminated." If termination occurs, we may issue the securities through another book-entry clearing system or decide that the securities may no longer be held through any book-entry clearing system.
Depositary Arrangements
The Senior Debt Securities of a series and the Subordinated Debt Securities of a series may be represented in whole or in part by one or more global securities that will be registered in the name of, or in the name of a nominee of, and deposited with, or on behalf of, DTC or a common depositary for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking, S.A. ("Clearstream Luxembourg") (the "depositary"). Global securities will be issued in registered form unless your prospectus supplement provides otherwise. Unless and until it is exchanged for securities in definitive form, any such global security may not be transferred except as a whole by the relevant depositary to its nominee, or vice versa, or by a nominee to another nominee of such depositary or, in either case, to a successor of such depositary or a nominee of such successor.
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The specific terms of the depositary arrangement with respect to a series of Senior Debt Securities and Subordinated Debt Securities will be described in the related prospectus supplement. We anticipate that the following provisions will apply to all depositary arrangements.
Upon the issuance of a global security, the depositary for such global security or its nominee will credit the accounts of persons entitled thereto with the respective beneficial interests in the principal amounts of the debt securities represented by such global security. Such accounts shall be designated by the underwriters, dealers or agents with respect to the Senior Debt Securities or Subordinated Debt Securities, or by us if we offer and sell the Senior Debt Securities or Subordinated Debt Securities directly. Ownership of beneficial interests in a global security will be limited to persons that have accounts with the depositary for such global security or its nominee (such persons, "participants") or persons that may hold interests through participants. Ownership of beneficial interests in the global security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the depositary or its nominee (with respect to interests of participants) for such global security and on the records of participants (with respect to interests of persons who hold interests through participants).
So long as the relevant depositary, or its nominee, is the registered owner of such global security, it will be considered the sole owner or holder of the relevant Senior Debt Securities and/or Subordinated Debt Securities represented by such global security for all purposes under the senior indenture and/or subordinated indenture. Except as provided below, owners of beneficial interests in a global security will not be entitled to have securities of the series represented by such global security registered in their names, will not receive or be entitled to receive physical delivery of securities of such series in definitive form and will not be considered the owners or holders thereof. Such owners of beneficial interests will not have the direct right to act upon any solicitation for actions from holders of the securities and will be permitted to act only to the extent appropriate proxies to do so from DTC, Euroclear or Clearstream, as applicable, have been received. Similarly, upon the occurrence of an event of default under the Senior Debt Securities or an event of default, default or solvency event under the Subordinated Debt Securities, unless and until securities in definitive form are issued, owners of beneficial interests in global securities will be restricted to acting only to the extent appropriate proxies have been received from DTC, Euroclear or Clearstream, as applicable.
Any payments of principal, interest or premium on Senior Debt Securities or Subordinated Debt Securities registered in the name of a depositary or its nominee will be made to it as the registered owner of the global security representing such securities. Neither we, nor any of the applicable trustees, paying agents or security registrars for such securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global security for such securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
We expect that the depositary for a global security or its nominee, upon receipt of any payment of principal, interest or premium, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the debt securities of such series represented by such global security as shown on the records of such depositary or its nominee. We also expect that payments by participants to owners of beneficial interests in such global security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities in "street name," and will be the responsibility of such participants.
Special Investor Considerations for Global Securities
As an indirect owner, an investor's rights relating to a global security will be governed by the account rules of the depositary and those of the investor's financial institution or other intermediary
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through which it holds its interest (e.g., Euroclear or Clearstream, if DTC is the depositary), as well as general laws relating to securities transfers. As discussed above, we do not recognize this type of investor or any intermediary as a holder of securities and instead deal only with the depositary that holds the global security.
Investors holding indirect interests in global securities should be aware of the following:
- •
- an investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest
in the securities, except in the special situations we describe below or as may be set forth in your prospectus supplement;
- •
- the laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair your ability to transfer beneficial interests in a global security;
- •
- an investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection of his or
her legal rights relating to the securities;
- •
- an investor may not be able to sell interests in the securities to some insurance companies and other institutions that are required by law to
own their securities in non-book-entry form or as may be described in your prospectus supplement;
- •
- in addition to restrictions imposed by applicable law, an investor may not be able to pledge his or her interest in a global security in
circumstances where certificates representing the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
- •
- the depositary's policies will govern payments, deliveries, transfers, exchanges, notices and other matters relating to an investor's interest
in a global security, and those policies may change from time to time. We, the applicable trustee and other agents will have no responsibility for any aspect of the depositary's policies, actions or
records of ownership interests in a global security. We, the applicable trustee and other agents also do not supervise the depositary in any way;
- •
- the depositary will require that those who purchase and sell interests in a global security within its book-entry system use immediately
available funds and your broker or bank may require you to do so as well; and
- •
- financial institutions that participate in the depositary's book-entry system and through which an investor holds its interest in the global securities, directly or indirectly, may also have their own policies affecting payments, deliveries, transfers, exchanges, notices and other matters relating to the securities, and those policies may change from time to time. For example, if you hold an interest in a global security through Euroclear or Clearstream, when DTC is the depositary, Euroclear or Clearstream, as applicable, will require those who purchase and sell interests in that security through them to use immediately available funds and comply with other policies and procedures, including deadlines for giving instructions as to transactions that are to be effected on a particular day. There may be more than one financial intermediary in the chain of ownership for an investor. We, the applicable trustee and the other agents do not monitor and are not responsible for the policies or actions or records of ownership interests of any of those intermediaries.
Special Situations When a Global Security Will Be Terminated
If a depositary for a global security in respect of a series of Senior Debt Securities or Subordinated Debt Securities is at any time unwilling or unable to continue as depositary, and we do not appoint a successor depositary within 120 days, or in the event of our winding up we fail to make any payment on any Senior Debt Securities or Subordinated Debt Securities when due, and the applicable trustee has
39
received notice from the registered owner of such global security requesting the exchange of a specified amount of such Senior Debt Securities or Subordinated Debt Securities for securities in definitive form, we will issue registered securities in respect of the Senior Debt Securities or Subordinated Debt Securities of such series in definitive form in exchange for the global security representing such series of Senior Debt Securities or Subordinated Debt Securities.
We may also at any time and in our sole discretion determine that the Senior Debt Securities or Subordinated Debt Securities of any series represented by one or more global securities shall no longer be represented by such global security or securities. In such event, we will issue registered securities in respect of the Senior Debt Securities or Subordinated Debt Securities of such series in definitive form. Further, if we so specify with respect to the Senior Debt Securities or Subordinated Debt Securities of a series, you may, on terms acceptable to us and the depositary for such global security, receive registered securities of such series in definitive form.
In any such instance, you will be entitled to physical delivery in definitive form of registered securities of the series of Senior Debt Securities or Subordinated Debt Securities represented by such global security, equal in principal amount to your beneficial interest, and to have such securities registered in your name.
Senior Debt Securities or Subordinated Debt Securities of any series so issued in definitive form will only be issued as registered securities in authorized minimum denominations and bearing any applicable restrictive legend. We believe that, for holders resident in the United States for tax purposes, there should be no tax consequences associated with an exchange of registered securities in global form for registered securities in definitive form.
If we issue Senior Debt Securities or Subordinated Debt Securities in definitive form in exchange for a particular global security, the relevant depositary, as holder of that global security, will surrender it against receipt of the Senior Debt Securities or Subordinated Debt Securities in definitive form, cancel the book-entry Senior Debt Securities or Subordinated Debt Securities of that series, and distribute through DTC, Euroclear or Clearstream, as the case may be, the Senior Debt Securities or Subordinated Debt Securities in definitive form of that series to the persons and in the amounts specified by DTC, Euroclear or Clearstream, as the case may be.
To the extent permitted by law, we, the applicable trustees, paying agents or security registrars shall be entitled to treat the person in whose name any Senior Debt Security or Subordinated Debt Security in definitive form is registered as the absolute owner. Payments in respect of a Senior Debt Security or Subordinated Debt Security in definitive form will be made to the person in whose name the definitive Senior Debt Security or Subordinated Debt Security is registered as it appears in the register for that series. They will be made by check mailed or delivered to the address of the person entitled thereto as such address shall appear in the security register or by wire transfer to an account maintained by the person entitled thereto as specified in the security register. In the event of a redemption, Senior Debt Securities or Subordinated Debt Securities issued in definitive form should be presented to the applicable paying agent for redemption.
Holders of Senior Debt Securities or Subordinated Debt Securities in definitive form will have the direct right to act upon any solicitation for actions from holders of the Senior Debt Securities or Subordinated Debt Securities, including upon the occurrence of an event of default under the Senior Debt Securities or an event of default, default or solvency event under the Subordinated Debt Securities, and will not be required to rely upon receipt of proxies from DTC, Euroclear or Clearstream.
Securities in registered form may be broken into more securities of smaller denominations (but not into denominations smaller than any minimum denomination applicable to the securities) or combined into fewer securities of larger denominations, as long as the total principal amount is not changed. This
40
is called an "exchange." Senior Debt Securities or Subordinated Debt Securities of any series issued in definitive form will be exchangeable for other Senior Debt Securities or Subordinated Debt Securities of the same series, of a like aggregate principal amount and tenor and of different authorized denominations. A Senior Debt Security or Subordinated Debt Security issued in definitive form may be presented for registration of transfer (with the form of transfer duly executed), at the office of the security registrar or at the office of any transfer agent we designate for such purpose with respect to any series of debt securities and referred to in an applicable prospectus supplement, without service charge but subject to payment of any taxes and other governmental charges as described in the applicable indenture. Such transfer or exchange will be effected after the security registrar or transfer agent, as the case may be, is satisfied with the documents of title and identity of the person making the request. We have initially appointed the senior trustee and the subordinated trustee as the security registrars under the relevant indentures. If a prospectus supplement refers to any transfer agents (in addition to the security registrar) that we have initially designated with respect to any series of debt securities, we may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for such series. We may at any time designate additional transfer agents with respect to any series of debt securities.
If the Senior Debt Securities of a series or the Subordinated Debt Securities of a series are redeemed in part, we will not be required to:
- •
- issue, register the transfer of or exchange the securities of any such series during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of securities of that series selected to be redeemed and ending at the close of business on the day of mailing of the relevant
notice of redemption; or
- •
- register the transfer of or exchange any registered security, or portion thereof, called for redemption, except the unredeemed portion of any registered security being redeemed in part.
Senior Debt Securities or Subordinated Debt Securities we issue may be held through one or more international and domestic clearing systems. The principal clearing systems we will use are the book-entry systems operated by DTC, Clearstream and Euroclear. These systems have established electronic securities and payment transfer, processing, depositary and custodial links among themselves and others, either directly or through custodians and depositaries. These links allow securities to be issued, held and transferred among the clearing systems without the physical transfer of certificates.
Special procedures to facilitate clearance and settlement have been established among these clearing systems to trade securities across borders in the secondary market. Where payments for debt securities we issue in global form will be made in U.S. dollars, these procedures can be used for cross-market transfers and the debt securities will be cleared and settled on a delivery against payment basis.
Global securities will be registered in the name of and deposited with a nominee for, and accepted for settlement and clearance by, one or more of DTC and a common depositary for Euroclear and Clearstream, and any other clearing system identified in the applicable prospectus supplement.
Cross-market transfers of securities that are not in global form may be cleared and settled in accordance with other procedures that may be established among the clearing systems for these securities. Investors in debt securities that are issued outside of the United States, its territories and possessions must initially hold their interests through Euroclear, Clearstream or the clearing system that is described in the applicable prospectus supplement. The policies of DTC, Euroclear and Clearstream will govern payments, transfers, exchange and other matters relating to the investor's interest in debt
41
securities held by them. This is also true for any other clearing system that may be named in a prospectus supplement.
The policies of DTC, Euroclear and Clearstream will govern payments, transfers, exchange and other matters relating to investors' interests in debt securities held by them. This is also true for any other clearing system that may be named in a prospectus supplement.
Neither we, nor any trustee, paying agent or registrar have any responsibility for any aspect of the actions of DTC, Euroclear and Clearstream or any of their direct or indirect participants or accountholders. Neither we, nor any trustee, paying agent or registrar have any responsibility for any aspect of the records kept by DTC, Euroclear and Clearstream or any of their direct or indirect participants or accountholders. Neither we, nor any trustee, paying agent or registrar supervise these systems in any way. This is also true for any other clearing system indicated in a prospectus supplement.
DTC, Euroclear and Clearstream and their participants and accountholders perform these clearance and settlement functions under agreements they have made with one another or with their customers. You should be aware that they are not obligated to perform these procedures and may modify them or discontinue them at any time.
The description of the clearing systems in this section reflects our understanding of the rules and procedures of DTC, Clearstream and Euroclear as they are currently in effect. Those systems could change their rules and procedures at any time.
The Clearing Systems
DTC
DTC has advised us as follows:
- •
- DTC is:
| (a) | a limited—purpose trust company organized under New York Banking Law, | ||
(b) |
a "banking corporation" within the meaning of New York Banking Law, |
||
(c) |
a member of the Federal Reserve System, |
||
(d) |
a "clearing corporation" within the meaning of the Uniform Commercial Code and |
||
(e) |
a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. |
- •
- DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to accounts of its participants. This eliminates the need for physical movement of certificates.
- •
- Participants in DTC include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other
organizations. DTC is partially owned by some of these participants or their representatives.
- •
- Indirect access to the DTC system is also available to banks, brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a DTC participant, either directly or indirectly.
- •
- The rules applicable to DTC and DTC participants are on file with the SEC.
42
Clearstream
Clearstream has advised us as follows:
- •
- Clearstream is a duly licensed bank organized as a société
anonyme incorporated under the laws of the Grand Duchy of Luxembourg and is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector
(Commission de Surveillance du Secteur Financier).
- •
- Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions among them. It does so
through electronic book-entry charges to the accounts of its customers. This eliminates the need for physical movement of certificates.
- •
- Clearstream provides other services to its accountholders, including safekeeping, administration, clearance and settlement of internationally
traded securities and lending and borrowing of securities.
- •
- Clearstream's customers include worldwide securities brokers and dealers, banks, trust companies and clearing corporations and may include
professional financial intermediaries. Its U.S. customers are limited to securities brokers and dealers and banks.
- •
- Indirect access to the Clearstream system is also available to others that clear through Clearstream customers or that have custodial relationships with its customers, such as banks, brokers, dealers and trust companies.
Euroclear
Euroclear has advised us as follows:
- •
- Euroclear is incorporated under the laws of Belgium as a bank and is subject to regulation by the Belgian Financial Services and Markets
Authority (Autorité des Services et Marchés Financiers) and the National Bank of Belgium (Banque
Nationale de Belgique).
- •
- Euroclear holds securities for its customers and facilitates the clearance and settlement of securities transactions among them. It does so
through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates.
- •
- Euroclear provides other services to its customers, including credit custody, lending and borrowing of securities and tri-party collateral
management. It interfaces with the domestic markets of several countries.
- •
- Euroclear customers include banks, including central banks, securities brokers and dealers, trust companies and clearing corporations and may
include certain other professional financial intermediaries.
- •
- Indirect access to the Euroclear system is also available to others that clear through Euroclear customers or that have relationships with
Euroclear accountholders.
- •
- All securities in Euroclear are held on a fungible basis. This means that specific certificates are not matched to specific securities
clearance accounts.
- •
- Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable law (collectively, the "Euroclear Terms and Conditions"). The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear.
43
Other Clearing Systems
We may choose any other clearing system for a particular series of debt securities. The clearance and settlement procedures for the clearing system we choose will be described in the applicable prospectus supplement.
Primary Distribution
The distribution of the debt securities will be cleared through one or more of the clearing systems that we have described above or any other clearing system that is specified in the applicable prospectus supplement. Payment for debt securities will be made on a delivery versus payment or free delivery basis. These payment procedures will be more fully described in the applicable prospectus supplement.
Clearance and settlement procedures may vary from one series of debt securities to another according to the currency that is chosen for the specific series of debt securities. Customary clearance and settlement procedures are described below.
We will submit applications to the relevant system or systems for the debt securities to be accepted for clearance. The clearance numbers that are applicable to each clearance system will be specified in the prospectus supplement.
Clearance and Settlement Procedures—DTC
DTC participants that hold debt securities through DTC on behalf of investors will follow the settlement practices applicable to U.S. corporate debt obligations in DTC's Same-Day Funds Settlement System.
Debt securities will be credited to the securities custody accounts of these DTC participants against payment in same-day funds, for payments in U.S. dollars, on the settlement date. For payments in a currency other than U.S. dollars, debt securities will be credited free of payment on the settlement date.
Clearance and Settlement Procedures—Euroclear and Clearstream
We understand that investors that hold their debt securities through Euroclear or Clearstream accounts will follow the settlement procedures that are applicable to conventional Eurobonds in registered form, or such other procedures as are applicable for other securities.
Debt securities will be credited to the securities custody accounts of Euroclear and Clearstream accountholders on the business day following the settlement date, for value on the settlement date. They will be credited either free of payment or against payment for value on the settlement date.
Secondary Market Trading
Trading between DTC Participants
Secondary market trading of the debt securities between DTC participants will occur in the ordinary way in accordance with DTC's rules. Secondary market trading will be settled using procedures applicable to U.S. corporate debt obligations in DTC's Same-Day Funds Settlement System for debt securities.
If payment is made in U.S. dollars, settlement will be in same-day funds. If payment is made in a currency other than U.S. dollars, settlement will be free of payment. If payment is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC participants involved.
44
Trading between Euroclear and/or Clearstream Accountholders
We understand that secondary market trading between Euroclear and/or Clearstream accountholders will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream. Secondary market trading will be settled using procedures applicable to conventional Eurobonds in registered form.
Trading between a DTC Seller and a Euroclear or Clearstream Purchaser
A purchaser of debt securities that are held in the account of a DTC participant must send instructions to Euroclear or Clearstream at least one business day prior to settlement. The instructions will provide for the transfer of the debt securities from the selling DTC participant's account to the account of the purchasing Euroclear or Clearstream accountholder. Euroclear or Clearstream, as the case may be, will then instruct the common depositary for Euroclear and Clearstream to receive the debt securities either against payment by the common depositary or free of payment.
The beneficial interests in the debt securities will be credited by DTC to the common depositary. Euroclear or Clearstream, as applicable, will then credit the account of the participant, following its usual procedures. Credit for the debt securities will appear on the next day, European time. Cash debit will be back-valued to, and the interest on the debt securities will accrue from, the value date, which would be the preceding day, when settlement occurs in New York. If the trade fails and settlement is not completed on the intended date, the Euroclear or Clearstream cash debit will be valued as of the actual settlement date instead.
Euroclear or Clearstream accountholders will need the funds necessary to process same-day funds settlement. The most direct means of doing this is to preposition funds for settlement, either from cash or from existing lines of credit, as for any settlement occurring within Euroclear or Clearstream. Under this approach, accountholders may take on credit exposure to Euroclear or Clearstream until the debt securities are credited to their accounts one business day later.
As an alternative, if Euroclear or Clearstream has extended a line of credit to them, accountholders can choose not to preposition funds and will instead allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear or Clearstream accountholders purchasing debt securities would incur overdraft charges for one business day (assuming they cleared the overdraft as soon as the debt securities were credited to their accounts). However, interest on the debt securities would accrue from the value date. Therefore, in many cases, the investment income on debt securities that is earned during that one business day period may substantially reduce or offset the amount of the overdraft charges. This result will, however, depend on each accountholder's particular cost of funds.
Because the settlement will take place during New York business hours, DTC participants will use their usual procedures to deliver debt securities to the common depositary on behalf of Euroclear or Clearstream accountholders. The sale proceeds will be available to the DTC seller on the settlement date. For the DTC participants, then, a cross-market transaction will settle no differently than a trade between two DTC participants.
Special Timing Considerations
You should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the debt securities through Clearstream and Euroclear on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States.
In addition, because of time-zone differences, there may be problems with completing transactions involving Clearstream and Euroclear on the same business day as in the United States. U.S. investors who wish to transfer their interests in the debt securities, or to receive or make a payment or delivery
45
of the debt securities, on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg or Brussels, depending on whether Clearstream or Euroclear is used.
Your prospectus supplement will include a description of the material tax consequences of acquiring, owning and disposing of the securities under U.S. federal and U.K. income tax laws.
46
We may sell the securities:
- •
- through underwriters,
- •
- through dealers,
- •
- through agents or
- •
- directly to purchasers.
The prospectus supplement with respect to the securities being offered thereby will set forth the terms of the offering of such securities, including the names of any underwriters, dealers or agents involved in the sale of such securities, the principal amounts or number of securities, as the case may be, to be purchased by any such underwriters, any applicable commissions or discounts, and any securities exchanges on which the securities may be listed. The expenses we incur in connection with the issuance and distribution of the securities and the net proceeds to us will also be set forth in the prospectus supplement.
If underwriters are used in the sale, the securities being sold will be acquired by the underwriters for their own account and distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Unless otherwise set forth in the prospectus supplement with respect to the securities being offered thereby, the obligations of the underwriters to purchase such securities will be subject to certain conditions precedent and the underwriters will be obligated to purchase all such securities if any of such securities are purchased. The initial public offering price of any securities and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
If dealers are used in the sale, unless otherwise indicated in the prospectus supplement with respect to the securities being offered thereby, we will sell such securities to the dealers as principals. The dealers may then resell such securities to the public at varying prices to be determined by such dealers at the time of resale.
Securities may also be sold through agents that we designate from time to time, or directly by us. Any agent involved in the offering and sale of the securities in respect of which this prospectus is being delivered will be named, and any commissions payable by us to such agent will be set forth, in the prospectus supplement with respect to such securities. Unless otherwise indicated in such prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment.
Underwriters, dealers and agents who participate in the distribution of the securities may be entitled under agreements entered into with us to indemnification by us against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the underwriters, dealers or agents may be required to make in respect thereof. Underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, Prudential plc in the ordinary course of business.
To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain, or otherwise affect the price of the securities. These may include over-allotment, stabilization, syndicate short covering transactions and penalty bids. Over-allotment involves sales in excess of the offering size, which creates a short position. Stabilizing transactions involve bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Syndicate short covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim selling concessions from dealers when the securities originally sold by the
47
dealers are purchased in covering transactions to cover syndicate short positions. These transactions may cause the price of the securities sold in an offering to be higher than it would otherwise be. These transactions, if commenced, may be continued by the persons participating in the offering at any time.
In the event that securities of any series are not listed on a U.S. national securities exchange, certain broker-dealers may make a market in such securities but will not be obligated to do so and may discontinue market making at any time without notice. We cannot assure you that any broker-dealer will make a market in securities of any series or as to the liquidity of the trading market for such securities.
Certain legal matters in connection with the securities to be offered hereby will be passed upon for us by Morgan, Lewis & Bockius UK LLP , London, England, our U.S. counsel, and by Slaughter and May, our English solicitors.
The consolidated financial statements and condensed financial statement schedule of Prudential plc and its subsidiaries as of December 31, 2019 and 2018, and for each of the years in the three-year period ended December 31, 2019, and management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2019 have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon authority of said firm as experts in accounting and auditing.
48
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this prospectus in connection with the offer made by this prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by Prudential plc or any of the underwriters, dealers or agents. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstance create an implication that there has been no change in the affairs of Prudential plc since the date hereof. This prospectus does not constitute an offer or solicitation by anyone in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation.
All dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Prudential plc
Senior Debt Securities
Subordinated Debt Securities
Preference Shares
American Depositary Shares
Prospectus
August 11, 2020
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 8. Indemnification of Directors and Officers
Article 194 of Prudential plc's Articles provides:
"The Company may indemnify any director, officer or employee of the Company or of any associated company against any liability and may purchase and maintain for any director, officer or employee of the Company or of any associated company insurance against any liability. No director of the Company or of any associated company shall be accountable to the Company or the members for any benefit provided pursuant to this Article and the receipt of any such benefit shall not disqualify any person from being or becoming a director of the Company."
Article 149 of Prudential plc's Articles provides:
"Without prejudice to the provisions of Article 194, the board may exercise all the powers of the Company to purchase and maintain insurance for or for the benefit of any person who is or was:
- (a)
- a
director, officer or employee of the Company, or any body which is or was the holding company or subsidiary undertaking of the Company, or in which the Company or
such holding company or subsidiary undertaking has or had any interest (whether direct or indirect) or with which the Company or such holding company or subsidiary undertaking is or was in any way
allied or associated; or
- (b)
- a trustee of any pension fund in which employees of the Company or any other body referred to in Article 149(a) is or has been interested,
including without limitation insurance against any liability incurred by such person in respect of any act or omission in the actual or purported execution or discharge of his duties or in the exercise or purported exercise of his powers or otherwise in relation to his duties, powers or offices in relation to the relevant body or fund."
Sections 232 to 236 of the Companies Act 2006 provide as follows:
- (1)
- Any
provision that purports to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any
negligence, default, breach of duty or breach of trust in relation to the company is void.
- (2)
- Any
provision by which a company directly or indirectly provides an indemnity (to any extent) for a director of the company, or of an associated company, against any
liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is a director is void, except as permitted
by—
- (a)
- section 233
(provision of insurance),
- (b)
- section 234
(qualifying third party indemnity provision), or
- (c)
- section 235
(qualifying pension scheme indemnity provision).
- (3)
- This
section applies to any provision, whether contained in a company's articles or in any contract with the company or otherwise.
- (4)
- Nothing in this section prevents a company's articles from making such provision as has previously been lawful for dealing with conflicts of interest.
"232. Provisions protecting directors from liability
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233. Provision of insurance
Section 232(2) (voidness of provisions for indemnifying directors) does not prevent a company from purchasing and maintaining for a director of the company, or of an associated company, insurance against any such liability as is mentioned in that subsection.
- (1)
- Section 232(2)
(voidness of provisions for indemnifying directors) does not apply to qualifying third party indemnity provision.
- (2)
- Third party indemnity provision means provision for indemnity against liability incurred by the director to a person other than the company or an associated company.
234. Qualifying third party indemnity provision
- (3)
- The
provision must not provide any indemnity against—
- (a)
- any
liability of the director to pay—
- (i)
- a
fine imposed in criminal proceedings, or
- (ii)
- a
sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or
- (b)
- any
liability incurred by the director—
- (i)
- in
defending criminal proceedings in which he is convicted, or
- (ii)
- in
defending civil proceedings brought by the company, or an associated company, in which judgment is given against him, or
- (iii)
- in
connection with an application for relief (see subsection (6)) in which the court refuses to grant him relief.
- (4)
- The
references in subsection (3)(b) to a conviction, judgment or refusal of relief are the final decision in the proceedings.
- (5)
- For
this purpose—
- (a)
- a
conviction, judgment or refusal of relief becomes final—
- (i)
- if
not appealed against, at the end of the period for bringing an appeal, or
- (ii)
- if
appealed against, at the time when the appeal (or any further appeal) is disposed of; and
- (b)
- an
appeal is disposed of—
- (i)
- if
it is determined and the period for bringing any further appeal has ended, or
- (ii)
- if
it is abandoned or otherwise ceases to have effect.
- (6)
- The reference in subsection (3)(b)(iii) to an application for relief is to an application for relief under section 661(3) or (4) (power of court to grant relief in case of acquisition of shares by innocent nominee), or section 1157 (general power of court to grant relief in case of honest and reasonable conduct).
Such provision is qualifying third party indemnity provision if the following requirements are met.
- (1)
- Section 232(2) (voidness of provisions for indemnifying directors) does not apply to a qualifying pension scheme indemnity provision.
235. Qualifying pension scheme indemnity provision
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- (2)
- Pension scheme indemnity provision means provision indemnifying a director of a company that is a trustee of an occupational pension scheme against liability incurred in connection with the company's activities as trustee of the scheme.
- (3)
- The
provision must not provide any indemnity against—
- (a)
- any
liability of the director to pay—
- (i)
- a
fine imposed in criminal proceedings, or
- (ii)
- a
sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or
- (b)
- any
liability incurred by the director in defending criminal proceedings in which he is convicted.
- (4)
- The
reference in subsection (3)(b) to a conviction is to the final decision in the proceedings.
- (5)
- For
this purpose—
- (a)
- a
conviction becomes final—
- (i)
- if
not appealed against, at the end of the period for bringing an appeal, or
- (ii)
- if
appealed against, at the time when the appeal (or any further appeal) is disposed of; and
- (b)
- an
appeal is disposed of—
- (i)
- if
it is determined and the period for bringing any further appeal has ended, or
- (ii)
- if
it is abandoned or otherwise ceases to have effect.
- (6)
- In this section "occupational pension scheme" means an occupational pension scheme as defined in section 150(5) of the Finance Act 2004 (c 12) that is established under a trust.
Such provision is qualifying pension scheme indemnity provision if the following requirements are met.
- (1)
- This
section requires disclosure in directors' report of—
- (a)
- qualifying
third party indemnity provision, and
- (b)
- qualifying pension scheme indemnity provision.
- (2)
- If
when a directors' report is approved any qualifying indemnity provision (whether made by the company or otherwise) is in force for the benefit of one or more
directors of the company, the report must state that such provision is in force.
- (3)
- If
at any time during the financial year to which a directors' report relates any such provision was in force for the benefit of one or more persons who were then
directors of the company, the report must state that such provision was in force.
- (4)
- If when a directors' report is approved qualifying indemnity provision made by the company is in force for the benefit of one or more directors of an associated company, the report must state that such provision is in force.
236. Qualifying indemnity provision to be disclosed in a directors' report
Such provision is referred to in this section as "qualifying indemnity provision".
II-3
- (5)
- If at any time during the financial year to which a directors' report relates any such provision was in force for the benefit of one or more persons who were then directors of an associated company, the report must state that such provision was in force".
- (1)
- If
in proceedings for negligence, default, breach of duty or breach of trust against—
- (a)
- an
officer of a company, or
- (b)
- a person employed by a company as auditor (whether he is or is not an officer of the company),
Section 1157 of the Companies Act 2006 provides as follows:
"1157. Power of court to grant relief in certain cases:
- (2)
- If
any such officer or person has reason to apprehend that a claim will or might be made against him in respect of negligence, default breach of duty or breach of
trust—
- (a)
- he
may apply to the court for relief, and
- (b)
- the
court has the same power to relieve him as it would have had if it had been a court before which proceedings against him for negligence, default, breach of duty
or breach of trust had been brought.
- (3)
- Where a case to which subsection (1) applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if he is satisfied that the defendant (in Scotland, the defender) ought in pursuance of that subsection to be relieved either in whole or in part from the liability sought to be enforced against him, withdraw the case from the jury and forthwith direct judgment to be entered for the defendant (in Scotland, grant decree of absolvitor) on such terms as to costs (in Scotland, expenses) or otherwise as the judge may think proper".
it appears to the court hearing the case that the officer or person is or may be liable but that he acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused, the court may relieve him, either wholly or in part, from his liability on such terms as it thinks fit.
The Registrant has arranged appropriate insurance cover in respect of legal action against directors and senior managers of the Registrant and its consolidated subsidiaries. The Registrant also provides protections for its and its consolidated subsidiaries' directors and senior managers against personal financial exposure they may incur in their capacity as such. These include qualifying third party indemnity provisions for the benefit of directors of the Registrant and other such persons, including, where applicable, in their capacity as directors of the Registrant's consolidated subsidiaries.
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- *
- Filed
as an exhibit to Registration Statement No. 333-199148 and incorporated herein by reference.
- **
- Incorporated
by reference to the Annual Report on Form 20-F (File No. 001-15040) previously filed by Prudential plc with the Securities and
Exchange Commission on March 22, 2019.
- ***
- Incorporated
by reference to the Report of Foreign Private Issuer on Form 6-K (File No. 001-15040), previously filed by Prudential plc with the
Securities and Exchange Commission on April 14, 2020.
- ****
- Filed as an exhibit to Registration Statement No. 333-117208 and incorporated herein by reference.
- (a)
- The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
II-5
and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and
(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of
this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective amendment to the Registration Statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to the Registration Statement, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Item 8.A. of Form 20-F if such financial statements and information are contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement.
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the Registration Statement as of the date the filed prospectus was deemed part of and included in the Registration Statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the Registration Statement relating to the securities in the Registration Statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering
II-6
thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the Registration Statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such effective date.
(6) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of an undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
II-7
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in London, England, on August 11, 2020.
|
PRUDENTIAL PLC | |||||
|
By: |
/s/ MICHAEL WELLS |
||||
|
Name: | Michael Wells | ||||
|
Title: | Group Chief Executive | ||||
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
|
Title
|
Date
|
|||
|---|---|---|---|---|---|
| /s/ PAUL MANDUCA Paul Manduca |
Chairman | August 11, 2020 | |||
/s/ MICHAEL WELLS Michael Wells |
Group Chief Executive, Executive Director |
August 11, 2020 |
|||
/s/ MARK FITZPATRICK Mark FitzPatrick CA |
Group Chief Financial Officer and Chief Operating Officer, Executive Director |
August 11, 2020 |
|||
/s/ JAMES TURNER James Turner FCA FCSI FRM |
Group Chief Risk and Compliance Officer, Executive Director |
August 11, 2020 |
|||
/s/ THE HON. PHILIP REMNANT The Hon. Philip Remnant CBE FCA |
Non-Executive Director |
August 11, 2020 |
|||
/s/ JEREMY ANDERSON Jeremy Anderson CBE |
Non-Executive Director |
August 11, 2020 |
|||
/s/ DAVID LAW David Law ACA |
Non-Executive Director |
August 11, 2020 |
II-8
Signature
|
Title
|
Date
|
|||
|---|---|---|---|---|---|
| /s/ KAIKHUSHRU NARGOLWALA Kaikhushru Nargolwala FCA |
Non-Executive Director | August 11, 2020 | |||
/s/ ANTHONY NIGHTINGALE Anthony Nightingale CMG SBS JP |
Non-Executive Director |
August 11, 2020 |
|||
/s/ ALICE SCHROEDER Alice Schroeder |
Non-Executive Director |
August 11, 2020 |
|||
/s/ SHRITI VADERA Shriti Vadera |
Non-Executive Director |
August 11, 2020 |
|||
/s/ THOMAS WATJEN Thomas Watjen |
Non-Executive Director |
August 11, 2020 |
|||
/s/ FIELDS WICKER-MIURIN Fields Wicker-Miurin OBE |
Non-Executive Director |
August 11, 2020 |
|||
/s/ AMY YIP Amy Yip |
Non-Executive Director |
August 11, 2020 |
|||
/s/ ANDREW BOWDEN Andrew Bowden |
Authorized Representative in the United States |
August 11, 2020 |
II-9
- *
- Filed
as an exhibit to Registration Statement No. 333-199148 and incorporated herein by reference.
- **
- Incorporated
by reference to the Annual Report on Form 20-F (File No. 001-15040) previously filed by Prudential plc with the Securities and
Exchange Commission on March 22, 2019.
- ***
- Incorporated
by reference to the Report of Foreign Private Issuer on Form 6-K (File No. 001-15040), previously filed by Prudential plc with the
Securities and Exchange Commission on April 14, 2020.
- ****
- Filed as an exhibit to Registration Statement No. 333-117208 and incorporated herein by reference.
II-10
PRUDENTIAL plc
Issuer
and
Citibank, N.A.
