SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 10, 1996
-------------------------------
Travelers/Aetna Property Casualty Corp.
- - - - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-14328 06-1445591
-------------- -------------------- --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Tower Square, Hartford, CT 06183
- - - - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(860) 277-0111
- - - - -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
TRAVELERS/AETNA PROPERTY CASUALTY CORP.
Current Report on Form 8-K
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
Exhibits:
Exhibit No. Description
----------- -----------
1.01 Underwriting Agreement dated May 10, 1996 between
Travelers P&C Capital II (the "Trust"), Travelers/Aetna
Property Casualty Corp. and Smith Barney Inc., as
Underwriter, relating to the offer and sale of
4,000,000 8% Trust Preferred Securities of the
Trust, liquidation value $25 per security.
4.01 Form of the Company's 8% Junior Subordinated Deferrable
Interest Debentures due May 15, 2036.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 14, 1996 TRAVELERS/AETNA PROPERTY
CASUALTY CORP.
By /s/ Firoz B. Tarapore
-----------------------
Firoz B. Tarapore
Assistant Treasurer
3
<PAGE>
EXHIBIT INDEX
-------------
Filing
Exhibit No. Description Method
- - - - ----------- ----------- ------
1.01 Underwriting Agreement dated May 10, 1996 between Travelers
P&C Capital II (the "Trust"), Travelers/Aetna Property
Casualty Corp. and Smith Barney Inc., as Underwriter,
relating to the offer and sale of 4,000,000 8% Trust
Preferred Securities of the Trust, liquidation value $25
per security. Electronic
4.01 Form of the Company's 8% Junior Subordinated Deferrable
Interest Debentures due May 15, 2036. Electronic
4
Exhibit 1.01
4,000,000 TRUST PREFERRED SECURITIES
TRAVELERS P&C CAPITAL II
8% Trust Preferred Securities
(Liquidation amount $25 per Trust Preferred Security)
guaranteed to the extent set forth in the Prospectus
Supplement dated May 10, 1996 by
TRAVELERS/AETNA PROPERTY CASUALTY CORP.
UNDERWRITING AGREEMENT
----------------------
May 10, 1996
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Travelers P&C Capital II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C.
Section 3801 et seq.), proposes, upon the terms and conditions set forth herein,
to issue and sell 4,000,000 8% Trust Preferred Securities with an aggregate
liquidation amount equal to $100,000,000 (the "Preferred Securities") to Smith
Barney Inc. (the "Underwriter"). The Company (as defined herein) is a majority-
owned subsidiary of The Travelers Insurance Group Inc. ("TIGI"), which in turn
is an indirect wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group").
The Preferred Securities and the Common Securities (as defined herein)
are to be issued pursuant to the terms of a declaration of trust, dated as of
March 15, 1996, as amended and restated as of May 15, 1996 (the "Declaration"),
among Travelers/Aetna Property Casualty Corp., a Delaware corporation (the
"Company" or "TAP" and, together with the Trust, the "Offerors"), as sponsor,
the trustees named therein (the "TAP Trustees") and the holders from time to
time of undivided beneficial interests in the assets of the Trust. The
Declaration is qualified as an indenture under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). Pursuant to the Declaration, the number of TAP
Trustees will initially be four. Two of the TAP Trustees (the
<PAGE>
2
"Regular Trustees") will be persons who are employees or officers of, or
affiliated with, the Company. The third TAP Trustee will be a financial
institution unaffiliated with the Company that will serve as property trustee
under the Declaration and as indenture trustee with respect to the Preferred
Securities for purposes of the 1939 Act (the "Institutional Trustee"). The
fourth TAP Trustee will be a financial institution or an affiliate thereof which
maintains a principal place of business in the State of Delaware, meeting the
requirements of the Delaware Act (the "Delaware Trustee"). Initially, The Chase
Manhattan Bank, N.A. ("Chase") will act as the Institutional Trustee and The
Chase Manhattan Bank (USA) will act as the Delaware Trustee until removed or
replaced by the holder of the Common Securities. The Preferred Securities will
be guaranteed by the Company on a subordinated basis with respect to
distributions and payments upon liquidation, redemption or otherwise (the
"Guarantee") pursuant to the Preferred Securities Guarantee Agreement dated as
of May 15, 1996 (the "Guarantee Agreement") between the Company and Chase, as
Trustee (the "Guarantee Trustee"). The assets of the Trust will consist of 8%
Junior Subordinated Deferrable Interest Debentures Due May 15, 2036 (the
"Subordinated Debentures") of the Company which will be issued under an
indenture, dated as of April 30, 1996 (the "Indenture"), between the Company and
Chase, as Trustee (the "Indenture Trustee"). Under certain circumstances, the
Subordinated Debentures will be distributable to the holders of undivided
beneficial interests in the assets of the Trust. The Preferred Securities, the
Guarantee and the Subordinated Debentures are referred to herein as the
"Securities."
The Offerors wish to confirm as follows their agreement with you, in
connection with the purchase of the Preferred Securities by you.
1. Registration Statement and Prospectus. The Offerors have
-------------------------------------
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Securities Act"), a registration statement on Form S-3 (File
No. 333-2684) under the Securities Act (the "registration statement"), including
a prospectus relating to certain of its securities (including the Securities)
and the offering thereof from time to time in accordance with Rule 415 under the
Securities Act. Such registration statement has been declared effective by the
Commission. The term "Registration Statement" as used in this Agreement means
the registration statement (including all financial schedules and exhibits), as
amended at the date hereof. If it is contemplated, at the time this Agreement
is executed, that a post-effective amendment to the registration statement will
be filed and must be declared effective before the offering of the Preferred
Securities may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If an additional registration statement is prepared and filed with
the Commission in accordance with Rule 462(b) under the Securities Act (an
"Additional Registration Statement"), the term "Registration Statement" as used
in this Agreement includes the Additional Registration Statement. The term
"Base Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement. The term "Prospectus" as used in this
Agreement
<PAGE>
3
means the Base Prospectus together with the prospectus supplement or supplements
relating to the Preferred Securities filed with the Commission pursuant to Rule
424(b) under the Securities Act. The term "Prepricing Prospectus" as used in
this Agreement means the prospectus supplement, if any, subject to completion
relating to the Preferred Securities together with the Base Prospectus as such
prospectus shall have been amended from time to time prior to the date of such
prospectus supplement and filed with the Commission pursuant to Rule 424(b)
under the Securities Act. Any reference in this Agreement to the registration
statement, the Registration Statement, any Prepricing Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as
of the date of the registration statement, the Registration Statement, such
Prepricing Prospectus or the Prospectus, as the case may be, and any reference
to any amendment or supplement to the registration statement, the Registration
Statement, any Prepricing Prospectus or the Prospectus shall be deemed to refer
to and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated Documents" means the documents
which at the time are incorporated by reference in the registration statement,
the Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Trust hereby agrees,
-------------------------------
subject to all the terms and conditions set forth herein, to issue and sell to
the Underwriter and, upon the basis of the representations, warranties and
agreements of the Offerors herein contained and subject to all the terms and
conditions set forth herein, the Underwriter agrees to purchase from the Trust,
at a purchase price of $25 per Preferred Security, plus accrued distributions,
if any, from May 15, 1996, 4,000,000 Preferred Securities.
