<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1998
REGISTRATION NUMBER
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
ORION CAPITAL CORPORATION ORION CAPITAL TRUST II
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS
SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION (STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION) OF INCORPORATION OR ORGANIZATION)
6749 6719
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
95-6069054 APPLIED FOR
(I.R.S. EMPLOYER (I.R.S. EMPLOYER
IDENTIFICATION NUMBER) IDENTIFICATION NUMBER)
- -------------------------------------------------------------------------------------------------------------
MICHAEL P. MALONEY, ESQ. MICHAEL P. MALONEY, ESQ.
SENIOR VICE PRESIDENT, ADMINISTRATIVE TRUSTEE
GENERAL COUNSEL AND SECRETARY 9 FARM SPRINGS ROAD
9 FARM SPRINGS ROAD FARMINGTON, CT 06032
FARMINGTON, CT 06032 (860) 674-7337
(860) 674-7337 (NAME, ADDRESS, INCLUDING
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE ZIP CODE, AND TELEPHONE NUMBER,
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box [ ].
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1)(2)(3) OFFERING PRICE(1)(2)(3) FEE(2)(3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exchange Capital Securities, Liquidation
Amount $1,000 per Exchange Capital
Security of Orion Capital Trust
II(4)................................. $125,000,000 100% $125,000,000 $36,875.00
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange Junior Subordinated Deferrable
Interest Debentures of Orion Capital
Corporation(2)........................
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange Guarantee by Orion Capital
Corporation with respect to the
Exchange Capital Securities(3)(4).....
- ---------------------------------------------------------------------------------------------------------------------------------
Total.......................... $125,000,000(4) 100% $125,000,000(5) $36,875.00
=================================================================================================================================
</TABLE>
(1) Estimated for the sole purpose of computing the registration fee. Pursuant
to Rule 457(n) under the Securities Act, no separate fee is payable with
respect to the Exchange Capital Securities Guarantee (the "Exchange
Guarantee").
(2) No separate consideration will be received for the Exchange Junior
Subordinated Deferrable Interest Debentures (the "Exchange Junior
Subordinated Debentures") distributed upon any liquidation of Orion Capital
Trust II.
(3) No separate consideration will be received for the Orion Capital Corporation
Exchange Guarantee.
(4) This Registration Statement (as the same may be amended from time to time
(the "Registration Statement")) is deemed to cover rights of holders of
Exchange Capital Securities of Orion Capital Trust II under the Amended and
Restated Declaration of Trust (the "Trust Agreement"), the rights of holders
of Exchange Junior Subordinated Debentures under the Indenture, the rights
of the holders of such Exchange Capital Securities under the Exchange
Guarantee and certain backup undertakings as described herein.
(5) Such amount represents the liquidation amount of the Orion Capital Trust II
Exchange Capital Securities to be exchanged hereunder and the principal
amount of Exchange Junior Subordinated Debentures that may be distributed to
holders of such Exchange Capital Securities upon any liquidation of Orion
Capital Trust II.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
ORION CAPITAL TRUST II
OFFER TO EXCHANGE ITS
7.701% EXCHANGE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER EXCHANGE CAPITAL SECURITY)
FOR ANY AND ALL OF ITS OUTSTANDING
7.701% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
ORION CAPITAL CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MAY , 1998 UNLESS EXTENDED.
------------------------
Orion Capital Trust II is a statutory business trust formed under the laws
of the State of Delaware (the "Trust"),at the instance of Orion Capital
Corporation, a Delaware corporation ("Orion" or "the Corporation"), which has
agreed to pay all fees, expenses, debts, and obligations (other than the Trust
Securities as defined below) related to the Trust. The Trust hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus (as the
same may be amended or supplemented from time to time, the "Prospectus") and in
the accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $125,000,000 aggregate liquidation amount determined
on the basis of $1,000 per Capital Security ("Liquidation Amount") of its 7.701%
Exchange Capital Securities (the "Exchange Capital Securities") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus constitutes a
part, for a like Liquidation Amount of its outstanding 7.701% Capital Securities
(the "Old Capital Securities") of which $125,000,000 aggregate Liquidation
Amount is outstanding. Pursuant to the Exchange Offer, Orion Capital
Corporation, a Delaware corporation ("Orion" or the "Corporation"), is also
offering to exchange (i) its guarantee of payments of cash distributions and
payments on liquidation of the Trust or redemption of the Old Capital
Securities, to the extent the Trust has funds legally available therefor, (the
"Old Guarantee") for a like guarantee in respect of the Exchange Capital
Securities (the "Exchange Guarantee") and (ii) all of its 7.701% Junior
Subordinated Interest Deferrable Debentures due April 15, 2028 (the "Old Junior
Subordinated Debentures") for a like aggregate principal amount of its 7.701%
Exchange Junior Subordinated Deferrable Interest Debentures due April 15, 2028
(the "Exchange Junior Subordinated Debentures"), which Exchange Guarantee and
Exchange Junior Subordinated Debentures also have been registered under the
Securities Act. The Old Capital Securities, the Old Guarantee and the Old Junior
Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the Exchange Capital Securities, the Exchange Guarantee and the
Exchange Junior Subordinated Debentures are collectively referred to herein as
the "Exchange Securities."