Subordinated Trustee
SUBORDINATED INDENTURE
Dated as of August 10, 2020
Subordinated Debt Securities
PRUDENTIAL plc
Reconciliation and tie showing the location in this Subordinated Indenture of the provisions inserted pursuant to Sections 310 to 318(a), inclusive, of the Trust Indenture Act.
|
Trust Indenture Act Section |
Subordinated Indenture Section | |||||
|
§310 |
(a)(1) |
6.09 | ||||
|
(a)(2) |
6.09 | |||||
|
(a)(3) |
Not applicable | |||||
|
(a)(4) |
Not applicable | |||||
|
(a)(5) |
6.09 | |||||
|
(b) |
6.08 and 6.10 | |||||
|
(c) |
Not applicable | |||||
|
§311 |
(a) |
6.13 | ||||
|
(b) |
6.13 | |||||
|
(c) |
Not applicable | |||||
|
§312 |
(a) |
7.01 and 7.02(a) | ||||
|
(b) |
7.02(b) | |||||
|
(c) |
7.02(c) | |||||
|
§313 |
(a) |
7.03(a) | ||||
|
(b) |
7.03(a) | |||||
|
(c) |
7.03(a) | |||||
|
(d) |
7.03(b) | |||||
|
§314 |
(a) |
7.04 and 10.04 | ||||
|
(b) |
Not applicable | |||||
|
(c) |
1.02 | |||||
|
(c)(1) |
1.02 | |||||
|
(c)(2) |
1.02 | |||||
|
(c)(3) |
1.01 | |||||
|
(d) |
Not applicable | |||||
|
(e) |
1.02 | |||||
|
§315 |
(a) |
6.01(a) | ||||
|
(b) |
6.02 and 7.03(a) | |||||
|
(c) |
6.01(b) | |||||
|
(d) |
6.01(c) | |||||
|
(d)(1) |
6.01(c)(1) | |||||
|
(d)(2) |
6.01(c)(2) | |||||
|
(d)(3) |
6.01(c)(3) | |||||
|
(e) |
5.14 | |||||
|
§316 |
(a)(1)(A) |
5.02 and 5.12 | ||||
|
(a)(1)(B) |
5.13 | |||||
|
(a)(2) |
Not applicable | |||||
|
(b) |
5.08 | |||||
|
(c) |
1.04(a) | |||||
|
§317 |
(a)(1) |
5.02 and 5.03 | ||||
|
(a)(2) |
5.04 | |||||
|
(b) |
10.03 | |||||
|
§318 |
(a) |
1.07 | ||||
|
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be part of this Subordinated Indenture. |
TABLE OF CONTENTS
|
|
|
Page |
|
ARTICLE ONE |
| |
|
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
| |
|
|
| |
|
Section 1.01. |
Definitions |
1 |
|
Section 1.02. |
Compliance Certificates and Opinions |
11 |
|
Section 1.03. |
Form of Documents Delivered to Subordinated Trustee |
12 |
|
Section 1.04. |
Acts of Holders; Communication by Holders with Other Holders |
12 |
|
Section 1.05. |
Notices, Etc., to Subordinated Trustee or Issuer |
13 |
|
Section 1.06. |
Notice to Holders; Waiver |
13 |
|
Section 1.07. |
Conflict with Trust Indenture Act |
14 |
|
Section 1.08. |
Effect of Headings and Table of Contents |
14 |
|
Section 1.09. |
Successors and Assigns |
14 |
|
Section 1.10. |
Separability Clause |
14 |
|
Section 1.11. |
Benefits of Subordinated Indenture |
14 |
|
Section 1.12. |
Governing Law |
14 |
|
Section 1.13. |
Non-Business Day |
14 |
|
Section 1.14. |
Immunity of Incorporators, Stockholders, Officers and Directors |
15 |
|
Section 1.15. |
Language of Notices, Etc. |
15 |
|
Section 1.16. |
Appointment of Agent for Service |
15 |
|
Section 1.17. |
Rules by the Subordinated Trustee and Agents |
16 |
|
Section 1.18. |
Successors; No Recourse Against Others |
16 |
|
Section 1.19. |
Duplicate Originals |
16 |
|
Section 1.20. |
Calculation Agent |
16 |
|
|
|
|
|
ARTICLE TWO |
| |
|
SECURITY FORMS |
| |
|
|
| |
|
Section 2.01. |
Forms of Securities |
16 |
|
Section 2.02. |
Form of Subordinated Trustee’s Certificate of Authentication |
17 |
|
Section 2.03. |
Securities in Global Form |
17 |
|
|
|
|
|
ARTICLE THREE |
| |
|
THE SECURITIES |
| |
|
|
| |
|
Section 3.01. |
Title; Payment and Terms |
18 |
|
Section 3.02. |
Denominations |
20 |
|
Section 3.03. |
Execution, Authentication, Delivery and Dating |
20 |
|
Section 3.04. |
Temporary Securities and Exchange of Securities |
21 |
|
Section 3.05. |
Registration, Registration of Transfer and Exchange |
22 |
|
Section 3.06. |
Mutilated, Destroyed, Lost and Stolen Securities |
23 |
|
Section 3.07. |
Payment of Interest; Interest Rights Preserved |
24 |
|
Section 3.08. |
Persons Deemed Owners |
27 |
|
Section 3.09. |
Cancellation |
28 |
|
Section 3.10. |
Computation of Interest |
28 |
|
Section 3.11. |
Common Code, CUSIP or ISIN Numbers |
28 |
|
Section 3.12. |
Authenticating Agents |
29 |
|
ARTICLE FOUR |
| |
|
SATISFACTION AND DISCHARGE |
| |
|
|
| |
|
Section 4.01. |
Satisfaction and Discharge of Securities of any Series |
29 |
|
Section 4.02. |
Application of Trust Money |
31 |
|
Section 4.03. |
Satisfaction and Discharge of Subordinated Indenture |
31 |
|
Section 4.04. |
Reinstatement |
32 |
|
Section 4.05 |
Relevant Regulator Consent |
32 |
|
ARTICLE FIVE |
| |
|
REMEDIES |
| |
|
|
| |
|
Section 5.01. |
Events of Default |
32 |
|
Section 5.02. |
Acceleration of Maturity; Rescission and Annulment |
32 |
|
Section 5.03. |
Payment Defaults, Perpetual Security Defaults, Payment Events |
33 |
|
Section 5.04. |
Subordinated Trustee May File Proofs of Claim |
35 |
|
Section 5.05. |
Subordinated Trustee May Enforce Claims Without Possession of Securities |
36 |
|
Section 5.06. |
Application of Money Collected |
36 |
|
Section 5.07. |
Limitation on Suits |
36 |
|
Section 5.08. |
Unconditional Right of Holders to Receive Principal (and Premium, if any) and Interest, if any |
37 |
|
Section 5.09. |
Restoration of Rights and Remedies |
37 |
|
Section 5.10. |
Rights and Remedies Cumulative |
37 |
|
Section 5.11. |
Delay or Omission Not Waiver |
37 |
|
Section 5.12. |
Control by Holders |
37 |
|
Section 5.13. |
Waiver of Past Defaults |
38 |
|
Section 5.14. |
Undertaking for Costs |
38 |
|
Section 5.15. |
Waiver of Stay or Extension Laws |
38 |
|
Section 5.16. |
Judgment Currency |
38 |
|
|
|
|
|
ARTICLE SIX |
| |
|
THE SUBORDINATED TRUSTEE |
| |
|
|
| |
|
Section 6.01. |
Certain Duties and Responsibilities |
39 |
|
Section 6.02. |
Notice of Default |
40 |
|
Section 6.03. |
Certain Rights of Subordinated Trustee |
40 |
|
Section 6.04. |
Not Responsible for Recitals or Issuance of Securities |
41 |
|
Section 6.05. |
May Hold Securities |
42 |
|
Section 6.06. |
Money Held in Trust |
42 |
|
Section 6.07. |
Compensation and Reimbursement |
42 |
|
Section 6.08. |
Disqualification; Conflicting Interests |
42 |
|
Section 6.09. |
Corporate Subordinated Trustee Required; Different Subordinated Trustees for Different Series; Eligibility |
43 |
|
Section 6.10. |
Resignation and Removal; Appointment of Successor |
43 |
|
Section 6.11. |
Acceptance of Appointment by Successor |
44 |
|
Section 6.12. |
Merger, Conversion, Consolidation or Succession to Business |
45 |
|
Section 6.13. |
Preferential Collection of Claims Against the Issuer |
45 |
|
ARTICLE SEVEN |
| |
|
HOLDERS LISTS AND REPORTS BY SUBORDINATED TRUSTEE AND ISSUER |
| |
|
|
| |
|
Section 7.01. |
Issuer to Furnish Subordinated Trustee Names and Addresses of Holders |
46 |
|
Section 7.02. |
Preservation of Information; Communications to Holders |
46 |
|
Section 7.03. |
Reports by Subordinated Trustee |
47 |
|
Section 7.04. |
Reports by Issuer |
47 |
|
|
|
|
|
ARTICLE EIGHT |
| |
|
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER |
| |
|
|
| |
|
Section 8.01. |
Issuer May Consolidate, Etc., Only on Certain Terms |
48 |
|
Section 8.02. |
Successor Corporation Substituted |
48 |
|
Section 8.03 |
Assumption of Obligations |
49 |
|
Section 8.04 |
Notification of Assumption or Substitution to the Relevant Regulator |
49 |
|
|
|
|
|
ARTICLE NINE |
| |
|
SUPPLEMENTAL INDENTURES |
| |
|
|
| |
|
Section 9.01. |
Supplemental Subordinated Indentures Without Consent of Holders |
50 |
|
Section 9.02. |
Supplemental Subordinated Indentures With Consent of Holders |
51 |
|
Section 9.03. |
Execution of Supplemental Subordinated Indentures |
52 |
|
Section 9.04. |
Effect of Supplemental Subordinated Indentures |
52 |
|
Section 9.05. |
Conformity With Trust Indenture Act |
52 |
|
Section 9.06. |
Reference in Securities to Supplemental Subordinated Indentures |
52 |
|
Section 9.07 |
Notification of Modification or Supplemental Indenture to Relevant Regulator |
52 |
|
|
|
|
|
ARTICLE TEN |
| |
|
COVENANTS |
| |
|
|
| |
|
Section 10.01. |
Payment of Principal (and Premium, if any) and Interest and Deferred Interest, if any |
52 |
|
Section 10.02. |
Maintenance of Office or Agency |
52 |
|
Section 10.03. |
Money for Securities Payments to Be Held in Trust |
53 |
|
Section 10.04. |
Statements as to Compliance |
54 |
|
Section 10.05. |
Corporate Existence |
54 |
|
Section 10.06. |
Waiver of Certain Covenants |
54 |
|
Section 10.07. |
Payment of Additional Amounts |
55 |
|
Section 10.08. |
Calculation of Original Issue Discount |
56 |
|
Section 10.09. |
Dividend and Capital Restriction |
56 |
|
|
|
|
|
ARTICLE ELEVEN |
| |
|
REDEMPTION OR VARIATION OF SECURITIES |
| |
|
|
| |
|
Section 11.01. |
Applicability of this Article |
57 |
|
Section 11.02. |
Election to Redeem; Notice to Subordinated Trustee |
57 |
|
Section 11.03. |
Selection of Securities to be Redeemed |
57 |
|
Section 11.04. |
Notice of Redemption |
57 |
|
Section 11.05. |
Deposit of Redemption Price |
58 |
|
Section 11.06. |
Securities Payable on Redemption Date |
58 |
|
Section 11.07. |
Securities Redeemed in Part |
59 |
|
Section 11.08. |
Tax Event Redemption |
59 |
|
Section 11.09 |
Regulatory Event Redemption |
60 |
|
Section 11.10 |
Early Redemption — Relevant Regulator Consent |
60 |
|
Section 11.11 |
Repurchases of Securities |
60 |
|
Section 11.12 |
Permitted Variation |
61 |
|
|
|
|
|
ARTICLE TWELVE |
| |
|
SINKING FUNDS |
| |
|
|
| |
|
Section 12.01. |
Applicability of this Article |
61 |
|
Section 12.02. |
Satisfaction of Sinking Fund Payments with Securities |
61 |
|
Section 12.03. |
Redemption of Securities for Sinking Fund |
62 |
|
|
|
|
|
ARTICLE THIRTEEN |
| |
|
SUBORDINATION OF SECURITIES |
| |
|
|
| |
|
Section 13.01 |
Securities Subordinate to Certain Creditors; Definition of Relative Rights |
62 |
|
Section 13.02 |
Provisions Solely to Define Relative Rights |
66 |
|
Section 13.03 |
Subordinated Trustee to Effectuate Subordination |
66 |
|
Section 13.04 |
No Waiver of Subordination Provisions |
66 |
|
Section 13.05 |
Notice to Subordinated Trustee |
66 |
|
Section 13.06 |
Reliance on Judicial Order or Certificate of Liquidating Agent |
67 |
|
Section 13.07 |
Subordinated Trustee Not Fiduciary for Creditors |
67 |
|
Section 13.08 |
Rights of Subordinated Trustee as Creditor; Preservation of Subordinated Trustee’s Rights |
67 |
|
Section 13.09 |
Article Applicable to Paying Agents |
68 |
|
Section 13.10 |
Conversion or Exchange Not Deemed Payment |
68 |
|
|
|
|
|
ARTICLE FOURTEEN |
| |
|
CONVERSION OR EXCHANGE OF SECURITIES |
| |
|
|
| |
|
Section 14.01 |
Applicability of Article |
68 |
|
Section 14.02 |
Election to Convert or Exchange; Notice to Subordinated Trustee |
68 |
|
Section 14.03 |
Notice of Conversion or Exchange |
68 |
|
Section 14.04 |
Deposit of Payments |
69 |
|
Section 14.05 |
Surrender of Securities |
69 |
|
Section 14.06 |
Issuance of Preference Shares |
69 |
|
Section 14.07 |
Effect of Conversion or Exchange |
69 |
|
Section 14.08 |
Validity of Preference Shares, Depositary Agreements and ADRs |
70 |
|
Section 14.09 |
Taxes and Charges |
70 |
|
Section 14.10 |
Subordinated Trustee Not Liable |
71 |
|
Section 14.11 |
Exchange or Conversion — Relevant Regulator Consent |
71 |
This is a SUBORDINATED INDENTURE dated as of August 10, 2020, among Prudential plc, a public limited company duly organized and existing under the laws of England and Wales and having its principal office at 1 Angel Court, London EC2R 7AG, England (hereinafter called the “Issuer”), and Citibank, N.A., a national banking association having its principal office at the Corporate Trust Office (as such term is defined below), as Subordinated Trustee (hereinafter called the “Subordinated Trustee”).
RECITALS OF THE ISSUER
The Issuer deems it necessary to issue from time to time for its lawful purposes securities in registered form (hereinafter called the “Securities”) evidencing its unsecured subordinated indebtedness and has duly authorized the execution and delivery of this Subordinated Indenture to provide for the issuance from time to time of the Securities, unlimited as to principal amount, to have such titles, to bear such rates of interest, to mature at such time or times and to have such other provisions as shall be established as hereinafter provided.
All things necessary to make this Subordinated Indenture a valid agreement of the Issuer, in accordance with its terms, have been done, and the Issuer proposes to do all things necessary to make the Securities, when executed by the Issuer and authenticated and delivered by the Subordinated Trustee hereunder and duly issued by the Issuer, the valid obligations of the Issuer as hereinafter provided.
NOW THEREFORE, THIS SUBORDINATED INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions.
For all purposes of this Subordinated Indenture and all Securities issued hereunder, except as otherwise expressly provided herein, in one or more indentures supplemental hereto or in an Officers’ Certificate pursuant to Section 3.01 or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United Kingdom, and the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United Kingdom at the date or time of such computation; and
(4) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Subordinated Indenture as a whole and not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article Three and Article Six, are defined in those Articles.
“Act”, when used with respect to any Holder, has the meaning specified in Section 1.04.
“Additional Amounts” has the meaning specified in Section 10.07.
“ADR Custodian” means the custodian under the ADR Deposit Agreement.
“ADR Deposit Agreement” means the deposit agreement, dated as of August 6, 2004, between the Issuer, Citibank, N.A., as depositary, and holders from time to time of American Depositary Receipts issued thereunder.
“ADR Depositary” means the depositary under the ADR Deposit Agreement.
“ADRs” means the American Depositary Receipts evidencing American Depositary Shares representing Preference Shares issued pursuant to the ADR Deposit Agreement.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Alternative Coupon Satisfaction Mechanism” means, with respect to the Perpetual Subordinated Capital Securities and Perpetual Subordinated Debt Securities, the procedure for raising cash through the issuance of shares by which the Issuer may be required or elect to satisfy a payment of Deferred Interest or a principal payment on the Perpetual Subordinated Capital Securities and Perpetual Subordinated Debt Securities, as and to the extent provided in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series of Perpetual Subordinated Capital Securities and Perpetual Subordinated Debt Securities.
“Assets” means the total amount of the Issuer’s non-consolidated gross assets as shown by the then latest published balance sheet, but adjusted for contingencies and for subsequent events, and to such extent as such Person or Persons giving the Solvency Condition report under Section 13.01(b) may determine.
“Auditors” means the auditors for the time being of the Issuer, or if there shall be joint auditors of the Issuer, any one or more of such joint auditors.
“Authenticating Agent” means any Person authorized to authenticate and deliver Securities in the name of and as the agent of, the Subordinated Trustee for the Securities of any series pursuant to Section 3.12.
“Bankruptcy Law” means any bankruptcy, insolvency, reorganization or other similar law of the United States or any State thereof, England or any other applicable country or jurisdiction.
“Board of Directors” means the board of directors of the Issuer or any duly authorized committee of that board or any director or directors and/or officer or officers of the Issuer to whom that board or committee shall have duly delegated its authority.
“Board Resolution” means (i) a copy of a resolution certified by a director, the Secretary or a Deputy or Assistant Secretary of the Issuer to have been duly adopted by the Board of Directors or an authorized committee thereof and to be in full force and effect on the date of such certification, or (ii) a certificate signed by the director or directors and/or officer or officers to whom the Board of Directors of the Issuer shall have duly delegated its authority, and, in each case, delivered to the Subordinated Trustee for the Securities of any series.
“Business Day”, when used with respect to any particular Place of Payment, means, unless otherwise specified in the Securities of a series, each day, other than a Saturday or Sunday, which is not a day on which commercial banking institutions in the City of New York or in London, England or in the applicable Place of Payment are authorized or required by law, regulation or executive order to close, and shall otherwise mean each day, other than a Saturday or Sunday, which is not a day on which banking institutions, at the place where any specified act pursuant to this Subordinated Indenture is to occur, are authorized or required by law, regulation or executive order to close.
“Calculation Agent” means, at any time, the Person appointed by the Issuer and that has accepted such appointment to calculate the interest rate or other amounts from time to time with respect to any series of Securities.
“Capital Regulations” means the legislation, rules, regulations and guidelines (in each case whether having the force of law or otherwise) that that require the Issuer or the Supervised Group to meet any minimum or notional margin requirement in respect of solvency, or any minimum requirement in respect of regulatory capital or capital ratios for insurance companies, insurance holding companies or financial groups to which the Issuer or the Supervised Group is subject from time to time including, without limitation:
(a) the Group Capital Rules; and
(b) any guidelines issued by the Relevant Regulator from time to time in connection with the Group Capital Rules, whether pursuant to section 95ZI of the Hong Kong Insurance Ordinance (Cap. 41) or otherwise,
in each case, to the extent applicable.
“Certificate of a Firm of Independent Public Accountants” means a certificate in form and substance reasonably acceptable to the Subordinated Trustee signed by a firm of independent public accountants of nationally recognized standing in the country of organization of the Issuer selected by the Issuer and reasonably acceptable to the Subordinated Trustee, which may include the Auditors of the Issuer.
“Commission” means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act (as defined below), or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
“Compulsory Interest Payment Date” means any Interest Payment Date on which (a) the Issuer meets the Regulatory Capital Requirement and satisfies the Solvency Condition, in each case, both at the time of, and immediately after, the relevant Interest Payment; (b) the Issuer has, in the six calendar months immediately preceding such Interest Payment Date, declared or paid any dividend on any class of its share capital; and (c) the Issuer is not required to defer payments of interest on the Securities pursuant to the terms of any Legacy Tier 1 Note.
“Corporate Trust Office” means the office of the Subordinated Trustee for Securities of any series at which at any particular time its corporate trust business shall be principally administered, which office of Citibank, N.A., at the date of the execution of this Subordinated Indenture, is located at (a) for note transfer/surrender purposes, 480 Washington Boulevard, 30th Floor, Jersey City, New Jersey 07310, Facsimile: (973) 461-7191 or (973) 461-7192, Attention: Agency & Trust — Prudential plc, and (b) for all other purposes, 388 Greenwich Street, New York, New York 10013, Facsimile: (212) 816-5527, Attention: Agency & Trust — Prudential plc, or such other address as the Subordinated Trustee may designate from time to time by notice to the Holders and the Issuer, or the principal corporate trust officer of any successor Subordinated Trustee (or such other address as such successor Subordinated Trustee may designate from time to time by notice to the Holders and the Issuer).
“corporation” includes corporations, associations, companies and business trusts.
“Current Interest” has the meaning specified in Section 3.07.
“Dated Subordinated Debt Securities” means securities evidencing unsecured subordinated indebtedness of the Issuer authenticated and delivered under this Subordinated Indenture and that have a fixed Stated Maturity or Redemption Date.
“Defaulted Interest” has the meaning specified in Section 3.07.
“Deferred Interest” means any interest payment not paid by the Issuer on an Interest Payment Date as a result of the operation of Section 3.07 or following an election made by the Issuer pursuant to Section 3.07, together with any interest accrued thereon in this Supplemental Indenture, which has not been subsequently satisfied, as may be further provided in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series.
“Deferred Interest Payment” means any payment that the Issuer makes in respect of Deferred Interest.
“Deferred Interest Payment Date” has the meaning specified in Section 3.07.
“Deferred Principal Payment Date” has the meaning specified in Section 3.07.
“Definitive Suspension” means, with respect to any series of Perpetual Subordinated Capital Securities, the suspension of the Alternative Coupon Satisfaction Mechanism with respect to such series as provided in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series of Perpetual Subordinated Capital Securities.
“Depositary” means, with respect to the Securities of any series issuable or issued in the form of a global Security, the Person designated as Depositary by the Issuer pursuant to Section 3.01 until a successor Depositary shall have become such pursuant to the applicable provisions of this Subordinated 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 each Depositary with respect to the Securities of that series.
“Discounted Security” means any Security which provides for an amount (excluding any amounts attributable to accrued but unpaid interest thereon) less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.
“Dollars” and the sign “$” mean the currency of the United States that as at the time of payment is legal tender for the payment of public and private debts.
“Event Date” has the meaning specified in Section 3.01(23).
“Event of Default” has the meaning specified in Section 5.01.
“Excepted Person” has the meaning specified in Section 14.10.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
“Foreign Currency” means a currency issued and actively maintained as a country’s or countries’ recognized unit of domestic exchange by the government of any country other than the United States.
“Group” means the Issuer and its Subsidiaries, as constituted at any particular time.
“Group Capital Rules” means the requirements in relation to the capital of the Supervised Group as prescribed by the Relevant Regulator and any amendment, supplement or replacement thereof from time to time.
“HKIA” means the Hong Kong Insurance Authority.
“Holder”, when used with respect to any Security, means the Person in whose name a Security is registered in the Security Register.
“interest”, when used with respect to a Discounted Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
“Interest Payment Date”, when used with respect to any Dated Subordinated Debt Securities or Perpetual Subordinated Debt Securities, means the Stated Maturity of an installment of interest on such Dated Subordinated Debt Securities or Perpetual Subordinated Debt Securities and, when used with respect to any Perpetual Subordinated Capital Securities, means each date defined as an Interest Payment Date in accordance with the terms thereof; provided, however, that, unless otherwise provided with respect to the Securities of any series, if the Issuer does not pay any installment of interest on an Interest Payment Date with respect to any Dated Subordinated Debt Securities or Perpetual Subordinated Debt Securities, the obligation to make such payment and such Interest Payment Date shall be deferred until the Deferred Interest Payment Date (it being understood for the avoidance of doubt that any such deferral shall take place only once with respect to any payment of interest).
“Interest Period” means, in respect of any series of Securities, the period from and including each Interest Payment Date for such series (or, as the case may be, the issue date of such series) up to but excluding the next (or first) Interest Payment Date in respect of such series or such other period as is specified to apply to such series in the applicable Board Resolution or supplemental indenture establishing the terms of such series.
“Issuer” means the Person named as an “Issuer” in the first paragraph of this Subordinated Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Subordinated Indenture, and thereafter “Issuer” shall mean such successor corporation.
“Issuer Request” and “Issuer Order” mean, respectively, a written request or order (a) signed in the name of the Issuer by (i) any two of its chairman of the Board of Directors, deputy chairman of the Board of Directors, group chief executive officer, treasurer, group finance director or director group finance and risk, (ii) any one of the foregoing Persons together with any group secretary or deputy group secretary of the Issuer, or (iii) any two Persons designated by the Issuer in an Issuer Order previously delivered to the Subordinated Trustee for Securities of any series and (b) delivered to the Subordinated Trustee and/or Paying Agent, as the case may be, for Securities of any series in accordance with the provisions of this Subordinated Indenture.
“Judgment Date” has the meaning specified in Section 5.16.
“Junior Securities” means, unless otherwise provided in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Securities:
(i) in the case of Dated Subordinated Debt Securities, the Issuer’s Ordinary Shares, the Issuer’s Tier 1 Capital and any other securities issued by the Issuer together with any securities issued by a Subsidiary where such securities benefit from a guarantee or support agreement from the Issuer, the claims of the holders of which rank, as regards distribution on a return of assets on the Issuer’s winding up or in respect of distributions or payments of dividends or any other payments thereon, after the Dated Subordinated Debt Securities;
(ii) in the case of Perpetual Subordinated Debt Securities, the Issuer’s Ordinary Shares, the Issuer’s Tier 1 Capital and any other securities issued by the Issuer together with any securities issued by a Subsidiary where such securities benefit from a guarantee or support agreement from the Issuer, the claims of the holders of which rank, as regards distribution on a return of assets on winding up of the Issuer or in respect of distributions or payments of dividends or any other payments thereon, after the Perpetual Subordinated Debt Securities; or
(iii) in the case of the Perpetual Subordinated Capital Securities, the Issuer’s Ordinary Shares and any other securities issued by the Issuer together with any securities issued by a Subsidiary where such securities benefit from a guarantee or support agreement from the Issuer, the claims of the holders of which rank, as regards distribution on a return of assets on the winding up of the Issuer or in respect of distributions or payments of dividends or any other payments thereon, after the Perpetual Subordinated Capital Securities.
“Legacy Tier 1 Notes” means the Issuer’s $250,000,000 6.75% Perpetual Subordinated Capital Securities, $300,000,000 6.50% Perpetual Subordinated Capital Securities and $700,000,000 5.25% Tier 1 Notes (in each case to the extent outstanding).
“Legacy Tier 2 Notes” means the Issuer’s £435,000,000 6.125% Subordinated Notes due 2031, €20,000,000 Index Linked Notes due July 2023, $725,000,000 4.375% Fixed Rate Undated Tier 2 Notes, $1,000,000,000 5.25% Fixed Rate Undated Tier 2 Notes and $750,000,000 4.875% Fixed Rate Undated Tier 2 Notes (in each case to the extent outstanding).
“Liabilities” means the total amount of the non-consolidated gross liabilities of the Issuer as shown by the latest published balance sheet of the Issuer but adjusted for contingencies and subsequent events in such manner as the Person or Persons giving the relevant Solvency Condition report under Section 13.01(b) may determine.
“Market Disruption Event” means, with respect to the Perpetual Subordinated Debt Securities and the Perpetual Subordinated Capital Securities, (i) the occurrence or existence of any material suspension of or limitation imposed on trading or on settlement procedures for transactions in the Issuer’s Ordinary Shares on the London Stock Exchange (or other stock exchange or designated offshore securities market constituting the principal trading market for the Issuer’s Ordinary Shares), or (ii) in the Issuer’s reasonable opinion, there has been a substantial deterioration in the price and/or value of its Ordinary Shares or circumstances are such as to prevent or to a material extent restrict the issue or delivery of the Ordinary Shares to be issued in accordance with the Alternative Coupon Satisfaction Mechanism or (iii) where, pursuant to provisions of the Perpetual Subordinated Debt Securities or the Perpetual Subordinated Capital Securities, monies are required to be converted from one currency upon sale of Ordinary Shares into another currency in respect of any payment of Deferred Interest, the occurrence of any event that makes it impracticable to effect such conversion.
“Market Exchange Rate” means, unless otherwise specified in the Securities of a series, (i) for any conversion involving a currency unit on the one hand and Dollars or any Foreign Currency on the other, the exchange rate between the relevant currency unit and Dollars or such Foreign Currency calculated by the method specified pursuant to Section 3.01 for the Securities of the relevant series and (ii) for any conversion of Dollars into any Foreign Currency or for any conversion of one Foreign Currency into Dollars or another Foreign Currency, the spot rate at noon local time in the relevant market at which, in accordance with normal banking procedures, the Dollars or Foreign Currency into which conversion is being made could be purchased with the Dollars or Foreign Currency from which conversion is being made from major banks located in either New York City, New York, London, England, or any other principal market for Dollars or such Foreign Currency, in each case determined by the Issuer. In the event of the unavailability of any of the exchange rates provided for in the foregoing clauses (i) and (ii), the Issuer shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations from one or more major banks in New York City, New York, London, England, or other principal market for such currency or currency unit in question, or such other quotations as the Issuer shall deem appropriate. Unless otherwise specified by the Issuer, if there is more than
one market for dealing in any currency or currency unit by reason of foreign exchange regulations or otherwise, the market to be used in respect of such currency or currency unit shall be that upon which a nonresident issuer of securities designated in such currency or currency unit would purchase such currency or currency unit in order to make payments in respect of such securities. For purposes of this definition, a “nonresident issuer” shall mean an issuer that is not a resident of the country or countries that issue such currency or whose currencies are included in such currency unit.
“Maturity”, when used with respect to any Security, means the date, if any, on which the principal (or, if the context so requires, lesser amount in the case of Discounted Securities) of (or premium, if any, on) that Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, request for redemption, repayment at the option of the holder, pursuant to any sinking fund provisions or otherwise; provided, however, that, unless otherwise provided with respect to the Dated Subordinated Debt Securities of any series, if the Issuer does not pay all or any part of principal (or any premium or interest thereon) at Maturity (other than principal due by declaration of acceleration), the obligation to make such payment and such Maturity shall be deferred until the Deferred Principal Payment Date (it being understood for the avoidance of doubt that any such deferral shall take place only once with respect to any payment).
“Officers’ Certificate” means a certificate of the Issuer signed by (i) any two of its chairman of the Board of Directors, deputy chairman of the Board of Directors, group chief executive officer, treasurer, group finance director or director group finance and risk or (ii) any one of the foregoing Persons together with any group secretary or deputy group secretary of the Issuer, and delivered in form and substance reasonably acceptable to the Subordinated Trustee and/or Paying Agent, as the case may be, for the Securities of any series in accordance with the provisions of this Subordinated Indenture.
“Opinion of Counsel” means a written opinion of legal counsel in form and substance reasonably acceptable to the Subordinated Trustee for the Securities of any series, which legal counsel shall be reasonably acceptable to the Subordinated Trustee and who may be regular outside counsel to the Issuer.
“Optional Interest Payment Date” shall mean, unless otherwise set forth in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of Securities, (a) in respect of the Perpetual Subordinated Capital Securities, an Interest Payment Date on which the Issuer has determined that (i) the Regulatory Capital Requirement will not be met on such date, (ii) it is required under the terms of any Parity Security not to pay the relevant interest payment or (iii) if applicable, the events specified in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof related to such series of Perpetual Subordinated Capital Securities have occurred; (b) in respect of the Perpetual Subordinated Debt Securities, an Interest Payment Date on which the Issuer has elected not to defer interest payments in accordance with Section 3.07; or (c) in respect of the Dated Subordinated Debt Securities and if such deferral option is specified in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of Dated Subordinated Debt Securities, an Interest Payment Date on which the Issuer has elected not to defer interest payments in accordance with Section 3.07.
“Ordinary Shares” means ordinary shares of Prudential plc having, at the date hereof, a par value of five pence each.
“Outstanding”, when used with respect to the Securities, means, as of the date of determination, all Securities which have been authenticated and delivered under this Subordinated Indenture, except:
(1) Securities which have been cancelled by the Subordinated Trustee for such Securities or delivered to such Subordinated Trustee for cancellation;
(2) Securities or portions thereof for whose payment or redemption money in the necessary amount has been deposited with or to the order of the Subordinated Trustee for such Securities or any Paying Agent (other than the Issuer or any other obligor upon the Securities) in trust or set aside and segregated in trust by the Issuer or any other obligor upon the Securities (if the Issuer or any other obligor upon the Securities shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that, if such Securities or portions thereof are to be redeemed, notice of such redemption has been duly given pursuant to this Subordinated Indenture, or provision therefor satisfactory to such Subordinated Trustee has been made unless, in each case, there is a default in such payment or redemption; and
(3) Securities which have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Subordinated Indenture, other than any such Securities in respect of which there shall have been presented proof reasonably satisfactory to the Issuer and the Subordinated Trustee for such Securities that any such Securities are held by bona fide holders in due course;
provided, however, that in determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver or taken any other action hereunder (a) Securities owned by the Issuer or any other obligor upon the Securities or any Affiliate of the Issuer or such other obligor shall be disregarded and deemed not to be Outstanding, except that, (i) in determining whether the Subordinated Trustee for such Securities shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or action, only Securities which a Responsible Officer of such Subordinated Trustee actually knows to be so owned shall be so disregarded and (ii) Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of such Subordinated 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 Affiliate of the Issuer or of such other obligor and (b) the principal amount of a Discounted Security that shall be deemed to be Outstanding for such purposes shall be equal to the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration pursuant to Section 5.02.
“Parity Securities” means, with respect to a particular series of Securities, unless otherwise provided in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series of Securities and (in the case of the Dated Subordinated Debt Securities) to which the interest deferral option applies, the Issuer’s capital instruments (including the Securities), preferred or Preference Shares or other securities issued by it together with any securities issued by a Subsidiary where such securities benefit from a guarantee or support agreement from the Issuer, the claims of the holders of which rank pari passu with the Securities, as the case may be, as to rights to and participation in the assets of the Issuer in the event of liquidation or winding up of the Issuer.
“Paying Agent” means any Person authorized by the Issuer to pay the principal of (and premium, if any, on) or interest or Deferred Interest, if any, on, and any Additional Amounts in respect of, any Securities on behalf of the Issuer and shall include the Subordinated Trustee.
“Payment Day” means any day which is, subject to the provisions of Section 1.13, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London, England and the City of New York.
“Payment Default” has the meaning specified in Section 5.03(a).
“Payment Event” has the meaning specified in Section 5.03(d).
“Permitted Variation” means any variation in the terms of the Securities of a series which, pursuant to Section 3.01(7) or Section 3.01(24), are permitted to be made by the Issuer under circumstances specified pursuant to Section 3.01(7) or Section 3.01(24).
“Perpetual Security Default” has the meaning specified in Section 5.03(b).
“Perpetual Subordinated Capital Securities” means securities of the Issuer evidencing unsecured subordinated indebtedness of the Issuer authenticated and delivered under this Subordinated Indenture, which have no fixed Stated Maturity for the payment of principal or Redemption Date, to which the subordination provisions of Section 13.01(e) apply, and which have such further terms as are established pursuant to a Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof.
“Perpetual Subordinated Debt Securities” means securities evidencing unsecured subordinated indebtedness of the Issuer authenticated and delivered under this Subordinated Indenture, which have no fixed Stated Maturity for the payment of principal or Redemption Date, to which the subordination provisions of Section 13.01(d) apply, and which have such further terms as are established pursuant to a Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof.
“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.
“Place of Payment”, when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any, on) and interest and Deferred Interest, if any, on, and any Additional Amounts in respect of, the Securities of that series are payable, as contemplated by Section 3.01 or the place or places where such Securities are to be surrendered in exchange for the Securities as varied in a Permitted Variation.
“Policyholder Claims” means claims of policyholders or policy beneficiaries in a winding-up, liquidation or administration of a Supervised Group Company to the extent that those claims relate to any debt to which the Supervised Group Company is, or may become, liable to a policyholder pursuant to a contract of insurance, including all amounts to which policyholders are entitled under applicable legislation or rules relating to the winding-up or administration of insurance companies to reflect any right to receive, or expectation of receiving, benefits which such policyholders may have.
“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by that particular Security, and, for the purposes of this definition, any Security authenticated and delivered under Section 3.06 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Security.
“Preference Shares” means an authorized series of preference shares of the Issuer for which, if applicable to a particular series of Securities, the Issuer may convert or exchange any series of Securities.
“Redemption Date”, when used with respect to any Security to be redeemed in whole or in part, means the date fixed for such redemption by or pursuant to this Subordinated Indenture; provided, however, that, unless otherwise provided with respect to the Securities (other than Perpetual Subordinated Capital Securities) of any series, if the Issuer does not pay all or any part of principal (or any premium or interest thereon) on the Redemption Date, the obligation to make such payment on such Redemption Date shall be deferred until the Deferred Principal Payment Date (it being understood for the avoidance of doubt that any such deferral shall take place only once with respect to any payment).
“Redemption Price”, when used with respect to any Security to be redeemed, means, unless otherwise specified in the Securities of a series, the aggregate of the amounts payable on redemption being the principal amount thereof plus accrued interest thereon, including any Deferred Interest.
“Regular Record Date” for the interest payable on any Interest Payment Date on the Securities of any series, means the date, if any, specified for that purpose as contemplated by Section 3.01.
“Regulatory Capital Requirement” means any requirement in respect of solvency or regulatory capital or capital ratios for insurance companies, insurance holding companies or financial groups imposed by the Relevant Regulator and to which the Issuer or the Supervised Group is subject from time to time.