The Company agrees that, in view of the fact that the proceeds of the
sale of the Preferred Securities will be invested in the Subordinated
Debentures, it shall pay to the Underwriter as compensation for its arranging
the investment of the proceeds therein, on the Closing Date, $.7875 per
Preferred Security, provided, however, that such compensation shall be $.50 per
Preferred Security for each sale of 10,000 or more Preferred Securities to a
single purchaser. The Underwriter shall inform the Company in writing on the
Closing Date of the aggregate number of Preferred Securities so sold.
3. Terms of Public Offering. The Offerors have been advised by you
------------------------
that the Underwriter proposes to make a public offering of the Preferred
Securities as soon as the Underwriter deems advisable after the Registration
Statement has become effective, this Agreement has been executed and delivered,
and the Declaration, the Guarantee Agreement and the Indenture have been
qualified under the 1939 Act. The entire proceeds from the sale of the
Preferred Securities will be combined with the entire proceeds from the sale by
the Trust to the
<PAGE>
4
Company of its common securities (the "Common Securities"), and will be used by
the Trust to purchase an equivalent amount of the Subordinated Debentures.
4. Delivery of the Preferred Securities and Payment Therefor.
---------------------------------------------------------
Delivery to the Underwriter of and payment for the Preferred Securities shall be
made at the office of Shearman & Sterling, 599 Lexington Avenue, New York, NY
10022, at 8:30 A.M., New York City time, on May 15, 1996 (the "Closing Date").
The place of closing for the Preferred Securities and the Closing Date may be
varied by agreement between you and the Company.
The Preferred Securities shall be delivered to you registered in the
name of CEDE & CO., as nominee for the Depositary Trust Company against payment
of the purchase price therefor in immediately available funds. The Preferred
Securities to be delivered to the Underwriter shall be made available to you in
New York City for inspection and packaging not later than 9:30 A.M., New York
City time, on the business day next preceding the Closing Date.
5. Agreements of the Offerors. The Offerors jointly and severally
--------------------------
agree with the Underwriter as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
(or any Additional Registration Statement) to be declared or to become effective
before the offering of the Securities may commence, the Offerors will endeavor
to cause the Registration Statement or such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested by
you, will confirm such advice in writing, when the Registration Statement or
such post-effective amendment has become effective.
(b) The Offerors will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Securities
for offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (e)
below, of any change in the condition (financial or other), business,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Securities Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act
<PAGE>
5
or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Offerors will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
(c) The Offerors will furnish to you, without charge, (i) two signed
copies (which may be photocopies) of the registration statement as originally
filed with the Commission and of each amendment thereto, including financial
statements and all exhibits to the registration statement, (ii) such number of
conformed copies of the registration statement as originally filed and of each
amendment thereto, but without exhibits, as you may reasonably request and (iii)
such number of copies of the Declaration, the Guarantee and the Indenture and of
the Incorporated Documents, as you may reasonably request.
(d) The Offerors will not file any amendment to the Registration
Statement or any Additional Registration Statement or make any amendment or
supplement to the Prospectus or, prior to the end of the period of time referred
to in the first sentence in subsection (e) below to which you shall reasonably
object, or file any Form 8-K which, upon filing becomes an Incorporated
Document, of which you shall not previously have been advised (other than
Form 8-Ks filed in connection with debt offerings by the Company).
(e) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriter a Prospectus is required by the Securities Act to be
delivered in connection with sales by any Underwriter or dealer, the Offerors
will expeditiously deliver to the Underwriter and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto) as
you may reasonably request. The Offerors' consent to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Securities Act and with the securities or Blue Sky laws of the
jurisdictions in which the Preferred Securities are offered by the Underwriter
and by all dealers to whom Preferred Securities may be sold, both in connection
with the offering and sale of the Preferred Securities and for such period of
time thereafter as the Prospectus is required by the Securities Act to be
delivered in connection with sales by the Underwriter or any dealer. If during
such period of time any event shall occur that in the judgment of the Offerors
or in the opinion of counsel for the Underwriter is required to be set forth in
the Prospectus (as then amended or supplemented) or should be set forth therein
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the Securities
Act or any other law, the Offerors will forthwith prepare and, subject to the
provisions of paragraph (d) above, file with the Commission an appropriate
supplement or amendment thereto (or to such document), and will expeditiously
furnish to the Underwriter and dealers a reasonable number of copies thereof.
For so long as a Prospectus is required to be delivered in connection with the
offering under the Act, in the event that the
<PAGE>
6
Company and the Underwriter agree that the Prospectus should be amended or
supplemented, the Offerors, if reasonably requested by the Underwriter, will
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(f) The Offerors will cooperate with you and with counsel for the
Underwriter in connection with the registration or qualification of the
Securities for offering and sale by the Underwriter and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company or the Trust be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Preferred Securities, in any
jurisdiction where it is not now so subject.
(g) The Offerors will make generally available to the Trust's
security holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(h) During the period of three years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders and a copy of each Annual Report on Form 10-K, each
quarterly report on Form 10-Q and each current report on Form 8-K filed by the
Company with the Commission under the Exchange Act, and (ii) from time to time
such other information concerning the Company as you may reasonably request, and
the Trust will furnish to you a copy of each report of the Trust mailed to
holders of Preferred Securities or Common Securities.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than by notice given by
you terminating this Agreement pursuant to Section 10 or Section 11 hereof) or
if this Agreement shall be terminated by the Underwriter because of any failure
or refusal on the part of the Offerors to comply with the terms or fulfill any
of the conditions of this Agreement, the Company agrees to reimburse the
Underwriter for all reasonable out-of-pocket expenses (including reasonable fees
and expenses of counsel for the Underwriter) incurred by you in connection
herewith.