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Old Securities, except that (i) the Exchange
Securities have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer applicable to the Old Securities,
(ii) the Exchange Capital Securities will not contain the $100,000 minimum
Liquidation Amount transfer restrictions (and to the extent such restriction
might be deemed applicable to the Exchange Offer, it is being waived by the
Corporation and the Trust), (iii) the Exchange Securities will not provide for
the increase in the Distribution (as defined below) rate thereon which is
payable on the Old Capital Securities if the Corporation and the Trust do not or
cannot fulfill certain obligations under a Registration Rights Agreement dated
as of February 5, 1998 (the "Registration Rights Agreement") among the
Corporation, the Trust and the Initial Purchasers (as defined in "Summary -- The
Exchange Securities -- Absence of Market for the Exchange Capital Securities"
(which obligations are satisfied upon the effectiveness of the Registration
Statement of which this Prospectus is a part), (iv) the Exchange Junior
Subordinated Debentures will be issued in denominations of $1,000 but will not
contain the $100,000 minimum principal amount transfer restriction and (v) the
Exchange Junior Subordinated Debentures will not provide for any increase in the
interest rate thereon which is payable on the Old Junior Subordinated Debentures
if the Corporation and the Trust do not or cannot fulfill certain obligations
under the Registration Rights Agreement (which obligations are satisfied upon
the effectiveness of the Registration Statement of which this Prospectus is a
part). See "Description of Exchange Securities" and "Description of Old
Securities." The Exchange Capital Securities are being offered for exchange in
order to satisfy certain obligations of the Corporation and the Trust under the
Registration Rights Agreement. In the event that the Exchange Offer is
consummated, any Old Securities which remain outstanding after consummation of
the Exchange Offer and the corresponding Exchange Securities issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage thereof have taken certain actions
or exercised certain rights under the Trust Agreement.
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Old Capital Securities on April , 1998.
SEE "RISK FACTORS" COMMENCING ON PAGE 18 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is April , 1998.
<PAGE> 3
The Exchange Capital Securities and the Old Capital Securities
(collectively, the "Capital Securities") will represent preferred beneficial
interests in the Trust. The Corporation is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities"). The Common Securities and the Capital Securities, are together
referred to herein as the "Trust Securities". The Bank of New York is the
Property Trustee of the Trust. The Trust exists for the sole purpose of issuing
the Trust Securities, investing the proceeds thereof in the Old Junior
Subordinated Debentures and the Exchange Junior Subordinated Debentures for
which they may be exchanged (together, the "Junior Subordinated Debentures") and
making Distributions. The Junior Subordinated Debentures are scheduled to mature
on April 15, 2028 (the "Stated Maturity"). The Corporation, as the holder of all
of the outstanding Common Securities, will have the right at any time to
dissolve the Trust and cause a Like Amount of the Junior Subordinated Debentures
to be distributed to the holders of the Trust Securities in liquidation of the
Trust, subject to the Corporation's having received an opinion by independent
tax counsel experienced in such matters to the effect that the holders will not
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and such distribution to holders of
Capital Securities. The Capital Securities may also be redeemed and the Stated
Maturity may under certain circumstances be shortened in the event of a Tax
Event or an Investment Company Event. See "Description of Exchange
Securities -- Description of Exchange Capital Securities -- Conditional Right to
Shorten Maturity and Special Event Redemption." The Capital Securities will have
a preference over the Common Securities under certain circumstances with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Exchange Securities -- Description of Exchange
Capital Securities -- Subordination of Common Securities." As more fully
described below, the Corporation, in addition to agreeing to pay all fees,
expenses, debts and obligations (other than the Trust Securities) related to the
Trust has entered into several contractual undertakings which, the Corporation
believes, taken together, guarantee to the holders of the Capital Securities a
full and unconditional right to enforce the payment of distributions, the
payment of the redemption price upon redemption of the Capital Securities and
the payment of the Liquidation Amount with respect to the Capital Securities
upon liquidation of the Trust. (See "Risk Factors -- Rights Under the Guarantee;
Direct Action For Payment.") Those contractual arrangements include the
Corporation's obligations under (i) the Guarantee for the benefit of the holders
of Capital Securities, (ii) the Trust Agreement, (iii) the Junior Subordinated
Debentures and (iv) the Indenture.