A “Regulatory Event” in respect of a series of Securities shall be deemed to have occurred if (i) the Securities of the relevant series would not be of a kind capable of counting (except where such non-qualification is only as a result of any applicable limitation on the amount of such capital) as cover for the minimum or notional margin of solvency or minimum capital or capital ratios required of the Issuer or the Supervised Group under the Capital Regulations as a result of any change to the Capital Regulations or the application or official interpretation thereof on or after the date of issue of the relevant series of Securities, or, in the case of (ii) to (v) inclusive below, if specified in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series of Securities; (ii) (in relation to Dated Subordinated Debt Securities and Perpetual Subordinated Debt Securities) at any time on or after the issue of such Securities, the Issuer or the Supervised Group is required under the Capital Regulations to have Tier 2 Capital, such Securities would no longer be eligible to qualify (save as aforesaid in (i)) for inclusion in the Issuer’s Tier 2 Capital on an unconsolidated and/or consolidated basis; or (iii) (in relation to Perpetual Subordinated Capital Securities) at any time on or after the issue of such Securities, the Issuer or the Supervised Group is required under the Capital Regulations to have Tier 1 Capital, such Securities would no longer be eligible to qualify (save as aforesaid in (i)) for inclusion in the Issuer’s Tier 1 Capital on an unconsolidated and/or consolidated basis; or (iv) (in relation to Dated Subordinated Debt Securities and Perpetual Subordinated Debt Securities) at any time on or after the issue of such Securities, the Issuer or the Supervised Group is required under the Capital Regulations to have Tier 2 Capital and the Issuer would be entitled to substitute such Dated Subordinated Debt Securities and Perpetual Subordinated Debt Securities for Preference Shares, such Preference Shares would no longer be of a kind eligible to qualify (save as aforesaid in (i)) for inclusion in the Issuer’s Tier 2 Capital on an unconsolidated and/or consolidated basis; or (v) (in relation to
Perpetual Subordinated Capital Securities) at any time on or after the issue of such Perpetual Subordinated Capital Securities, the Issuer or the Supervised Group is required under the Capital Regulations to have Tier 1 Capital and the Issuer would be entitled to substitute such Perpetual Subordinated Capital Securities for Preference Shares, such Preference Shares would no longer be of a kind eligible to qualify (save as aforesaid in (i)) for inclusion in the Issuer’s Tier 1 Capital on an unconsolidated and/or consolidated basis.
“Relevant Date” means the date on which a payment first becomes due and payable, except that, if the full amount of the monies payable has not been received by the relevant Paying Agent or the Subordinated Trustee on or prior to such due date, it means the first date on which, the full amount of such monies having been so received and being available for payment to Holders of the relevant Security, notice to that effect shall have been duly given to the Holders of the relevant Security.
“Relevant Regulator” means the HKIA or such successor or other authority having primary supervisory authority with respect to prudential matters of the Issuer and/or the Supervised Group.
“Relevant Regulator Consent” means any necessary prior consent of or, following the giving of due notice, no objection being received to, the relevant redemption, payment, repayment, purchase, modification or substitution, as the case may be, from, the Relevant Regulator.
“Responsible Officer”, when used with respect to the Subordinated Trustee for any series of Securities, means any officer of such Subordinated Trustee assigned to administer its corporate trust matters or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject, and in such case, who shall have direct responsibility for the day to day administration of this Subordinated Indenture.
“Securities” means the Dated Subordinated Debt Securities, the Perpetual Subordinated Debt Securities and the Perpetual Subordinated Capital Securities.
“Security Register” and “Security Registrar” have the respective meanings specified in Section 3.05.
“Senior Creditors” has with respect to (i) Dated Subordinated Debt Securities, the meaning set forth in Section 13.01(c), (ii) Perpetual Subordinated Debt Securities, the meaning specified in Section 13.01(d) and (iii) Perpetual Subordinated Capital Securities, the meaning specified in Section 13.01(e).
A “series” of Securities means all Securities denoted as part of the same series authorized by or pursuant to a particular Board Resolution or a particular indenture supplemental hereto.
“Solvency Condition” means, when used with respect to any series of Securities, that (a) the Issuer is able to pay its debts to its Senior Creditors, the Holders of the Securities and the holders of any Parity Securities as they fall due and (b) the Issuer’s total Assets exceed its total Liabilities other than Liabilities to persons that are not Senior Creditors, the Holders of the Securities or the holders of any Parity Securities. The determination of whether the Solvency Condition has been satisfied shall be made in accordance with Section 13.01(b) or as otherwise provided in the Board Resolution or supplemental indenture establishing the terms of such series of Securities.
“Special Record Date” for the payment of any Defaulted Interest on the Securities of any series means a date fixed by the Issuer for such series pursuant to Section 3.07.
“Stated Maturity”, when used with respect to any Security or any installment of principal thereof (or premium, if any, thereon) or interest, if any, thereon, means the date, if any, specified in such Security as the fixed date on which the principal of such Security (or premium, if any, thereon) or such installment of principal (or premium, if any, thereon) or interest is due and payable; provided, however, that, unless otherwise provided with respect to the Securities of any series, if the Issuer does not pay all or any part of principal (or any premium or interest thereon) on the Stated Maturity, the obligation to make such payment and such Stated Maturity shall be deferred until the Deferred Principal Payment Date (it being understood for the avoidance of doubt that any such deferral shall take place only once with respect to any payment).
“Sterling” and the sign “£” mean United Kingdom Pounds Sterling.
“Stock Exchange”, unless specified otherwise with respect to any particular series of Securities, means any stock exchange or securities association upon which any Securities of that series are duly listed.
“Subordinated Indenture” means this instrument as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, unless the context otherwise requires, shall include the terms of a particular series of Securities established as contemplated by Section 3.01.
“Subordinated Tier 2 Capital” means securities which:
(a) constitute Tier 2 Capital;
(b) contain provision for contractual subordination to Senior Creditors; and
(c) are not Legacy Tier 2 Notes or Legacy Tier 1 Notes.
“Subordinated Trustee” means the Person named as the “Subordinated Trustee” in the first paragraph of this instrument and, subject to the provisions of Article Six hereof, shall also include its successors and assigns as Subordinated Trustee hereunder. If there shall be at one time more than one Subordinated Trustee hereunder, “Subordinated Trustee” shall mean each such Subordinated Trustee and shall apply to each such Subordinated Trustee only with respect to those series of Securities with respect to which it is serving as Subordinated Trustee.
“Subsidiary” means a company which is for the time being a subsidiary of the Issuer, within the meaning of Section 1159 of the Companies Act 2006 of Great Britain as in force at the date of this Subordinated Indenture.
“Substitute Date” has the meaning specified in Section 5.16.
“Supervised Group” means, collectively, the Supervised Group Companies.
“Supervised Group Company” means
(a) the Issuer;
(b) all Subsidiaries of the Issuer; and
(c) any other entities that are, according to International Financial Reporting Standards as issued by the International Accounting Standards Board and as endorsed by the European Union (or such other accounting standard used to audit the Issuer’s financial statements), treated as members of the insurance group to which the Issuer belongs,
provided, however, that the Relevant Regulator may in its discretion include or exclude entities as Supervised Group Companies.
“Tax Call Event” has the meaning ascribed to it in a Board Resolution or supplemental indenture executed pursuant to Section 3.01.
“Tax Event” means, unless otherwise specified in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of any series of Securities, (a) following the fifth anniversary or, in the case of Perpetual Subordinated Capital Securities, the tenth anniversary, of the issuance of any series, a determination by the Issuer that: (i) in making any interest payments or Deferred Interest Payments on the Securities of any series, the Issuer has paid, or will or would on the next Interest Payment Date be required to pay, Additional Amounts required by Section 10.07 hereof and the same cannot be avoided by using reasonable measures available to the Issuer; (ii) payments, including any interest payments or Deferred Interest Payments, on the next Interest Payment Date in respect of the relevant series of Securities would be treated as “distributions” within the meaning of section 1000 of the UK Corporation Tax Act 2010 (as amended, re-enacted or replaced); or (iii) the Issuer would not be entitled to claim a deduction in computing its U.K. taxation liabilities in respect of any interest payment (including any Deferred Interest Payment) on the Securities of any series or the value of the deduction to the Issuer would be materially reduced; and (b) before the fifth anniversary or, in the case of Perpetual Subordinated Capital Securities, the tenth anniversary, of the issuance of any series, an event of the type described in clause (a) occurring as a result of a Tax Law Change, which change or amendment becomes effective or, in the case of a change of law, is enacted on or after the date on which agreement is reached to issue the Securities and such obligation cannot be avoided by the Issuer taking reasonable measures available to it.
“Tax Law Change” means a change in or amendment to the laws or regulations of the United Kingdom or any political sub-division or any authority thereof or therein having power to tax (including any treaty to which the United Kingdom is a party), or any change in the application of official or generally published interpretation of those laws or regulations (including a change or amendment resulting from a holding by a court or tribunal or competent jurisdiction) which change or amendment becomes effective or, in the case of a change in law, is enacted on or after the date of issue of the relevant series of Securities.
“Taxing Jurisdiction” has the meaning specified in Section 10.07.
“Tier 1 Capital” means tier 1 group available capital within the meaning given to such term for the purposes of the Capital Regulations from time to time.
“Tier 2 Capital” means tier 2 group available capital within the meaning given to such term for the purposes of the Capital Regulations from time to time.
“Trust Indenture Act” means the U.S. Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was executed, or, with respect to a Board Resolution, Officers’ Certificate or supplemental indenture, as applicable, pursuant to which a series of Securities is established pursuant to Section 3.01, as in force at the date at which such Board Resolution, Officers’ Certificate or supplemental indenture, as applicable, is executed.
“United Kingdom” and “U.K.” mean the United Kingdom of Great Britain and Northern Ireland.
“United States” and “U.S.” mean, unless otherwise specified with respect to the Securities of a series pursuant to Section 3.01, the United States of America (including the States and the District of Columbia), its territories, its “possessions” (which include, at the date of this Subordinated Indenture, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands) and other areas subject to its jurisdiction.
“U.S. Government Obligations” means non-callable (i) direct obligations (or certificates representing an ownership interest in such obligations) of the United States for which its full faith and credit are pledged or (ii) obligations of a Person controlled or supervised by, and acting as an agency or instrumentality of, the United States, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States.
SECTION 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Issuer to the Subordinated Trustee for any series of Securities to take any action under any provision of this Subordinated Indenture, the Issuer shall furnish to such Subordinated Trustee an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Subordinated 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, if any, have been complied with, provided that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Subordinated Indenture relating to such particular application or request, the requirements hereof and thereof may be satisfied by the same documents as contemplated by Section 1.03 such that no duplicate certificate or opinion need be furnished.
Every certificate (other than certificates provided pursuant to Section 10.04) or opinion with respect to compliance with a condition or covenant provided for in this Subordinated Indenture shall include the following (or such other statements or information as the Subordinated Trustee may reasonably request):
(1) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Subordinated Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any of a number of specified Persons, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate 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, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to matters upon which his certificate or opinion is based are erroneous.
Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Issuer stating that the information with respect to such factual matters is in the possession of the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Subordinated Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 1.04. Acts of Holders; Communication by Holders with Other Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Subordinated Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Subordinated Trustee for the appropriate series of Securities and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Subordinated Indenture and (subject to Sections 6.01 and 6.03) conclusive in favor of the Subordinated Trustee for the appropriate series of Securities, the Issuer and any agent of such Subordinated Trustee or the Issuer, if made in the manner provided in this Section.
The Issuer may set at its discretion a record date for purposes of determining the identity of Holders of Securities entitled to vote or consent to any action by vote or consent authorized or permitted under this Subordinated Indenture, but the Issuer shall have no obligation to do so. If not set by the Issuer prior to the first solicitation of Holders of Securities of such series made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day prior to the first solicitation of such vote or consent or, if later, the date of the most recent list of Holders furnished to the Subordinated Trustee prior to such solicitation pursuant to Section 7.01. Upon the fixing of such a record date, those persons who were Holders of Securities at such record date (or their duly designated proxies), and only those persons, shall be entitled with respect to such Securities to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date.
(b) Subject to Sections 6.01 and 6.03, the fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public, commissioner for oaths or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or association or a member of a partnership, or an official of a public or governmental body, on behalf of such corporation, association, partnership or public or governmental body or by a fiduciary, such certificate or affidavit shall also constitute sufficient proof of this authority.
(c) Subject to Sections 6.01 and 6.03, the fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Subordinated Trustee for the appropriate series of Securities deems sufficient.
(d) The principal amount and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register.
(e) In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver under this Subordinated Indenture, the principal amount of a Discounted Security that may be counted in making such determination and that shall be deemed to be Outstanding for such purposes shall be equal to the amount of the principal thereof that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02 at the time the taking of such action by the Holders of such requisite aggregate principal amount is evidenced to the Subordinated Trustee for such Securities.
(f) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Subordinated Trustee for such Securities, the Security Registrar, any Paying Agent or the Issuer in reliance thereon, whether or not notation of such action is made upon such Security.
SECTION 1.05. Notices, Etc., to Subordinated Trustee or Issuer.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Subordinated Indenture to be made upon, given or furnished to, or filed with:
(1) the Subordinated Trustee for a series of Securities by any Holder or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with such Subordinated Trustee at its Corporate Trust Office, “Attention: Agency & Trust — Prudential plc”; or
(2) the Issuer by the Subordinated Trustee or any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if (a) addressed to Prudential plc, “Attention: Group Secretarial” and (b) in writing and mailed, first class postage prepaid, or hand delivered to the Issuer addressed to it at the address of its principal office specified in the first paragraph of this Subordinated Indenture or at any other address previously furnished in writing to such Subordinated Trustee by the Issuer, or if sent by facsimile transmission addressed to the Issuer at facsimile number +44 20 7548 3739 or at any other facsimile number previously furnished in writing to such Subordinated Trustee by the Issuer.
SECTION 1.06. Notice to Holders; Waiver.
Where this Subordinated Indenture provides for notice to Holders of a series of Securities of any event, such notice shall be given (unless otherwise expressly provided herein or in the Securities of a series) in writing and mailed, first class postage prepaid, to each Holder, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders of Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Security shall affect the sufficiency of such notice with respect to other Holders of Securities. Any notice mailed in the manner prescribed by this Subordinated Indenture shall be deemed to have been given whether or not received by any particular Holder. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders of Securities by mail, then such notification as shall be made with the approval of the Subordinated Trustee for such Securities shall constitute a sufficient notification for every purpose hereunder.
Notwithstanding the first paragraph of this Section 1.06, if the entire principal amount of the Securities of a series or a portion thereof is represented by one or more global Securities held by a Depositary, all notices with respect to such entire principal amount or portion thereof, as the case may be, shall be sent only to such Depositary or its nominee, as the Holder, and such Depositary will communicate such notices to its participants in accordance with its standard procedures.
Where this Subordinated 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 Subordinated Trustee for such Securities, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
A copy of any notice or communication sent by the Issuer to any Holder of Securities shall also be provided to the Subordinated Trustee for such Securities at the same time in the manner provided for notices to the Subordinated Trustee under Section 1.05.
SECTION 1.07. Conflict with Trust Indenture Act.
If any provision of this Subordinated Indenture limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be a part of and govern this Subordinated Indenture, the latter provision shall control. If any provision of this Subordinated Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Subordinated Indenture as so modified or excluded, as the case may be.
SECTION 1.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns.
All covenants and agreements in this Subordinated Indenture by the Issuer shall bind its respective successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
In any case any provision in this Subordinated Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Subordinated Indenture.
Nothing in this Subordinated Indenture or in the Securities, expressed or implied, shall give to any Person, other than the parties hereto (including their successors hereunder) and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Subordinated Indenture.
SECTION 1.12. Governing Law.
This Subordinated Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, except as stated in Section 2.01 and except for Section 13.01, which shall be governed by and construed in accordance with English law.
SECTION 1.13. Non-Business Day.
Unless otherwise specified in the Securities of a series, in any case where any Interest Payment Date, Redemption Date, Event Date or Stated Maturity of a Security of any particular series shall not be a Business Day at any Place of Payment with respect to Securities of that series, then (notwithstanding any other provision of this Subordinated Indenture) payment of principal (or, if the context so requires, lesser amount in the case of Discounted Securities) of (and premium, if any, on) and interest and Deferred Interest, if any, with respect to such Security and the exchange or conversion of such Security need not be made or occur at such Place of Payment on such date, but may be made or occur on the next succeeding Business Day at such Place of Payment with the same force and effect as such payment, or conversion or exchange, had occurred on the Interest Payment Date, Redemption Date, Event Date, as the case may be, or at the Stated Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Event Date or Stated Maturity, as the case may be; and provided further, that if such next succeeding Business Day at any Place of Payment would fall in the succeeding fiscal year of the Issuer, payment may be made in full or such conversion or exchange may occur on the immediately preceding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, Redemption Date, Event Date or Stated Maturity, as the case may be.
SECTION 1.14. Immunity of Incorporators, Stockholders, Officers and Directors.
No recourse shall be had for the payment of the principal of (or premium, if any, on), or the interest or Deferred Interest, if any, on any Security of any series, or for any claim based thereon, or upon any obligation, covenant or agreement of this Subordinated Indenture or any indenture supplemental hereto, or any Security, or because of any indebtedness evidenced thereby, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Issuer or of any predecessor or successor corporations thereto, either directly or indirectly through the Issuer or any predecessor or successor corporations, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that this Subordinated Indenture and all the Securities of each series are solely corporate obligations, and that no personal liability whatsoever shall attach to, or is incurred by, any incorporator, stockholder, officer or director, past, present or future, of the Issuer or of any predecessor or successor corporations thereto, either directly or indirectly through the Issuer or any such predecessor or successor corporations, because of the incurring of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Subordinated Indenture or in any of the Securities of any series, as the case may be, or to be implied herefrom or therefrom; and that all such personal liability is hereby expressly released and waived as a condition of, and as part of the consideration for, the execution of this Subordinated Indenture and the issuance of the Securities of each series.
SECTION 1.15. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or other action required or permitted under this Subordinated Indenture shall be in the English language, and any published notice may also be in an official language of the country or province of publication.
SECTION 1.16. Appointment of Agent for Service.
By the execution and delivery of this Subordinated Indenture, the Issuer designates and appoints Jackson National Life Insurance Company at 1 Corporate Way, Lansing, Michigan 48951, as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the Securities or this Subordinated Indenture which may be instituted in any Federal or New York State Court located in the Borough of Manhattan, City and State of New York, but for that purpose only, and agrees that service of process upon said Jackson National Life Insurance Company, directed to the attention of the General Counsel and written notice of said service given by the Person serving the same to it, addressed as provided in Section 1.05, shall be deemed in every respect effective service of process upon it in any such suit or proceeding in any Federal or State court in such Borough, City and State. The Issuer hereby submits (for the purposes of any such suit or proceedings) to the jurisdiction of any such court in which any such suit or proceeding is so instituted, and irrevocably waives, to the fullest extent it may lawfully do so, any objection it may have now or hereafter to the laying of the venue of any such suit, action or proceeding in any such court and irrevocably waives, to the fullest extent it may lawfully do so, any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Such submission and waiver shall be irrevocable so long as any of the Securities remain Outstanding and such appointment shall be irrevocable until the appointment with due care of a reputable successor by the Issuer and such successor’s acceptance of such appointment. Upon such acceptance, the Issuer shall notify the Subordinated Trustee of the name and address of such successor. The Issuer further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of said Jackson National Life Insurance Company or its successor in full force and effect so long as any of the Securities shall be Outstanding. The Subordinated Trustee shall not be obligated and shall have no responsibility with respect to any failure by the Issuer to take any such action.
The Issuer agrees, to the fullest extent that it lawfully may do so, that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Issuer and may be enforced in the courts of England and Wales (or any other courts to the jurisdiction of which the Issuer is subject) by a suit upon such judgment, provided that service of process is effected upon the Issuer in the manner specified in the foregoing paragraph or as otherwise permitted by law; provided, however, that the Issuer does not waive, and the foregoing provisions of this sentence shall not constitute or be deemed to constitute a waiver of, (i) any right to appeal any such judgment, to seek any stay or otherwise to seek reconsideration or review of any such judgment, (ii) any stay of execution or levy pending an appeal from, or a suit, action or proceeding for reconsideration of, any such judgment, or (iii) any other right or remedy of the Issuer to the extent not expressly waived in accordance with this Section.
Notwithstanding the foregoing, any actions arising out of or relating to the Securities or this Subordinated Indenture may be instituted by any party hereto and, subject to the limitations set forth in Article Five of this Subordinated Indenture, by the Holder of any Security in any competent court in England and Wales.
Nothing in this Section shall affect the right of the Subordinated Trustee or any Holder of any Security to serve process in any manner permitted by applicable law or limit the right of the Subordinated Trustee or any Holder of any Security to bring proceedings against the Issuer in the courts of any other jurisdiction or jurisdictions.
SECTION 1.17. Rules by the Subordinated Trustee and Agents.
The Subordinated Trustee may make reasonable rules for action by or a meeting of Holders. The Securities Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
SECTION 1.18. Successors; No Recourse Against Others.
(a) All agreements of the Issuer in this Subordinated Indenture and the Securities shall bind its successors. All agreements of the Subordinated Trustee in this Subordinated Indenture shall bind its successors.
(b) All liability of the Issuer described in the Securities insofar as it relates to any director, officer, employee or stockholder, as such, of the Issuer is waived and released by each Holder.
SECTION 1.19. Duplicate Originals.
The parties may sign any number of copies of this Subordinated Indenture. One signed copy is enough to prove this Subordinated Indenture.
SECTION 1.20. Calculation Agent.
If the Company appoints a Calculation Agent pursuant to Section 3.01 with respect to any series of Subordinated Debt Securities, any determination of the interest rate on, or other amounts in relation to, such series of Subordinated Debt Securities in accordance with the terms of such series of Subordinated Debt Securities by such Calculation Agent shall (in the absence of gross negligence or willful misconduct) be binding on the Company, the Subordinated Trustee and all Holders and (in the absence of gross negligence or willful misconduct) no liability to the Holders shall attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions.
ARTICLE TWO
SECURITY FORMS
SECTION 2.01. Forms of Securities.
The Securities of each series shall be in such form or forms (including global form) as shall be established by or pursuant to a Board Resolution and, subject to Section 3.03, set forth in, or determined in the manner provided in, an Officers’ Certificate, or in an indenture supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Subordinated Indenture or any indenture supplemental hereto and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law, with any rule or regulation made pursuant thereto, with any rules of any securities exchange or of any automated quotation system or to conform to usage, as may, consistently herewith, be determined by the officers executing such Securities. Such execution of such Securities shall be conclusive evidence as regards the Issuer as to any such determination made by the Issuer.
The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Securities. Such execution of such definitive Securities shall be conclusive evidence as regards the Issuer as to any such determination made by the Issuer.
Each Security issued hereunder shall have endorsed thereon a statement in the following form or in substantially the following form:
THE RIGHTS OF THE HOLDER OF THIS SECURITY ARE, TO THE EXTENT AND IN THE MANNER SET FORTH IN SECTION 13.01 OF THE SUBORDINATED INDENTURE HEREINAFTER
REFERRED TO, SUBORDINATED TO THE CLAIMS OF OTHER CREDITORS OF THE ISSUER AND THIS SECURITY IS ISSUED SUBJECT TO THE PROVISIONS OF THAT SECTION 13.01, AND THE HOLDER OF THIS SECURITY BY ACCEPTING THE SAME, AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS. THE PROVISIONS OF SECTION 13.01 OF THE SUBORDINATED INDENTURE AND THE TERMS OF THIS PARAGRAPH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH ENGLISH LAW.
SECTION 2.02. Form of Subordinated Trustee’s Certificate of Authentication.
Unless otherwise specified as contemplated by Section 3.01, the Certificate of Authentication on all Securities shall be in substantially the following form:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the Subordinated Indenture described herein.
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Citibank, N.A. | ||
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as Subordinated Trustee | ||
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By |
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Authorized Officer | ||
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Dated |
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SECTION 2.03. Securities in Global Form.
If any Security of a series is issuable in global form, such Security may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby shall be made by the Subordinated Trustee or Security Registrar and in such manner as shall be specified in such Security. Any instructions by the Issuer with respect to a Security in global form, after its initial issuance, shall be in writing but need not comply with Section 1.02.
Unless otherwise specified in the Securities of a series, every global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE SUBORDINATED INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM IN ACCORDANCE WITH THE TERMS HEREOF AND OF THE SUBORDINATED INDENTURE, TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE OR TO THE DEPOSITORY TRUST COMPANY OR A SUCCESSOR THEREOF BY A NOMINEE OF THE DEPOSITORY TRUST COMPANY OR A SUCCESSOR THEREOF AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE SUBORDINATED INDENTURE.
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 ENTITY AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, 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.
ARTICLE THREE
THE SECURITIES
SECTION 3.01. Title; Payment and Terms.
The aggregate principal amount of Securities which may be authenticated and delivered and Outstanding under this Subordinated Indenture is unlimited. The Securities may be issued up to the aggregate principal amount of Securities from time to time authorized by or pursuant to a Board Resolution of the Issuer.
The Securities may be issued in one or more series. There shall be established in one or more Board Resolutions or pursuant to authority granted by one or more Board Resolutions and, subject to Section 3.03, set forth in, or determined in the manner provided in, an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series any or all of the following, as applicable (each of which, if so provided, may be determined from time to time by the Issuer with respect to unissued Securities of the series and set forth in such Securities of the series when issued from time to time):
(1) whether Securities of that series are to be Dated Subordinated Debt Securities, Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities;
(2) the title of the Securities of that series (which shall distinguish the Securities of that series from all other series of Securities); if the Securities of that series will be in bearer rather than registered form, the forms, procedures and mechanics to be employed in connection therewith; any limit upon the aggregate principal amount of the Securities of that series which may be authenticated and delivered under this Subordinated Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of that series pursuant to Section 3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Securities which, pursuant to Section 3.03, are deemed never to have been authenticated and delivered hereunder);
(3) the percentage or percentages of principal amount at which the debt securities of the series will be issued;
(4) certain dates or periods, including: (a) the original issue date or dates or periods during which the Securities of that series may be issued; (b) the date or dates (or manner of determining the same) on which, or the range of dates within which, the principal of (and premium, if any, on) the Securities of that series is payable; and (c) the record dates, if any, for the determination of Holders of Securities of such series to whom such principal (and premium, if any) is payable;
(5) information with regard to interest, including: (a) the rate or rates (or the manner of calculation thereof, including any provisions for the increase or decrease of such rate or rates upon the occurrence of specific events) at which the Securities of that series shall bear interest (if any), or the discount, if any, at which any Discounted Securities may be issued; (b) the date or dates from which such interest shall accrue; (c) the Interest Payment Dates on which such interest shall be payable (or manner of determining the same); (d) the Regular Record Date for the interest payable on any Securities on any Interest Payment Date; and (e) the manner in which such interest shall be paid (including whether such interest may be paid in accordance with the Alternative Coupon Satisfaction Mechanism);
(6) the place or places where, subject to the provisions of Section 10.02: (a) the principal of (and premium, if any, on) and interest or Deferred Interest, if any, on Securities of that series shall be payable; (b) any Securities of that series may be surrendered for registration of transfer, any Securities of that series may be surrendered for exchange; and (c) notices and demands to or upon the Issuer in respect of the Securities of that series and this Subordinated Indenture may be served;
(7) the terms and conditions, if any, upon which Securities of that series may be redeemed, purchased or repaid, in whole or in part, at the option of the Issuer or otherwise including the period or periods within which or manner of determining the same and the price or prices at which or manner of determining the same, and whether and under what conditions such Securities shall be subject to a Permitted Variation in lieu of redemption;
(8) the right or obligation (which may be fixed or contingent upon events), if any, of the Issuer to redeem, purchase or repay Securities of that series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof, and the period or periods within which or manner of determining the same, the price or prices at which or manner of determining the same, and the terms and conditions upon which, Securities of that series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;
(9) the terms and conditions, if any, upon which Securities of that series may be converted or exchanged into Preference Shares;
(10) the minimum denomination or denominations in which any Securities of that series shall be issuable if other than integral multiples of $1,000;
(11) with respect to Securities other than Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities, if other than the principal amount thereof, the portion of the principal amount of Securities of that series which shall be payable upon a redemption prior to Maturity or a declaration of acceleration of the Maturity thereof pursuant to Section 5.02;
(12) if other than as set forth in this Subordinated Indenture, any additional or differing provisions, if any, with respect to Deferred Interest, Events of Default, Payment Defaults, Perpetual Security Defaults, Payment Events, Tax Events, Regulatory Events, Junior Securities, Parity Securities and subordination, together with details for any indemnification or application of the Alternative Coupon Satisfaction Mechanism through the issuance of Ordinary Shares or otherwise (including the Events of Default, Payment Defaults, Perpetual Security Defaults and Payment Events described in Sections 5.01 and 5.03) and any covenants or agreements of the Issuer with respect to the Securities of that series, whether or not such Events of Default, Payment Defaults, Perpetual Security Defaults or Payment Events or covenants or agreements are consistent with the Events of Default, Payment Defaults, Perpetual Security Defaults or Payment Events or covenants or agreements set forth herein;
(13) if a Person other than Citibank, N.A. is to act as Subordinated Trustee for the Securities of that series, the name and location of the Corporate Trust Office of such Subordinated Trustee and if other than such Subordinated Trustee, the identity of each Security Registrar and/or Paying Agent;
(14) the index, if any, used to determine the amount of payments of principal of (and premium, if any, on) and interest and Deferred Interest, if any, on the Securities of that series;
(15) if other than as set forth in Section 4.01, provisions for the satisfaction and discharge of this Subordinated Indenture with respect to the Securities of that series;
(16) the date as of which any global Security representing Outstanding Securities of that series shall be dated if other than the date of original issuance of the first Security of that series to be issued;
(17) the application, if any, of Sections 10.07 and 11.08 to the Securities of that series;
(18) whether the Securities of the series shall be issued in whole or in part in the form of a global Security or Securities and, in such case, the Depositary for such global Security or Securities;
(19) whether any legends shall be stamped or imprinted on all or a portion of the Securities of such series, and the terms and conditions upon which any such legends may be removed;
(20) the form of the Securities of that series (including the terms and conditions of such Securities);
(21) in the case of any series of Perpetual Subordinated Capital Securities and any series of Perpetual Subordinated Debt Securities, the particular terms of such series, including those relating to the Optional Interest Payment Dates, Alternative Coupon Satisfaction Mechanism, Definitive Suspension, optional redemption, and such other terms relating to Deferred Interest, Events of Default, Perpetual Security Defaults, Payment Events, Tax Events, Tax Call Events, Regulatory Events, Junior Securities, Parity Securities and subordination;
(22) in the case of any series of Dated Subordinated Debt Securities, any additional terms relating to the deferral of interest;
(23) whether the Securities of the series shall be convertible or exchangeable into Preference Shares at the option of the Issuer pursuant to Article Fourteen; the dates on which of such conversion or exchange may occur the date upon which the Issuer opts to exchange or convert the Securities being referred to as (the “Event Date”); and the nature of the Preference Shares and any additional or other provisions relating to such conversion or exchange;
(24) under what circumstances, if any, the Issuer will pay Additional Amounts on the Securities of that series in respect of taxes, duties, assessments or other governmental charges of whatever nature imposed, levied, collected, withheld, deducted or assessed (and the relevant Taxing Jurisdiction) and, if so, whether the Issuer will
have the option to redeem or enter into a Permitted Variation of the terms of such Securities rather than pay such Additional Amounts (and the terms of any such option; and
(25) any other terms of that series (which terms shall be consistent with the provisions of this Subordinated Indenture except as such terms are otherwise expressly provided for in an applicable Board Resolution or supplemental indenture executed hereunder with respect to such series).
All Securities of any particular series shall be identical except as to authentication date, public offering price, denomination and issue date, except as may otherwise be provided in or pursuant to such Board Resolutions and set forth in such Officers’ Certificates relating thereto or provided in or pursuant to any supplemental indenture hereto (provided that the Securities of a series shall be fungible with all other Securities of such series). The terms of such Securities may be determined by the Issuer from time to time if so provided in or established pursuant to the authority granted in the Board Resolutions. All Securities of any one series need not be issued at the same time, and unless otherwise provided, a series may be reopened for issuance of additional Securities of such series.
If any of the terms of the Securities of a series are established by action taken pursuant to one or more Board Resolutions, a copy of an appropriate record of such action shall be certified by an appropriate officer of the Issuer and delivered to the Subordinated Trustee at or prior to the delivery of the Officers’ Certificate setting forth the terms of such Securities.
Prior to the delivery of a Security of any series in any such form to the Subordinated Trustee for authentication, the Issuer shall deliver to the Subordinated Trustee (and the Subordinated Trustee shall be fully protected in relying upon) an Issuer Order for the authentication and delivery of such Securities and the following:
(1) the Board Resolution, the Officers’ Certificate and the supplemental indenture, as applicable, by or pursuant to which such form of Security have been approved;
(2) an Officers’ Certificate of the Issuer dated the date such certificate is delivered to the Subordinated Trustee stating that all conditions precedent provided for in this Subordinated Indenture relating to the authentication and delivery of such Securities in such form have been complied with; and
(3) an Opinion of Counsel stating that such Securities when authenticated and delivered by the Subordinated Trustee and issued by the Issuer in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Issuer enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
SECTION 3.02. Denominations.
Unless otherwise provided with respect to any series of Securities as contemplated by Section 3.01, any Securities of a series shall be issuable in denominations of $1,000 and any integral multiple thereof; provided, however, that Securities may be issuable in denominations of less than $1,000 solely to the extent necessary to accommodate book-entry positions that have been created in denominations of less than $1,000 by the Depositary.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Issuer by any of two of its directors or by one director and the group secretary of the Issuer. The signature of any of these officers on the Securities may be manual or facsimile or, as and to the extent required by the Depositary, manual.
Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Subordinated Indenture, the Issuer may deliver Securities of any series as executed by the Issuer to the Subordinated Trustee for the Securities of such series for authentication, together with an Issuer Order for the authentication and delivery of such Securities, and such Subordinated Trustee, in accordance with such Issuer Order, shall authenticate and deliver such Securities. If any Security shall be represented by a global Security, then, for purposes of this Section and Section
3.04, the notation of a beneficial owner’s interest therein upon original issuance of such Security shall be deemed to be delivery in connection with the original issuance of such beneficial owner’s interest in such global Security. If all the Securities of any one series are not to be issued at one time and if a Board Resolution or indenture supplemental hereto relating to such Securities shall so permit, such Issuer Order may set forth procedures acceptable to the Subordinated Trustee for the issuance of such Securities, including without limitation, procedures with respect to interest rate, Stated Maturity, if any, date of issuance and date from which interest, if any, shall accrue. Such procedures may authorize authentication and delivery pursuant to electronic instruction from the Issuer or its duly authorized agent.
Notwithstanding any contrary provision herein, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Board Resolution and/or indenture supplemental hereto, Officers’ Certificate and Opinion of Counsel otherwise required pursuant to Sections 1.02 and 3.01 at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued; provided that it shall be necessary to deliver such documents in connection with any reopening of a series of Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Subordinated Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by manual signature by the Subordinated Trustee for such Security or in the name of such Subordinated Trustee by any Authenticating Agent pursuant to Section 3.12, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Issuer, and the Issuer shall deliver such Security to the Subordinated Trustee for cancellation as provided in Section 3.09, for all purposes of this Subordinated Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Subordinated Indenture.
Any global Security shall, unless otherwise provided therein, be delivered to a Depositary designated pursuant to Section 3.01. Each Depositary designated pursuant to Section 3.01 for a global Security must at the time of its designation and at all times while it serves as such Depositary be a clearing agency registered under the Exchange Act and any other applicable statute or regulation.
The Subordinated Trustee shall have the right to decline to authenticate and deliver any Securities if the Subordinated Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Subordinated Trustee in good faith shall determine that such action would expose the Subordinated Trustee to personal liability to existing Holders or would affect the Subordinated Trustee’s own rights, duties or immunities under the Securities, this Subordinated Indenture or otherwise in a manner which is not reasonably acceptable to the Subordinated Trustee acting in good faith.
SECTION 3.04. Temporary Securities and Exchange of Securities.
Pending the preparation of definitive Securities of any particular series, the Issuer may execute, and upon an Issuer Order the Subordinated Trustee for the Securities of such series shall authenticate and deliver, in the manner specified in Section 3.03, temporary Securities which are printed, lithographed, typewritten, photocopied or otherwise produced in any authorized denomination, with like terms and conditions as the definitive Securities of the series in lieu of which they are issued, in registered form and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine. Such execution of such Securities shall be conclusive evidence as regards the Issuer as to any such determination made by the Issuer.
If temporary Securities of any particular series are issued, the Issuer will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of such definitive Securities, the temporary Securities of such series shall be exchangeable for such definitive Securities and of a like Stated Maturity, if any, and with like terms and provisions upon surrender of the temporary Securities of such series at the office or agency of the Issuer in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any particular series, the Issuer shall execute and (in accordance with an Issuer Order delivered at or prior to the authentication of the first definitive Security of such series) the Subordinated Trustee for the Securities of such series shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations of the same series and of a like
Stated Maturity, if any, and with like terms and provisions. Until exchanged as hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Subordinated Indenture as definitive Securities of the same series authenticated and delivered hereunder, with like terms and conditions, except where specified therein with respect to certification requirements prior to payment of interest in certain cases.
SECTION 3.05. Registration, Registration of Transfer and Exchange.
The Issuer shall cause to be kept for the Securities of each series a security register (such security register or registers herein sometimes collectively referred to as the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Securities and of transfers of Securities. Unless and until otherwise determined by the Issuer, the Subordinated Trustee shall act as Security Registrar (the “Security Registrar”) and the Security Register shall be kept at the Corporate Trust Office of the Subordinated Trustee. At all reasonable times, the Security Register shall be open for inspection by the Issuer and the Issuer and its duly authorized agents. The Issuer may appoint co-Security Registrars; provided that at any given time there shall be only one Security Register with respect to a series of Securities. In acting hereunder and in connection with the Securities, the Security Registrar shall act solely as agent of the Issuer and will not thereby assume any obligations towards or relationship of agency or trust for or with any Holder.