(j) The Trust will apply the net proceeds from the sale of the
Preferred Securities, and the Company will apply the net proceeds from the sale
of the Subordinated Debentures, substantially in accordance with the description
set forth in the Prospectus.
<PAGE>
7
(k) The Offerors will timely file the Prospectus pursuant to Rule
424(b) under the Securities Act and will advise you of the time and manner of
such filing.
(l) Each of the Trust and the Company agree, during the period
beginning on the date of this Agreement and continuing to and including the date
that is 60 days after the Closing Date, not to offer, sell, contract to offer,
sell or otherwise dispose of any preferred securities, any preferred stock or
any other securities (including any backup undertakings for such preferred stock
or other securities) of the Company or of the Trust, in each case that are
substantially similar to the Preferred Securities, or any securities convertible
into or exchangeable for the Preferred Securities or such substantially similar
securities of either the Trust or the Company, except Preferred Securities
offered pursuant to the Base Prospectus, without the prior written consent of
the Underwriter.
(m) Except as stated in this Agreement and in any Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Preferred
Securities to facilitate the sale or resale of the Preferred Securities.
6. Representations and Warranties of the Offerors. The Offerors
----------------------------------------------
jointly and severally represent and warrant to, and agree with, the Underwriter
that:
(a) The General Instructions to Form S-3 under the Securities Act
permit the use of Form S-3 in connection with the offering. The registration
statement in the form in which it became or becomes effective and also in such
form as it may be when any post-effective amendment thereto shall become
effective and the Prospectus and any supplement or amendment thereto when filed
with the Commission under Rule 424(b) under the Securities Act, complied or will
comply in all material respects with the provisions of the Securities Act and
will not at any such times contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the registration
statement or the Prospectus made in reliance upon and in conformity with (i)
information relating to the Underwriter furnished to the Offerors in writing by
or on behalf of the Underwriter through you expressly for use therein, or (ii)
the Statement of Eligibility and Qualification (Form T-1) under the 1939 Act of
each of the Institutional Trustee, the Guarantee Trustee and the Indenture
Trustee.
(b) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, any further
Incorporated Documents so filed will, when they are filed, conform in all
material respects with the requirements of the Exchange Act and the rules and
<PAGE>
8
regulations thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
(c) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights, except as set forth in Section 5
of the Shareholders Agreement dated as of April 2, 1996 among TIGI and the other
shareholders party thereto (the "Shareholders Agreement") and Section 5.1 of the
Intercompany Agreement dated as of April 2, 1996 between Travelers Group and the
Company (the "Intercompany Agreement").
(d) The execution and delivery of, and the performance by the Company
and the Trust of their respective obligations under, this Agreement have been
duly and validly authorized by the Company and the Trust, respectively, and this
Agreement has been duly executed and delivered by the Company and the Trust.
(e) The Preferred Securities have been duly and validly authorized by
the Declaration and, when executed by the Trust and authenticated by the
Institutional Trustee in accordance with the Declaration and delivered to you
against payment therefor in accordance with the terms hereof, will be validly
issued and (subject to the terms of the Declaration) will be fully paid and non-
assessable undivided beneficial interests in the assets of the Trust, will be
entitled to the benefits of the Declaration and will conform to all statements
relating thereto contained in the Registration Statement and the Prospectus, and
any amendment or supplement thereto; the issuance of the Preferred Securities is
not subject to preemptive or other similar rights; holders of Preferred
Securities will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit under the General
Corporation Law of the State of Delaware; and authorization for listing the
Preferred Securities on the New York Stock Exchange has been given, subject to
official notice of issuance.
(f) The Declaration has been duly and validly authorized by the
Company and, at the Closing Date, will have been duly executed and delivered by
the Company and the Regular Trustees, and assuming due execution and delivery by
the Institutional Trustee and the Delaware Trustee, the Declaration will be a
valid and legally binding obligation of the Company and the Regular Trustees,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); the
Declaration has been (or will have been) duly qualified under the 1939
<PAGE>
9
Act and conforms to the description thereof in the Registration Statement and
the Prospectus, and any amendment or supplement thereto.
(g) The Guarantee has been duly and validly authorized by the Company
and, at the Closing Date, will have been duly executed and delivered by the
Company, and assuming due execution and delivery by the Guarantee Trustee, the
Guarantee will be a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); the Guarantee
has been (or will have been) duly qualified under the 1939 Act and conforms to
the description thereof in the Registration Statement and the Prospectus, and
any amendment or supplement thereto.
(h) The Indenture has been duly and validly authorized by the Company
and, at the Closing Date, will have been duly executed and delivered by the
Company, and assuming due execution and delivery by the Indenture Trustee, the
Indenture will be a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity); the Indenture has been (or
will have been) duly qualified under the 1939 Act and conforms to the
description thereof in the Registration Statement and the Prospectus, and any
amendment or supplement thereto.
(i) The Subordinated Debentures have been duly and validly authorized
by the Company and, when authenticated by the Indenture Trustee in the manner
provided for in the Indenture and issued in accordance with the Indenture and
delivered to the Trust against payment therefor as described in the Registration
Statement and the Prospectus, and any amendment or supplement thereto, will be
valid and legally binding obligations of the Company, enforceable in accordance
with their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity) will be in the form contemplated by, and
entitled to the benefits of, the Indenture and conforms to the description
thereof in the Registration Statement and the Prospectus, and any amendment or
supplement thereto.
(j) The Trust has been duly created and is validly existing and in
good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus, and any amendment or supplement thereto,
and to enter into and perform its obligations under this Agreement, the
Preferred Securities and the Declaration and is not required to be authorized to
do business in any other jurisdiction; the Trust is not a party to or otherwise
bound by any
<PAGE>
10
agreement other than those described in the Prospectus, and any amendment or
supplement thereto; the Trust will be classified as a grantor trust and not as
an association taxable as a corporation for United States federal income tax
purposes; and the Trust is and will be treated as a consolidated subsidiary of
the Company pursuant to generally accepted accounting principles.
(k) The Regular Trustees of the Trust are officers of the Company and
have been duly authorized by the Company to execute and deliver the Declaration.
(l) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and any
amendment or supplement thereto, to enter into and perform its obligations under
this Agreement, the Declaration, the Indenture, the Guarantee and the
Subordinated Debentures, and to purchase, own and hold the Common Securities
issued by the Trust, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure or failures (individually or in the
aggregate) so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries taken as a whole.