As used herein, (i) the "Indenture" means the Indenture, dated as of
February 5, 1998, as amended and supplemented from time to time, between the
Corporation and The Bank of New York as trustee (the "Debenture Trustee"),
relating to the Junior Subordinated Debentures, (ii) the "Trust Agreement" means
the Amended and Restated Declaration of Trust relating to the Trust among the
Corporation as Sponsor, The Bank of New York as Property Trustee (the "Property
Trustee"), Bank of New York (Delaware) as Delaware Trustee (the "Delaware
Trustee"), and the Administrative Trustees named therein (collectively, with the
Property Trustee and Delaware Trustee, the "Issuer Trustees"), and (iii) the
"Common Guarantee" means the Common Securities Guarantee Agreement executed and
delivered by the Corporation for the benefit of the holders of the Common
Securities. In addition, as the context may require, (i) "Capital Securities"
and "Trust Securities" include the Old Capital Securities and the Exchange
Capital Securities, (ii) "Trust Securities" includes the Capital Securities and
the Common Securities, (iii) "Junior Subordinated Debentures" includes the Old
Junior Subordinated Debentures and the Exchange Junior Subordinated Debentures,
and (iv) "Guarantee" includes the Old Guarantee and the Exchange Guarantee.
Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of DTC. Beneficial interests in such
Capital Securities will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in such interests will therefore settle in
immediately available funds.
Holders of the Exchange Capital Securities will be entitled to receive
preferential cumulative cash distributions arising from the payment of interest
on the Junior Subordinated Debentures, accruing from April 15, 1998 and payable
semi-annually in arrears on April 15 and October 15 of each year, commencing
October 15, 1998, at the annual rate of 7.701% of the Liquidation Amount of
$1,000 per Trust Security ("Distributions"). So long as no Debenture Event of
Default (as defined in "Description of the Exchange
2
<PAGE> 4
Securities -- Description of Junior Subordinated Debentures -- Debenture Events
of Default") has occurred and is continuing, the Corporation will have the right
to defer payments of interest on the Junior Subordinated Debentures at any time
and from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity. Upon
the termination of any Extension Period and the payment of all amounts then due,
the Corporation may elect to begin a new Extension Period, subject to the
requirements set forth herein. If and for so long as interest payments on the
Junior Subordinated Debentures are so deferred, Distributions on the Capital
Securities will also be deferred and the Corporation and its subsidiaries will
not be permitted, subject to certain exceptions described herein, to declare or
pay any cash distributions with respect to the Corporation's capital stock
(which includes common and preferred stock) or to make any payment with respect
to debt securities of the Corporation that rank pari passu with or junior to the
Junior Subordinated Debentures. None of the Corporation's subsidiaries will be
prohibited from declaring and paying cash distributions with respect to its
capital stock or from making payments with respect to its debt securities.
During an Extension Period, interest on the Junior Subordinated Debentures will
continue to accrue (and the amount of Distributions to which holders of Capital
Securities are entitled will continue to accumulate) at the rate of 7.701% per
annum, compounded semi-annually. From and after the commencement of any such
Extension Period, holders of Capital Securities will be required to include the
accruals of interest in gross income for United States federal income tax
purposes (as original issue discount) prior to the receipt of cash attributable
to such interest. See "Description of Exchange Securities -- Description of
Exchange Junior Subordinated Debentures -- Option to Extend Interest Payment
Date" and "Certain Federal Income Tax Consequences -- Interest Income and OID."
The Corporation will, through the Guarantee, the Common Guarantee, the
Trust Agreement, the Junior Subordinated Debentures and the Indenture (each as
defined below), taken together, fully, irrevocably and unconditionally guarantee
all of the Trust's obligations under the Trust Securities. See "Description of
Exchange Securities -- Relationship Among the Exchange Capital Securities, the
Exchange Junior Subordinated Debentures and the Exchange Guarantee -- Full and
Unconditional Guarantee." The Guarantee and the Common Guarantee will guarantee
payments of Distributions and payments on liquidation or redemption of the Trust
Securities, but in each case only to the extent that the Trust holds funds on
hand legally available therefor and has failed to make such payments, as
described herein. See "Description of Exchange Securities -- Description of
Exchange Guarantee." If the Corporation fails to make a required payment on the
Junior Subordinated Debentures, the Trust will not have sufficient funds to make
the related payments, including Distributions, on the Trust Securities. The
Guarantee and the Common Guarantee will not cover any such payment when the
Trust does not have sufficient funds on hand legally available therefor. In such
event, a holder of Capital Securities may institute a legal proceeding directly
against the Corporation to enforce its rights in respect of such payment. See
"Description of Exchange Securities -- Description of Exchange Junior
Subordinated Debentures -- Enforcement of Certain Rights by Holders of Exchange
Capital Securities." The Junior Subordinated Debentures will be subordinate and
junior in right of payment to all Senior Indebtedness (as defined in
"Description of Exchange Securities -- Description of Exchange Junior
Subordinated Debentures -- Subordination"). The obligations of the Corporation
under the Guarantee and the Common Guarantee will be (i) subordinate and junior
in right of payment to all other liabilities of the Corporation; (ii) pari passu
with (A) the most senior preferred or preference stock now or hereafter issued
by the Corporation, and (B) any guarantee now or hereafter entered into by the
Corporation in respect of any capital securities or common securities of any
other trust similar to the Trust, or of a trustee of such trust, or of a
partnership or other entity affiliated with the Corporation that is a financing
vehicle of the Corporation (collectively, "Other Trusts"); and (iii) senior to
the Corporation's common stock.