Upon surrender for registration of transfer of any Security of any particular series at the office or agency of the Issuer in a Place of Payment for that series, the Issuer shall execute, and upon an Issuer Order the Subordinated Trustee for the Securities of each series shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations, and of a like Stated Maturity, if any, and of a like series and aggregate principal amount and with like terms and conditions.
Except as set forth below, at the option of the Holder, Securities of any particular series may be exchanged for other Securities of any authorized denominations and of a like Stated Maturity, if any, and of a like series and aggregate principal amount and with like terms and conditions, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Issuer shall execute, and upon an Issuer Order the Subordinated Trustee for such Securities shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
Notwithstanding any other provision of this Section 3.05 or of Section 3.04, unless and until it is exchanged in whole or in part for Securities in definitive form, a 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.
If at any time the Depositary for Securities of a series notifies the Issuer that it is unwilling or unable to continue as Depositary for the Securities of such series or if at any time the Depositary for the Securities for such series shall no longer be eligible under Section 3.03, the Issuer shall appoint a successor Depositary with respect to the Securities for such series. If a successor Depositary for the Securities of such series is not appointed by the Issuer within 120 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer’s election pursuant to Section 3.01 shall no longer be effective with respect to the Securities for such series and the Issuer will execute, and the Subordinated Trustee, upon receipt of an Issuer Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form, in an aggregate principal amount equal to the principal amount of the global Security or Securities representing such series in exchange for such global Security or Securities.
The Issuer may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more global Securities shall no longer be represented by such global Security or Securities. In such event the Issuer will execute, and the Subordinated Trustee, upon receipt of an Issuer Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the global Security or Securities representing such series in exchange for such global Security or Securities.
If specified by the Issuer pursuant to Section 3.01 with respect to a series of Securities, the Depositary for such series of Securities may surrender a global Security for such series of Securities in exchange in whole or in part for Securities of such series of like tenor and terms, and in definitive form, on such terms as are acceptable to the Issuer and such Depositary. Thereupon the Issuer shall execute, and the Subordinated Trustee upon
an Issuer Order shall authenticate and deliver, without service charge but at the expense of the Issuer, (i) to each Person specified by such Depositary, a new Security or Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the global Security; and (ii) to such Depositary, a new global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered global Security and the aggregate principal amount of Securities delivered to Holders thereof.
Upon the exchange of a global Security for Securities in definitive form, such global Security, if so exchanged in its entirety, shall upon an Issuer Order be cancelled by the Subordinated Trustee. Securities issued in exchange for a global Security pursuant to this Section 3.05 shall be registered in such names and in such authorized denominations as the Depositary for such global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Subordinated Trustee in writing. The Subordinated Trustee shall deliver, or cause to be delivered, such Securities to the persons in whose names such Securities are so requested.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Subordinated Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or exchange shall (if so required by the Issuer or the Subordinated Trustee for such Security) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Security Registrar for such series duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holders for any registration of transfer or exchange of Securities, but the Issuer and/or the Subordinated Trustee may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of such Holder’s Securities, other than exchanges pursuant to Section 3.04, 9.06 or 11.07 not involving any transfer.
The Issuer shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 11.04 and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Security so selected for redemption as a whole or in part, except the unredeemed portion of any Security being redeemed in part.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Subordinated Trustee for such Security, or the Issuer and the Subordinated Trustee for a Security receive evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) there is delivered to the Issuer and the Subordinated Trustee such security and/or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of written notice to the Issuer or the Subordinated Trustee that such Security has been acquired by a bona fide purchaser, the Issuer shall execute and upon Issuer Request such Subordinated Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security or in exchange for such mutilated Security, a new Security of the same series and in a like principal amount and of a like Stated Maturity and with like terms and conditions and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Issuer in its discretion may, instead of issuing a new Security, pay such Security (without surrender thereof except in the case of a mutilated Security) if the applicant for such payment shall furnish to the Issuer and the Subordinated Trustee for such Security such security and/or indemnity as may be required by them to save each of them harmless, and in case of destruction, loss or theft, evidence satisfactory to the Issuer and such Subordinated Trustee and any agent of any of them of the destruction, loss or theft of such Security and the ownership thereof.
Upon the issuance of any new Security under this Section, the Issuer may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including all fees and expenses of the Subordinated Trustee for such Security) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security or in exchange for any mutilated Security, shall constitute an original additional contractual obligation of the Issuer whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Subordinated Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder.
The provisions of this Section 3.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
(a) General. Interest on any Security which is due and payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest payment; provided, however, that interest, if any, payable at Maturity will be payable to the Person to whom principal shall be payable.
Pursuant to Section 3.01, the Issuer shall designate the manner in which interest shall be paid (including whether such interest may be paid in accordance with the Alternative Coupon Satisfaction Mechanism).
Unless otherwise provided with respect to the Securities of any series, payment of interest may be made at the option of the Issuer by check mailed or delivered to the address of the Person entitled thereto as such address shall appear in the Security Register or by transfer to a bank account maintained by the payee.
(b) Payments of Interest on Dated Subordinated Debt Securities. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the particular series, if the Issuer fails to pay an installment of interest on an Interest Payment Date with respect to any Dated Subordinated Debt Securities, or does not pay all or any part of the principal of (or premium, if any, on) any such Securities on the Stated Maturity, if any, or any other date set for redemption, the obligation to make such payment on such Interest Payment Date, Stated Maturity or other date set for redemption, as the case may be, shall be deferred until: (i) in the case of a payment of interest, the date upon which the Issuer pays a dividend or distribution or makes any other payment on any Junior Securities or Parity Securities (other than (A) a final dividend declared by the Issuer with respect to its Ordinary Shares prior to the date that the decision to defer such interest payment is made or (B) a payment made by one of the Issuer’s wholly-owned subsidiaries to another wholly-owned subsidiary or directly to the Issuer) (a “Deferred Interest Payment Date”) or the earlier to occur of the Stated Maturity for the payment of principal or the Deferred Principal Payment Date, as the case may be; and (ii) in the case of a payment of principal (or premium, if any), the first Business Day after the date that falls six months after such payment was originally due (a “Deferred Principal Payment Date”).
Except as otherwise provided in a supplemental indenture or Board Resolution executed pursuant to Section 3.01 for the Securities of such series, no payment deferred in accordance with the foregoing will accrue interest and no payment so deferred shall be treated as due for any purpose until the Deferred Interest Payment Date or Deferred Principal Payment Date, as the case may be. Accordingly, no such deferral will constitute a Payment Default or an Event of Default under Section 5.01 or Section 5.03 hereof with respect to such Securities.
Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of the Securities, if the Issuer defers an interest payment with respect to any Dated Subordinated Debt Securities or Perpetual Subordinated Debt Securities, as the case may be, in accordance with the terms of this Subordinated Indenture (including any Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series), then neither the Issuer nor any entity the Issuer controls, directly or indirectly, shall be permitted: (a) to declare or pay a dividend or distribution or make any other payment on any Preference Shares, Parity Securities or on any Junior Securities (other than (i) a final dividend declared by the Issuer with respect to its Ordinary Shares prior to the date that the decision to defer such interest payment is made or (ii) a payment made by one of the Issuer’s wholly-owned subsidiaries to another wholly-owned subsidiary or directly to the Issuer); or (b) to redeem, purchase or otherwise acquire any Parity Securities or any Junior Securities, in each case unless or until all interest deferred in accordance with the foregoing has been received by the Holders of the Dated Subordinated Debt Securities and no other payment of arrears of interest remains unsatisfied.
For purposes of the foregoing, the payment (or declaration of payment) of a dividend or distribution on Junior Securities and Parity Securities shall be deemed to include the making of any interest, coupon or dividend payment (or payment under any guarantee in respect thereof) and the redemption, purchase or other acquisition of such securities (save where the funds used to redeem, purchase or acquire those securities are derived from an issue of Junior Securities or Parity Securities (i) made at any time within the six-month period prior to the time of such redemption, purchase or acquisition, and (ii) with the same or junior ranking on a return of assets on a winding up or in respect of a distribution or payment of interest, coupons or dividends and/or any other amounts thereunder to those securities being redeemed, purchased or acquired). The Subordinated Trustee shall be entitled to rely on an Officers’ Certificate (and shall be protected in so doing) as to whether the redemption, purchase or acquisition falls within the exception set out above and, if the Subordinated Trustee does so rely, such Officers’ Certificate shall, in the absence of clear error, be conclusive and binding on the Issuer and the holders of the Securities.
(c) Payments of Interest on Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities, (i) payment of interest on the Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities will be mandatory on each Compulsory Interest Payment Date and (ii) any accrued interest for an Interest Period on any Perpetual Subordinated Capital Securities of a particular series which is not paid by the Issuer either (x) because the Issuer elects not to make a payment of interest on any Optional Interest Payment Date, (y) because the Solvency Condition is not satisfied on an Interest Payment Date or (z) because of the occurrence of a Payment Event, together with any other accrued interest for previous Interest Periods in respect of such Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities which was not paid by the Issuer so long as the same remains unpaid, shall constitute “Deferred Interest”.
(d) In respect of the Perpetual Subordinated Capital Securities and Perpetual Subordinated Debt Securities, if provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, interest on the Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, as the case may be, which is payable on each Compulsory Interest Payment Date and is not deferred shall constitute “Current Interest”. The Issuer may satisfy its obligation to pay Current Interest on such Securities through the issuance of Perpetual Subordinated Debt Securities, Perpetual Subordinated Capital Securities and/or Ordinary Shares, in accordance with the procedures set out in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, as the case may be.
(e) Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, Deferred Interest shall not itself bear interest and will be payable only as set out below. In respect of a series of Perpetual Subordinated Capital Securities, Deferred Interest shall only be payable upon the redemption of such series or upon their repurchase by the Issuer or (subject to the provisions of Section 13.01 hereof) upon the commencement of the winding up of the Issuer and not in any other circumstances. In respect of the Perpetual Subordinated Capital Securities, the Issuer may satisfy its obligation to pay Deferred Interest upon the redemption of such series or upon their repurchase by the Issuer only in accordance with the Alternative Coupon Satisfaction Mechanism provided for in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Perpetual Subordinated Capital Securities except in the case of the winding up of the Issuer, in which case any Deferred Interest will be payable by the liquidator in the same manner and with the same ranking as the principal on the Perpetual Subordinated Capital Securities.
In respect of Perpetual Subordinated Debt Securities, at the option of the Issuer, but subject to satisfying the Solvency Condition, Deferred Interest will be payable in whole or in part (as specified in the notice given by the Issuer) at any time upon notice being given by the Issuer to the Subordinated Trustee and the Holders of Perpetual Subordinated Debt Securities as specified in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Perpetual Subordinated Debt Securities. In respect of Perpetual Subordinated Debt Securities, Deferred Interest will become payable on the redemption of the Perpetual Subordinated Debt Securities or on their repurchase by the Issuer (or on behalf of the Issuer) or (subject to the provisions set out in Section 13.01 hereof) upon the commencement of the winding up of the Issuer and not in any other circumstances, but so that in the case of payment of part of the Deferred Interest, the
interest accrued during any Interest Period shall not be paid prior to that accrued during an earlier Interest Period. In respect of Perpetual Subordinated Debt Securities, the Issuer may satisfy its obligation to pay Deferred Interest in accordance with the Alternative Coupon Satisfaction Mechanism, as set forth in the relevant Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Perpetual Subordinated Debt Securities, except in the case of the winding up of the Issuer, in which case any Deferred Interest will be payable by the liquidator in the same manner and with the same ranking as the principal on the Perpetual Subordinated Debt Securities.
Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a series of Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities, if the Issuer defers an interest payment with respect to any Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities in accordance with the terms of this Subordinated Indenture (including any Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series), then neither the Issuer nor any entity the Issuer controls, directly or indirectly, shall be permitted: (a) to declare or pay a dividend or distribution or make any other payment on any Parity Securities or on any Junior Securities (other than (i) a final dividend declared by the Issuer with respect to its Ordinary Shares prior to the date that the decision to defer such interest payment is made or (ii) a payment made by one of the Issuer’s wholly-owned subsidiaries to another wholly-owned subsidiary or directly to the Issuer); or (b) to redeem, purchase or otherwise acquire Parity Securities or any Junior Securities, in each case unless or until the interest otherwise due and payable on the next succeeding Interest Payment Date (but excluding Deferred Interest, if any) in respect of such Securities is duly set aside and provided for or paid in full.
For purposes of the foregoing, the payment (or declaration of payment) of a dividend or distribution on Junior Securities and Parity Securities shall be deemed to include the making of any interest, coupon or dividend payment (or payment under any guarantee in respect thereof) and the redemption, purchase or other acquisition of such securities (save where the funds used to redeem, purchase or acquire those securities are derived from an issue of Junior Securities or Parity Securities (i) made at any time within the six-month period prior to the time of such redemption, purchase or acquisition, and (ii) with the same or junior ranking on a return of assets on a winding up or in respect of a distribution or payment of interest, coupons or dividends and/or any other amounts thereunder to those securities being redeemed, purchased or acquired). The Subordinated Trustee shall be entitled to rely on an Officers’ Certificate (and shall be protected in so doing) as to whether the redemption, purchase or acquisition falls within the exception set out above and, if the Subordinated Trustee does so rely, such Officers’ Certificate shall, in the absence of clear error, be conclusive and binding on the Issuer and the holders of the Securities.
The Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of each series of Perpetual Subordinated Capital Securities and Perpetual Subordinated Debt Securities, shall set forth additional matters with respect to Deferred Interest with respect to such series, including: (a) the manner in which the Alternative Coupon Satisfaction Mechanism will apply to such series; (b) the dates, times and manner in which the Issuer will be obligated to satisfy any Deferred Interest; (c) the consequences of the occurrence of a Market Disruption Event or a Definitive Suspension; and (d) such other matters with respect to Deferred Interest as are set forth therein.
(f) Payment of Defaulted Interest. Any interest (a) on any Dated Subordinated Debt Securities of any particular series which is due and payable, but is not punctually paid or duly provided for, on any Deferred Interest Payment Date or (b) on any Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities of any particular series which is due and payable, but is not punctually paid or duly provided for, on any Compulsory Interest Payment Date (herein called “Defaulted Interest”) shall, in each case, forthwith cease to be payable to the Holder on the relevant Regular Record Date and such Defaulted Interest shall be paid by the Issuer, at its election in each case, as provided in clause (1) or (2) below:
(1) the Issuer may elect to make payment of any Defaulted Interest to the Persons in whose names any Securities of that series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Issuer shall notify the Subordinated Trustee for such Securities of such series in writing at least 30 days prior to the date of the proposed payment of the amount of Defaulted Interest proposed to be paid on each Security of that series and the date of the proposed payment, and at the same time the Issuer shall deposit with such Subordinated Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to such Subordinated Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. The Issuer shall fix a Special Record Date, and promptly give notice thereof to the Subordinated Trustee, for the payment of such Defaulted Interest. The Special Record Date shall not be more than 15 days and not less than 10 days prior to the date of the proposed payment and shall not be less than 10 days after the receipt by such Subordinated Trustee of the notice of the proposed payment. The Issuer or such Subordinated Trustee, in the name and at the expense of the Issuer, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid to each Holder of Securities of that series at his address as it appears in the Security Register no less than seven days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names any such Securities of that series (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (2); or
(2) the Issuer may make payment of any Defaulted Interest on Securities of any particular series in any other lawful manner not inconsistent with the requirements of any Stock Exchange on which the Securities may be listed, and upon such notice as may be required by such Stock Exchange, unless, after notice is given by the Issuer to the Subordinated Trustee for the Securities of such series of such proposed manner of payment pursuant to this clause, such manner of payment shall be deemed impracticable by such Subordinated Trustee.
Subject to the foregoing provisions of this Section and Section 3.05, each Security delivered under this Subordinated Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
(g) Payment of Interest on Deferred Interest. To the extent provided for in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a particular series of Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities, a Redemption Date on which any Deferred Interest Payments are due to be satisfied may be postponed (i) following the occurrence of a Market Disruption Event during the 14 Business Days preceding such Redemption Date until such Market Disruption Event no longer exists and such deferral will not constitute a Perpetual Security Default; in addition, to the extent provided for in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a particular series of Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities, interest will not accrue on Deferred Interest during a Market Disruption Event provided however that if a Market Disruption Event exists and is continuing for more than 14 days after the initial Redemption Date, interest will accrue on such Deferred Interest from (and including) the 14th day following the initial Redemption Date to (but excluding) the date such Deferred Interest is paid at the rate of interest applicable to such series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities or (ii) in other circumstances where the Issuer is otherwise not able to raise sufficient funds through the Alternative Coupon Satisfaction Mechanism to satisfy all Deferred Interest Payments payable on such Redemption Date and, to the extent set forth in such Board Resolution or supplemental indenture interest will accrue on outstanding Deferred Interest Payments that would otherwise have been satisfied on such initially scheduled Redemption Date from (and including) such Redemption Date to (but excluding) the date such Deferred Interest Payments are paid, at the rate of interest applicable to such series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities.
The Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of each series of Perpetual Subordinated Capital Securities and Perpetual Subordinated Debt Securities shall set forth additional matters with respect to Deferred Interest with respect to such series, including: (a) the manner in which the Alternative Coupon Satisfaction Mechanism will apply to such series; (b) the dates, times and manner in which the Issuer will be obligated to satisfy any Deferred Interest; (c) the consequences of the occurrence of a Market Disruption Event or a Definitive Suspension; and (d) such other matters with respect to Deferred Interest as are set forth therein.
SECTION 3.08. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the Issuer, the Subordinated Trustee for such Security and any agent of the Issuer or such Subordinated Trustee may treat the Person in whose name any such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Section 3.07) interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the Issuer, such Subordinated Trustee or any agent of the Issuer or such Subordinated Trustee shall be affected by notice to the contrary.
None of the Issuer, the Subordinated Trustee, any Paying Agent or the Security Registrar will have any responsibility or obligation to any beneficial owner of a global Security, a member of, or a participant in, the Depositary for such global Security or other Person with respect to the accuracy of the records of the Depositary for such global Security or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary for such global Security) of any notice (including any notice of redemption or purchase) or the payment of any amount or delivery of any Securities (or other security or property) under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary for such global Security or its nominee in the case of a global Security). The rights of beneficial owners in any global Security shall be exercised only through the Depositary for such global Security subject to the applicable rules and procedures of such Depositary. The Issuer, the Subordinated Trustee, any Paying Agent or the Security Registrar may rely and shall be fully protected in relying upon information furnished by the Depositary for such global Security with respect to its members, participants and any beneficial owners.
The Subordinated Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among the Depositary for such global Security and participants, members or beneficial owners in any global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Neither the Subordinated Trustee nor any of its agents shall have any responsibility for any actions taken or not taken by the Depositary for such global Security.
SECTION 3.09. Cancellation.
Unless otherwise specified in the Securities of a series, all Securities surrendered for payment, redemption, registration of transfer or exchange, or delivered in satisfaction of any sinking fund payment, shall, if surrendered to any Person other than the Subordinated Trustee for such Securities, be delivered to such Subordinated Trustee and shall be promptly cancelled by it. The Issuer may at any time deliver to the Subordinated Trustee for Securities of a series for cancellation any Securities previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by such Subordinated Trustee. Notwithstanding any other provision of this Subordinated Indenture to the contrary, in the case of a series, all the Securities of which are not to be originally issued at one time, a Security of such series shall not be deemed to have been Outstanding at any time hereunder if and to the extent that, subsequent to the authentication and delivery thereof, such Security is delivered to the Subordinated Trustee for such Security for cancellation by the Issuer or any agent thereof upon the failure of the original purchaser thereof to make payment therefor against delivery thereof, and any Security so delivered to such Subordinated Trustee shall be promptly cancelled by it. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Subordinated Indenture. All cancelled Securities held by the Subordinated Trustee for such Securities shall be disposed of by the Subordinated Trustee in accordance with its standard procedures and a certificate of disposition evidencing such disposition of Securities shall be provided to the Issuer by the Subordinated Trustee, unless by an Issuer Order the Issuer shall direct that such cancelled Securities shall be returned to it. Global securities shall not be disposed of until exchanged in full for definitive Securities or until payment thereon is made in full.
SECTION 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.01 for Securities of any particular series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11. Common Code, CUSIP or ISIN Numbers.
The Issuer in issuing any series of the Securities may use Common Code, CUSIP or ISIN numbers, if then generally in use, and thereafter with respect to such series, the Subordinated Trustee or Security Registrar may use such numbers in any notice of redemption with respect to such series provided that any such
notice 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 a redemption or otherwise, 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. The Issuer will promptly notify the Subordinated Trustee of any change in the Common Code, CUSIP or ISIN numbers.
SECTION 3.12. Authenticating Agents.
From time to time, the Subordinated Trustee for the Securities of any series may, subject to its sole discretion, and shall, upon receipt of an Issuer Order, and for such period as the Issuer shall elect, appoint one or more Authenticating Agents with respect to the Securities of such series, which may include any director or officer of the Issuer or any Affiliate or both of them, with power to act in the name of the Subordinated Trustee and subject to its direction in the authentication and delivery of Securities of such series in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 11.07 as fully to all intents and purposes as though such Authenticating Agent had been expressly authorized by those Sections of this Subordinated Indenture to authenticate and deliver Securities of such series. For all purposes of this Subordinated Indenture, the authentication and delivery of such Securities of such series by an Authenticating Agent for such Securities pursuant to this Section shall be deemed to be authentication and delivery of such Securities “by the Subordinated Trustee” for the Securities of such series. Any such Authenticating Agent shall (except in the case of the Issuer, an Affiliate, or an officer or director of the Issuer or an Affiliate) at all times be a corporation organized and doing business under the laws of the United States or of any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal, State or District of Columbia authority, as the case may be. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such 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. If at any time an Authenticating Agent for any series of Securities shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any Authenticating Agent for any series of Securities may resign at any time by giving written notice of resignation to the Subordinated Trustee for such series and to the Issuer. The Subordinated Trustee for any series of Securities may at any time and shall, upon an Issuer Request, terminate the appointment of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Issuer in the manner set forth in Section 1.05. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent for any series of Securities shall cease to be eligible under this Section, the Subordinated Trustee for such series may and shall, upon an Issuer Request, appoint a successor Authenticating Agent, shall give written notice of such appointment to the Issuer and shall give written notice of such appointment to all Holders of Securities of such series in the manner set forth in Section 1.06. Any successor Authenticating Agent, upon acceptance of his appointment hereunder, shall become vested with all the rights, powers and duties of his predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Issuer agrees to pay to any corporation of which any director or officer has been appointed as Authenticating Agent for such series from time to time reasonable compensation for such services.
If an appointment with respect to one or more series of Securities is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Subordinated Trustee’s certificate of authentication, an alternate certificate of authentication substantially in the form specified in Section 2.02.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Securities of any Series.
(a) The Issuer shall be deemed to have satisfied and discharged the entire indebtedness on all the Securities of any particular series and the Subordinated Trustee for the Securities of such series, upon an Issuer Request and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of such indebtedness, when:
(1) either:
(A) all Securities of such series theretofore authenticated and delivered (other than (i) any Securities of such series which have been mutilated, destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.06 and (ii) Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the last paragraph of Section 10.03) have been delivered to the Subordinated Trustee for the Securities of such series for cancellation; or
(B) except as otherwise specified pursuant to Section 3.01 for the Securities of such series, with respect to all Outstanding Securities of such series described in (A) above not theretofore so delivered to the Subordinated Trustee for the Securities of such series for cancellation:
(i) the Issuer has irrevocably deposited, or caused to be deposited, with the Subordinated Trustee for the Securities of such series as trust funds in trust an amount sufficient (without consideration of any reinvestment thereof) to pay and discharge the entire indebtedness on all such Outstanding Securities of such series for unpaid principal (and premium, if any) and interest and Deferred Interest, if any, to the Stated Maturity, if any, or any Redemption Date as contemplated by Section 4.02, as the case may be; or
(ii) the Issuer has deposited, or caused to be deposited, with such Subordinated Trustee as obligations in trust such amount of U.S. Government Obligations as will, as evidenced by a Certificate of a Firm of Independent Public Accountants delivered to such Subordinated Trustee, together with the predetermined and certain income to accrue thereon (without consideration of any reinvestment thereof), be sufficient to pay and discharge when due the entire indebtedness on all such Outstanding Securities of such series for unpaid principal (and premium, if any) and interest and Deferred Interest, if any, to the Stated Maturity, if any, or Redemption Date as contemplated by Section 4.02, as the case may be;
(iii) the Issuer has deposited, or caused to be deposited, with such Subordinated Trustee in trust an amount equal to the amount referred to in clause (i) or (ii) in any combination of currency or currency unit or U.S. Government Obligations and has delivered a Certificate of a Firm of Independent Public Accountants to such Subordinated Trustee verifying that such combination of funds and U.S. Government Obligations will be sufficient to pay and discharge the entire indebtedness on all Outstanding Securities of such series for unpaid principal (and premium, if any) and interest and Deferred Interest, if any, to the Stated Maturity, if any, or any Redemption Date as contemplated by Section 4.02, as the case may be, taking into account the predetermined and certain income to accrue on such U.S. Government Obligations (but without any consideration of any reinvestment thereof) and without taking consideration of any reinvestment of any such funds; or
(iv) such Securities are converted or exchanged for Preference Shares in accordance with Article Fourteen and the applicable supplemental indenture for each series of such Securities.
(2) the Issuer has paid or caused to be paid all other sums payable with respect to the Securities of such series;
(3) the Issuer has delivered to such Subordinated Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the entire indebtedness on all Securities of such series have been complied with;
(4) except in the circumstances set out in Section 4.01(a)(1)(B)(iv), if the Securities of such series are not to become due and payable at their Stated Maturity, if any, within one year of the date of a deposit pursuant to Section 4.01(a)(1)(B) or are not to be called for redemption within one year of the date of such deposit under arrangements satisfactory to such Subordinated Trustee as of the date of such deposit, then the Issuer shall have given, not later than the date of such deposit, notice of such deposit to the Holders of such Securities; and
(5) except in the circumstances set out in Section 4.01(a)(1)(B)(iv), if the conditions set forth in Section 4.01(a)(1)(A) have not been satisfied, and unless otherwise specified pursuant to Section 3.01 for the Securities of such series, the Issuer has delivered to the Subordinated Trustee an Opinion of Counsel to the effect
that (A) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of this Subordinated Indenture there has been a change in applicable United States Federal income tax law, in either case to the effect that, and based upon which such Opinion of Counsel shall confirm that, the beneficial owners of Securities of such series will not recognize income, gain or loss for United States Federal income tax purposes as a result of such deposit, satisfaction 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 time as would have been the case if such deposit, satisfaction and discharge had not occurred.
Upon the satisfaction of the conditions set forth in this Section 4.01 with respect to all the Securities of any series, the terms and conditions of the Securities of such series, including the terms and conditions with respect thereto set forth in this Subordinated Indenture, as applicable shall no longer be binding upon, or applicable to, the Issuer, and the Holder of the Securities of such series shall look for payment only to the funds or obligations deposited with the Subordinated Trustee pursuant to Section 4.01(a)(1)(B)(i)-(iii); provided, however, that in no event shall the Issuer be discharged from (i) any payment obligations in respect of Securities of such series which are deemed not to be Outstanding under clause (3) of the definition thereof if such obligations continue to be valid obligations of the Issuer under applicable law, (ii) any obligations under Sections 4.02(b), 6.07 and 6.10 and (iii) any obligations under Sections 3.04, 3.05 and 3.06 (except that Securities of such series issued upon registration of transfer or exchange or in lieu of mutilated, destroyed, lost or stolen Securities shall not be obligations of the Issuer) and Sections 3.11, 5.16, 7.01 and 10.02; and provided, further, that in the event a petition seeking relief under any applicable Bankruptcy Law is filed and not discharged with respect to the Issuer within 123 days after the deposit, the entire indebtedness on all Securities of such series shall not be discharged, and in such event the Subordinated Trustee shall return such deposited funds or obligations as it is then holding to the Issuer upon an Issuer Request.
SECTION 4.02. Application of Trust Money.
(a) All money and obligations deposited with the Subordinated Trustee for any series of Securities pursuant to Section 4.01 shall be held irrevocably in trust and shall be made under the terms of an escrow trust agreement in form satisfactory to such Subordinated Trustee. Such money and obligations shall be applied by such Subordinated Trustee, in accordance with the provisions of the Securities, this Subordinated Indenture and such escrow trust agreement, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as such Subordinated Trustee may determine, to the Persons entitled thereto, of the principal of (and premium, if any, on) and interest and Deferred Interest, if any, on the Securities for the payment of which such money and obligations have been deposited with such Subordinated Trustee. If Securities of any series are to be redeemed prior to their Stated Maturity, if any, whether pursuant to any optional redemption provisions or in accordance with any mandatory sinking fund requirement, the Issuer shall make such arrangements as are satisfactory to the Subordinated Trustee for any series of Securities for the giving of notice of redemption by such Subordinated Trustee in the name, and at the expense, of the Issuer.
(b) The Issuer shall pay and shall indemnify the Subordinated Trustee for any series of Securities against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations deposited pursuant to Section 4.01 or the interest and principal received in respect of such U.S. Government Obligations other than any such tax, fee or other charge which by law is payable by or on behalf of Holders; it being understood that the Subordinated Trustee shall bear no responsibility for any such tax, fee or other charge which by law is payable by or on behalf of Holders. The obligation of the Issuer under this Section 4.02(b) shall be deemed to be an obligation of the Issuer under Section 6.07(2).
(c) Anything in this Article Four to the contrary notwithstanding, the Subordinated Trustee for any series of Securities shall deliver or pay to the Issuer from time to time upon an Issuer Request any money or U.S. Government Obligations held by it as provided in Section 4.01 which, as expressed in a Certificate of a Firm of Independent Public Accountants delivered to such Subordinated Trustee, are in excess of the amount thereof which would then have been required to be deposited for the purpose for which such money or U.S. Government Obligations were deposited or received.
SECTION 4.03. Satisfaction and Discharge of Subordinated Indenture.
Upon compliance by the Issuer with the provisions of Section 4.01 as to the satisfaction and discharge of each series of Securities issued hereunder, and if the Issuer has paid or caused to be paid all other sums payable under this Subordinated Indenture, this Subordinated Indenture shall cease to be of any other effect (except
as otherwise provided herein). Upon an Issuer Request and receipt of an Opinion of Counsel and an Officers’ Certificate complying with the provisions of Section 1.02, the Subordinated Trustees for all series of Securities (at the expense of the Issuer) shall execute proper instruments acknowledging satisfaction and discharge of this Subordinated Indenture.
Notwithstanding the satisfaction and discharge of this Subordinated Indenture, any obligations of the Issuer under Sections 3.04, 3.05, 3.06, 4.02(b), 4.04, 5.16, 6.07, 6.10, 7.01 and 10.02 and the obligations of the Subordinated Trustee for any series of Securities under Section 4.02 and the rights and immunities of the Subordinated Trustee under this Subordinated Indenture shall survive.
SECTION 4.04. Reinstatement.
If the Subordinated Trustee for any series of Securities is unable to apply any of the amounts (for purposes of this Section 4.04, “Amounts”) or U.S. Government Obligations, as the case may be, described in Section 4.01(a)(1)(B)(i), (ii) or (iii), respectively, in accordance with the provisions of Section 4.01 by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, each of the obligations of the Issuer under this Subordinated Indenture and the Securities of such series shall be revived and reinstated as though no deposit had occurred pursuant to Section 4.01 until such time as the Subordinated Trustee for such series is permitted to apply all such Amounts or U.S. Governmental Obligations, as the case may be, in accordance with the provisions of Section 4.01; provided, however, that if, due to the reinstatement of its rights or obligations hereunder, the Issuer has made any payment of principal of (or premium, if any, on) or interest or Deferred Interest, if any, on such Securities, the Issuer shall be subrogated to the rights of the Holders of such Securities to receive payment from such Amounts or U.S. Government Obligations, as the case may be, held by the Subordinated Trustee for such series.
SECTION 4.05. Relevant Regulator Consent.
The Issuer may only make an Issuer Request as provided under Article Four of this Subordinated Indenture provided that (a) the Issuer has notified the Relevant Regulator of its intention to do so prior to the Issuer making such Issuer Request and no objection thereto has been raised by the Relevant Regulator or, if required, a Relevant Regulator Consent has been received prior to the Issuer making such Issuer Request and (b) such Issuer Request shall only be applicable if, when and to the extent not prohibited by the Capital Regulations.
ARTICLE FIVE
REMEDIES
SECTION 5.01. Events of Default.
Unless otherwise provided for in the Board Resolution or supplemental indenture pursuant to Section 3.01 establishing the terms of a particular series of Securities, “Event of Default” wherever used herein with respect to any particular series of Securities means any one of the following events (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) if an order is made by a court of competent jurisdiction and is not successfully appealed within 30 days of the making of such order, or an effective shareholders’ resolution is validly adopted, for the winding up of the Issuer in England and Wales (except in the case of winding-up solely for the purpose of a reconstruction or amalgamation or substitution in place of the Issuer of a successor in business in each case where the Securities remain outstanding and are assumed by such successor in business on terms previously approved in writing by the Holders of not less than 75% in aggregate principal amount of the Outstanding Securities of that series); or
(b) any other events of default provided with respect to Securities of that series as set forth in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such series.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to any particular series of Securities occurs and is continuing, the Subordinated Trustee for the Securities of such series or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities of that series may exercise any right, power or remedy permitted by law, and shall have, in particular, without limiting the generality of the foregoing, the right to declare the entire principal amount of (including premium, if any, on), or (in the case of Discounted Securities) such lesser amount as may be provided for with respect to the Securities of such series, and unless otherwise provided in a Board Resolution or supplemental indenture pursuant to Section 3.01 hereof, any accrued but unpaid interest on, all the Outstanding Securities of that series to be due and payable immediately, by a notice in writing to the Issuer (and to the Subordinated Trustee if given by Holders). Upon any such declaration of acceleration such principal or such lesser amount, as the case may be, including premium, if any, thereon, together with any accrued interest, Deferred Interest (but only to the extent specifically provided for) and all other amounts owing thereunder and hereunder (with respect to such series of Securities), shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.
At any time after such a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the Subordinated Trustee for the Securities of any series as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series, by written notice to the Issuer and such Subordinated Trustee, may rescind and annul such declaration and its consequences provided:
(1) the Issuer has paid or deposited with such Subordinated Trustee a sum sufficient to pay:
(A) all overdue interest on all Securities of that series;
(B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon from the date such principal became due at a rate per annum equal to the rate borne by the Securities of such series (or, in the case of Discounted Securities, the yield to maturity, if any, set forth therein), to the extent that the payment of such interest shall be legally enforceable;
(C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor or in the Securities of such series (or, unless otherwise specified pursuant to Section 3.01, in the case of Discounted Securities, the yield to maturity, if any, set forth therein); and
(D) in Dollars, all sums paid or advanced by the Subordinated Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of such Subordinated Trustee, its agents and counsel and all other amounts then due to such Subordinated Trustee under Section 6.07;
and
(2) all Events of Default with respect to the Securities of such series have been cured or waived.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
If the Securities become due and payable (whether pursuant to this Section 5.02 or Article Eleven below) and the Issuer fails to pay such amounts (or any damages awarded for breach of any obligations in respect of the Securities or this Subordinated Indenture) forthwith upon demand, notwithstanding the continuing right of any Holder to receive payment of the principal of and interest and Deferred Interest (if any) on Securities or any right of the Subordinated Trustee or the agents hereunder to receive payment or indemnification as provided for in Section 6.07 hereof, or to institute suit for the enforcement of any such payments, the Subordinated Trustee, in its own name and as trustee of an express trust, may (but shall not be obligated to) institute proceedings for the winding up of the Issuer in England and Wales but not elsewhere, and/or prove in a winding up of the Issuer or claim in a liquidation of the Issuer for all such due and payable amounts (including any damages awarded for breach of any obligations in respect of the Securities or this Subordinated Indenture) but no other remedy shall be available to the Subordinated Trustee.
SECTION 5.03. Payment Defaults, Perpetual Security Defaults, Payment Events.
(a) Payment Defaults. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of the particular series, with respect to the Securities of any series of Dated Subordinated Debt Securities, a “Payment Default” shall occur if the Issuer fails to pay, or set aside, principal of (or premium, if any, on) or accrued interest, if any, on any such Securities when due, and such failure continues for 14 days, provided that:
(1) if the Issuer does not pay or set aside for payment an installment of interest on an Interest Payment Date with respect to any Dated Subordinated Debt Securities, or
(2) the Issuer does not pay or set aside for payment all or any part of the principal of (or premium, if any, on) any such Dated Subordinated Debt Securities on the Stated Maturity (if any) or any Redemption Date,
the failure to make such payment shall not constitute a “Payment Default” and the obligation to make such payment shall be deferred until (i) in the case of payment of interest, the applicable Deferred Interest Payment Date and (ii) in the case of a payment of principal (or premium, if any), the Deferred Principal Payment Date.