(m) All the Company's "significant" subsidiaries as determined in
accordance with Regulation S-X under the Securities Act (collectively, the
"Subsidiaries") are listed in Exhibit A-1 hereto. Each Subsidiary and Gulf
Insurance Company ("Gulf") is a corporation duly organized, validly existing and
in good standing in Connecticut in the case of the Subsidiaries and Missouri in
the case of Gulf, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure (individually or in the
aggregate) so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries taken as a whole; all the
outstanding shares of capital stock of each of the Subsidiaries and Gulf have
been duly authorized and validly issued, are fully paid and nonassessable, and
are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest or
other encumbrance.
(n) Without limitation of the foregoing, each Subsidiary and Gulf is
duly organized and licensed as an insurance company in the state of
incorporation identified in Exhibit A hereto, is duly licensed or authorized as
an insurer or reinsurer in each other jurisdiction where it is required to be so
licensed or authorized to conduct its business as described in the Prospectus,
<PAGE>
11
except where the failure (individually or in the aggregate) to be so licensed or
authorized in any such jurisdiction does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries taken as a whole; each of the
Company, each Subsidiary and Gulf has made all required filings under applicable
insurance company statutes and insurance holding company statutes, and has filed
all notices, reports, documents or other information required to be filed
thereunder, except (i) for filings required in connection with the Transactions
described in the Prospectus under the heading "Recent History" which were not
required to be made on or prior to the date of this Agreement or the Closing
Date, or (ii) where the failure to have such authorizations, approvals, orders,
consents, licenses, certificates, permits, registrations or qualifications
(individually or in the aggregate) does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries taken as a whole; and none of
the Company, any Subsidiary or Gulf has received any notification from any
insurance regulatory authority to the effect that any additional authorization,
approval, order, consent, license, certificate, permit, registration or
qualification from any insurance regulatory authority is needed to be obtained
by any of the Company, any Subsidiary or Gulf other than (x) filings required in
connection with the Transactions described in the Prospectus under the heading
"Recent History" which were not required to be made on or prior to the date of
this Agreement or the Closing Date, or (y) in any case where it could be
reasonably expected that the failure to acquire such additional authorization,
approval, order, consent, license, certificate, permit, registration or
qualification (individually or in the aggregate) would have a material adverse
effect on the condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries taken as a whole.
(o) There are no legal or governmental proceedings (including,
without limitation, actions or proceedings by any insurance regulatory agency or
body) pending or, to the knowledge of the Company, threatened, against the
Company, any of the Subsidiaries, Gulf or the Trust, or to which the Company,
any of the Subsidiaries, Gulf or the Trust is a party, or to which any of their
respective properties is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described as required, and
there are no agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement that are not described
or filed as required by the Securities Act.
(p) (i) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or bylaws, or other
organizational documents; (ii) the Trust is not in violation of the Declaration
or its Certificate of Trust filed with the State of Delaware on March 15, 1996;
and (iii) neither the Company, any of the Subsidiaries nor the Trust is in
violation of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company, any of the Subsidiaries (including the
requirements of the insurance laws and regulations of its state of incorporation
and the insurance laws and regulations of other
<PAGE>
12
jurisdictions which are applicable to such Subsidiary) or the Trust or (iv) of
any decree of any court or governmental agency or body having jurisdiction over
the Company, any of the Subsidiaries or the Trust, or (v) in default in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any agreement,
indenture, lease or other instrument to which the Company, any of the
Subsidiaries or the Trust is a party or by which any of them or any of their
respective properties may be bound, except, in the case of clauses (iii), (iv)
and (v), where any such violation or default would not have a material adverse
effect (individually or in the aggregate) on the condition (financial or other),
business, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(q) Neither the issuance and sale of the Preferred Securities by the
Trust, the extension of the Guarantee by the Company, the issuance and sale of
the Subordinated Debentures by the Company, the execution, delivery or
performance of this Agreement, the Declaration, the Indenture and the Guarantee
by the Offerors, nor the consummation by the Offerors of the transactions
contemplated hereby and thereby and compliance by the Offerors with their
respective obligations hereunder and thereunder (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body (including any insurance regulatory body), administrative
agency or other governmental body, agency or official (except such as may be
required for the registration of the Securities under the Securities Act and the
Exchange Act and compliance with the securities or Blue Sky laws of various
jurisdictions, all of which have been or will be effected in accordance with
this Agreement), except where the failure to obtain such consent, approval,
authorization or other order or make such registration or filing would not have
(individually or in the aggregate) a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and its subsidiaries taken as a whole, or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation or bylaws, or other organizational
documents, of the Company or any of the Subsidiaries or the Declaration or
Certificate of Trust of the Trust or (iii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any agreement,
indenture, lease or other instrument to which the Company, any of the
Subsidiaries or the Trust is a party or by which any of them or any of their
respective properties may be bound, or (iv) violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree of
any government, government instrumentality (including, without limitation, any
insurance regulatory agency or body) or court, domestic or foreign, applicable
to the Company or any of the Subsidiaries or the Trust or any of their
respective properties, or (v) will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company, any of
the Subsidiaries or the Trust pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject, except, in
the case of clauses (iii), (iv) and (v) of this paragraph (q), any such
conflict, breach or default, violation or any such lien or encumbrance that
would not (individually or in the
<PAGE>
13
aggregate) have a material adverse effect on the condition (financial or other)
business properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(r) Except as disclosed in the Prospectus, neither the Company nor
any of the Subsidiaries has received any notice from any other party to any
material treaty, contract, agreement or arrangement relating to reinsurance that
such other party intends not to perform such treaty, contract, agreement or
arrangement in any material respect, and the Company and the Subsidiaries have
no knowledge that any of the other parties to such treaties, contracts,
agreements or arrangements will be unable to perform its obligations under such
treaty, contract, agreement or arrangement in any material respect, except to
the extent (i) the Company or its subsidiaries have established reserves in
their financial statements which they deem adequate for potential uncollectible
reinsurance or (ii) such nonperformance would not have a material adverse effect
(individually or in the aggregate) on the condition (financial or other),
business, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(s) The accountants, KPMG Peat Marwick LLP, who have certified or
shall certify the financial statements included in the Registration Statement
and the Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Securities Act.
(t) The consolidated historical and pro forma financial statements,
together with related schedules and notes, included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), comply
as to form in all material respects with the requirements of the Securities Act.
Such historical financial statements present fairly the consolidated financial
position of the Company and its subsidiaries and the combined financial position
of The Aetna Casualty and Surety Company and The Standard Fire Insurance Company
and their subsidiaries, in each case at the respective dates indicated and the
results of their operations and their cash flows for the respective periods
indicated in accordance with generally accepted accounting principles
consistently applied throughout such periods. The pro forma financial
statements have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the basis described therein, and the assumptions used in the
preparation thereof are, in the Company's opinion, reasonable. The other
financial and statistical information relating to the Company and the
Subsidiaries and data included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), historical and pro forma, that are
identified as being prepared in accordance with generally accepted accounting
principles, are, in all material respects, accurately presented and prepared on
a basis consistent with such financial statements and the books and records of
the Company and the Subsidiaries.
(u) The statutory financial statements of the Company's insurance
subsidiaries from which certain ratios and other statistical data included in
the Registration Statement and
<PAGE>
14
Prospectus (and any amendment or supplement thereto) have been derived, have
been prepared for each relevant period in conformity with accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the insurance departments of the states of domicile of such subsidiaries, in
effect at such time of preparation, except as otherwise stated therein.
(v) The execution and delivery of, and the performance by the Company
of its obligations under, each of (i) this Agreement; and (ii) the Intercompany
Agreement; the Shareholders Agreement; the Credit Agreement, dated as of
March 15, 1996, among the Company and a syndicate of banks for which Citibank,
N.A. is acting as administration agent; the Tax Sharing Agreement, effective as
of January 1, 1996, among the Company, TIGI and Travelers Group; and the Tax
Allocation Agreement, effective as of January 1, 1996, among Travelers Group,
TIGI and the Company (collectively, the "Transaction Agreements"), have been
duly and validly authorized by the Company, and each of this Agreement and the
Transaction Agreements have been duly executed and delivered by the Company; the
Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of
November 28, 1995, between TIGI and Aetna Life and Casualty Company ("Aetna")
has been duly assigned to the Company; and each of the Transaction Agreements
and the Stock Purchase Agreement constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except to the extent that (i) enforcement thereof may be limited by
(x) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (y) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (ii) the rights to indemnity and
contribution hereunder and thereunder may be limited by United States federal or
state securities laws.
(w) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), (i)
neither the Company, any of the Subsidiaries nor the Trust has incurred any
liability or obligation, direct or contingent, or entered into any transaction,
not in the ordinary course of business (including any material addition, or any
development involving a prospective material addition, to the Company's
consolidated reserve for insurance claims and claims expense, other than as
contemplated by the Registration Statement or the Prospectus) that is material
to the Company, its subsidiaries and the Trust taken as a whole, (ii) there has
not been any change in the capital stock of the Company nor any material
increase in the short-term debt or long-term debt of the Company or any of the
Subsidiaries (other than as a result of the issuance of commercial paper or
other short-term instruments in lieu of up to $700 million of Debt Securities as
disclosed in Note 6 under the heading "Capitalization" in the Prospectus or in
the ordinary course of business) and (iii) there has not been any material
adverse change, or any development involving or which may reasonably be expected
to involve, a prospective material adverse change,
<PAGE>
15
in the condition (financial or other), business, net worth or results of
operations of the Company and its subsidiaries taken as a whole.
(x) The Offerors have not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Preferred Securities, will not distribute any offering materials in connection
with the offering and sale of the Preferred Securities other than the
Registration Statement, the Prepricing Prospectus, if any, the Prospectus or
other materials, if any, permitted by the Securities Act.
(y) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities (the "Permits") as are necessary to own the properties and to
conduct the business of the Company and its subsidiaries in the manner described
in the Prospectus, subject to such qualifications as may be set forth in the
Prospectus; and the Company and each of the Subsidiaries has fulfilled and
performed all its obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other impairment of the rights of the
holder of any such Permit, subject in each case to such qualification as may be
set forth in the Prospectus, except in each case where the failure (individually
or in the aggregate) to have such Permits, the failure to fulfill or perform all
obligations under such Permits or the revocation or termination of such Permits
would not have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(aa) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and with
statutory accounting principles, and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(ba) The Travelers Indemnity Company, each of its subsidiaries and the
Trust have filed, or have had filed on their behalf, all tax returns required to
be filed, which returns are complete and correct, and neither The Travelers
Indemnity Company nor any of its subsidiaries is in default in the payment of
any taxes which were payable pursuant to said returns or any assessments with
respect thereto, except where such failure to file, defect or default
(individually or in the aggregate) would not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries taken as a whole.
<PAGE>
16
(ca) No holder of any security of the Company has any right to require
registration of the Preferred Securities or of any other security of the Company
because of the filing of the registration statement or the consummation of the
transactions contemplated by this Agreement.
(da) The Company and the Subsidiaries own or possess or have been
granted a valid license to use all trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Registration Statement and
Prospectus as being owned by or licensed to them or any of them or necessary for
the conduct of their respective businesses, and the Company is not aware of any
material claim to the contrary or any material challenge by any other person to
the rights of the Company and the Subsidiaries with respect to the foregoing.
(ea) Neither the Trust nor the Company is now, and after giving effect
to the transactions contemplated hereby, will be, and neither the Trust nor the
Company is controlled by, or acting on behalf of any person which is, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(fa) Except as otherwise disclosed in the Prospectus, to the best
knowledge of the Company, no change in any insurance laws or regulations is
pending which could reasonably be expected to be adopted and if adopted, could
reasonably be expected to have, individually or in the aggregate with all such
changes, a material adverse effect upon the condition (financial or other),
business, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(ga) Each of the Offerors has complied with all provisions of Florida
Statutes, Sec. 517.075, relating to issuers doing business with Cuba.
(ha) Each of the Company and the Subsidiaries has fulfilled in all
material respects its obligations, if any, under the minimum funding standards
of Section 302 of the United States Employee Retirement Income Security Act of
1974 ("ERISA") and such regulations and published interpretations thereunder
with respect to each "plan" (as defined in ERISA and such regulations and
published interpretations) sponsored by the Company or one of its affiliates and
in which employees of the Company and the Subsidiaries are eligible to
participate and each such plan is in compliance in all material respects with
the presently applicable provisions of ERISA and such regulations and published
interpretations, and has not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA, except where any
failure to fulfill such obligations or any such noncompliance would not have
(individually or in the aggregate) a material adverse effect on the condition
(financial or other), business, properties net worth or results of operations of
the Company and its subsidiaries taken as a whole.