(b) Perpetual Security Defaults. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of the particular series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, a “Perpetual Security Default” shall occur if:
(1) the Issuer fails to pay or set aside for payment the amount due to satisfy any interest payment on a Compulsory Interest Payment Date, and such failure continues for a period of 14 days, or
(2) the Issuer fails to pay or set aside a sum to provide for payment of the principal amount, or fails to pay or set aside a sum to provide for payment of any accrued but unpaid interest and any Deferred Interest on the date fixed for redemption of such series and such failure continues for a period of 14 days, the failure to make or set aside such payment shall not constitute a “Perpetual Security Default” and the obligation to make such payment shall be deferred until (i) in the case of a payment of interest, the date upon which the Issuer pays a dividend on any class of the Issuer’s share capital or the Issuer makes any payment on any series of Junior Securities or debt securities ranking pari passu with such series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, as the case may be, and (ii) in the case of a payment of principal (or premium, if any), any accrued but unpaid interest or any Deferred Interest on a date set for redemption, the first Business Day after the date that falls six months after such payment was originally due.
(c) Proceedings upon Occurrence of a Payment Default or Perpetual Security Default. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of the particular series, if a Payment Default (with respect to Securities of any series of Dated Subordinated Debt Securities), or a Perpetual Security Default (with respect to any series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities), occurs and is continuing, the Subordinated Trustee for the Securities of such series may in its discretion commence (1) a proceeding in England and Wales (but not elsewhere) for the winding up of the Issuer or (2) a judicial proceeding for the collection of the sums so due and unpaid; provided that the Subordinated Trustee may not declare the principal amount of any such Securities to be due and payable.
(d) Payment Events. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of the particular series of Securities, if the Issuer fails to pay the amount due to satisfy any principal or interest payment that would have become due with respect to such Securities but for the Solvency Condition not being satisfied, such failure continues for 14 days and the Solvency Condition is not satisfied at the end of such 14-day period, such failure will not constitute a “Perpetual Security Default”, but instead will constitute a “Payment Event”, together with any other Payment Event with respect to any other series of Securities.
(e) Certain Limitations. It shall not be a Payment Default, Perpetual Security Default or Payment Event if such sums were not paid in order to comply with a statute, regulation or order of any court of competent jurisdiction. Where there is doubt as to the validity or applicability of any such statute, regulation or order, it shall not be a Payment Default, Perpetual Security Default or Payment Event if the Issuer acts on the advice given to it and to the Subordinated Trustee, in the form of an Opinion of Counsel acceptable to the Subordinated Trustee. However, the Issuer shall take action, including proceedings for a court declaration, to resolve the doubt, if counsel to the Issuer advises that the action is appropriate and reasonable. In this case, the Issuer shall proceed with the action promptly and be bound by any final resolution of the doubt. If such resolution is a determination that the Issuer can make the relevant payment without violating any statute, regulation or order then the payment shall become due and payable immediately after the Issuer has been informed of the determination.
(f) Proceeding upon the Occurrence of a Payment Event. Unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of the particular series, if a Payment Event with respect to a series of Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities occurs and is continuing, the Subordinated Trustee may (but shall not be obligated to) institute proceedings in England and Wales (but not elsewhere) for the winding up of the Issuer, but may not pursue any other legal remedy, including a judicial proceedings for the collection of the sums so due and unpaid.
(g) Waiver of Certain Rights. The Subordinated Trustee for the Securities of a series waives on behalf of the Holders of such Securities, and the Holder of any Security by his acceptance thereof will be deemed to have waived, any right of set-off or counterclaim that such Holders might otherwise have against the Issuer as the case may be, whether prior to or in any such bankruptcy or winding up as referred to in this Section 5.03. Notwithstanding the preceding sentence, if any of the rights and claims of any Holder are discharged by set-off, such Holder will immediately pay an amount equal to the amount of such discharge to the Issuer or, if applicable, the liquidator or trustee or receiver in bankruptcy of the Issuer, and until such time as payment is made will hold a sum equal to such amount in trust for the Issuer or, if applicable, the liquidator or trustee or receiver in bankruptcy of the Issuer. Accordingly, such discharge will be deemed not to have taken place.
(h) Certain Other Proceedings. Without prejudice to the provisions of Sections 5.03(a) through 5.03(g), the Subordinated Trustee may (but shall not be obligated to) without further notice, institute such proceedings against the Issuer as it may think fit to enforce any obligation, condition or provision binding on the Issuer (which the Issuer has failed to perform or comply with) under the Subordinated Indenture or the Securities of a series (other than any payment obligation of the Issuer under or arising from such Securities or the Subordinated Indenture including, without limitation, payment of any principal, or premium, if any, or interest (together with any Deferred Interest, if applicable) and any other amount otherwise due and payable under such Securities (including any Additional Amounts, and any damages awarded for breach of any obligations under such Securities or the Subordinated Indenture)), and in no event shall the Issuer, by virtue of the institution of any such proceedings, be obliged to pay any sum or sums (in cash or otherwise) sooner than the same would otherwise have been payable by it.
SECTION 5.04. Subordinated Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the Issuer or any other obligor upon the Securities of any series or the property of the Issuer or of such other obligor or their creditors, the Subordinated Trustee for the Securities of such series (irrespective of whether the principal (or lesser amount in the case of Discounted Securities) of any Security of such series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether such Subordinated Trustee shall have made any demand on the Issuer for the payment of overdue principal or interest or Deferred Interest (if the same has not been paid on the date on which the same shall have become due and payable as provided for in the Board Resolution or supplemental indenture executed pursuant to Section 3.01) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(1) to file and prove a claim for the whole amount of principal (or lesser amount in the case of Discounted Securities) (and premium, if any) and interest and Deferred Interest, if any, owing and unpaid in respect of the Securities of such series and to file such other papers or documents as may be necessary or advisable in order to have the claims of such Subordinated Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of such Subordinated Trustee, its agents and counsel and all other amounts due to such Subordinated Trustee under Section 6.07) and of the Holders of the Securities of such series allowed in such judicial proceeding;
(2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and
(3) unless prohibited by law or applicable regulations, to vote on behalf of the Holders of the Securities of such series in any election of a trustee in bankruptcy, liquidator or other persons performing similar functions;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder of Securities to make such payments to such Subordinated Trustee, and in the event that such Subordinated Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to such Subordinated Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of such Subordinated Trustee, its agents and counsel and any other amounts due such Subordinated Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Subordinated Trustee for the Securities of any series to authorize or consent to or accept or adopt on behalf of any Holder of a Security any plan of reorganization, arrangement, adjustment or composition affecting the Securities of such series or the rights of any Holder thereof, or to authorize the Subordinated Trustee for the Securities of any series to vote in respect of the claim of any Holder in any such proceeding, except as aforesaid, for the election of a trustee in bankruptcy or other person performing similar functions.
SECTION 5.05. Subordinated Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Subordinated Indenture or the Securities of any series may be prosecuted and enforced by the Subordinated Trustee for the Securities of any series without the possession of any of the Securities of such series or the production thereof in any proceeding relating thereto, and any such proceeding instituted by such Subordinated Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of such Subordinated Trustee, its agents and counsel and all other amounts due to such Subordinated Trustee under Section 6.07, be for the ratable benefit of the Holders of the Securities of such series in respect of which such judgment has been recovered.
SECTION 5.06. Application of Money Collected.
Subject to Article Thirteen in relation to subordination, any money collected by the Subordinated Trustee for the Securities of any series pursuant to this Article with respect to the Securities of such series shall be applied in the following order, at the date or dates fixed by such Subordinated Trustee and, in case of the distribution of such money on account of principal (or lesser amount in the case of Discounted Securities) (or premium, if any) or interest or Deferred Interest, if any, upon presentation of the Securities of such series and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due to the Subordinated Trustee, the Calculation Agent, the Paying Agent and the Security Registrar, and any predecessor trustee, calculation agent, paying agent and security registrar under Section 6.07;
Second: To the payment of the amounts then due and unpaid upon the Securities of such series for principal (or lesser amount in the case of Discounted Securities) of (and premium, if any, on) and interest and Deferred Interest, if any, on such Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (or lesser amount in the case of Discounted Securities) (and premium, if any) and interest and Deferred Interest, if any, respectively; and
Third: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.07. Limitation on Suits.
Except as set forth in Section 5.08, no Holder of any Security of any particular series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Subordinated Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) an Event of Default, Payment Default, Perpetual Security Default or Payment Event with respect to that series shall have occurred and be continuing and such Holder shall have previously given written notice to the Subordinated Trustee for the Securities of such series of such Event of Default, Payment Default, Perpetual Security Default or Payment Event and the continuance thereof;
(2) the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series shall have made written request to the Subordinated Trustee for the Securities of such series to institute proceedings in respect of such Event of Default, Payment Default, Perpetual Security Default or Payment Event in its own name as Subordinated Trustee hereunder;
(3) such Holder or Holders have offered to such Subordinated Trustee indemnity and/or security satisfactory to the Subordinated Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;
(4) such Subordinated Trustee for 60 days after its receipt of such notice, request and offer of indemnity and/or security has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to such Subordinated Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more Holders of Securities of that series shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Subordinated Indenture to affect, disturb or prejudice the rights of any other Holders of Securities of that series, or to enforce any right under this Subordinated Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Securities of that series.
SECTION 5.08. Unconditional Right of Holders to Receive Principal (and Premium, if any) and Interest, if any.
Notwithstanding any other provision in this Subordinated Indenture, but subject to Article Thirteen in relation to subordination and subject to Section 3.07 hereof, and subject further to the obligation to make Deferred Interest Payments pursuant to the Alternative Coupon Satisfaction Mechanism, as and to the extent set forth in a Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Securities, the Holder of any Security shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any, on) and interest, if any, on such Security on the Stated Maturity, Deferred Interest Payment Date or Deferred Principal Payment Date, as the case may be, expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment and such right shall not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies.
If the Subordinated Trustee for the Securities of any series or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Subordinated Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Subordinated Trustee or to such Holder, then and in every such case the Issuer, such Subordinated Trustee and the Holders of Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of such Subordinated Trustee and such Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Subordinated Trustee for the Securities of any series or to the Holders of Securities 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.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Subordinated Trustee for the Securities of any series or of any Holder of any Security of such series to exercise any right or remedy accruing upon any Event of Default, Payment Default, Perpetual Security Default or Payment Event with respect to the Securities of such series shall impair any such right or remedy or constitute a waiver of any such Event of Default, Payment Default, Perpetual Security Default or Payment Event or an acquiescence therein. Every right and remedy given by this Article or by law to such Subordinated Trustee for the Securities of any series or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Subordinated Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders.
Subject to Section 6.03, the Holders of a majority in aggregate principal amount of the Outstanding Securities of any particular series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Subordinated Trustee for the Securities of such series with respect to
the Securities of that series or exercising any trust or power conferred on such Subordinated Trustee with respect to such Securities; provided that:
(1) the Subordinated Trustee may refuse to follow any direction in conflict with any rule of law or with this Subordinated Indenture or which is unjustly prejudicial to the Holders of the Securities of that series not taking part in the direction. For the avoidance of doubt, the determination of whether any direction is unjustly prejudicial to any Holder is solely at the discretion of the Subordinated Trustee (and the Subordinated Trustee may but shall not be obligated to make such determination);
(2) the Subordinated Trustee need not take any action which might involve it in personal liability; and
(3) such Subordinated Trustee may take any other action deemed proper by such Subordinated Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any particular series may on behalf of the Holders of all the Securities of that series waive any past default hereunder with respect to that series and its consequences, except:
(1) a default in the payment of the principal of (or premium, if any, on) or interest or Deferred Interest, if any, on any Security of that series; or
(2) a default with respect to a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of that series affected.
Upon any such waiver, such default shall cease to exist and shall be deemed to have been cured, for every purpose of this Subordinated Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Subordinated Indenture agree, and each Holder of any Security 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 Subordinated Indenture or in any suit against the Subordinated Trustee for the Securities of any series for any action taken or omitted by it as Subordinated Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall (subject to applicable laws) not apply to any suit instituted by the Subordinated Trustee for the Securities of any series, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of any particular series or to any suit instituted by any Holder of any Security for the enforcement of the payment of the principal of (or premium, if any, on) or interest or Deferred Interest, if any, on any Security of such series on or after the respective Stated Maturities, if any, expressed in such Security (or, in the case of redemption or conversion or exchange, on or after the Redemption Date or the Event Date, as the case may be) or the date such Security becomes due and payable as expressed herein.
SECTION 5.15. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Subordinated Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Subordinated Trustee for any series of Securities, but will suffer and permit the execution of every such power as though no such law had been enacted.
SECTION 5.16. Judgment Currency.
If, for the purpose of obtaining a judgment in any court with respect to any obligation of the Issuer hereunder or under any Security, it shall become necessary to convert into any other currency or currency unit any
amount in the currency or currency unit due hereunder or under such Security, then such conversion shall be made by the Issuer at the Market Exchange Rate as in effect on the date of entry of the judgment (the “Judgment Date”). If pursuant to any such judgment, conversion shall be made on a date (the “Substitute Date”) other than the Judgment Date and there shall occur a change between the Market Exchange Rate as in effect on the Judgment Date and the Market Exchange Rate as in effect on the Substitute Date, the Issuer agrees to pay such additional amounts (if any) as may be necessary to ensure that the amount paid is equal to the amount in such other currency or currency unit which, when converted at the Market Exchange Rate as in effect on the Judgment Date, is the amount due hereunder or under such Security. Any amount due from the Issuer under this Section 5.16 shall be due as a separate debt and is not to be affected by or merged into any judgment being obtained for any other sum due hereunder or in respect of any Security, as the case may be. In no event, however, shall the Issuer be required to pay more in the currency or currency unit due hereunder or under such Security at the Market Exchange Rate as in effect on the Judgment Date than the amount of currency or currency unit stated to be due hereunder or under such Security so that in any event the obligations of the Issuer hereunder or under such Security will be effectively maintained as obligations in such currency or currency unit, and the Issuer shall be entitled to withhold (or be reimbursed for, as the case may be) any excess of the amount actually realized upon any such conversion on the Substitute Date over the amount due and payable on the Judgment Date.
ARTICLE SIX
THE SUBORDINATED TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default, Payment Default, Perpetual Security Default or Payment Event with respect to the Securities of any series for which the Subordinated Trustee is serving as such:
(1) such Subordinated Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Subordinated Indenture, and no implied covenants or obligations shall be read into this Subordinated Indenture against such Subordinated Trustee; and
(2) in the absence of bad faith on its part, such Subordinated Trustee may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, upon certificates or opinions furnished to such Subordinated Trustee and conforming to the requirements of this Subordinated Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to such Subordinated Trustee, such Subordinated Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Subordinated Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(b) In case an Event of Default, Payment Default, Perpetual Security Default or Payment Event with respect to a series of Securities has occurred and is continuing, the Subordinated Trustee for the Securities of such series shall exercise such of the rights and powers vested in it by this Subordinated Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. The Subordinated Trustee will be under no obligation to exercise any of its rights or powers under the Subordinated Indenture at the request of any Holder unless such Holder shall have offered to the Subordinated Trustee security and/or indemnity satisfactory to the Subordinated Trustee against any loss, liability or expense, and then only to the extent required by the terms of the Subordinated Indenture.
(c) No provision of this Subordinated Indenture shall be construed to relieve the Subordinated Trustee for Securities of any series from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:
(1) this Subsection (c) shall not be construed to limit the effect of Subsection (a) of this Section;
(2) such Subordinated Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Subordinated Trustee was grossly negligent in ascertaining the pertinent facts;
(3) such Subordinated Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with a direction received by it pursuant to Section 5.02, 5.07,
5.12 or 5.13 or exercising any trust or power conferred upon such Subordinated Trustee under this Subordinated Indenture with respect to the Securities of that series; and
(4) no provision of this Subordinated Indenture shall require the Subordinated Trustee for any series of Securities to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers.
(d) Whether or not therein expressly so provided, every provision of this Subordinated Indenture relating in any way to the Subordinated Trustee for any series of Securities shall be subject to the provisions of this Section.
SECTION 6.02. Notice of Default.
Within 90 days after the occurrence of any Event of Default, Payment Default, Perpetual Security Default or Payment Event hereunder with respect to Securities of any particular series, the Subordinated Trustee for the Securities of such series shall give to Holders of Securities of that series, in the manner set forth in Section 1.06, notice of such default if actually known to such Subordinated Trustee, unless such default shall have been cured or waived; provided, that in the case of any default of the character specified in Section 5.03(h) with respect to Securities of that series no such notice to Holders shall be given until at least 60 days after the occurrence thereof.
SECTION 6.03. Certain Rights of Subordinated Trustee.
Except as otherwise provided in Section 6.01:
(1) the Subordinated Trustee for any series of Securities may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, discretion, consent, order, bond, debenture, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order, as the case may be, and any resolution of the Board of Directors of the Issuer may be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Subordinated Indenture such Subordinated Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, such Subordinated Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate and/or Opinion of Counsel;
(4) such Subordinated Trustee may consult with counsel of its selection and the advice or opinion of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) such Subordinated Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Subordinated Indenture at the request or direction of any of the Holders of Securities of any series pursuant to this Subordinated Indenture for which it is acting as Subordinated Trustee, unless such Holders shall have offered to such Subordinated Trustee security and/or indemnity satisfactory to the Subordinated Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction;
(6) such Subordinated 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, coupon or other paper or document, but such Subordinated Trustee may make such further inquiry or investigation into such facts or matters as it may see fit, and, if such Subordinated Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney;
(7) such Subordinated Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and such Subordinated 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;
(8) such Subordinated Trustee shall have no duties or responsibilities with respect to and shall have no liability for the actions taken or the failures to act of any other Subordinated Trustees appointed hereunder;
(9) such Subordinated Trustee shall not be liable for any action taken, suffered or omitted to be taken in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Subordinated Indenture;
(10) the Subordinated Trustee shall not be deemed to have notice or knowledge of any Event of Default, Payment Default, Perpetual Security Default, or Payment Event, except in the case of a default in the payment of the principal (or premium, if any, on) or interest, if any, on any Security of that series or in the case that written notice of any event which is in fact such an Event of Default, Payment Default, Perpetual Security Default, or Payment Event is received by a Responsible Officer of the Subordinated Trustee at its Corporate Trust Office and such notice references the Securities, the Issuer and this Subordinated Indenture;
(11) the rights, privileges, protections, immunities and benefits given to the Subordinated Trustee, including, without limitation, its right to be indemnified, are extended to and shall be enforceable by, the Subordinated Trustee in each of its capacities hereunder, and to each agent, including, without limitation, the Calculation Agent, custodian and other Person employed to act hereunder;
(12) before the Subordinated Trustee acts or refrains from acting, the Subordinated Trustee may request that the Issuer deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Subordinated Indenture, which Officers’ Certificate may be signed by any Person authorized to sign an Officers’ Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded;
(13) the permissive right of the Subordinated Trustee to take or refrain from taking action hereunder shall not be construed as a duty;
(14) the Subordinated Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Indenture;
(15) in no event shall the Subordinated Trustee be responsible or liable for special, indirect, punitive, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit, goodwill or opportunity), whether or not foreseeable, even if the Subordinated Trustee has been advised of the possibility of such loss or damage and regardless of the form of action. The provisions of this Section 6.03(15) shall survive the termination or discharge of this Indenture and the resignation or removal of the Subordinated Trustee; and
(16) the Subordinated Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Subordinated Indenture arising out of or caused, directly or indirectly, by circumstances beyond its control, including acts of God, earthquakes, fire, flood, terrorism, wars and other military disturbances, sabotage, epidemics, pandemics, riots, interruptions, loss or malfunctions of utilities, computer (hardware or software) or communication services, accidents, labor disputes, acts of civil or military authority and governmental action or unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facilities, it being understood that the Subordinated Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under any such circumstances.
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities.
The recitals and statements contained herein (except the name, address and jurisdiction of organization of the Subordinated Trustee) and in the Securities (except the Subordinated Trustee’s certificates of authentication) shall be taken as the recitals of and statements of the Issuer, and the Subordinated Trustee for any series of Securities assumes no responsibility for their correctness. The Subordinated Trustee for any series of Securities shall not be responsible for and makes no representations as to the validity or sufficiency of this Subordinated Indenture or of the Securities (except the Subordinated Trustee’s certificates of authentication thereof) of any series. The Subordinated Trustee for any series of Securities shall not be accountable for the use or application by the Issuer of the Securities or the proceeds thereof. The Subordinated Trustee shall have no duty to ascertain or inquire as to the performance of the Issuer’s covenants in Article Ten hereof or otherwise established by the terms of any Security.
SECTION 6.05. May Hold Securities.
The Subordinated Trustee for any series of Securities, any Paying Agent, Security Registrar or any other agent of the Issuer or such Subordinated Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal with the Issuer with the same rights it would have if it were not such Subordinated Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 6.06. Money Held in Trust.
Money held by the Subordinated Trustee for any series of Securities (in any of its capacities hereunder, including as Subordinated Trustee, Securities Registrar or Paying Agent) in trust hereunder need not be segregated from other funds except to the extent required by law. The Subordinated Trustee for any series of Securities (in any of its capacities hereunder, including as Subordinated Trustee, Securities Registrar or Paying Agent) shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Issuer.
SECTION 6.07. Compensation and Reimbursement.
The Issuer agrees:
(1) to pay to the Subordinated Trustee for any series of Securities from time to time such compensation for all services rendered by it hereunder as the Issuer and the Subordinated Trustee shall mutually agree upon in writing (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Subordinated Trustee for any series of Securities upon its request for all reasonable expenses, disbursements and advances incurred or made by such Subordinated Trustee in accordance with any provision of this Subordinated Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence or willful misconduct (as finally adjudicated in a non-appealable decision by a court of competent jurisdiction); and
(3) to indemnify such Subordinated Trustee for, and to hold it harmless against, any loss, liability or reasonable expense incurred without gross negligence or willful misconduct on its part (as finally adjudicated by a court of competent jurisdiction), arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim (whether assented to by the Issuer, any Holder or otherwise) or liability in connection with the exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Issuer under this Section, the Subordinated Trustee for any series of Securities shall have a lien prior to the Securities upon all property and funds held or collected by such Subordinated Trustee as such, except funds held in trust for the payment of principal of (or premium, if any, on) or interest, if any on particular Securities.
Without prejudice to any other rights available to the Subordinated Trustee under applicable law, when the Subordinated Trustee incurs expenses (including the reasonable fees and expense of its counsel) or renders services after an Event of Default specified in Section 5.01 occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.
The rights of the Subordinated Trustee under this Section 6.07 shall survive the resignation or removal of the Subordinated Trustee, the payment in full of the Securities for which it is the Subordinated Trustee, the discharge of this Subordinated Indenture, and the termination hereof. All indemnifications and releases from liability granted hereunder to the Subordinated Trustee shall extend to its officers, directors, employees, agents, successors and assigns.
SECTION 6.08. Disqualification; Conflicting Interests.
The Subordinated Trustee for the Securities shall be subject to the provisions of Section 310(b) of the Trust Indenture Act during the period of time required thereby. Nothing herein shall prevent the Subordinated Trustee from filing with the Commission the application referred to in the penultimate paragraph of Section 310(b) of the Trust Indenture Act. In determining whether the Subordinated Trustee has a conflicting interest as defined in
Section 310(b) of the Trust Indenture Act with respect to the Securities of any series, there shall be excluded Securities of any particular series of Securities other than that series. If the Subordinated Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Subordinated Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Subordinated Indenture.
SECTION 6.09. Corporate Subordinated Trustee Required; Different Subordinated Trustees for Different Series; Eligibility.
There shall at all times be a Subordinated Trustee hereunder which shall be:
(1) a corporation organized and doing business under the laws of the United States of America, any state thereof, or the District of Columbia, authorized under such laws to exercise corporate trust power and subject to supervision or examination by Federal or State authority; or
(2) a corporation or other Person organized and doing business under the laws of a foreign government that is permitted to act as Subordinated Trustee pursuant to a rule, regulation, or other order of the Commission, authorized under such laws to exercise corporate trust powers,
and which shall have at all times a combined capital and surplus of at least $50,000,000. If such corporation or other Person publishes reports of condition at least annually, pursuant to law or to 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. None of the Issuer, any other obligor upon the Securities or any Person directly or indirectly controlling, controlled by, or under common control with the Issuer or any other obligor upon the Securities shall serve as Subordinated Trustee for any of the Securities. A different Subordinated Trustee may be appointed by the Issuer for any series of Securities prior to the issuance of such Securities. If the initial Subordinated Trustee for any series of Securities is to be other than Citibank, N.A., the Issuer and such Subordinated Trustee shall, prior to the issuance of such Securities, execute and deliver an indenture supplemental hereto, which shall provide for the appointment of such Subordinated Trustee as Subordinated Trustee for the Securities of such series and shall add to or change any of the provisions of this Subordinated Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Subordinated Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Subordinated Trustees as co-trustees of the same trust and that each such Subordinated Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Subordinated Trustee. If at any time the Subordinated Trustee for the Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereunder specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Subordinated Trustee for the Securities of any series and no appointment of a successor Subordinated Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Subordinated Trustee in accordance with the applicable requirements of Section 6.11.
(b) The Subordinated Trustee for the Securities of any series may resign at any time with respect to the Securities of such series by giving written notice thereof to the Issuer. If the instrument of acceptance by a successor Subordinated Trustee required by Section 6.11 shall not have been delivered to the Subordinated Trustee for the Securities of such series within 30 days after the giving of such notice of resignation, the resigning Subordinated Trustee may petition, at the expense of the Issuer, any court of competent jurisdiction for the appointment of a successor Subordinated Trustee with respect to the Securities of such series.
(c) The Subordinated Trustee for the Securities of any series may be removed at any time with respect to the Securities of such series by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series, delivered to such Subordinated Trustee and to the Issuer. If the instrument of acceptance by a successor Subordinated Trustee required by Section 6.11 shall not have been delivered to the Subordinated Trustee for the Securities of such series within 30 days after the Act of Holders giving effect to such removal, the Subordinated Trustee may petition, at the expense of the Issuer, any court of competent jurisdiction for the appointment of a successor Subordinated Trustee with respect to the Securities of such series.
(d) If at any time:
(1) the Subordinated Trustee for the Securities of any series shall fail to comply with Section 310(b) of the Trust Indenture Act pursuant to Section 6.08 hereof after written request therefor by the Issuer or by any Holder who has been a bona fide Holder of a Security of such series for at least six months, unless the Subordinated Trustee’s duty to resign is stayed in accordance with the provisions of Section 310(b) of the Trust Indenture Act; or
(2) such Subordinated Trustee shall cease to be eligible under Section 6.09 and shall fail to resign after written request therefor by the Issuer or by any such Holder; or
(3) such Subordinated Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of such Subordinated Trustee or of its property shall be appointed or any public officer shall take charge or control of such Subordinated Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; or
(4) if an administrative or other receiver or an administrator or other similar official is appointed in relation to such Subordinated Trustee, or in relation to the whole or a material part of the assets of such Subordinated Trustee, or an encumbrancer takes possession of the whole or a material part of the assets of such Subordinated Trustee, or a distress or execution or other process is levied or enforced upon or sued out against the whole or a material part of the assets of such Subordinated Trustee, or if such Subordinated Trustee shall commence a voluntary case or proceeding under any applicable Bankruptcy Law, or any other case or proceeding to be adjudicated as bankrupt or insolvent, or such Subordinated Trustee shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator (or other similar official) of such Subordinated Trustee or its property or affairs, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action,
then, in any such case, (i) the Issuer by a Board Resolution may remove such Subordinated Trustee or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security 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 such Subordinated Trustee and the appointment of a successor Subordinated Trustee.
(e) If the Subordinated Trustee for the Securities of any series shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Subordinated Trustee for the Securities of any series for any cause, the Issuer, by a Board Resolution, shall promptly appoint a successor Subordinated Trustee with respect to the Securities of such series and shall comply with the applicable requirements of Section 6.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Subordinated Trustee with respect to the Securities of such series shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series delivered to the Issuer and the retiring Subordinated Trustee, the successor Subordinated Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Subordinated Trustee for the Securities of such series and supersede the successor Subordinated Trustee appointed by the Issuer. If no successor Subordinated Trustee for the Securities of such series shall have been so appointed by the Issuer or the Holders and shall have accepted appointment in the manner required by Section 6.11, and if such Subordinated Trustee is still incapable of acting, any Holder who has been a bona fide Holder of a Security 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 appointment of a successor Subordinated Trustee with respect to the Securities of such series.
(f) The Issuer shall give notice of each resignation and each removal of the Subordinated Trustee with respect to the Securities of any series and each appointment of a successor Subordinated Trustee with respect to the Securities of any series in the manner and to the extent provided in Section 1.06. Each notice shall include the name of the successor Subordinated Trustee with respect to the Securities of that series and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) Every successor Subordinated Trustee appointed hereunder with respect to the Securities of any series shall execute, acknowledge and deliver to the Issuer and to the retiring Subordinated Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Subordinated Trustee shall become effective and such successor Subordinated Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, indemnities and duties of the retiring Subordinated Trustee; but, on the request of the Issuer or the successor Subordinated Trustee, such retiring Subordinated Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Subordinated Trustee all the rights, powers and trusts of the retiring Subordinated Trustee and shall duly assign, transfer and deliver to such successor Subordinated Trustee all property and money held by such retiring Subordinated Trustee hereunder, subject to the lien provided by Section 6.07.
(b) In case of the appointment hereunder of a successor Subordinated Trustee with respect to the Securities of one or more (but not all) series, the Issuer, the retiring Subordinated Trustee and each successor Subordinated Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Subordinated Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer to, and to vest in, each successor Subordinated Trustee all the rights, powers, trusts, indemnities and duties of the retiring Subordinated Trustee with respect to the Securities of that or those series to which the appointment of such successor Subordinated Trustee relates, (ii) if the retiring Subordinated Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts, indemnities and duties of the retiring Subordinated Trustee with respect to the Securities of that or those series as to which the retiring Subordinated Trustee is not retiring shall continue to be vested in the retiring Subordinated Trustee and (iii) shall add to or change any of the provisions of this Subordinated Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Subordinated Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Subordinated Trustees as co-trustees of the same trust and each such Subordinated Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Subordinated Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Subordinated Trustee shall become effective to the extent provided therein and each such successor Subordinated Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, indemnities and duties of the retiring Subordinated Trustee with respect to the Securities of that or those series to which the appointment of such successor Subordinated Trustee relates, subject to the lien provided by Section 6.07; but, on request of the Issuer or any successor Subordinated Trustee, such retiring Subordinated Trustee shall duly assign, transfer and deliver to such successor Subordinated Trustee all property and money held by such retiring Subordinated Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Subordinated Trustee relates, subject to the lien provided by Section 6.07.
(c) Upon request of any such successor Subordinated Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Subordinated Trustee all such rights, powers, trusts, indemnities and duties referred to in Subsections (a) or (b) of this Section, as the case may be.
(d) No successor Subordinated Trustee shall accept its appointment unless at the time of such acceptance such successor Subordinated Trustee for the Securities of any series shall be qualified and eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Subordinated Trustee for the Securities of any series may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Subordinated Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of such Subordinated Trustee, shall be the successor of such Subordinated Trustee 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. In case any Securities shall have been authenticated, but not delivered, by the Subordinated Trustee or the Authenticating Agent for such series then in office, any successor by merger, conversion or consolidation to such authenticating Subordinated Trustee, or any successor Authenticating Agent, as the case may be, may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Subordinated Trustee or successor Authenticating Agent had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
If and when the Subordinated Trustee for Securities of any series shall be or become a creditor of the Issuer (or any other obligor upon the Securities of such series), the Subordinated Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against the Issuer (or any such other obligor).
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY SUBORDINATED TRUSTEE AND ISSUER
SECTION 7.01. Issuer to Furnish Subordinated Trustee Names and Addresses of Holders.
With respect to each particular series of Securities, the Issuer will furnish or cause to be furnished to the Subordinated Trustee for the Securities of such series:
(1) at least semi-annually and, if applicable, not more than 15 days after each Regular Record Date relating to that series (or, if there is no Regular Record Date relating to that series, on June 30 and December 31), a list, in such form as such Subordinated Trustee may reasonably require, containing all the information in the possession or control of the Issuer or any of its Paying Agents as to the names and addresses of the Holders of that series as of such dates, excluding from any such list all the information already in the possession or control of the Subordinated Trustee which was received by such Subordinated Trustee acting in any capacity with respect to such series of Securities; and
(2) at such other times as such Subordinated Trustee or Paying Agent may request in writing, within 30 days after the receipt by the Issuer of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list all the information already in the possession or control of the Subordinated Trustee which was received by such Subordinated Trustee acting in any capacity with respect to such series of Securities.
SECTION 7.02. Preservation of Information; Communications to Holders.
(a) The Subordinated Trustee for each series of Securities shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of the Securities of such series contained in the most recent lists furnished to such Subordinated Trustee as provided in Section 7.01 and the names and addresses of Holders of the Securities of such series received by such Subordinated Trustee in its capacity as Security Registrar for such series, if so acting. The Subordinated Trustee for each series of Securities may destroy any list relating to such series of Securities furnished to it as provided in Section 7.01 upon receipt of a new list relating to such series so furnished.
(b) If three or more Holders of Securities of any particular series (hereinafter referred to as “applicants”) apply in writing to the Subordinated Trustee for the Securities of any such series, and furnish to such Subordinated Trustee reasonable proof that each such applicant has owned a Security of that series for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Securities of that series with respect to their rights under this Subordinated Indenture or under the Securities of that series and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then such Subordinated Trustee shall, within five Business Days after the receipt of such application, at its election, either:
(1) afford such applicants access to the information preserved at the time by such Subordinated Trustee in accordance with Section 7.02(a); or
(2) inform such applicants as to the approximate number of Holders of Securities of that series whose names and addresses appear in the information preserved at the time by such Subordinated Trustee in accordance with Section 7.02(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.
If any such Subordinated Trustee shall elect not to afford such applicants access to that information, such Subordinated Trustee shall, upon the written request of such applicants, mail to each Holder of Securities of that series whose name and address appears in the information preserved at the time by such Subordinated Trustee in accordance with Section 7.02(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to such Subordinated Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, such Subordinated Trustee shall mail to such applicants and file with the
Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of such Subordinated Trustee, such mailing would be contrary to the best interests of the Holders of Securities of that series or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, such Subordinated Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise such Subordinated Trustee shall be relieved of any obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities of each series, by receiving and holding the same, agrees with the Issuer and the Subordinated Trustee for the Securities of such series that none of the Issuer, such Subordinated Trustee or any of their agents shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of the Securities of such series in accordance with Section 7.02(b), regardless of the source from which such information was derived, and that the Subordinated Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 7.02(b).
SECTION 7.03. Reports by Subordinated Trustee.
(a) Within 60 days after August 7 of each year commencing with the year following the first issuance of Securities, the Subordinated Trustee for the Securities of each series shall transmit by mail to all Holders of the Securities of such series, in the manner and to the extent provided in Section 313 of the Trust Indenture Act, a brief report dated as of each such August 7 if required by the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such transmission to Holders of Securities of any series, be filed by the Subordinated Trustee for the Securities of such series with each Stock Exchange, with the Commission and with the Issuer. The Issuer will notify such Subordinated Trustee when such series of Securities is listed on any Stock Exchange.
SECTION 7.04. Reports by Issuer.
The Issuer will:
(1) file with the Subordinated Trustee for the Securities of such series, 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 (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Issuer is not required to file information, documents or reports pursuant to either of said Sections, then it will file with such Subordinated Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;
(2) file with the Subordinated Trustee for the Securities of such series and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Issuer, with the conditions and covenants of this Subordinated Indenture as may be required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders of Securities of each series, as provided in Section 313(c) of the Trust Indenture Act, within 30 days after the filing thereof with the Subordinated Trustee for the Securities of such, series, such summaries of any information, documents and reports required to be filed by the Issuer pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; provided that the delivery of such reports, information and documents to the Subordinated Trustee is for informational purposes only and the Subordinated Trustee’s receipt of such shall not constitute notice, constructive or otherwise, of any information contained therein or determinable therefrom, including the Issuer’s compliance with any of its covenants hereunder or under any Securities (as to which the Subordinated Trustee is entitled to rely exclusively on Officers’ Certificates).
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 8.01. Issuer May Consolidate, Etc., Only on Certain Terms.
So long as any Security remains Outstanding, the Issuer shall not consolidate or amalgamate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person unless:
(1) the corporation formed by such consolidation or amalgamation or into which the Issuer is merged, or the Person which acquires, leases or is the transferee of or recipient of the conveyance or transfer, of substantially all of the properties and assets of the Issuer as an entirety shall
(A) be a corporation or other Person organized and validly existing under the laws of any country that is a member of the Organisation for Economic Co-operation and Development (as the same may be constituted from time to time); and
(B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Subordinated Trustee for each series of Securities, in form reasonably satisfactory to each such Subordinated Trustee, with any amendments or revisions necessary to take account of the jurisdiction in which any such corporation or Person is organized (if other than England and Wales),
(i) the due and punctual payment of the principal of (and premium, if any, on) and interest, if any, on, and any sinking fund payment in respect of, all of the Securities,
(ii) the performance of every covenant of this Subordinated Indenture and of all the Securities on the part of the Issuer to be performed,
(iii) such assumption shall provide that such corporation or Person shall pay to the Holder of any Securities such additional amounts as may be necessary in order that every net payment of the principal of (and premium, if any, on) and interest, if any, and Deferred Interest, if any, on such Securities will not be less than the amounts provided for in the Securities to be then due and payable, and
(iv) with respect to (iii) above such obligation shall extend to any deduction or withholding for or on account of any present or future tax, assessment or governmental charge imposed upon such payment by the United Kingdom or the country in which any such corporation or Person is organized or any district, municipality or other political subdivision or taxing authority thereof (subject to the limitations set forth in Section 10.08 in respect of the payment of Additional Amounts as applied to such country);
(2) immediately after giving effect to such transaction, no Event of Default, Payment Default, Perpetual Security Default or Payment Event with respect to any series of Securities, and no event which, after notice or lapse of time or both, would become an Event of Default, Payment Default, Perpetual Security Default or Payment Event with respect to any series of Securities, shall have occurred and be continuing; and
(3) the Issuer has delivered to the Subordinated Trustee for each series of Securities an Officers’ Certificate and an Opinion of Counsel each stating that such consolidation, amalgamation, merger, conveyance, transfer or lease and such supplemental indenture evidencing the assumption by such corporation or Person comply with this Subordinated Indenture and that all conditions precedent provided for in this Subordinated Indenture relating to such transaction have been complied with.