<PAGE>
17
7. Indemnification and Contribution. (a) Each of the Trust and the
--------------------------------
Company jointly and severally agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Prepricing Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to the Underwriter
furnished in writing to the Offerors by or on behalf of the Underwriter through
you expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to any Prepricing
Prospectus shall not inure to the benefit of the Underwriter (or to the benefit
of any person controlling the Underwriter) to the extent that any such loss,
claim, damage, liability or expense arises from the sale of the Preferred
Securities by the Underwriter to any person if it shall be established that a
copy of the Prospectus shall not have been delivered or sent to such person
within the time required by the Securities Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus and such correction would have cured the defect
giving rise to such loss, claim, damage, liability or expense, provided that the
Offerors have delivered the Prospectus to the Underwriter in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Trust or the Company
may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Trust or the Company, the Underwriter or
such controlling person shall promptly notify the Trust and the Company, and the
Trust or the Company shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Underwriter or
such controlling person unless (i) the Trust or the Company has agreed in
writing to pay such fees and expenses, (ii) the Trust or the Company has failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both the
Underwriter or such controlling person and the Trust or the Company, and the
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and the Trust or the Company by
the same counsel would be inappropriate under applicable standards of
professional
<PAGE>
18
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the Trust or the Company shall not have the right to assume the defense of
such action, suit or proceeding on behalf of the Underwriter or such controlling
person). It is understood, however, that the Trust and the Company together
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Underwriter and
all such controlling persons not having actual or potential differing interests
with you or among themselves, which firm shall be designated in writing by the
Underwriter, and that all such fees and expenses shall be reimbursed as they are
incurred. The Trust and the Company shall not be liable for any settlement of
any such action, suit or proceeding effected without the Company's written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the Trust and
the Company agree to indemnify and hold harmless the Underwriter, to the extent
provided in the preceding paragraph, and any such controlling person from and
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) The Underwriter agrees to indemnify and hold harmless the Trust,
the Company, the Company's directors, the Company's officers and the Travelers
Trustees who sign the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, to the same extent as the foregoing indemnity from the Trust
and the Company to the Underwriter, but only with respect to information
relating to the Underwriter furnished in writing by or on behalf of the
Underwriter through you expressly for use in the Registration Statement, the
Prospectus or any Prepricing Prospectus, or any amendment or supplement thereto.
If any action, suit or proceeding shall be brought against the Trust, the
Company, any of the Company's directors, any such officer or trustee, or any
such controlling person, based on the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against the Underwriter pursuant to
this paragraph (c), the Underwriter shall have the rights and duties given to
the Trust or the Company by paragraph (b) above (except that if the Trust or the
Company shall have assumed the defense thereof, the Underwriter shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
Underwriter's expense), and the Trust, the Company, the Company's directors, any
such officer or trustee, and any such controlling person shall have the rights
and duties given to the Underwriters by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Underwriter
may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages,
<PAGE>
19
liabilities or expenses referred to therein, then an indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Trust and the Company on the one hand and the
Underwriter on the other hand from the offering of the Preferred Securities, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Trust and the Company on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Trust and the
Company on the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Trust bear to the total underwriting
discounts and commissions received by the Underwriter, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault of the
Trust and the Company on the one hand and the Underwriter on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Offerors on the
one hand or by the Underwriter on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Trust, the Company and the Underwriter agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, the Underwriter
shall not be required to contribute any amount in excess of the amount by which
the total price of the Preferred Securities underwritten by it and distributed
to the public exceeds the amount of any damages which the Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
relating to any pending or threatened action, suit or proceeding in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless
<PAGE>
20
such settlement, compromise or consent (i) includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding and (ii) does not include a statement as to
or an admission of fault or culpability by or on behalf of any indemnified
party.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Trust and the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter, the Trust, the Company, the Company's directors or
officers, the Travelers Trustees, or any person controlling the Company, (ii)
acceptance of any Preferred Securities and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to the Underwriter or any person
controlling the Underwriter, or to the Trust, the Company, the Company's
directors or officers, the Travelers Trustees, or any person controlling the
Company, shall be entitled to the benefits of the indemnity, contribution, and
reimbursement agreements contained in this Section 7.
8. Conditions of Underwriter's Obligations. The obligation of the
---------------------------------------
Underwriter to purchase the Preferred Securities hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
(or an Additional Registration Statement) to be declared or to become effective
before the offering of the Preferred Securities may commence, the registration
statement or such post-effective amendment or Additional Registration Statement
shall have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in writing
by you, and all filings, if any, required by Rules 424 and 430A under the
Securities Act shall have been timely made; no stop order suspending the
effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Offerors or the Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the registration
statement or the Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company or its
subsidiaries taken as a whole from what was set forth in the Prospectus, which,
in your opinion, as Underwriter, would materially adversely affect the market
for the Preferred Securities, or (ii) any event or development relating to or
involving the Company or any officer
<PAGE>
21
or director of the Company which makes any statement made in the Prospectus
untrue or which, in the opinion of the Company and its counsel or the
Underwriter and its counsel, requires the making of any addition to or change in
the Prospectus in order to state a material fact required by the Securities Act
or any other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the Prospectus
to reflect such event or development would, in your opinion, as Underwriter,
materially adversely affect the market for the Preferred Securities.
(c) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom, special counsel for the Offerors, dated
the Closing Date and addressed to you, as Underwriter, substantially in the form
of Exhibit B-1 attached hereto.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States,
the State of New York or the State of Delaware, provided that (i) each such
local counsel is acceptable to the Underwriter, (ii) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Underwriter and is, in form and substance satisfactory to it
and its counsel, and (iii) counsel shall state in their opinion that they
believe that they and the Underwriter are justified in relying thereon. Insofar
as such opinions involve factual matters, such counsel may rely, to the extent
such counsel deems proper, upon certificates of officers of the Company, its
subsidiaries and the Trust and certificates of public officials.
(d) You shall have received, on the Closing Date, an opinion of
Skadden, Arps, Slate, Meagher & Flom, special tax counsel to the Company and the
Trust, dated the Closing Date and addressed to you, as Underwriter,
substantially in the form of Exhibit B-2 attached hereto.
(e) You shall have received on the Closing Date, an opinion of
Charles O. Prince, III, Esq., corporate counsel for the Company, dated the
Closing Date and addressed to you, as Underwriter, substantially in the form of
Exhibit C hereto.
(f) You shall have received, on the Closing Date, an opinion of
Seward & Kissel, counsel for Chase, dated the Closing Date and addressed to you,
as Underwriter, substantially in the form of Exhibit D attached hereto.
(g) You shall have received, on the Closing Date, an opinion of
Shearman & Sterling, counsel for the Underwriter, dated the Closing Date and
addressed to you, as Underwriter, with respect to the matters referred to
paragraphs (1), (2), (7)-(9), (11) and the two paragraphs following paragraph 16
of Exhibit B-1 and such other related matters as you may request.
<PAGE>
22
(h) You shall have received letters addressed to you, as Underwriter,
and dated the date hereof and the Closing Date from KPMG Peat Marwick,
independent certified public accountants, substantially in the forms heretofore
approved by you.
(i) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Offerors, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company (other than as a
result of the issuance of commercial paper or other short-term instruments in
lieu of up to $600 million of Debt Securities as disclosed in Note 6 under the
heading "Capitalization" in the Prospectus, or in the ordinary course of
business) from that set forth or contemplated in the Registration Statement or
the Prospectus (or any amendment or supplement thereto); (iii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement or the
Prospectus (or any amendment or supplement thereto), (A) any material adverse
change in the condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries taken as a whole, or
(B) any material addition, or any development involving a prospective material
addition, to, other than as contemplated by the Registration Statement or the
Prospectus, the Company's consolidated reserve for insurance claims and claims
expense; (iv) the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (other than in the ordinary course of
business), that are material to the Company and its subsidiaries taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto), and the Trust shall not
have any liabilities or obligations, direct or contingent, other than those
arising under the Declaration; and (v) all the representations and warranties of
the Trust and the Company contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and you shall have received a certificate, dated the
Closing Date, signed by the chief executive officer or vice chairman and the
chief financial officer of the Company (or such other officers as are acceptable
to you) and one signed by the Regular Trustees, to the effect set forth in this
Section 8(i) and in Section 8(j) hereof.
(j) Neither the Trust nor the Company shall have failed at or prior
to the Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date.
(k) The Preferred Securities shall have been listed or approved for
listing upon notice of issuance, on the New York Stock Exchange.
<PAGE>
23
(l) The Offerors shall have furnished or caused to be furnished to
you such further certificates and documents as you shall have reasonably
requested.
(m) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or the financial
strength or claims paying ability of any intracompany insurance pool to which
any Subsidiary belongs by any of Moody's Investor Services, Inc., Standard &
Poor's Ratings Group or A.M. Best & Co. and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities or the
claims paying ability of any such insurance pool, the effect of which, in any
such case described in clause (i) or (ii), would in your opinion as Underwriter,
materially and adversely affect the market for the Preferred Securities.
(n) The Company shall have consummated the transactions contemplated
under the caption "Recent History" in the Prospectus except for the payment of
$300 million expected to be paid by The Travelers Indemnity Company to the
Company.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company or
any Travelers Trustee and delivered to you, as Underwriter, or to counsel for
the Underwriter, shall be deemed a representation and warranty by the Company
and the Trust to the Underwriter as to the statements made therein.
9. Expenses. The Company agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by it and
by the Trust of its and the Trust's respective and joint obligations hereunder:
(i) the preparation, printing or reproduction, and filing with the Commission of
the registration statement (including financial statements and exhibits
thereto), each Prepricing Prospectus, the Prospectus, each amendment or
supplement to any of them, this Agreement, the Declaration, the Guarantee, the
Indenture and the Statement of Eligibility and Qualification of each of the
Institutional Trustee, the Guarantee Trustee and the Indenture Trustee; (ii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the registration
statement, each Prepricing Prospectus, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as may be
reasonably requested for use in connection with the offering and sale of the
Preferred Securities; (iii) the preparation, printing (or reproduction),
execution and delivery of the Declaration, the Guarantee and the Indenture and
the preparation, printing, authentication, issuance and delivery of the
Securities, including any stamp taxes in connection with the original issuance
and sale of the Preferred Securities; (iv) the printing (or
<PAGE>
24
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Preferred Securities; (v)
the registration of the Securities under the Exchange Act and the listing of the
Preferred Securities on the New York Stock Exchange; (vi) the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriter
relating to the preparation, printing (or reproduction), and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees and the reasonable fees and expenses of
counsel for the Underwriter in connection with any filings required to be made
with the National Association of Securities Dealers, Inc.; (viii) the fees and
expenses of
<PAGE>
25
the Institutional Trustee, the Delaware Trustee, the Guarantee Trustee and the
Indenture Trustee; (ix) the fees and expenses associated with obtaining ratings
for the Preferred Securities from nationally recognized statistical rating
organizations; (x) the transportation and other expenses incurred by or on
behalf of representatives of the Offerors in connection with presentations to
prospective purchasers of the Preferred Securities; and (xi) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Offerors.
10. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Preferred Securities may commence,
when notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company or the Trust, by notifying you, or by you, as Underwriter, by notifying
the Offerors.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of the
Underwriter to the Offerors, by notice to the Offerors, if prior to the Closing
Date: (i) trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited, (ii) a general moratorium on commercial banking
activities in New York or Connecticut shall have been declared by either federal
or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in your
judgment, impracticable or inadvisable to commence or continue the offering of
the Preferred Securities on the terms set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Preferred Securities by
the Underwriter. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriter. The statements set
----------------------------------------
forth in the last paragraph on the cover page, the stabilization legend on the
third page, and the statements in the the last sentence in the fourth paragraph,
the fifth paragraph and the ninth paragraph under the caption "Underwriting" in
the prospectus supplement and the stabilization legend on the third page in the
Base Prospectus, constitute the only information furnished by or on behalf of
the Underwriter through you as such information is referred to in Sections 6(a)
and 7 hereof.
<PAGE>
26
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
-------------
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Offerors, to the Company, or to
the Trust care of the Company, at the office of the Company at One Tower Square,
Hartford, Connecticut 06183, Attention: Jay S. Fishman, with a copy to Skadden,
Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022,
Attention: Kenneth J. Bialkin; or (ii) if to you, as Underwriter, care of Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013, Attention: Manager,
Investment Banking Division, with a copy to General Counsel, Investment Banking
Division, and to Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022, Attention: Faith Grossnickle.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Trust, the Company, the Company's directors and officers, the
Travelers Trustees, and the other controlling persons referred to in Section 7
hereof and their respective successors and assigns, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from the
Underwriter of any of the Preferred Securities in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed
----------------------------
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Company and the Underwriter.