SECTION 8.02. Successor Corporation Substituted.
Upon any consolidation, amalgamation or merger, or any conveyance, transfer or lease of the properties and assets of the Issuer substantially as an entirety in accordance with Section 8.01, the successor corporation formed by such consolidation or amalgamation or into which the Issuer is merged or the Person to which such conveyance or transfer or with which such lease is made shall succeed to, and be substituted for, and may exercise every right and power of the Issuer under this Subordinated Indenture with the same effect as if such successor corporation or Person had been named as the Issuer herein, and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under this Subordinated Indenture or the Securities, as the case may be.
SECTION 8.03. Assumption of Obligations.
With respect to the Securities of any series, any Subsidiary of the Issuer, any successor in business of the Issuer, any holding company of the Issuer or any other Subsidiary of such holding company (any of the foregoing, a “successor entity”) may without the consent of any Holder assume the obligations of the Issuer (or any corporation which shall have previously assumed the obligations of the Issuer) for the due and punctual payment of the principal of (and premium, if any, on) and interest (including any Deferred Interest), if any, on any series of Securities in accordance with the provisions of such Securities and this Subordinated Indenture and the performance of every covenant of this Subordinated Indenture and such series of Securities on the part of the Issuer to be performed or observed provided, that:
(a) there is no Event of Default or Payment Default continuing in relation to the relevant series of Subordinated Debt Securities;
(b) the successor entity shall expressly assume such obligations by an amendment to the Subordinated Indenture, executed by the Issuer and such successor entity, if applicable, and delivered to the Subordinated Trustee, in form satisfactory to the Subordinated Trustee, and, except where the new principal debtor is the successor in business or holding company of the Issuer, the Issuer shall, by amendment to the Subordinated Indenture, unconditionally guarantee (such guarantee shall be given on a subordinated basis consistent with Article Thirteen hereof) all of the obligations of such successor entity under the Securities of such series and the Subordinated Indenture as so modified by such amendment;
(c) such successor entity shall confirm in such amendment to the Subordinated Indenture that such successor entity will pay all Additional Amounts, if any, payable pursuant to Section 10.07 in respect of all the Securities (subject to the exceptions specified therein) provided, however, that for these purposes such successor entity’s country of organization will be substituted for the references to the United Kingdom in the definition of “Taxing Jurisdiction”;
(d) immediately after giving effect to such assumption of obligations, no Event of Default or Payment Default and no event which, after notice or lapse of time or both, would become an Event of Default or Payment Default, shall have occurred and be continuing; and
(e) the Issuer shall have delivered to the Subordinated Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such assumption complies with this Article and that all conditions precedent herein provided for relating to such assumption have been complied with.
Upon any such assumption, the successor entity shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Subordinated Indenture with respect to any such Securities with the same effect as if such successor entity had been named as the Issuer in this Subordinated Indenture (provided, however, that the right of the successor to redeem the Securities of the relevant series shall only apply with respect to any change or amendment to, or change in the application or official interpretation of, the laws or regulations (including any treaty) of the successor’s jurisdiction of incorporation which occurs after the date of assumption), and the Issuer or any legal and valid successor corporation which shall theretofore have become such in the manner prescribed herein, shall be released from all liability as obligor upon any such Securities except as provided in clause (a) of this Section 8.03.
If the Issuer makes payment under the guarantee, the Issuer shall be required to pay all Additional Amounts, if any, payable pursuant to Section 10.07 in respect of the Securities (subject to the exceptions set forth therein), provided, however, that for purposes of payment by the Issuer under the guarantee, the definition of “Taxing Jurisdiction” shall include the successor entity’s country of organization and the United Kingdom.
SECTION 8.04. Notification of Assumption or Substitution to the Relevant Regulator.
No such assumption or substitution as is referred to in either Section 8.02 or 8.03 shall be effected in relation to any series of Securities, unless the Issuer has notified the Relevant Regulator of its intention to do so prior to the date scheduled therefor and no objection thereto has been raised by the Relevant Regulator or, if required, a Relevant Regulator Consent therefor has been received.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Subordinated Indentures Without Consent of Holders.
Without the consent of any Holders of Securities, the Issuer, when authorized by a Board Resolution and the Subordinated Trustee or Subordinated Trustees for the Securities of any or all series, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the relevant Subordinated Trustee or Subordinated Trustees, for any of the following purposes:
(1) to evidence the succession of another corporation to the Issuer and the assumption by any such successor of the covenants of the Issuer herein and contained in the Securities; or
(2) to add to the covenants of the Issuer, for the benefit of the Holders of all or any particular series of Securities (and, if such covenants are to be for the benefit of fewer than all series of Securities, stating that such covenants are being included solely for the benefit of such series), to convey, transfer, assign, mortgage or pledge any property to or with the Subordinated Trustee for the Securities of any such series or otherwise secure any such series of the Securities or to surrender any right or power herein conferred upon the Issuer; or
(3) to add any additional Events of Default, Payment Defaults, Perpetual Security Defaults or Payment Events with respect to any or all series of Securities (and, if any such Event of Default, Payment Default, Perpetual Security Default or Payment Event applies to fewer than all series of Securities, stating each series to which such Event of Default, Payment Default, Perpetual Security Default or Payment Event applies); provided that any such additional Event of Default, Payment Default, Perpetual Security Default or Payment Event would not cause any such series of Securities to be in default immediately upon any such addition; or
(4) to change or eliminate any restrictions on the payment of principal of or any premium or interest on Securities or to provide (subject to applicable laws) for the issuance of uncertificated Securities of any series in addition to or in place of any certificated Securities and to make all appropriate changes for such purposes; provided, however, that any such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or
(5) to change or eliminate any of the provisions of this Subordinated Indenture; provided, however, that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or
(6) to evidence and provide for the acceptance of appointment hereunder of a Subordinated Trustee, other than Citibank, N.A., for a series of Securities and to add to or change any of the provisions of this Subordinated Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Subordinated Trustee, pursuant to the requirements of Section 6.09; or
(7) to evidence and provide for the acceptance of appointment hereunder by a successor Subordinated Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Subordinated Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Subordinated Trustee, pursuant to the requirements of Section 6.11(b); or
(8) to add to the conditions, limitations and restrictions on the authorized amount, form, terms or purposes of issue, authentication and delivery of Securities, as herein set forth, with such other conditions, limitations and restrictions thereafter to be observed; or
(9) to supplement any of the provisions of this Subordinated Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of Securities pursuant to Section 4.01; provided, however, that any such action shall not adversely affect the interests of the Holders of Securities of such series or any other series of Securities in any material respect; or
(10) to add to or change or eliminate any provisions of this Subordinated Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act or any rules and regulations of the Commission; or
(11) to cure any ambiguity or defect, to correct or amend or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters
or questions arising under this Subordinated Indenture; provided, that any such action shall not adversely affect the interests of the Holders of Securities of any particular series in any material respect; or
(12) to establish the terms of a series of Securities to be issued hereunder pursuant to, and in accordance with, Section 3.01; or
(13) to reflect a Permitted Variation.
SECTION 9.02. Supplemental Subordinated Indentures With Consent of Holders.
The Issuer, when authorized by a Board Resolution, and the Subordinated Trustee or Subordinated Trustees for the Securities of any or all series may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Subordinated Indenture or of modifying in any manner the rights of the Holders of such Securities under this Subordinated Indenture, but only with the consent of the Holders of more than 50% in aggregate principal amount of the Outstanding Securities of each series of Securities then Outstanding affected thereby, in each case by Act of said Holders of Securities of each such series delivered to the Issuer and the Subordinated Trustee for Securities of each such series; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity, if any, of the principal of, or any installment of principal of or interest on, any Security, or change the terms of any Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities to include a Stated Maturity of the principal amount thereof, or reduce the principal amount thereof or the rate of interest thereon, if any, or any Deferred Interest or any premium or principal payable upon the redemption thereof, or change any obligation of the Issuer to pay additional amounts pursuant to Sections 5.16 and 10.07 (except as contemplated by Section 8.01(1) and permitted by Section 9.01(1)) or reduce the amount of the principal of a Discounted Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02, or change any Place of Payment where any Security or the interest or Deferred Interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity, if any, thereof or the date any such payment is otherwise due and payable (or, in the case of redemption, on or after the Redemption Date); or
(2) reduce the percentage in aggregate principal amount of the Outstanding Securities of any particular series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Subordinated Indenture or certain defaults hereunder and their consequences that is provided for in this Subordinated Indenture; or
(3) change any obligation of the Issuer to maintain an office or agency in the places and for the purposes specified in Section 10.02;
(4) change the terms and conditions (i) under which the Securities are convertible or exchangeable or (ii) of the Preference Shares into which such Securities may be converted or exchanged, in each case, in any manner that has a material adverse effect on the rights of any holder of such Securities;
(5) modify any of the provisions of this Section or Sections 5.13 or 10.07, except to increase any specified percentage in aggregate principal amount required for any actions by Holders or to provide that certain other provisions of this Subordinated Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder of a Security with respect to changes in the references to “the Subordinated Trustee” and concomitant changes in this Section and Sections 5.12 or 10.06, or the deletion of this proviso, in accordance with the requirements of Sections 6.09, 6.11(b), 9.01(6) and 9.01(7); or
(6) change in any manner adverse to the interests of the Holders of any Outstanding Securities the subordination provisions of such Securities.
A supplemental indenture which changes or eliminates any covenant or other provision of this Subordinated Indenture which has expressly been included solely for the benefit of one or more particular series of Securities or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Subordinated Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Subordinated Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Subordinated Indenture, the Subordinated Trustee for any series of Securities shall be entitled to receive, and (subject to Section 6.01 and 6.03) shall be fully protected in relying upon, (i) an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Subordinated Indenture, (ii) a copy of the Board Resolution, certified by the Secretary or a Deputy or Assistant Secretary of the Issuer, authorizing the execution of such supplemental indenture and (iii) if such supplemental indenture is executed pursuant to Section 9.02, evidence reasonably satisfactory to the Subordinated Trustee of the consent of Holders required to consent thereto. The Subordinated Trustee for any series of Securities may, but shall not (except to the extent required in the case of a supplemental indenture entered into under Section 9.01(6) or (7); provided that the Subordinated Trustee’s rights, liabilities, duties or immunities are not materially and adversely affected) be obligated to, enter into any such supplemental indenture which affects such Subordinated Trustee’s own rights, liabilities, duties or immunities under this Subordinated Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Subordinated Indentures.
Upon the execution of any supplemental indenture under this Article, this Subordinated Indenture shall be modified in accordance therewith and such supplemental indenture shall form a part of this Subordinated Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.05. Conformity With Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.06. Reference in Securities to Supplemental Subordinated Indentures.
Securities of any particular series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Subordinated Trustee for the Securities of such series, bear a notation in form approved by such Subordinated Trustee as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Securities of any series so modified as to conform, in the opinion of the Subordinated Trustee for the Securities of such series and the Board of Directors of the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and such Securities may be authenticated and delivered by such Subordinated Trustee for the Securities of such series in exchange for Outstanding Securities of such series.
SECTION 9.07. Notification of Modification or Supplemental Indenture to Relevant Regulator.
No such modification shall be effected in relation to any series of Securities, unless the Issuer has notified the Relevant Regulator of its intention to do so prior to the date scheduled therefor and no objection thereto has been raised by the Relevant Regulator or, if required, a Relevant Regulator Consent has been received.
ARTICLE TEN
COVENANTS
SECTION 10.01. Payment of Principal (and Premium, if any) and Interest and Deferred Interest, if any.
The Issuer agrees, for the benefit of each particular series of Securities, that it will duly and punctually pay the principal of, and premium, if any, on and interest and Deferred Interest, if any, on that series of Securities in accordance with the terms of the Securities of such series and this Subordinated Indenture.
SECTION 10.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, The City of New York, and in each Place of Payment for the Securities of a series an office or agency where Securities of that series may be presented or surrendered for payment, and an office or agency where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Issuer with respect to the Securities of that
series and this Subordinated Indenture may be served. The Issuer will give prompt written notice to the Subordinated Trustee for the Securities of that series of the location, and any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency in respect of any series of Securities or shall fail to furnish the Subordinated Trustee for the Securities of that series with the address thereof, such presentations (to the extent permitted by law) and surrenders of Securities of that series may be made and notices and demands may be made or served at the Corporate Trust Office of such Subordinated Trustee, and the Issuer hereby appoints the Subordinated Trustee as its agent to receive such respective presentations, surrenders, notices and demands.
The Issuer may also from time to time designate one or more other offices or agencies (in or outside a Place of Payment) where the Securities of one or more series may be presented or surrendered for any or all of the purposes specified above in this Section and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain an office or agency in each Place of Payment for such purpose. The Issuer will give prompt written notice to the Subordinated Trustee for the Securities of each series so affected of any such designation or rescission and of any change in the location of any such office or agency.
SECTION 10.03. Money for Securities Payments to Be Held in Trust.
If the Issuer shall at any time act as its own Paying Agent with respect to any particular series of Securities, it will, on or before each due date of the principal of (or premium, if any, on) or interest, if any, or Deferred Interest, if any, on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium, if any, and interest and Deferred Interest, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Subordinated Trustee for the Securities of such series of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents for any particular series of Securities, the Issuer will, prior to 10:00 a.m. in the applicable Place of Payment on each due date of the principal of (or premium, if any, on) or interest or Deferred Interest, if any, on any such Securities, deposit with a Paying Agent for the Securities of such series a sum sufficient to pay the principal (and premium, if any) and interest and, subject to Section 3.07, Deferred Interest, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Subordinated Trustee for the Securities of such series) the Issuer will promptly notify such Subordinated Trustee of its action or failure so to act; provided that, to the extent such deposit is received by the Paying Agent after 10:00 a.m. in the applicable Place of Payment, on any such due date, such deposit will be deemed deposited on the next Business Day.
The Issuer will cause each Paying Agent (other than the Subordinated Trustee) for any particular series of Securities to execute and deliver to such Subordinated Trustee an instrument in which such Paying Agent shall agree with such Subordinated Trustee, subject to the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (or premium, if any, on) or interest or Deferred Interest, if any, on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;
(2) give such Subordinated Trustee notice of any default by the Issuer (or any other obligor upon the Securities) in the making of any payment of principal of (and premium, if any, on) and interest and Deferred Interest, if any, on Securities of that series; and
(3) at any time during the continuation of any such default, upon the written request of such Subordinated Trustee, forthwith pay to such Subordinated Trustee all sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Subordinated Indenture or for any other purpose, pay, or by an Issuer Order direct any Paying Agent to pay, to the Subordinated Trustee for the Securities of any series all sums held in trust by the Issuer or such Paying Agent, such sums to be held by such Subordinated Trustee upon the same trusts as those upon which sums were held by the Issuer or such Paying Agent; and, upon such payment by any Paying Agent to such Subordinated Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Subordinated Trustee or any Paying Agent for the Securities of any series or then held by the Issuer in trust for the payment of the principal of (and premium, if any, on) and interest and Deferred Interest, if any, on any Securities of any particular series and remaining unclaimed for two years after
such principal (and premium, if any) and interest and Deferred Interest, if any, has become due and payable shall, unless otherwise required by mandatory provisions of applicable escheat, or abandoned or unclaimed property law, be paid to the Issuer, on an Issuer Request, or (if then held by the Issuer) shall be discharged from such trusts; and the Holder of such Security shall, thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof, and all liability of such Subordinated Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that such Subordinated Trustee or such Paying Agent, before being required to make any such repayment shall give notice to the Holder of such Security in the manner set forth in Section 1.06 that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notice, any unclaimed balance of such money then remaining will, unless otherwise required by mandatory provisions of applicable escheat, or abandoned or unclaimed property law be repaid to the Issuer; provided, further, that the Subordinated Trustee or such Paying Agent shall give written notice of any such unclaimed amounts to the Issuer within 30 days after the end of such two-year period.
In acting hereunder and in connection with the Securities, the Paying Agent shall act solely as agent of the Issuer, and will not thereby assume any obligations towards or relationship of agency of trust for or with any Holder.
SECTION 10.04. Statements as to Compliance.
The Issuer will deliver to the Subordinated Trustee for each series of Securities, within four months after the end of each fiscal year ending after the date hereof, an Officers’ Certificate (one of the signers of which shall be the chief executive officer, treasurer or finance director of the Issuer) stating whether or not, to the knowledge of such officers, after due investigation, the Issuer has complied with all conditions and covenants and fulfilled all of its obligations under this Subordinated Indenture during such year and, if such officers have obtained knowledge of any default or Event of Default, specifying all such defaults or Events of Default and the nature and status thereof of which such officers may have knowledge and whether any such default or Event of Default is continuing or not.
For purposes of this Section, such compliance or fulfillment shall be determined without regard to any period of grace or requirement of notice provided under this Subordinated Indenture.
The Issuer shall deliver to the Subordinated Trustee, as soon as possible and in any event within five days after the Issuer becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers’ Certificate setting forth the nature and status of such Event of Default.
SECTION 10.05. Corporate Existence.
Subject to Article Eight, the Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.
SECTION 10.06. Waiver of Certain Covenants.
The Issuer may omit in any particular instance to comply with any covenant or condition set forth in Sections 10.02 and 10.05 and any other covenant not set forth herein and specified pursuant to Section 3.01 to be applicable to the Securities of any series, if before or after the time for such compliance, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of each series of Securities affected by the omission (which, in the case of a covenant not set forth herein and specified pursuant to Section 3.01 to be applicable to the Securities of any series, shall include only those series to which such covenant is so specified to be applicable) shall, in each case by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Issuer and the duties of the Subordinated Trustee and the Paying Agent for the Securities of each series with respect to any such covenant or condition shall remain in full force and effect.
SECTION 10.07. Payment of Additional Amounts.
Unless otherwise provided in the Board Resolution or supplemental indenture pursuant to Section 3.01 establishing the terms of a particular series of Securities, all payments of principal (and premium, if any) and interest and Deferred Interest, if any by or on behalf of the Issuer in respect of any Security will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the United Kingdom, or any political sub-division of, or any authority of, or in, the United Kingdom having power to tax (the “Taxing Jurisdiction”), unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, the Issuer will in respect of payments of principal (and premium, if any) and interest and Deferred Interest, if any pay such additional amounts on the Security as shall be necessary in order that the net amount received by the Holder of the Security after such withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Security in the absence of any requirements to make such presented for withholding or deduction (“Additional Amounts”), except that no such Additional Amounts shall be payable in relation to any Security:
(1) presented for payment by, or on behalf of, a Holder who is liable for such taxes, duties or governmental charges in respect of such Security by reason of his having some connection with the Taxing Jurisdiction other than the mere holding of such Security; or
(2) presented for payment by, or on behalf of, a holder who would be able to avoid such withholding or deduction by complying with any statutory requirements (including, but not limited to, obtaining and/or presenting any form of certificate) or by mailing a declaration or any other statement or claim for exemption (including, but not limited to, a declaration of nonresidence), but fails to do so; or
(3) presented for payment more than 30 days after the Relevant Date except to the extent that the relevant Holder would have been entitled to such Additional Amounts on presenting the Security for payment on such thirtieth day assuming that day to have been a Payment Day.
No Additional Amounts will be paid as provided above with respect to any payment of principal of (or premium, if any, on) or interest, if any, or Deferred Interest, if any on any such Security to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of any such payment to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such a partnership or the beneficial owner of such payment would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of any such Security.
Whenever in this Subordinated Indenture there is mentioned, in any context, the payment of the principal of (or premium, if any, on) or interest, if any, or Deferred Interest (or, with respect to the Perpetual Subordinated Capital Securities, any other payments), if any on any Security, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in the terms of such Securities and this Section to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of Additional Amounts (if applicable) in any provisions hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of Additional Amounts as contemplated by Section 3.01(17), at least 10 days prior to the first Interest Payment Date with respect to that series of Securities (or if the Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal and any premium is made), and at least 10 days prior to each date of payment of principal (and premium, if any) and interest and Deferred Interest, if any, if there has been any change with respect to the matters set forth in the below-mentioned Officers’ Certificate, the Issuer will furnish the Subordinated Trustee for that series of Securities with an Officers’ Certificate instructing such Subordinated Trustee whether such payment of principal of (and premium, if any, on) and interest, if any, and Deferred Interest, if any, on the Securities of that series shall be made to Holders of Securities of that series without withholding for or on account of any tax, assessment, duty or other governmental charge referred to above or described in the Securities of that series. If any such withholding shall be required, then such Officers’ Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities and the Issuer will pay to the Subordinated Trustee for such series of Securities such Additional Amounts as may be required pursuant to the terms applicable to such series. The Issuer covenants to indemnify the Subordinated Trustee for such series of Securities and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without gross negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers’ Certificate furnished pursuant to this Section 10.07 or the failure to provide any such Officers’ Certificate. The obligations contained in the immediately preceding sentence of the Issuer shall survive payment of all of the Securities, the satisfaction and discharge of this Subordinated Indenture, and the resignation or removal of the Subordinated Trustee or any Paying Agent for such series of Securities.
SECTION 10.08. Calculation of Original Issue Discount.
The Issuer shall deliver to the Subordinated 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 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 U.S. Internal Revenue Code of 1986, as amended from time to time.
SECTION 10.09. Dividend and Capital Restriction
From and including an Optional Interest Payment Date on which the Issuer does not make payment in full of all interest payments to be paid on such date, or any Interest Payment Date on which the Solvency Condition is not satisfied, the Issuer will not (a) declare or pay a dividend or distribution or make any other payment on any Parity Securities or Junior Securities (other than (i) a final dividend declared by the Issuer with respect to its Ordinary Shares prior to the date that the decision to defer such interest payment is made or (ii) a payment made by one of the Issuer’s wholly-owned Subsidiaries to another wholly-owned Subsidiary or directly to the Issuer), or (b) redeem, purchase or otherwise acquire any Parity Securities or Junior Securities, either (y) (in the case of Perpetual Subordinated Debt Securities and Dated Subordinated Debt Securities) in each case unless or until all Deferred Interest and/or, as the case may be, arrears of interest have been received and (in the case of Perpetual Subordinated Debt Securities) no other payment of Deferred Interest or, (in the case of Dated Subordinated Debt Securities) arrears of interest remains unsatisfied or (z) (in the case of Perpetual Subordinated Capital Securities) in each case unless or until the interest (but excluding Deferred Interest, if any) otherwise due and payable on the Perpetual Subordinated Capital Securities during the next twelve months is duly set aside and provided for or paid in full.
Following a date fixed for redemption or exchange of any Securities on which the Issuer is unable to issue sufficient Ordinary Shares to make payment in full of all Deferred Interest to be paid on such date under the Alternative Coupon Satisfaction Mechanism, as set forth in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Securities, the Issuer will not (a) declare or pay a dividend or distribution or make any other payment on, and will procure that no dividend or distribution or other payment is made on, any Parity Securities or Junior Securities (other than (i) a final dividend declared by the Issuer with respect to its Ordinary Shares prior to such redemption or exchange date or (ii) a payment made by one of the Issuer’s wholly-owned Subsidiaries to another wholly-owned Subsidiary or directly to the Issuer), or (b) redeem, purchase or otherwise acquire any Parity Securities or Junior Securities, in each case until such corporate authorizations as are required to issue the necessary Ordinary Shares are obtained and all Deferred Interest to be satisfied has been duly set aside or provided for or paid in full.
The foregoing restrictions do not apply to payments the Issuer makes to policyholders or other customers, or transfers to or from the fund for future appropriations, in each case in the ordinary course of business consistent with past practice.
For the purposes of the foregoing provisions, the payment (or declaration of payment) of a dividend or distribution on Parity Securities or Junior Securities shall be deemed to include the making of any interest, coupon or dividend payment (or payment under any guarantee in respect thereof) and the redemption, purchase or other acquisition of such securities (save where the funds used to redeem, purchase or acquire those securities are derived from an issue of Parity Securities or Junior Securities (i) made at any time within the six-month period prior to the time of such redemption, purchase or acquisition, and (ii) with the same or junior ranking on a return of assets on a winding up or in respect of a distribution or payment of interest, coupons or dividends and/or any other amounts thereunder as those securities being redeemed, purchased or acquired). The Subordinated Trustee shall be entitled to rely on a written certificate signed by two of the Issuer’s directors as to whether the redemption, purchase or acquisition falls within the exception set out above and such certificate shall, in the absence of clear error, be conclusive and binding on the Issuer and the Holders of the Securities.
ARTICLE ELEVEN
REDEMPTION OR VARIATION OF SECURITIES
SECTION 11.01. Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking fund or otherwise) as permitted or required by the terms of any such Securities shall be made in accordance with such terms and (except as otherwise specified pursuant to Section 3.01 with respect to Securities of such series) this Article; provided, however, that if any of the terms of any such Securities shall conflict with any provision of this Article, the terms of such Securities shall govern; and provided, further, that the option or obligation of the Issuer to redeem any Securities on any Redemption Date shall be subject to any consent required of the Relevant Regulator having been obtained and subject also in the case of Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities to the Solvency Condition being satisfied by the Issuer on any such Redemption Date and such other requirements as may be established pursuant to a Board Resolution or supplemental indenture executed pursuant to Section 3.01 with respect to such series.
SECTION 11.02. Election to Redeem; Notice to Subordinated Trustee.
The election of the Issuer to redeem any Securities of any series shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Issuer of less than all of the Securities of any particular series, the Issuer shall, at least 45 days prior to the Redemption Date fixed by the Issuer (unless a shorter notice shall be satisfactory to the Subordinated Trustee for the Securities of such series), notify the Subordinated Trustee for the Securities of such series by an Issuer Request of such Redemption Date and of the principal amount of Securities of that series to be redeemed.
In the case of any redemption of Securities of any series prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Subordinated Indenture, the Issuer shall furnish the Subordinated Trustee for Securities of such series with an Officers’ Certificate evidencing compliance with such restriction.
In the case of any redemption of Securities of any series pursuant to Sections 11.08 or 11.09, the Issuer shall furnish the Subordinated Trustee for Securities of such series with an Officers’ Certificate and an Opinion of Counsel confirming that the Issuer is entitled to exercise the right of redemption.
SECTION 11.03. Selection of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the Issuer may select the series to be redeemed, and if less than all of the Securities of any series are to be redeemed, the particular Securities of that series to be redeemed shall be selected by the Issuer not more than 45 days prior to the Redemption Date from the Outstanding Securities of that series not previously called for redemption, by, (i) if the Securities are listed on any Stock Exchange, in compliance with the requirements of the principal Stock Exchange on which the Securities are listed, (ii) on a pro rata basis to the extent practicable or (iii) to the extent that selection on a pro rata basis is not practicable by lot or such other method as the Subordinated Trustee for the Securities of such series shall deem fair and appropriate.
The Issuer shall promptly notify in writing the Subordinated Trustee for the Securities of such series selected for redemption and, in the case of any Securities of a series selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Subordinated Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities 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 Securities which has been or is to be redeemed.
SECTION 11.04. Notice of Redemption.
Unless otherwise specified in the Securities of a series, notice of redemption shall be given in the manner provided in Section 1.06 not later than 30 days and not earlier than 60 days (or in the case of partial redemption 45 days) prior to the Redemption Date, to each Holder of Securities to be redeemed and, with respect to the Perpetual Subordinated Capital Securities, the Subordinated Trustee, the Calculation Agent and any Paying Agent of such series. A notice or redemption relating to a series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all Outstanding Securities of a particular series are to be redeemed, the identification (and, in the case of a partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
(4) that, on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date;
(5) the place or places where such Securities are to be surrendered for payment of the Redemption Price;
(6) that the redemption is for a sinking fund, if such is the case; and
(7) the Common Code(s), CUSIP number(s) and ISIN, if any, with respect to such Securities.
Notice of redemption of Securities to be redeemed at the election of the Issuer shall be given by the Issuer or, at the Issuer’s written request, by the Subordinated Trustee for such Securities in the name and at the expense of the Issuer.
SECTION 11.05. Deposit of Redemption Price.
Subject in the case of Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities to the Solvency Condition being satisfied by the Issuer on or prior to such Redemption Date, on or prior to any Redemption Date, and subject to any consent required from the Relevant Regulator having been obtained, the Issuer shall deposit with the Subordinated Trustee for the Securities to be redeemed (or, if the Issuer is acting as its own Paying Agent for such Securities, segregate and hold in trust as provided in Section 10.03) an amount of money in same day funds sufficient to pay the principal amount (or, if the context so requires, lesser amount in the case of Discounted Securities) of (and premium, if any, thereon), and (except if the Redemption Date shall be an Interest Payment Date) any accrued interest on, and, subject to Section 3.07, Deferred Interest, if any, on all the Securities which are to be redeemed on that date.
SECTION 11.06. Securities Payable on Redemption Date.
(a) Notice of redemption having been given as aforesaid, subject, in the case of Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities, to the Solvency Condition being satisfied by the Issuer and such other requirements as may be set out in the terms for a series being satisfied, and to any consent required of the Relevant Regulator having been obtained, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Issuer shall default in the payment of the Redemption Price), such Securities shall cease to bear interest. Upon surrender of such Security for redemption in accordance with said notice, such Security or specified portions thereof shall be paid by the Issuer at the Redemption Price; provided, however, that unless otherwise specified as contemplated by Section 3.01, installments of interest on Securities whose Stated Maturity, if any, is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (or, if the context shall so require, lesser amount in the case of Discounted Securities) thereof (and premium, if any, thereon) shall, until paid, bear interest from the Redemption Date at a rate per annum equal to the rate borne by the Security (or, in the case of Discounted Securities, the yield to maturity, if any, set forth therein).
(b) In the event that it is so provided for in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of a particular series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities, a Redemption Date on which any Deferred Interest Payments are due to be satisfied under the Alternative Coupon Satisfaction Mechanism may be postponed following the occurrence of a Market Disruption Event, or in other circumstances where the Issuer is otherwise not able to raise sufficient funds through the Alternative Coupon Satisfaction Mechanism to satisfy all Deferred Interest Payments payable on such Redemption Date. In such event, the Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities of such series will remain Outstanding and will continue to accrue and pay
interest in accordance with their terms, and such postponement of the Redemption Date will not constitute a Perpetual Security Default. In addition, to the extent set forth in such Board Resolution or supplemental indenture, following the 14th day after postponement of a Redemption Date as described above, interest will accrue on outstanding Deferred Interest Payments that would otherwise have been satisfied on such initially scheduled Redemption Date from (and including) such initial Redemption Date to (but excluding) the date such Deferred Interest Payments are paid, at the rate of interest applicable to such series of Perpetual Subordinated Capital Securities or Perpetual Subordinated Debt Securities.
(c) A determination to postpone the Redemption Date in respect of such Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities will be made not later than the Business Day prior to the initially scheduled Redemption Date, and notice thereof will be given to holders of the affected Securities. Notice of a new Redemption Date in respect of such Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities will be given to holders not less than 30 nor more than 60 days prior to the newly selected Redemption Date.
SECTION 11.07. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at the Place of Payment (with, if the Issuer, the Subordinated Trustee or the Security Registrar for such Security so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Issuer, the Subordinated Trustee and the Security Registrar for such Security duly executed by the Holder thereof or his attorney duly authorized in writing), and the Issuer shall execute and upon Issuer Request such Subordinated Trustee shall authenticate and deliver to the Holder of such Security, without service charge but at the expense of the Issuer, a new Security or Securities, of any authorized denomination as requested by such Holder, of the same series and having the same terms and provisions and in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered; except that, if a global Security is so surrendered, the Issuer shall execute, and upon Issuer Request the Subordinated Trustee shall authenticate and deliver to the Depositary for such global Security, without service charge but at the expense of the Issuer, a new global Security of like tenor in a denomination equal to and in exchange for the unredeemed portion of the principal amount of the global Security so surrendered.
SECTION 11.08. Tax Event Redemption.
(a) The Securities of any series may be redeemed, subject to any other terms set forth herein and in the Board Resolution or supplemental indenture pursuant to Section 3.01 and in such Securities, and subject, in the case of Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities of any series, to the Solvency Condition being satisfied by the Issuer, as a whole but not in part, at the option of the Issuer, upon not less than 30 nor more than 60 days’ notice to the Subordinated Trustee for such series of Securities and the Holders of such Securities in writing, at a Redemption Price equal to 100% of the principal amount thereof (or, if the context so requires, such lesser amount in the case of Discounted Securities) (and premium, if any, thereon), together with accrued and unpaid interest for the then current period and Deferred Interest, if any, thereon to, but excluding, the Redemption Date, and any Securities convertible or exchangeable into Preference Shares may, at the option of the Issuer, be converted or exchanged as a whole, and any Additional Amounts thereon upon the occurrence of a Tax Event. Any such notice of redemption shall be irrevocable.
Prior to the redemption of any series of Securities following the occurrence of a Tax Event, the Issuer shall be required, before it gives a notice of redemption, to deliver to the Subordinated Trustee an Officers’ Certificate stating that all conditions precedent to such redemption have been complied with and an Opinion of Counsel concluding that in the opinion of such counsel a Tax Event has occurred and the Issuer is entitled to exercise its right of redemption in accordance with the terms of the Securities.
If the Issuer provides an Opinion of Counsel in the appropriate jurisdiction, dated as of the date of the relevant event referred to in the preceding paragraph, that no obligation to pay any Additional Amount aforesaid arises, then that Opinion of Counsel shall be final and binding, solely for purposes of such paragraph, on the Issuer, the Subordinated Trustee and the Holders of the Securities of any such series as to the law of the relevant jurisdiction at the date of such Opinion of Counsel.
The rights of the Issuer to redeem the Dated Subordinated Debt Securities, the Perpetual Subordinated Debt Securities and the Perpetual Subordinated Capital Securities of any series, upon the occurrence of a Tax Event occurring as a result of a Tax Law Change, will be subject to any conditions (including the Relevant
Regulator consenting to such redemption in the form of the grant of a waiver) specified in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such Securities being satisfied.
(b) In relation to a series of Dated Subordinated Debt Securities, except as otherwise indicated to the Issuer by the Relevant Regulator, the Issuer may not redeem the Securities upon the occurrence of a Tax Event prior to the fifth anniversary of the issue date of the Securities unless such redemption is funded out of the proceeds of a new issuance of capital of the same or higher quality than the relevant Securities.
SECTION 11.09. Regulatory Event Redemption.
(a) Subject to the Issuer satisfying the Solvency Condition (in relation to the Perpetual Subordinated Debt Securities and the Perpetual Subordinated Capital Securities) on and immediately following any applicable date set for redemption and the Regulatory Capital Requirement on and immediately following any applicable date set for redemption, if a Regulatory Event is deemed to have occurred the Securities of any series may be redeemed, in whole but not in part, at the option of the Issuer, upon not more than 60 days’ nor less than 30 days’ prior notice to the Holders of such Securities, at a Redemption Price equal to 100% of the principal amount thereof (and premium, if any, thereon), or such other Redemption Price as may be specified in the applicable Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of the relevant series of Securities, together with accrued interest, if any, and any Deferred Interest, if applicable, thereon to the date set for redemption.
(b) The rights of the Issuer to redeem the Securities of any series, upon the occurrence of a Regulatory Event, will be subject to any conditions (including the Relevant Regulator consenting to such redemption in the form of the grant of a waiver) specified in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 hereof establishing the terms of such Securities being satisfied.
(c) In the case of redemption upon the occurrence of a Regulatory Event, the Issuer shall be required, before it gives a notice of redemption, to deliver to the Subordinated Trustee an Officers’ Certificate confirming that all conditions precedent to such redemption have been complied with.
(d) In relation to a series of Dated Subordinated Debt Securities, if and to the extent required by the Capital Regulations applicable in relation to Tier 2 Capital, and except as otherwise indicated to the Issuer by the Relevant Regulator, the Issuer may not redeem the Securities upon the occurrence of a Regulatory Event prior to the fifth anniversary of the issue date of the Securities unless such redemption is funded out of the proceeds of a new issuance of capital of the same or higher quality as the relevant Securities.
SECTION 11.10. Early Redemption — Relevant Regulator Consent.