Very truly yours,
TRAVELERS P&C CAPITAL II
By _____________________
as Regular Trustee
By _____________________
as Regular Trustee
TRAVELERS/AETNA
PROPERTY CASUALTY CORP.
By _____________________
Name:
Title:
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
By
-------------------------
Managing Director
<PAGE>
EXHIBIT A
LIST OF SUBSIDIARIES
Jurisdiction
Name of Incorporation
---- ----------------
The Travelers Indemnity Company . . . . . CT
The Aetna Casualty and Surety Company . . CT
The Standard Fire Insurance Company . . . CT
The Aetna Casualty and Surety Company
of America . . . . . . . . . . . . . CT
Exhibit 4.01
No. T-1 $103,093,000
TRAVELERS/AETNA PROPERTY CASUALTY CORP.
8% Junior Subordinated Deferrable Interest Debentures due May 15, 2036
TRAVELERS/AETNA PROPERTY CASUALTY CORP., a Delaware corporation (the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The
Chase Manhattan Bank, N.A., as Institutional Trustee of Travelers P&C Capital
II, pursuant to that certain Amended and Restated Declaration of Trust dated as
of May 15, 1996, or registered assigns, the principal sum of One Hundred Three
Million Ninety-Three Thousand Dollars ($103,093,000) on May 15, 2036, and to pay
interest on said principal sum from May 15, 1996, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral as
set forth herein) in arrears on March 31, June 30, September 30 and December 31
of each year commencing June 30, 1996, at a rate of 8% per annum, until the
principal hereof shall have become due and payable, and on any overdue principal
and premium, if any, and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Security is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, which shall be the close of business on the
first Business Day next preceding such Interest Payment Date. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such regular record date and may be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered Holders of this series of Securities not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as
<PAGE>
2
more fully provided in the Indenture. The principal of (and premium, if any)
and the interest on this Security shall be payable at the office or agency of
the Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of this Security is the Institutional Trustee
of a TAP Trust, the payment of the principal of (and premium, if any) and
interest on this Security will be made at such place and to such account as may
be designated by such Institutional Trustee.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by, such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness of the Company, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Security are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
<PAGE>
3
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated: May 15, 1996
TRAVELERS/AETNA PROPERTY
CASUALTY CORP.
By:_________________________
Name:
Title:
By: _______________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series of Securities described in
the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, N.A.,
as Trustee
By:__________________
Authorized Signatory
<PAGE>
(Reverse of Security)
This Security is one of a duly authorized series of securities of the
Company (herein sometimes referred to as the "Securities"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of April 30, 1996 (the "Indenture"), duly executed and
delivered between the Company and The Chase Manhattan Bank, N.A., as Trustee
(the "Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the respective rights, limitations
of rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities. By the terms of the Indenture, the
Securities are issuable in series that may vary as to amount, date of maturity,
rate of interest and in other respects as provided in the Indenture. This
series of Securities is limited in aggregate principal amount to
$______________.
Because of the occurrence and continuation of a Tax Event, in certain
circumstances, this Security may become due and payable at 100% of the principal
amount thereof, together with any interest accrued thereon (the "Redemption
Price"). The Redemption Price shall be paid prior to 12:00 noon, New York City
time, on the date of such redemption or at such earlier time as the Company
determines. The Company shall have the right to redeem this Security at the
option of the Company, without premium or penalty, in whole or in part at any
time on or after May 15, 2001 (an "Optional Redemption"), or at any time in
certain circumstances upon the occurrence of a Tax Event, at a redemption price
equal to 100% of the principal amount thereof, plus any accrued but unpaid
interest to the date of such redemption (the "Optional Redemption Price"). Any
redemption pursuant to this paragraph will be made upon not less than 30 days
nor more than 60 days notice, at the Optional Redemption Price. If the
Securities are only partially redeemed by the Company pursuant to an Optional
Redemption, the Securities will be redeemed pro rata or by lot or by any other
method utilized by the Trustee; provided that if, at the time of redemption, the
Securities are registered as a Global Security, the Depositary shall determine
the principal amount of such Securities held by each Security Beneficial Owner
to be redeemed in accordance with its procedures.
In the event of redemption of this Security in part only, a new
Security or Securities of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series affected at the time
outstanding, as defined in the Indenture, to execute
<PAGE>
2
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Securities; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any Securities of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the Holder of each Security so affected, or (ii) reduce
the aforesaid percentage of Securities, the Holders of which are required to
consent to any such supplemental indenture, without the consent of the Holders
of each Security then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Securities of any series at the time outstanding affected thereby,
on behalf of all of the Holders of the Securities of such series, to waive any
past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture with respect to such series,
and its consequences, except a default in the payment of the principal of or
premium, if any, or interest on any of the Securities of such series. Any such
consent or waiver by the registered Holder of this Security (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this Security and of any Security issued
in exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Security at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the
Securities and from time to time to extend the interest payment period of such
Securities for up to 20 consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Securities to the extent that payment of such interest is enforceable under
applicable law); provided, that no such Extended Interest Payment Period shall
extend beyond the maturity of the Securities; and provided further that during
any such Extended Interest Payment Period (a) the Company shall not declare or
pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payment with respect thereto (other than (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion
<PAGE>
3
or exchange provisions of such capital stock or the security being converted or
exchanged), and (b) the Company shall not make any payment of interest on or
principal of (or premium, if any, on), or repay, repurchase or redeem, any debt
securities issued by the Company which rank pari passu with or junior to the
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Before the termination of any such Extended Interest
Payment Period, the Company may further extend such Extended Interest Payment
Period, provided that such Extended Interest Payment Period together with all
such further extensions thereof shall not exceed 20 consecutive quarters. At
the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest and any additional amounts then due,
the Company may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Security is transferable by the registered Holder hereof
on the Security Register of the Company, upon surrender of this Security for
registration of transfer at the office or agency of the Trustee in the City and
State of New York accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any paying agent and the Security Registrar
may deem and treat the registered holder hereof as the absolute owner hereof
(whether or not this Security shall be overdue and notwithstanding any notice of
ownership or writing hereon made by anyone other than the Security Registrar)
for the purpose of receiving payment of or on account of the principal hereof
and premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Security, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
<PAGE>
4
The Securities of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations herein and therein
set forth, Securities of this series so issued are exchangeable for a like
aggregate principal amount of Securities of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