Securities may only be redeemed by the Issuer as provided under Article Eleven of this Subordinated Indenture if the Issuer (a) has notified the Relevant Regulator of its intention to do so prior to the Issuer becoming committed to the proposed redemption and no objection thereto has been raised by the Relevant Regulator or, if required, the Relevant Regulator has consented prior to the Issuer becoming committed to the proposed redemption and (b) redeems such Securities only if, when and to the extent not prohibited by the Capital Regulations.
SECTION 11.11. Repurchases of Securities.
(a) Subject to Section 11.11(b) and Section 11.11(c), the Issuer and any member of the Group, having given prior notice to, and having received no objection from, the Relevant Regulator (so long as such notice is required to be given), may at any time or from time to time purchase Securities by tender, in the open market, by private agreement or otherwise on such terms and conditions as it shall determine.
(b) The Issuer shall not, and the Issuer shall procure that no other Supervised Group Company shall, and no related party over which the Issuer or any other Supervised Group Company exercises control or significant influence shall, purchase any Securities.
(c) The Issuer shall not, and the Issuer shall procure that no other Supervised Group Company shall, directly or indirectly fund the purchase of any Securities.
SECTION 11.12. Permitted Variation.
If so specified with respect to the Securities of a series pursuant to Section 3.01, the terms of such Securities shall be subject to a Permitted Variation in accordance with their terms and this Section 11.12. Unless otherwise provided under Section 3.01 with respect to any series of Securities, the election of the Issuer to enter into a Permitted Variation with respect to any Securities shall be evidenced by or pursuant to a Board Resolution. Notice of a Permitted Variation shall be given in the manner provided in Section 1.06 not less than 30 nor more than 60 days prior to the date fixed for such variation to become effective to each Holder of Securities of such series. All such notices shall state:
(1) the date as of which such variation is intended to become effective;
(2) a description of the changes to be made to such Securities;
(3) the Place of Payment where such Securities are to be surrendered in exchange for the Securities as varied, if new forms of securities are to be issued in connection therewith;
(4) the CUSIP number or numbers, the Common Code, or the ISIN, if any, with respect to such Securities; and
(5) any other information required by any Stock Exchange where such Securities are then listed or quoted or otherwise required by applicable law.
Notice of variation of Securities shall be given by the Issuer or, at the Issuer’s written request, by the Subordinated Trustee in the name and at the expense of the Issuer provided the Subordinated Trustee has received such notice at least five Business Days prior to the last date such notice can be sent to the Holders.
Any Permitted Variation will be reflected in a supplemental indenture entered into pursuant to Section 9.01 of this Subordinated Indenture.
ARTICLE TWELVE
SINKING FUNDS
SECTION 12.01. Applicability of This Article.
Redemption of Securities of any series through operation of a sinking fund as permitted or required by the terms of any such Securities shall be made in accordance with such terms and (except as otherwise specified pursuant to Section 3.01 with respect to Securities of such series) this Article; provided, however, that if any of the terms of any such Securities shall conflict with any provision of this Article, the terms of such Securities shall govern; and provided, further, that the option or obligation of the Issuer to make any sinking fund payment with respect to any Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities shall be subject to the Solvency Condition being satisfied by the Issuer and to any consent required of the Relevant Regulator having been obtained.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any particular series is herein referred to as a “mandatory sinking fund payment”, and any payment in excess of such minimum amount provided for by the terms of Securities of any particular series is herein referred to as an “optional sinking fund payment”. If provided for by the terms of Securities of any particular series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.02. Each sinking fund payment shall be applied to the redemption of Securities of any particular series as provided for by the terms of Securities of that series.
SECTION 12.02. Satisfaction of Sinking Fund Payments With Securities.
The Issuer (i) may deliver Outstanding Securities of a series (other than any Securities previously called for redemption) and (ii) may apply as a credit Securities of a series which have been redeemed either at the election of the Issuer pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided, however, that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Subordinated Trustee
for such Securities at the principal amount thereof (or, if the context so requires, such lesser amount in the case of Discounted Securities) and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 12.03. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any particular series of Securities (or such shorter period as shall be satisfactory to the Subordinated Trustee for the Securities of such series), the Issuer will deliver to the Subordinated Trustee for the Securities of such series an Officers’ Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash in the currency or currency unit in which the Securities of that series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of that series and except as provided in Sections 3.11(b), 3.11(d) and 3.11(e)) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 12.02 and shall state the basis for such credit and that such Securities have not previously been so credited and will also deliver to such Subordinated Trustee any Securities to be so delivered. The Issuer or the Subordinated Trustee for the Securities of such series shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.03 and cause notice of the redemption thereof to be given in the name of and at the expense of the Issuer in the manner provided in Section 11.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 11.05, 11.06 and 11.07.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.01. Securities Subordinate to Certain Creditors; Definition of Relative Rights.
(a) General. The Issuer covenants and agrees, and each Holder of Securities of each series, by his acceptance thereof, likewise covenants and agrees, that, to the extent expressly provided in this Subordinated Indenture or in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of a series of Securities, the Securities of each series shall constitute direct, unsecured and unconditional obligations of the Issuer, ranking equally and ratably without any preference among themselves and, in the event of the bankruptcy or winding up or liquidation of the Issuer, the claims of the holders thereof shall be subordinate to, and subject in right of payment to, the prior payment in full of, all claims of the Senior Creditors of the Issuer with respect to such Securities as described herein (or in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of such series of Securities), without any preference among themselves. To the extent and in the manner set forth herein or in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of such series of Securities, the indebtedness represented by any of the Securities and the payment of the principal of (and premium, if any, on) and interest and Deferred Interest, if any, on any of the Securities and any payment in connection with any applicable sinking fund or redemption provisions or the payment of any other sums due on any such Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full, in cash or cash equivalents, to all claims of Senior Creditors with respect to such series and, with respect to any Perpetual Subordinated Debt Securities and Perpetual Subordinated Capital Securities, conditional upon the Solvency Condition being satisfied by the Issuer as described in paragraph (b) of this Section.
(b) No payment of principal, premium, if any, interest, if any, or Deferred Interest, if any, or in connection with any sinking fund or redemption provision in respect of any of the Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities, and no purchase of any of the Perpetual Subordinated Debt Securities or Perpetual Subordinated Capital Securities, beneficially by or for the account of the Issuer or any of the Subsidiaries of the Issuer shall be made unless two members of the Board of Directors of the Issuer or the Auditors or (if the Issuer is in bankruptcy, winding up or liquidation in England and Wales) the liquidator of the Issuer shall have reported to the Subordinated Trustee in writing within 14 days before such payment or within 6 months before such redemption or purchase that in their or, as the case may be, his opinion the Solvency Condition would be satisfied by the Issuer both at the time of and immediately after such payment, redemption or purchase. Any such report shall, in the absence of manifest error, be treated and accepted by the Issuer, the Subordinated Trustee, and the Holders of any of the Securities as correct and sufficient evidence of such satisfaction of the Solvency Condition.
(c) Subordination of Dated Subordinated Debt Securities. The rights and claims of the Holders of any series of Dated Subordinated Debt Securities are subordinated to Senior Creditors with respect to
such Securities, or any other subordinated debt securities of the Issuer not expressed to rank equally with or junior to such Securities.
The following are “Senior Creditors” with respect to any series of Dated Subordinated Debt Securities unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of such Securities: any unsubordinated creditors of the Issuer or any Supervised Group Company (including all policyholders and beneficiaries pursuant to a contract of insurance of a Supervised Group Company (and including, for the avoidance of doubt, all Policyholder Claims)).
In the event of the bankruptcy, winding up or liquidation of the Issuer, the claims of Holders of Dated Subordinated Debt Securities will rank at least pari passu with the Legacy Tier 2 Notes and all other of the Issuer’s obligations that constitute, or would but for any applicable limitation on the amount of such capital constitute, Subordinated Tier 2 Capital and in priority to the Legacy Tier 1 Notes and all other obligations of the Issuer which constitute, or would but for any applicable limitation on the amount of such capital constitute, Tier 1 Capital, and in priority to the claims of holders of all classes of the share capital of the Issuer.
In the event of the bankruptcy, winding up or liquidation of the Issuer, if the amounts payable with respect to the Dated Subordinated Debt Securities and any claims ranking pari passu with any such Securities are not paid in full, the Holders of any such Securities and holders of other claims ranking pari passu with any such Securities shall share ratably in any distribution of the assets of the Issuer in proportion to the respective amounts to which they are entitled.
(d) Subordination of Perpetual Subordinated Debt Securities. The rights and claims of the Holders of any series of Perpetual Subordinated Debt Securities are subordinated to Senior Creditors with respect to such Securities, including claims of any holders of Dated Subordinated Debt Securities or any other subordinated debt securities of the issuer not expressed to rank equally with or junior to the Perpetual Subordinated Debt Securities.
The following are “Senior Creditors” with respect to any series of Perpetual Subordinated Debt Securities unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of such Securities: (i) any creditors who are unsubordinated creditors of the Issuer with claims admitted in the event of the winding up of the Issuer; (ii) any creditors of the Issuer whose claims rank, or are expressed to rank, subordinated to the claims of other creditors of the Issuer (other than those whose claims constitute, or would but for any applicable limitation on the amount of such capital, constitute Tier 1 Capital (which ranks, or is expressed to rank, junior to the Perpetual Subordinated Debt Securities)) or whose claims rank, or are expressed to rank, equally with, or junior to, the claims of the Holders of the Perpetual Subordinated Debt Securities.
Except in a bankruptcy, winding up, liquidation or, if the Relevant Regulator has indicated in writing that it has no objection to such payment, any payments of principal, premium, if any, interest, if any, or Deferred Interest, if any, in respect of the Perpetual Subordinated Debt Securities of any series are conditional upon the Issuer satisfying the Solvency Condition at the time of and immediately after any such payment, and no principal, premium, if any, interest, if any, or Deferred Interest, if any, shall be payable in respect of any series of such debt securities and neither the Issuer nor any of its Subsidiaries, as applicable, may redeem or repurchase any of the debt securities of any such series except to the extent that the Issuer would meet the Regulatory Capital Requirement and satisfy the Solvency Condition both at the time of and immediately after, any such payment, redemption or repurchase.
In the event of the bankruptcy, winding up or liquidation of the Issuer, the claims of Holders of Perpetual Subordinated Debt Securities will rank at least pari passu with all other of the Issuer’s obligations that constitute, or would but for any applicable limitations on the amount of such capital constitute, Tier 2 Capital and in priority to those whose claims constitute, or would but for any applicable limitation as the amount of such capital constitute, Tier 1 Capital and in priority to the claims of holders of all classes of share capital of the Issuer.
In the event of the bankruptcy, winding up or liquidation of the Issuer, the amount that shall be payable with respect to the Perpetual Subordinated Debt Securities of each series shall be determined by calculating the amount, if any, as would have been payable in respect thereof as if, on the day immediately prior to the commencement of any such bankruptcy, winding up or liquidation and thereafter, the Holders of such Perpetual Subordinated Debt Securities were the holders of the Issuer’s Preference Shares having a preferential right to a return of assets in any such bankruptcy, winding up or liquidation over the holders of all issued classes of share
capital for the time being and any notional class of shares in the Issuer’s capital by reference to which the claims of any person in the Issuer’s winding up are to be determined (other than any notional class of shares of equal seniority with such shares), assuming that such Preference Shares were entitled (to the exclusion of other rights or privileges) to receive as a return of capital in such bankruptcy, winding up or liquidation an amount equal to the principal amount of the Perpetual Subordinated Debt Securities of such series then Outstanding together with premium, if any, and interest accrued to the date of repayment, if any, and Deferred Interest to the extent provided pursuant to Section 3.01. In the event such amounts and any claims ranking pari passu are not paid in full, the Holders of such Securities and claims will share ratably in any such distribution of the assets of the Issuer in proportion to the respective amounts to which they are entitled.
(e) Subordination of Perpetual Subordinated Capital Securities. The rights and claims of the Holders of any series of Perpetual Subordinated Capital Securities are subordinated to Senior Creditors with respect to such Securities, including claims of any holders of Dated Subordinated Debt Securities, Perpetual Subordinated Debt Securities or any other subordinated debt securities of the Issuer not expressed to rank equally with or junior to the Perpetual Subordinated Capital Securities.
The following are “Senior Creditors” with respect to any series of Perpetual Subordinated Capital Securities unless otherwise provided in the Board Resolution or supplemental indenture executed pursuant to Section 3.01 establishing the terms of such Securities: (i) any creditors who are unsubordinated creditors of the Issuer with claims admitted in the event of the winding up of the Issuer; (ii) any creditors of the Issuer having claims in respect of liabilities that rank, or are expressed to rank, subordinated to the claims of other creditors of the Issuer (other than those whose claims constitute, or would but for any applicable limitation on the amount of such capital constitute, Tier 1 Capital or whose claims rank, or are expressed to rank, equally with, or junior to, the claims of the holders of the Perpetual Subordinated Capital Securities); (iii) any creditors of the Issuer whose claims are in respect of the Issuer’s outstanding debt securities that constitute Tier 2 Capital (and such other securities outstanding from time to time that rank or are expressed to rank equally with, or senior to, any such Tier 2 Capital); and (iv) all other creditors having claims, including other such creditors holding subordinated debt securities, except those that rank, or are expressed to rank, equally with (including holders of Parity Securities) or junior to (including holders of Junior Securities) the claims of any holder of Perpetual Subordinated Capital Securities of such series.
Except in a bankruptcy, winding up, liquidation or, if the Relevant Regulator has indicated in writing that it has no objection to such payment, any payments of principal, premium, if any, interest, if any, or Deferred Interest, if any, in respect of the Perpetual Subordinated Capital Securities of any series are conditional upon the Issuer satisfying the Solvency Condition at the time of and immediately after any such payment, and no principal, premium, if any, interest, if any, or Deferred Interest, if any, shall be payable in respect of any series of such debt securities and neither the Issuer nor any of its Subsidiaries, as applicable, may redeem or repurchase any of the debt securities of any such series except to the extent that the Issuer would meet the Regulatory Capital Requirement and satisfy the Solvency Condition both at the time of and immediately after, any such payment, redemption or repurchase.
In the event of the bankruptcy, winding up or liquidation of the Issuer, the claims of Holders of Perpetual Subordinated Capital Securities will rank at least pari passu with all other of the Issuer’s obligations that constitute, or would but for any applicable limitations on the amount of such capital constitute, Tier 1 Capital and in priority to the claims of holders of all classes of the Issuer’s share capital (but, unless otherwise specified in the applicable Board Resolutions or supplemental indentures executed pursuant to Section 3.01 with respect to the relevant series of Perpetual Subordinated Capital Securities, pari passu with the holders of the Issuer’s most senior ranking class of issued Preference Shares, if any, except to the extent such Preference Shares represent claims of Senior Creditors).
In the event of the bankruptcy, winding up or liquidation of the Issuer, the amount that shall be payable with respect to the Perpetual Subordinated Capital Securities of each series shall be determined by calculating the amount, if any, as would have been payable in respect thereof as if, on the day immediately prior to the commencement of any such bankruptcy, winding up or liquidation and thereafter, the Holders of such Perpetual Subordinated Capital Securities were the holders of Preference Shares in the capital of the Issuer having a preferential right to a return of assets in the winding up over the holders of all issued classes of share capital of the Issuer (but, unless otherwise specified in the applicable Board Resolutions or supplemental indentures executed pursuant to Section 3.01 with respect to the relevant series of Perpetual Subordinated Capital Securities, pari passu with the holders of the Issuer’s most senior ranking class of issued Preference Shares, if any, except to the extent
such Preference Shares represent claims of Senior Creditors), assuming that such Preference Shares were entitled (to the exclusion of other rights or privileges) to receive as a return of capital in such bankruptcy, winding up or liquidation an amount equal to the principal amount of the Perpetual Subordinated Capital Securities of such series then Outstanding together with premium, if any, interest accrued to the date of repayment, if any, and Deferred Interest to the extent provided for pursuant to Section 3.01. In the event such amounts and any claims ranking pari passu are not paid in full, the holders of such Securities and claims will share ratably in any such distribution of the assets of the Issuer in proportion to the respective amounts to which they are entitled.
(f) Order of Payment. In the event of the bankruptcy, winding up or liquidation of the Issuer, all amounts in respect of any of the Securities issued by such Issuer paid to the Subordinated Trustee for the Securities of any series by the applicable liquidator of the Issuer in the bankruptcy, winding up or liquidation of the Issuer shall be held by such Subordinated Trustee upon trust and applied by the Subordinated Trustee:
(1) firstly, for payment or satisfaction of the costs, charges, expenses (including reasonable counsel fees) and liabilities incurred by such Subordinated Trustee and its agents and attorneys in or about the execution of the trusts of these presents (including all amounts due and payable pursuant to Section 6.07);
(2) secondly, for payment of claims of all Senior Creditors with respect to Dated Subordinated Debt Securities in the bankruptcy, winding up or liquidation of the Issuer to the extent that such claims are admitted to proof in the bankruptcy, winding up or liquidation (not having been satisfied out of the other resources of the Issuer) excluding interest accruing after commencement of the bankruptcy, winding up or liquidation;
(3) thirdly, for payment pari passu and ratably of the amounts owing on or in respect of all Dated Subordinated Debt Securities of any such series issued hereunder by such Issuer;
(4) fourthly, for the payment of claims of all Senior Creditors with respect to Perpetual Subordinated Debt Securities in the bankruptcy, winding up or liquidation of the Issuer to the extent that such claims are admitted as proof in the bankruptcy, winding up or liquidation (not having been satisfied out of the other resources of the Issuer) excluding interest accruing after commencement of the bankruptcy, winding up or liquidation;
(5) fifthly, for payment pari passu and ratably of the amounts owing on or in respect of all Perpetual Subordinated Debt Securities of any series issued hereunder by such Issuer;
(6) sixthly, for the payment of claims of all Senior Creditors with respect to Perpetual Subordinated Capital Securities in the bankruptcy, winding up or liquidation of the Issuer to the extent that such claims are admitted as proof in the bankruptcy, winding up or liquidation (not having been satisfied out of the other resources of the Issuer) excluding interest accruing after commencement of the bankruptcy, winding up or liquidation; and
(7) seventhly, for payment pari passu and ratably of the amounts owing on or in respect of all Perpetual Subordinated Capital Securities of any series issued hereunder by such Issuer.
The trust mentioned above may be performed by the Subordinated Trustee paying over to the applicable liquidator the amounts received by the Subordinated Trustee as aforesaid (less any amounts thereof applied in the implementation of such trust) on terms that such liquidator shall distribute the same accordingly and the receipt of such liquidator for the same shall be a good discharge to the Subordinated Trustee for the performance by it of such trust. The Subordinated Trustee shall be entitled and it is hereby authorized to call for and to accept as conclusive evidence thereof a written certificate from the applicable liquidator as to: (i) the amount of the claims of the Senior Creditors with respect to each series of Subordinated Debt Securities referred to above; and (ii) the Persons entitled thereto and their respective entitlements.
(g) Amounts Held in Trust. The provisions of this Section shall not be applicable to any amounts of principal, premium, if any, and interest and Deferred Interest, if any, or any amounts in connection with any applicable sinking fund or redemption provisions or payment of any other sums due on any such Securities, in respect of any of the Securities for the payment of which funds have been deposited in trust with the Subordinated Trustee or any Paying Agent or have been set aside by the Issuer in trust in accordance with the provisions of this Subordinated Indenture; provided, however, that at the time of such deposit or setting aside, and immediately thereafter, the foregoing provisions of this Section are complied with.
(h) Subrogation. In a bankruptcy, winding up or liquidation in England and Wales of the Issuer, subject to the satisfaction in full of all claims of Senior Creditors of a particular series of Securities issued hereunder that are admitted in such bankruptcy, winding up or liquidation or the claim of the Subordinated Trustee or the agents hereunder to receive payment or indemnification as provided for in Section 6.07 hereof, the Holders of the Securities of such series shall be subrogated (pro rata with the holders (or the trustees for such holders) of other pari passu claims, including the Holders of all other Securities issued hereunder ranking pari passu with such series on the basis of the respective amounts paid over, directly or through the applicable liquidator, to or for the benefit of such Senior Creditors) to the rights of such Senior Creditors to receive payments or distributions of cash, property or securities of the Issuer applicable to claims of such Senior Creditors until the principal, premium, if any, and interest, if any, in respect of any such Securities, shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to such Senior Creditors of cash, property or securities of the Issuer to which any such Holders or the Subordinated Trustee would be entitled except for the provisions of this Section, and no payment over by any such Holders or the Subordinated Trustee, directly or through the applicable liquidator, to or for the benefit of such Senior Creditors pursuant to the provisions of this Section, shall, as between the Issuer, its creditors other than such Senior Creditors, and any such Holders and the Subordinated Trustee be deemed to be a payment by the Issuer to or on account of such Senior Creditors.
SECTION 13.02. Provisions Solely to Define Relative Rights.
The provisions of this Article Thirteen are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities of each series on the one hand and the Senior Creditors of the Issuer on the other hand. Other than as provided for in this Subordinated Indenture, any Board Resolutions or supplemental indentures executed pursuant to Section 3.01 with respect to any series of Securities, nothing contained in this Article or elsewhere in this Subordinated Indenture or in the Securities is intended to or shall (a)(i) impair, as among the Issuer, its creditors (other than Senior Creditors) and the Holders of any Securities issued by such Issuer, the obligation of the Issuer, which is absolute and unconditional, to pay to the Holders of such claims the principal of, premium, if any, on and interest and Deferred Interest, if any, on such Securities as and when the same shall become due and payable in accordance with their terms and this Subordinated Indenture or (ii) affect the relative rights against such Issuer of the Holders of any such Securities and creditors of such Issuer (other than the Senior Creditors) or (iii) prevent the Subordinated Trustee or such Holders from exercising all remedies otherwise permitted hereunder or by applicable law upon default under this Subordinated Indenture, subject to the rights, if any, under this Article of the Senior Creditors of the Issuer to receive cash, property or securities otherwise payable or deliverable to the Subordinated Trustee or such Holders; or (b) prevent the Subordinated Trustee or such Holders from exercising all remedies otherwise permitted hereunder or by applicable law upon default under this Subordinated Indenture.
SECTION 13.03. Subordinated Trustee to Effectuate Subordination.
Each Holder of Securities by his acceptance thereof authorizes and directs the Subordinated Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination of such Securities provided in this Article Thirteen and appoints the Subordinated Trustee his attorney-in-fact for any and all such purposes.
SECTION 13.04. No Waiver of Subordination Provisions.
No right of any present or future Senior Creditors of the Issuer, if any, 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 Senior Creditors of the Issuer, if any, or by any noncompliance by the Issuer with the terms, provisions and covenants of this Subordinated Indenture, regardless of any knowledge thereof that any such Senior Creditors of the Issuer, if any, may have or be otherwise charged with.
SECTION 13.05. Notice to Subordinated Trustee.
The Issuer shall give prompt written notice to the Subordinated Trustee of any fact known to it which would prohibit the making of any payment when due to or by the Subordinated Trustee in respect of any Securities. Notwithstanding the provisions of this Article or any other provision of this Subordinated Indenture but subject to the provisions of Section 13.01, the Subordinated Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment when due to or by the Subordinated Trustee in respect of any such Securities unless and until a Responsible Officer of the Subordinated Trustee shall have received at the Corporate Trust Office written notice thereof from the Issuer or a Senior Creditor of such Issuer, as
the case may be, or from any trustee therefor, as the case may be together with evidence reasonably satisfactory to the Subordinated Trustee of the holdings of the Senior Creditors or of the authority of such Senior Creditor or trustee; and, prior to the receipt of any such written notice by a Responsible Officer of the Subordinated Trustee, the Subordinated Trustee, subject to the provisions of Section 6.01, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Subordinated Trustee shall not have received the notice provided for in this Section at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any, on) and interest and Deferred Interest, if any, on any Security), then, subject to the provisions of Section 13.01, the Subordinated Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date.
Subject to the provisions of Section 6.01, the Subordinated Trustee shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a Senior Creditor or a trustee therefor, to establish that such notice has been given by a Senior Creditor of such Issuer or a trustee therefor. In the event that the Subordinated Trustee determines in good faith that further evidence is required with respect to the right of any Person as a Senior Creditor of such Issuer to participate in any payment or distribution pursuant to this Article, the Subordinated Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Subordinated Trustee as to the amount of claims 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 Thirteen, and if such evidence is not furnished, the Subordinated Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
SECTION 13.06. 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 Subordinated Trustee, subject to the provisions of Section 6.01, and the Holders of the Securities shall be entitled to conclusively rely upon (i) any order or decree entered by any court in England and Wales in which any bankruptcy, winding up or liquidation of the Issuer, if any, or similar case or proceeding, including a proceeding for the suspension of payments under English law, is pending, or (ii) a written certificate of the applicable liquidator, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Subordinated Trustee and such Holders, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the Senior Creditors of the Issuer, if any, as the case may be, and other claims against such 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 13.07. Subordinated Trustee Not Fiduciary for Creditors.
The Subordinated Trustee shall not be deemed to owe any fiduciary duty to the Senior Creditors or any other holder of any instrument other than Securities issued under this Indenture, if any, as the case may be, or the Issuer, , and shall not be liable to any of the Senior Creditors, such other holders or the Issuer if it shall in good faith mistakenly pay over or distribute to Holders of the Securities or to the Issuer or to any other Person cash, property or securities to which any such Senior Creditors or depositors and other creditors shall be entitled by virtue of this Article or otherwise. With respect to the Senior Creditors, the Subordinated Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to the Senior Creditors or such other creditors shall be read into this Indenture against the Subordinated Trustee.
SECTION 13.08. Rights of Subordinated Trustee as Creditor; Preservation of Subordinated Trustee’s Rights.
The Subordinated Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any claims of Senior Creditors of the Issuer, if any, as the case may be, which may at any time be held by it, to the same extent as any other Senior Creditors of the Issuer, if any, as the case may be, and nothing in this Subordinated Indenture shall deprive the Subordinated Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the Subordinated Trustee under or pursuant to Section 6.07.
SECTION 13.09. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Subordinated Trustee shall have been appointed by the Issuer and be then acting hereunder, the term “Subordinated 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 Subordinated Trustee; provided, however, that Section 13.08 shall not apply to the Issuer or any Affiliate of the Issuer, if the Issuer or such Affiliate acts as Paying Agent.
SECTION 13.10. Conversion or Exchange Not Deemed Payment.
For the purposes of this Article Thirteen only, delivery of Preference Shares upon conversion or exchange of Securities in accordance with Article Fourteen, if applicable to a particular series of Securities, shall not be treated as constituting a payment or distribution on account of the principal of the Securities or on account of the purchase or other acquisition of the Securities. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Issuer, its creditors and the Holders of the Securities, the right, which if applicable to a particular series of Securities is absolute and unconditional, of the Issuer to convert or exchange the Securities in accordance with Article Fourteen.
ARTICLE FOURTEEN
CONVERSION OR EXCHANGE OF SECURITIES
SECTION 14.01. Applicability of Article.
If specified pursuant to Section 3.01 for the Securities of any series, the Securities of such series shall be convertible or exchangeable in accordance with their terms and (except as otherwise specified as contemplated by Section 3.01 for Securities of such series) in accordance with this Article. Unless otherwise specified pursuant to Section 3.01 for the Securities of any series, the Securities of each series shall be convertible or exchangeable, at the Issuer’s option and in its sole discretion, in whole or in part, into Preference Shares in each case in accordance with this Article.
SECTION 14.02. Election to Convert or Exchange; Notice to Subordinated Trustee.
An election of the Issuer to convert or exchange Securities, as the case may be, shall be evidenced by an Officers’ Certificate furnished to the Subordinated Trustee stating that the Issuer is entitled to effect such conversion or exchange and setting forth a statement of facts demonstrating the same.
SECTION 14.03. Notice of Conversion or Exchange.
Not less than 30 days nor more than 60 days prior to the Event Date, the Issuer shall notify the Subordinated Trustee in writing of its election to convert or exchange, as the case may be, the Securities and of the series of Securities to which such election relates. The Subordinated Trustee shall within five Business Days after receipt of such notice from the Issuer and at the expense of the Issuer, cause notice of such election to be mailed to each Holder of Securities to be converted or exchanged, as the case may be.
All notices of conversion or exchange shall be prepared by the Issuer and shall state:
(1) the Event Date;
(2) if less than all of the series of the Securities are to be converted or exchanged, the identification of the particular Securities to be converted or exchanged, including relevant CUSIP numbers and other securities identification numbers, which Securities shall be selected by the Subordinated Trustee from the Outstanding Securities of such series not previously called for conversion, by pro rata or by lot or by such other method as the Subordinated Trustee shall deem fair and appropriate provided, that if on the Event Date such Securities are registered as a global Security, the Depositary shall determine, in accordance with its procedures, the principal amount of such Securities held by each of the Depositary’s participants to be converted or exchanged;
(3) that on the Event Date, the Security to be converted or exchanged will cease to exist except, if applicable, to evidence the Preference Shares as described in Section 14.07 below on and after such Event Date;
(4) if such Securities are not registered as a global Security, the place or places where such Securities are to be surrendered for conversion or exchange;
(5) the form in which the Issuer will issue the Preference Shares; and
(6) such information as may be set out in a Board Resolution or supplemental indenture executed pursuant to Section 3.01.
SECTION 14.04. Deposit of Payments.
Prior to 10:00 a.m., New York time, on any Event Date, the Issuer shall deposit with the Subordinated Trustee or with a Paying Agent an amount of money sufficient to pay accrued interest, if any, to the Event Date on the Securities to be converted or exchanged on the Event Date. To the extent an such money is received by the Subordinated Trustee or Paying Agent from the Issuer after 10:00 a.m. New York time on such due date, such money will be deemed to have been deposited within one (1) Business Day of receipt thereof.
SECTION 14.05. Surrender of Securities.
Without prejudice to the Issuer’s right to convert or exchange the Securities, any Security which is to be converted or exchanged shall, unless such Security is registered as a global Security, be surrendered at an office or agency of the Issuer designated for that purpose pursuant to Section 10.02 not less than 10 days prior to the Event Date (with due endorsement by, or a written instrument of transfer in form satisfactory to the Issuer and the Subordinated Trustee duly executed by the Holder thereof or his attorney-in-fact duly authorized in writing) accompanied by written notice to the Issuer (with a copy to the Subordinated Trustee) specifying the name or names with address or addresses in which the Preference Shares, are to be issued. Upon receipt of such written notice, the Issuer will, if applicable, direct the ADR Depositary accordingly under the terms of the ADR Deposit Agreement. Securities surrendered for conversion or exchange shall, if surrendered to any Person other than the Subordinated Trustee, be delivered to the Subordinated Trustee for delivery by it to the Issuer or, if delivered to the Subordinated Trustee, shall be delivered by it to the Issuer.
SECTION 14.06. Issuance of Preference Shares.
On or prior to the Event Date with respect to Securities surrendered for conversion or exchange, the Issuer shall, unless the Issuer shall have notified the Subordinated Trustee otherwise in writing not less than 30 days nor more than 60 days prior to the Event Date, deliver or procure the delivery of a single share warrant to bearer to the ADR Depositary evidencing all of the Preference Shares in respect of which such Securities are to be converted in accordance with the provisions of this Article Fourteen. Such conversion or exchange shall be deemed to have been made immediately prior to the close of business in New York City on the Event Date.
In the event that the Issuer shall have notified the Subordinated Trustee that it will not deliver or procure the delivery of a single share warrant to bearer in exchange for the Securities of a series subject to the conversion or exchange as provided in Section 14.05: (i) the Issuer shall, on or prior to the Event Date, with respect to definitive Securities, deliver or procure the delivery of individual certificates representing the Preference Shares (or evidencing the rights to receive such Preference Shares) of such series for which such Securities are to be converted or exchanged in accordance with the provisions of this Article Fourteen; or (ii) in the case of Preference Shares in registered form, such Preference Shares shall be registered in the names of the Holders of such Securities in definitive form as they appear on the Security Register or, at the direction of such Holder, in the name of the ADR Custodian for the account and benefit of the ADR Depositary who will issue ADRs to such Holder; or (iii) in the case of Preference Shares evidenced by share warrants to bearer, such Preference Shares shall be delivered to the bearer of the bearer Security in definitive form or, at the direction of such bearer, to the ADR Custodian for the account and benefit of the ADR Depositary who will issue ADRs to such Holder.
Any exchange or conversion shall be deemed to have been made immediately prior to the close of business in New York City on the Event Date.
SECTION 14.07. Effect of Conversion or Exchange.
Notice of conversion or exchange having been given as aforesaid, the Securities so to be converted or exchanged, as the case may be, shall on the Event Date cease to exist for any purpose, other than to evidence the Preference Shares as described below. Upon the Event Date accrued interest, if any, on such Security to the Event Date and all other amounts due and owing hereunder shall be paid by the Issuer to the Holder surrendering such Security. Such payment shall be a condition to the conversion or exchange and no conversion or exchange shall occur unless such payments are made.
On and after the Event Date, each Security converted or exchanged, until surrendered, shall be deemed to evidence the right to receive the Preference Shares with a liquidation preference equivalent to the
principal amount of such Security upon such surrender. On and after the Event Date, until a Holder of a Security has surrendered such Security, such Holder shall be entitled to receive any dividends, payments or other distributions in respect of such Preference Shares and shall have the same rights with respect to, and shall be deemed to be the Holder of, such Preference Shares as if it had so surrendered such Security on or prior to the Event Date; provided, however, that no dividends, payments or other distributions in respect of such Preference Shares shall be paid or distributed to such Holder any earlier than the date on which such Security is surrendered.
SECTION 14.08. Validity of Preference Shares, Depositary Agreement and ADRs.
The Issuer shall take all corporate and other action which may be necessary in order that it may validly and legally issue Preference Shares upon each conversion or exchange of the Outstanding Securities. The Issuer covenants that the Preference Shares will when issued upon such conversion or exchange be duly authorized and validly issued, fully paid, free of all liens and charges, and not subject to calls for further funds.
The Issuer will take all corporate or other action which may be necessary to ensure (i) the validity and enforceability of the Depositary Agreement and (ii) that the applicable ADRs may be validly and legally issued upon each conversion or exchange of the Outstanding Securities for Preference Shares.
Notwithstanding any provision of this Subordinated Indenture to the contrary, the right of the Issuer to cause any conversion or exchange of the Securities of any series for Preference Shares on any proposed Event Date shall, unless otherwise provided in a Board Resolution or supplemental indenture executed pursuant to Section 3.01, be subject to the fulfillment of the following conditions with respect to such Securities of such series, and the Issuer represents and warrants for the benefit of the holders of Preference Shares that all such conditions shall have been satisfied prior to any such conversion or exchange on the Event Date:
(1) as of such Event Date, there shall be no accrued but unpaid interest (including Deferred Interest) outstanding on the Securities of such Series (including amounts paid on the Event Date) or other unpaid amounts then due and owing hereunder;
(2) as of such Event Date, no Event of Default, Payment Default, Payment Event or Capital Security Event Default shall have occurred and be continuing with respect to the particular series of Securities;
(3) as of such Event Date, there has not been, in any one instance or in the aggregate, an adverse effect on the rights, powers, privileges, validity or enforceability of the Preference Shares, the ADRs or the Deposit Agreement;
(4) the Preference Shares to be issued on such Event Date shall be duly authorized and reserved for issuance upon such conversion and when issued upon such exchange, will be fully paid and not subject to calls for further funds;
(5) no consents, authorizations, approvals or exemptions, except in each case such as shall have been obtained, will be required prior to such Event Date for the issuance and delivery of the Preference Shares to be issued upon such conversion or exchange or the ADRs;
(6) the issuance and delivery of the Preference Shares and the ADRs to be issued on such Event Date shall not violate (i) the Articles of Association of the Issuer or (ii) any law, rule or regulation applicable to the Issuer;
(7) there shall have not occurred any change in law in England, or any amendment of the Articles of Association of the Issuer, prior to such Event Date, materially and adversely affecting the rights and privileges attached to the Preference Shares or the ADRs (including, without limitation, the rights of the holders thereof in the event of a bankruptcy or other similar proceeding with respect to the Issuer) or such holders’ access to the courts of the United Kingdom and other applicable governmental authorities to enforce such rights; and
(8) such other condition(s) as may be set out in a Board Resolution or supplemental indenture executed pursuant to Section 3.01.
SECTION 14.09. Taxes and Charges.
Unless otherwise specified pursuant to Section 3.01, the issuance and delivery of Preference Shares upon conversion or exchange of the Securities of any series pursuant to this Article Fourteen shall be made without charge to the converting or exchanging Holder of Securities for such Preference Shares, or for any tax or other governmental charge (other than taxes on income or capital gains) in respect of the issuance or delivery of
such Preference Shares; provided, however, that the Issuer shall not be required to pay any tax or other governmental charge which may be payable in respect of (a) issuance or delivery of Preference Shares by or at the direction or request of a Holder thereof to any Person who is or is a nominee or agent for a Person whose business is or includes the provision of clearance services within the meaning of Section 70 or Section 96 of the Finance Act of 1986 of the United Kingdom or whose business is or includes issuing depositary receipts within the meaning of Section 67 or Section 93 of the Finance Act of 1986 of the United Kingdom, other than the ADR Depositary or ADR Custodian or any successor thereto, all such Persons being “Excepted Persons”, or (b) a transfer involved in the issuance and delivery of any such Preference Shares to any Person other than any Holder (not being an Excepted Person) of the Security to be converted or exchanged (unless such other person is the Depositary selected by the Issuer for the Securities of such series), and, without prejudice to the Issuer’s right to convert or exchange the Securities, the Issuer shall not be required to issue or deliver or procure the delivery of such Preference Shares unless and until the Person requesting the issuance or delivery thereof shall have paid to the Issuer the amount of such tax or other governmental charge or shall have established to the satisfaction of the Issuer that such tax or other governmental charge has been paid.
SECTION 14.10. Subordinated Trustee Not Liable.
The Subordinated Trustee shall not be accountable with respect to the validity or value (or the kind or amount) of any Preference Shares which may be issued or delivered upon the conversion or exchange of any Security pursuant to this Article Fourteen, and makes no representation with respect thereto. The Subordinated Trustee shall not be responsible for any failure of the Issuer to issue, transfer or deliver or procure the delivery of any Preference Shares upon the surrender of any Security for the purpose of a conversion or exchange pursuant to this Article Fourteen or to comply with any of the covenants of the Issuer contained in this Article Fourteen.
SECTION 14.11. Exchange or Conversion — Relevant Regulator Consent.
Securities may only be exchanged or converted by the Issuer as provided under this Article Fourteen provided that the Issuer (a) has notified the Relevant Regulator of its intention to do so prior to the Issuer becoming committed to the proposed exchange or conversion and no objection thereto has been raised by the Relevant Regulator or, if required, a Relevant Regulator Consent has been received prior to the Issuer becoming committed to the proposed exchange or conversion, (b) has satisfied the Relevant Regulator that, after such exchange, the Issuer would meet the Regulatory Capital Requirement and satisfy the Solvency Condition, and (c) exchanges or converts, as the case may be, such Securities if, when and to the extent not prohibited by the Capital Regulations.
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This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Subordinated Indenture to be duly executed as of the date first written above.
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PRUDENTIAL plc, | |
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as Issuer | |
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/s/ Mark FitzPatrick |
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Name: Mark FitzPatrick | |
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Title: Group Chief Financial Officer and Chief Operating Officer | |
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CITIBANK, N.A. | |
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/s/ Jennifer H. McCourt |
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Name: Jennifer H. McCourt | |
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Title: Senior Trust Officer | |
August 11, 2020
Prudential plc
1 Angel Court
London EC2R 7HJ
United Kingdom
Ladies and Gentlemen:
We have acted as special New York and United States federal counsel to Prudential plc, a public limited company formed under the laws of England and Wales (the “Company”), in connection with the preparation and filing with the U.S. Securities and Exchange Commission (the “Commission”) under the U.S. Securities Act of 1933, as amended (the “1933 Act”), of a registration statement on Form F-3 (the “Registration Statement”) relating to the offering from time to time, together or separately and in one or more series, of its senior debt securities (the “Senior Debt Securities”), its subordinated debt securities (the “Subordinated Debt Securities” and, together with the Senior Debt Securities, the “Debt Securities”) and its preference shares.
Unless otherwise provided in any prospectus supplement forming part of the Registration Statement relating to a particular series of Debt Securities, the Senior Debt Securities are to be issued under a senior indenture, dated April 14, 2020 (the “Senior Indenture”), between the Company and Citibank, N.A., as senior trustee (the “Senior Trustee”), and the Subordinated Debt Securities are to be issued under a subordinated indenture, dated August 10, 2020 (the “Subordinated Indenture” and, together with the Senior Indenture, the “Indentures”), between the Company and Citibank, N.A., as subordinated trustee (the “Subordinated Indenture”). The Senior Indenture and the Subordinated Indenture are being filed as exhibits to the Registration Statement.
In connection with this opinion, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the above-referenced Registration Statement, an executed copy of the Senior Indenture and an executed copy of the Subordinated Indenture and such other documents and records as we deemed appropriate for purposes of the opinions set forth herein.
We have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of the documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, facsimile, pdf or photostatic copies, and the authenticity of the originals of all documents submitted to us as copies. We have also assumed and
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Morgan, Lewis & Bockius UK LLP | |
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+44.20.3201.5000
+44.20.3201.5001
Morgan, Lewis & Bockius UK LLP is a limited liability partnership registered in England and Wales under number OC378797 with its registered office at Condor House, 5-10 St. Paul’s Churchyard, London EC4M 8AL and is a law firm authorised and regulated by the Solicitors Regulation Authority, whose rules can be accessed at rules.sra.org.uk. Our SRA authorisation number is 615176. We use the word “partner” to refer to a member of the LLP. A list of the members of Morgan, Lewis & Bockius UK LLP is available for inspection at the above address. Further information about Morgan Lewis can be found on www.morganlewis.com.
have not verified (i) the accuracy as to factual matters of each document we have reviewed and (ii) that the Debt Securities will conform to the forms thereof set forth in the board resolution, officer’s certificate or supplemental indenture, as the case may be, pursuant to which the terms of such Debt Securities are established.
Based upon and subject to the foregoing and to the limitations and qualifications described below, we are of the opinion that:
1. When the Senior Debt Securities shall have been duly authorized, executed, authenticated by the Senior Debt Trustee and delivered in accordance with the terms of the Senior Indenture, the Senior Debt Securities will be the valid, binding and enforceable obligations of the Company, entitled to the benefits of the Senior Indenture.
2. When the Subordinated Debt Securities shall have been duly authorized, executed, authenticated by the Subordinated Debt Trustee and delivered in accordance with the terms of the Subordinated Indenture, the Subordinated Debt Securities will be the valid, binding and enforceable obligations of the Company, entitled to the benefits of the Subordinated Indenture.
Insofar as the foregoing opinions relate to the validity, binding effect or enforceability of any agreement or obligation of the Company, (a) we have assumed that the Company and each other party to such agreement or obligation has satisfied or, prior to the issuance of the Debt Securities, will satisfy those legal requirements that are applicable to it to the extent necessary to make such agreement or obligation enforceable against it (except that no such assumption is made as to the Company regarding matters of the federal law of the United States of America or the law of the State of New York that in our experience normally would be applicable to general business entities with respect to such agreement or obligation), and (b) such opinions are subject to the effects of (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at law), including the implied covenant of good faith and fair dealing.
In rendering the opinions expressed above, we have further assumed that (a) the Registration Statement and any amendments thereto (including post-effective amendments) will have become effective and comply with all applicable laws, (b) the Registration Statement will be effective and will comply with all applicable laws at the time the Debt Securities are offered or issued as contemplated by the Registration Statement, (c) the terms of the Debt Securities will conform to the forms thereof and will not violate any applicable law, result in a default under or breach of any agreement or instrument binding upon the Company or violate any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (d) the Debt Securities will be sold and delivered to, and paid for by, the purchasers at the price specified in, and in accordance with the terms of, an agreement or agreements duly authorized, executed and delivered by the parties thereto, (e) the Company will authorize the offering and issuance of the Debt Securities, will authorize, approve and establish the final terms and conditions thereof and will take any other appropriate additional corporate action and (f) certificates, if required, representing the Debt Securities will be duly executed and delivered and, to the extent required by the applicable Indenture, duly authenticated and countersigned. In addition, we have assumed, (i) the due incorporation and valid existence of the Senior Debt Trustee and the Subordinated Debt Trustee, (ii) that the Senior Debt Trustee and Subordinated Debt Trustee have the requisite legal power and authority to perform their obligations under the applicable Indenture, (iii) that the Senior Indenture and the Subordinated Indenture have been duly and validly authorized, executed and delivered by the Senior Debt Trustee and the Subordinated Debt Trustee, respectively, and (iv) that the applicable Indenture will constitute at the time of issuance of any Debt Securities
thereunder the valid and binding obligation of the Senior Debt Trustee or the Subordinated Debt Trustee, as the case may be.
With respect to the second sentence in Section 1.16 in each of the Indentures, we express no opinion as to the subject matter jurisdiction of any United States federal court to adjudicate any action relating to the Indenture where jurisdiction based on diversity of citizenship under 28 U.S.C. §1332 does not exist. In addition, we express no opinion as to the validity, binding effect or enforceability of Article 13 of the Subordinated Indenture and the subordination provisions of the Subordinated Securities (which are expressed to be governed by the law of England).
We note that by statute New York provides that a judgment or decree rendered in a currency other than the currency of the United States shall be converted into U.S. dollars at the rate of exchange prevailing on the date of entry of the judgment or decree. There is no corresponding United States federal statute and no controlling United States federal court decision on this issue. Accordingly, we express no opinion as to whether a United States federal court would award a judgment in a currency other than U.S. dollars or, if it did so, whether it would order conversion of the judgment into U.S. dollars. In addition, we express no opinion as to the enforceability of any provision of the Indentures relating to currency indemnity.
We render the foregoing opinions as members of the Bar of the State of New York and express no opinion as to laws other than the laws of the State of New York and the federal laws of the United States of America.
We are furnishing this opinion letter to you, solely for your benefit in connection with the filing of the Registration Statement with the Commission under the 1933 Act. This opinion letter is not to be used, circulated, quoted or otherwise referred to for any other purpose. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption “Legal Opinions” in the prospectus that forms part of the Registration Statement and in any prospectus supplement related thereto. In giving this consent, we do not admit that we are acting within the category of persons whose consent is required under Section 7 of the 1933 Act.
Yours faithfully
/s/ Morgan, Lewis & Bockius UK LLP
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One Bunhill Row London EC1Y 8YY T +44 (0)20 7600 1200 F +44 (0)20 7090 5000 |
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11 August 2020 |
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Your reference |
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Prudential plc 1 Angel Court |
Our reference HJZB Direct line 020 7090 3258 |
Dear Sirs,
Prudential plc (the “Company”)
Shelf Registration Statement on Form F-3
We have acted as English solicitors to the Company. This opinion as to English law as at today’s date is addressed to you in connection with a registration statement on Form F-3, to be filed on 11 August 2020 with the United States Securities and Exchange Commission (the “Commission”) by the Company under the United States Securities Act 1933, as amended (the “Securities Act”) and which relates, inter alia, to the offer and sale of Senior Debt Securities (the “Senior Debt Securities”), Subordinated Debt Securities (the “Subordinated Debt Securities” and, together with the Senior Debt Securities, the “Debt Securities”), Preference Shares and American Depositary Shares by the Company (the “Registration Statement”). Senior Debt Securities will be issued under the Senior Indenture (as defined below) and Subordinated Debt Securities will be issued under the Subordinated Indenture (as defined below), in each case as supplemented from time to time.
For the purposes of this opinion, we have examined copies of the following documents:
(a) the Subordinated Indenture dated 10 August 2020 between the Company as issuer and Citibank, N.A. as subordinated trustee, and as filed as an exhibit to the Registration Statement (the “Subordinated Indenture”);
(b) the Senior Indenture dated 14 April 2020 between the Company as issuer and Citibank, N.A. as senior trustee, and as filed as an exhibit to the Registration Statement (the “Senior Indenture”),
(the Indentures described in (a) and (b) above, as supplemented from time to time, are referred to in this opinion letter as the “Indentures”);
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SJ Cooke SM Edge PP Chappatte PH Stacey DL Finkler SP Hall JD Boyce N von Bismarck PWH Brien SR Galbraith AG Ryde JAD Marks DA Wittmann TS Boxell |
JC Twentyman DJO Schaffer STM Lee AC Cleaver DR Johnson RA Swallow CS Cameron CA Connolly PJ Cronin BJ-PF Louveaux E Michael RR Ogle PC Snell HL Davies |
JC Putnis RA Sumroy JC Cotton RJ Turnill WNC Watson CNR Jeffs SR Nicholls MJ Tobin DG Watkins BKP Yu EC Brown RA Chaplin J Edwarde AD Jolly |
S Maudgil JS Nevin JA Papanichola RA Byk GA Miles GE O’Keefe MD Zerdin RL Cousin BJ Kingsley IAM Taylor DA Ives MC Lane LMC Chung RJ Smith |
MD’AS Corbett PIR Dickson IS Johnson RM Jones EJ Fife JP Stacey LJ Wright JP Clark WHJ Ellison AM Lyle-Smythe A Nassiri DE Robertson TA Vickers RA Innes |
CP McGaffin CL Phillips SVK Wokes NSA Bonsall MJM Cox RCT Jeens V MacDuff PL Mudie OI Storey DM Taylor RJ Todd WJ Turtle OJ Wicker DJO Blaikie |
CVK Boney F de Falco SNL Hughes PR Linnard KA O’Connell N Yeung CJCN Choi NM Pacheco CL Sanger HE Ware HJ Bacon TR Blanchard NL Cook AJ Dustan |
HEB Hecht CL Jackson OR Moir S Shah |
Authorised and regulated
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(c) the form of global share warrant representing preference shares in bearer form of the Company filed as Exhibit 4.3 to the Registration Statement;
(d) the form of share certificate representing preference shares in registered form of the Company filed as Exhibit 4.4 to the Registration Statement;
(e) the form of ADR Deposit Agreement filed as Exhibit 4.5 to the Registration Statement;
(f) a certificate dated 14 April 2020 of Thomas Clarkson, the Company Secretary of the Company (the “Secretary’s Certificate”) having annexed thereto documents including a copy of an extract of the resolutions of the Board of Directors of the Company dated 9 March 2020 and the resolutions of a committee of the Board of Directors dated 3 April 2020, each certified as a true and up to date copy as at the date of the Secretary’s Certificate;
(g) a certificate dated 10 August 2020 of Mark FitzPatrick, a director of the Company, (the “Director’s Certificate”) having annexed thereto:
(i) a copy of the Memorandum and Articles of Association of the Company, certified as a true, complete and up to date copy;
(ii) a copy of the minutes of a meeting of the Board of Directors of the Company held on 23 July 2020 and a copy of the minutes of a meeting of a committee of the Board of Directors of the Company held on 10 August 2020, each certified as a true and up to date copy; and
(iii) a copy of the power of attorney of the Company dated 10 August 2020, certified as a true and up to date copy.
This opinion sets out our opinion on certain matters of English law as at today’s date and the opinion set out herein is based on English law in force and applied by English courts as at the date of this opinion.
We have not made any investigation of, and do not express any opinion on, the laws of any jurisdiction other than England and neither express nor imply any opinion as to any other laws, in particular the laws of the State of New York and of the United States of America.
Expressions defined in the Indentures shall have the same meanings when used in this opinion.
We have assumed:
(i) the conformity to original documents of all copy (including electronic copy) documents examined by us;
(ii) that all signatures on the executed documents which, or copies of which, we have examined are genuine;
(iii) the capacity, power and authority of each of the parties (other than the Company) to execute, deliver and perform its obligations under each of the Indentures;
(iv) the accuracy and completeness of all statements made in the Director’s Certificate and the documents referred to therein and that such certificate and statements remain true, accurate and complete as at the date of this opinion and as at each date on which Debt Securities or Preference Shares are, from time to time, issued;
(v) the accuracy and completeness of all statements made in the Secretary’s Certificate as at the date of the Secretary’s Certificate;
(vi) that the copy of the Memorandum and Articles of Association of the Company examined by us is complete and up to date and would, as at today’s date, comply, with respect to the Articles of Association, with section 36 of the Companies Act 2006;
(vii) that the directors of the Company have complied with their duties as directors insofar as relevant to this opinion;
(viii) that no law of any jurisdiction outside England would render the execution or delivery of the Indentures or the Debt Securities illegal or ineffective and that, insofar as any obligation under any Indenture is performed in, or is otherwise subject to, any jurisdiction other than England and Wales, its performance will not be illegal or ineffective by virtue of the law of that jurisdiction;
(ix) that the Debt Securities will, upon issue, be duly executed and unconditionally delivered by the parties thereto and will be authenticated in accordance with the provisions of the relevant Indenture and the Debt Securities will not be inconsistent with any applicable prospectus supplement or any resolutions of the Board of Directors of the Company (or of any committee of the Board of Directors of the Company) passed subsequent to the date hereof;
(x) that the Preference Shares will be issued in accordance with the provisions of the relevant Indenture, the Memorandum and Articles of
Association of the Company and the relevant shareholders’ authority to allot such Preference Shares and will not be inconsistent with any applicable prospectus supplement, any resolutions of the Board of Directors of the Company (or of any committee of the Board of Directors of the Company) passed subsequent to the date hereof;
(xi) that (a) the information disclosed by our searches on 10 August 2020 of the Companies House database and of the Central Registry of Winding-up Petitions on 10 August 2020 in relation to the Company (the “Searches”), was then complete, up to date and accurate and has not since then been altered or added to and (b) those Searches did not fail to disclose any information relevant for the purpose of this opinion.
(xii) that, as at the date of this opinion and on each date on which Debt Securities or Preference Shares are issued, (a) no proposal has been made for a voluntary arrangement, and no moratorium has been obtained, in relation to the Company under Part I or Part A1 of the Insolvency Act 1986 (as amended), (b) the Company has not given any notice in relation to or passed any winding-up resolution, (c) no application has been made or petition presented to a court, and no order has been made by a court, for the winding-up or administration of, or commencement of a moratorium in relation to, the Company, and no step has been taken to strike off or dissolve the Company, (d) no liquidator, administrator, monitor, nominee, supervisor, receiver, administrative receiver, trustee in bankruptcy or similar officer has been appointed in relation to the Company or any of its assets or revenues, and no notice has been given or filed in relation to the appointment of such an officer, and (e) no insolvency proceedings or analogous procedures have been commenced in any jurisdiction outside England and Wales in relation to the Company or any of its assets or revenues;
(xiii) that none of the parties to the Indentures and Registration Statement has taken or will take any action in relation to the Debt Securities (a) which constitutes carrying on, or purporting to carry on, a regulated activity in the United Kingdom in contravention of Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) (within the meaning of the FSMA) or (b) in consequence of anything said or done by a person in the course of carrying on or purporting to carry on a regulated activity (within the meaning of the FSMA) in the United Kingdom in contravention of that Section;
(xiv) that no amendment has been, or will be, made to either of the Indentures or to the Registration Statement as filed on the date hereof;
(xv) that (except so far as permitted by Section 21 of the FSMA or applicable regulations or rules made under the FSMA) no agreement to engage in investment activity (within the meaning of section 21(8) of the FSMA) in connection with any of the Debt Securities has been or will be entered into in consequence of an unlawful communication (within the meaning of section 30 of the FSMA);
(xvi) that none of the Debt Securities or Preference Shares will be offered or sold to persons in the United Kingdom except in circumstances that will not result in an offer to the public in the United Kingdom contrary to section 85(1) of the FSMA;
(xvii) that any party to the Indentures which is subject to the supervision of any regulatory authority in the United Kingdom has complied and will comply with all the requirements of such regulatory authority in connection with the issue, offer and sale of the Debt Securities;
(xviii) that the Indentures and the Debt Securities (when executed, authenticated and delivered in accordance with the Indentures) constitute, and will constitute, (as the case may be) valid, binding and enforceable obligations of the parties thereto under the laws of the State of New York and that the Indentures and the Debt Securities have the same meaning and effect as they would have if they were governed by English law;
(xix) that the Indentures have been unconditionally delivered by the Company;
(xx) that the Indentures have been executed by the persons authorised in the board minutes or power of attorney referred to in subparagraphs (d), (e)(ii) and (iii) above;
(xxi) that the choice of (a) English law to govern the Relevant Provision (as defined below) and (b) the law of the State of New York to govern the Indentures except for the Relevant Provision (as defined below) was freely made in good faith by the respective parties and there is no reason for avoiding such choice on the grounds of public policy;
(xxii) that the performance of each obligation under the Indentures: (a) is not illegal or contrary to public policy in any place outside England and Wales in which that obligation is to be performed; (b) is not contrary to any exchange control regulations of any member of the International Monetary Fund; and (c) is not in conflict with the by-laws of other constitutional documents of any party; and
(xxiii) that all acts, conditions or things required to be fulfilled, performed or effected in connection with the Indentures under the laws of any jurisdiction other than England and Wales have been duly fulfilled, performed and effected in accordance with the laws of each such jurisdiction.
Based on and subject to the foregoing and subject to the reservations mentioned below and to any matters not disclosed to us, we are of the following opinion:
1. The Company is a public limited company which has been duly incorporated and is validly existing.
2. The Company has the capacity and power to execute and deliver the Indentures and to exercise its rights and perform its obligations thereunder.
3. The Indentures have been duly executed by the Company.
4. Following the issuance of any Subordinated Debt Securities pursuant to the Subordinated Indenture, Section 13.01 of the Subordinated Indenture, (the “Relevant Provision”), which is expressed to be governed by and construed in accordance with English law, will constitute a valid, binding and enforceable obligation of the Company.
5. All necessary corporate action has been taken by the Company to authorise the execution and delivery of the Indentures and the exercise of its rights and performance of its obligations thereunder.
6. Any final and conclusive judgment against the Company for a definite sum of money entered by a court of the State of New York in any suit, action or proceedings arising out of or in connection with the obligations of the Company under the Indentures would be enforced by the English courts, without re-examination or re-litigation of the matters adjudicated upon, provided that:
(a) the judgment was not obtained by fraud;
(b) the enforcement of the judgment would not be contrary to English public policy (and enforcement of a judgment for liability founded on Federal or State securities laws of the United States may be contrary to public policy);
(c) the judgment is not of a public nature;
(d) the judgment was not obtained in proceedings which were brought in breach of Section 32 of the Civil Jurisdiction and Judgments Act 1982;
(e) the judgment was not obtained in proceedings contrary to natural justice;
(f) the judgment is not inconsistent with an English judgment in respect of the same matter;
(g) the judgment is not for multiple damages;
(h) enforcement proceedings are instituted within six years after the date of the judgment;
(i) the foreign court had jurisdiction according to the English rules on private international law;
(j) an English Court may refuse to give effect to any provision in an agreement which would involve the enforcement of foreign taxation or penal laws; and
(k) any undertakings or indemnities in relation to United Kingdom stamp duties given by the Company may be void under the provisions of Section 117 of the Stamp Act 1891 of the United Kingdom (as amended).
A foreign judgment may be “final and conclusive” though it is subject to appeal.
7. The execution and delivery of the Indentures by the Company and the exercise of its rights and the performance of its obligations thereunder:
(a) are not, as at the date hereof, prohibited by any law or regulation applicable to English companies generally or by the Memorandum or Articles of Association of the Company; and
(b) do not require, as at the date hereof, under any law or regulation applicable to English companies generally, any order, permission, authorisation, approval or consent from, or filing or registration with, any public authority or governmental agency in England.
8. The choice of the law of the State of New York as the governing law of the Indentures (except for the Relevant Provision) is a valid choice of law. English law will treat the validity and binding nature of the obligations contained in the Indentures (except for the Relevant Provision) as being governed by the law of the State of New York.
9. The Board of Directors of the Company are duly authorised to allot up to US$20 million, €20 million and £20 million in aggregate nominal amount of Preference Shares under Section 551 of the Companies Act 2006 until the conclusion of its Annual General Meeting to be held in 2024 (after which time the Directors must seek the approval of the shareholders of the Company to renew their authority to allot, if such approval has not already been granted). The Preference Shares, when allotted and issued either directly or by exchange
for the Debt Securities, in each case, in accordance with the terms of the Debt Securities and the Indentures will:
(a) be validly issued and will be fully paid and not subject to any calls for further funds; and
(b) not be subject to any pre-emption rights of any shareholder of the Company.
Our reservations are as follows:
(a) This opinion sets out our opinion on certain matters of English law as at today’s date and as currently applied by the English courts. We express no opinion on European Union law as it affects or would be applied in any jurisdiction other than England and Wales. We have not made any investigation of, and do not express any opinion on, any other law.
For the purposes of this letter, “European Union law” means all European Union law that forms part of English law pursuant to sections 1A and 1B of the European Union (Withdrawal) Act 2018 (as amended) (the “EUWA”). Any reference in this opinion to direct EU legislation and EU-derived domestic legislation (each as defined in the EUWA) shall be construed accordingly.
(b) The terms “binding” and “enforceable”, as used in this opinion, mean that the obligation is of a type which the English courts enforce. This does not mean that the obligation will necessarily be legally binding and enforceable in all circumstances in accordance with its terms, enforcement being subject to, for example, the discretion of the court to order specific performance or to issue an injunction, the provisions of the Limitation Act 1980, the acceptance of jurisdiction by the English courts, rules of procedure and principles of law and equity of general application.
(c) Where the parties have agreed to submit to the exclusive jurisdiction of the courts of any place outside England and Wales, we express no opinion as to whether the English courts would accept jurisdiction.
(d) If an English court assumes jurisdiction:
(i) it would not apply the laws of the State of New York if:
(A) the laws of the State of New York were not pleaded and proved; or
(B) to do so would be contrary to English public policy or mandatory rules of English law; or
(C) to do so would give effect to a foreign penal, revenue or other public law; and
(ii) it may have regard to the law of the place of performance of any obligation under the Indentures which is to be performed outside England and Wales. It may refer to that law in relation to the manner of performance and the steps to be taken in the event of defective performance.
(e) Under Regulation (EC) No. 593/2008 on the law applicable to contractual obligations, contracting parties may select a law to govern only part of a contract. There is, however, a limit on the ability of the parties to a contract to split the governing law in this way. This limit is often expressed by saying that the parties may only effect such a “dépeçage” where the chosen laws can be reconciled as a matter of logic. If this cannot be done, there is a risk that the parties’ choice of law may be held by an English court to be invalid.
(f) There is doubt as to the enforceability in England, in original actions or in actions for the enforcement of judgments of United States courts, of liabilities predicated solely upon the Federal or State securities laws of the United States.
(g) Undertakings and indemnities contained in the Indentures may not be enforceable before an English court insofar as they purport to require payment or reimbursement of the costs of any unsuccessful litigation brought before an English court.
(h) Laws relating to insolvency, liquidation, administration, moratorium, reorganisation or other laws or procedures affecting creditors’ rights may affect the obligations of the Company under the Indentures, the Preference Shares or the Debt Securities and the remedies available, and the payment obligations of the Company may be subject to obligations mandatorily preferred by law.
(i) The exercise of certain of the Company’s rights and obligations under the Debt Securities and Preference Shares is, as at today’s date, subject to the Company obtaining the approval of or consent from the Hong Kong Insurance Authority (the “HKIA”) (including in the form of a waiver) and to such other or further conditions as the HKIA may impose from time to time.
(j) We express no opinion as to whether specific performance or injunctive relief, being equitable remedies, would be available in respect of any obligations of the Company.
(k) Except as specifically provided in paragraph 8 above, we have not been responsible for investigating or verifying the accuracy of the facts, including statements of law, or the reasonableness of any statements of opinion contained
in the Registration Statement (including any amendments or supplements thereto, including any prospectus supplement) or whether any material facts have been omitted from it. Accordingly, we express no opinion as to whether the Registration Statement (or any part thereof) contains all the information required to be contained in any of them or whether the persons responsible for the Registration Statement have discharged their obligations in relation to the information contained in or disclosed by the Registration Statement.
(l) This opinion is subject to any limitations arising from:
(i) United Nations, European Union or United Kingdom sanctions or other similar measures implemented or effective in the United Kingdom and applicable to any party to the Indentures or any transfers or payments made under the Indentures; and
(ii) EU Regulation 2271/96 protecting against the effects of the extra-territorial application of legislation adopted by a third country (the “Blocking Regulation”) and legislation related to the Blocking Regulation.
(m) The Searches are not conclusive as to whether or not insolvency proceedings have been commenced in relation to the Company or any of its assets. For example, information required to be filed with the Registrar of Companies at Companies House or the Central Registry of Winding up Petitions is not in all cases required to be filed immediately (and may not be filed at all or on time); once filed, the information may not be made publicly available immediately (or at all); information filed with a District Registry or County Court may not, and in the case of administrations will not, become publicly available at the Central Registry; and the Searches may not reveal whether insolvency proceedings or analogous procedures have been commenced in jurisdictions outside England and Wales.
(n) The validity of subordination arrangements is not definitively established in legislation or case law. The effectiveness of contractual subordination arrangements under English law still relies primarily on the first instance decision in Re Maxwell Communications Corporation PLC No. 2 (1994).
(o) We have not been asked to, and we do not, express any opinion as to:
(i) any taxation (including value added tax) which will or may arise in connection with the Indentures; or
(ii) the enforceability of rights which may arise under the Contracts (Rights of Third Parties) Act 1999 in favour of any person who is not a party to the relevant Indenture.
(p) Section 13.04 (No Waiver of Subordination Provisions) of the Subordinated Indenture provides that the right of Senior Creditors (as defined in the Subordinated Indenture) to enforce subordination as provided in the Subordinated Indenture will be affected by certain circumstances. We express no opinion as to whether this will be effective.
This opinion is to be governed by and construed in accordance with English law. This opinion is being provided to you in connection with the issue, from time to time, of the Debt Securities and the Preference Shares under the Facility and may not be reproduced, quoted, summarised or relied upon by any other person or for any other purpose without our express written consent.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name in the paragraphs under the headings “Limitations on Enforcement of U.S. Laws Against Us, Our Management and Others” and “Legal Opinions” in the Registration Statement without admitting that we are “experts” under the Securities Act or the rules and regulations of the Commission issued thereunder with respect to any part of the Registration Statement, including this exhibit.
To the extent permitted by applicable law and regulation, you may rely on this opinion only on the condition that your recourse to us in respect of the matters addressed in this opinion is against the firm’s assets only and not against the personal assets of any individual partner. The firm’s assets for this purpose consists of all assets of the firm’s business, including any right of indemnity of the firm or its partners under the firm’s professional indemnity insurance policies, but excluding any right to seek contribution or indemnity from or against any partner of the firm or person working for the firm or similar right.
Yours faithfully,
/s/ Slaughter and May
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KPMG LLP |
Tel +44 (0) 20 7311 1000 |
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Audit |
Fax +44 (0) 20 7311 3311 |
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15 Canada Square |
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London E14 5GL |
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United Kingdom |
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Consent of Independent Registered Public Accounting Firm
The Board of Directors
Prudential Plc:
We consent to the use of our reports dated 20 March 2020 with respect to the consolidated statements of financial position of Prudential plc as of 31 December 2019 and 2018, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended 31 December 2019, and the related notes, and the disclosures marked “audited” within the Group Risk Framework section on pages 70 to 90 of the 2019 Form 20-F of Prudential plc, and the condensed financial statement Schedule II, and the effectiveness of internal control over financial reporting as of 31 December 2019, incorporated herein by reference and to the reference to our firm under the heading “Experts” in the prospectus.
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/s/ KPMG LLP |
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KPMG LLP |
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London, England |
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11 August 2020 |
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
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) x
Citibank, N.A.
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A National Banking Association |
13-5266470 |
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(I.R.S. employer |
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identification no.) |
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388 Greenwich Street, New York, New York |
10013 |
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(Address of principal executive office) |
(Zip code) |
Prudential plc
(Exact name of Registrant as specified in its charter)
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England and Wales |
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Not Applicable |
1 Angel Court
London EC2R 7AG, England
(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)
Debt 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.
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Address |
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Comptroller of the Currency |
Washington, D.C. |
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Federal Reserve Bank of New York |
33 Liberty Street, New York, NY |
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Federal Deposit Insurance Corporation |
Washington, D.C. |
(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.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this Statement of Eligibility.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as exhibits hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to commence business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 — The consent of the Trustee required by Section 321 (b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A. (as of March 31, 2020 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Citibank, N.A., a national banking association organized and existing under the laws of the United States of America, 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 10th day of August, 2020.
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CITIBANK, N.A. | |
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By: |
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Name: |
Jennifer McCourt |
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Title: |
Senior Trust Officer |
CONSOLIDATED BALANCE SHEET Citigroup Inc. and Subsidiaries March 31, 2020 (Unaudited) December 31, 2019 In millions of dollars Cash and due from banks (including segregated cash and other deposits) $ 23,755 $ 23,967 Securities borrowed and purchased under agreements to resell (including $155,637 and $153,193 as of March 31, 2020 and December 31, 2019, respectively, at fair value), net of allowance 262,536 251,322 Trading account assets (including $190,227 and $120,236 pledged to creditors at March 31, 2020 and December 31, 2019, respectively) 365,000 276,140 Available-for-sale debt securities (including $8,989 and $8,721 pledged to creditors as of March 31, 2020 and December 31, 2019, respectively) 308,219 280,265 2020 and December 31, 2019, respectively), net of allowance 82,315 80,775 Equity securities (including $1,213 and $1,162 at fair value as of March 31, 20120 and December 31, 2019, respectively) 8,349 7,523 Loans: value) 288,430 309,548 Corporate (including $3,981 and $4,067 as of March 31, 2020 and December 31, 2019, respectively, at fair value) 432,590 389,935 Allowance for credit losses on loans (ACLL) (20,841) (12,783) Goodwill 21,264 22,126 Other assets (including $14,663 and $12,830 as of March 31, 2020 and December 31, 2019, respectively, at fair value), net of allowance 112,873 107,709 The following table presents certain assets of consolidated variable interest entities (VIEs), which are included on the Consolidated Balance Sheet above. The assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs, presented on the following page, and are in excess of those obligations. In addition, the assets in the table below include third-party assets of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation. March 31, 2020 (Unaudited) December 31, 2019 In millions of dollars Assets of consolidated VIEs to be used to settle obligations of consolidated VIEs Trading account assets 6,278 6,719 Loans, net of unearned income Corporate 19,845 16,175 Allowance for credit losses on loans (ACLL) (3,729) (1,841) Other assets 70 73 Statement continues on the next page. 90 Total assets of consolidated VIEs to be used to settle obligations of consolidated VIEs$66,134 $69,506 Total loans, net$58,689 $61,311 Loans, net of unearned income$62,418 $63,152 Consumer42,57346,977 Investments9871,295 Cash and due from banks$110 $108 Total assets$2,219,770 $1,951,158 Intangible assets (including MSRs of $367 and $495 as of March 31, 2020 and December 31, 2019, at fair value)4,5604,822 Total loans, net$700,179 $686,700 Loans, net of unearned income$721,020 $699,483 Consumer (including $18 and $18 as of March 31, 2020 and December 31, 2019, respectively, at fair Total investments$398,883 $368,563 Held-to-maturity debt securities (including $1,119 and $1,923 pledged to creditors as of March 31, Investments: Brokerage receivables, net of allowance68,55539,857 Deposits with banks, net of allowance262,165169,952 Assets
CONSOLIDATED BALANCE SHEET (Continued) Citigroup Inc. and Subsidiaries March 31, 2020 (Unaudited) December 31, 2019 In millions of dollars, except shares and per share amounts Liabilities Interest-bearing deposits in U.S. offices (including $1,090 and $1,624 as of March 31, 2020 and December 31, 2019, respectively, at fair value) 462,327 401,418 Interest-bearing deposits in offices outside the U.S. (including $1,557 and $695 as of March 31, 2020 and December 31, 2019, respectively, at fair value) 523,774 484,669 Securities loaned and sold under agreements to repurchase (including $62,734 and $40,651 as of March 31, 2020 and December 31, 2019, respectively, at fair value) 222,324 166,339 163,995 Trading account liabilities 119,894 Long-term debt (including $52,914 and $55,783 as of March 31, 2020 and December 31, 2019, respectively, at fair value) 266,098 248,760 Total liabilities $ 2,026,788 $ 1,757,212 Preferred stock ($1.00 par value; authorized shares: 30 million), issued shares: as of March 31, 2020— 719,200 and as of December 31, 2019—719,200, at aggregate liquidation value $ 17,980 $ 17,980 3,099,632,709 and as of December 31, 2019—3,099,602,856 31 31 107,550 Additional paid-in capital 107,840 Treasury stock, at cost: March 31, 2020—1,017,824,700 shares and December 31, 2019—985,479,501 shares (64,147) (61,660) Total Citigroup stockholders’ equity $ 192,331 $ 193,242 Total equity $ 192,982 $ 193,946 The following table presents certain liabilities of consolidated VIEs, which are included on the Consolidated Balance Sheet above. The liabilities in the table below include third-party liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation. The liabilities also exclude amounts where creditors or beneficial interest holders have recourse to the general credit of Citigroup. March 31, 2020 (Unaudited) December 31, 2019 In millions of dollars Liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Citigroup 25,393 Long-term debt 25,582 Total liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Citigroup $ 37,716 $ 36,530 The Notes to the Consolidated Financial Statements are an integral part of these Consolidated Financial Statements. 91 Other liabilities926917 Short-term borrowings$11,397 $10,031 Total liabilities and equity$2,219,770 $1,951,158 Noncontrolling interest651704 Accumulated other comprehensive income (loss) (AOCI)(32,521)(36,318) Retained earnings163,438165,369 Common stock ($0.01 par value; authorized shares: 6 billion), issued shares: as of March 31, 2020— Stockholders’ equity Other liabilities (including $4,339 and $6,343 as of March 31, 2020 and December 31, 2019, respectively, at fair value), including allowance60,14157,979 Short-term borrowings (including $8,364 and $4,946 as of March 31, 2020 and December 31, 2019, respectively, at fair value)54,95145,049 Brokerage payables74,36848,601 Total deposits$1,184,911 $1,070,590 Non-interest-bearing deposits in offices outside the U.S.85,43985,692 Non-interest-bearing deposits in U.S. offices$113,371 $98,811
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