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined in "Description of the Exchange Securities -- Description of
Exchange Capital Securities -- Redemption"), (i) in whole but not in part, on
the Stated Maturity upon repayment of the Junior Subordinated Debentures at a
redemption price equal to the principal amount of, plus accrued and unpaid
interest on, the Junior Subordinated Debentures (the "Maturity Redemption
Price"), (ii) in whole but not in part, at any time, contemporaneously with the
optional prepayment of the Junior Subordinated Debentures, upon the occurrence
and continuation of a Special Event (as defined in "Description of the Exchange
Securities --
3
<PAGE> 5
Description of Junior Subordinated Debentures -- Conditional Right to Shorten
Maturity and Special Event Prepayment") at a redemption price equal to the
Special Event Prepayment Price of the Junior Subordinated Debentures (as defined
below in this paragraph) (the "Special Event Redemption Price"), and (iii) in
whole or in part, at any time, contemporaneously with the optional prepayment by
the Corporation of the Junior Subordinated Debentures, at a redemption price
equal to the Optional Prepayment Price of the Junior Subordinated Debentures (as
defined below in this paragraph) (the "Optional Redemption Price"). Any of the
Maturity Redemption Price, the Special Event Redemption Price and the Optional
Redemption Price may be referred to herein as the "Redemption Price." See
"Description of Exchange Securities -- Description of Capital
Securities -- Redemption." The Junior Subordinated Debentures will be prepayable
prior to the Stated Maturity at the option of the Corporation (i) at any time,
in whole or in part, at a prepayment price (the "Optional Prepayment Price")
equal to the greater of (a) 100% of the principal amount to be prepaid or (b)
the sum, as determined by a Quotation Agent, of the present values of the
remaining scheduled payments of principal to be prepaid and interest thereon
discounted to the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in
either case, accrued and unpaid interest thereon to the date of prepayment, or
(ii) at any time, in whole but not in part, upon the occurrence and continuation
of a Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (a) 100% of the principal amount thereof or (b) the sum,
as determined by a Quotation Agent (as defined in "Descriptions of the Exchange
Securities -- Description of Junior Subordinated Debentures -- Conditional Right
to Shorten Maturity and Special Event Prepayment"), of the present values of the
remaining scheduled payments of principal and the interest thereon discounted to
the prepayment date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Special Event Adjusted Treasury Rate (as defined
in "Descriptions of the Exchange Securities -- Description of Junior
Subordinated Debentures -- Conditional Right to Shorten Maturity and Special
Event Prepayment") plus, in either case, accrued and unpaid interest thereon to
the date of prepayment. Either of the Optional Prepayment Price or the Special
Event Prepayment Price may be referred to herein as the "Prepayment Price." See
"Description of Exchange Securities -- Description of Exchange Junior
Subordinated Debentures -- Optional Prepayment" and "-- Conditional Right to
Shorten Maturity and Special Event Prepayment."
The Corporation, as the holder of all of the outstanding Common Securities,
will have the right at any time to terminate the Trust and cause a Like Amount
of the Junior Subordinated Debentures to be distributed to the holders of the
Trust Securities in liquidation of the Trust, subject to the Corporation's
having received an opinion of counsel to the effect that such distribution will
not be a taxable event for United States federal income tax purposes to holders
of Capital Securities. Unless the Junior Subordinated Debentures are distributed
to the holders of the Trust Securities, in the event of a liquidation of the
Trust as described herein, after satisfaction of liabilities to creditors of the
Trust as required by applicable law, the holders of the Capital Securities
generally will be entitled to receive a Liquidation Amount of $1,000 per Capital
Security plus accumulated and unpaid Distributions thereon to the date of
payment. See "Description of Exchange Securities -- Description of Exchange
Capital Securities -- Liquidation of the Trust and Distribution of Exchange
Junior Subordinated Debentures."
------------------------
The Trust is making the Exchange Offer of the Exchange Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Corporation nor the Trust has sought its own interpretive
letter and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the two immediately
following sentences, the Corporation and the Trust believe that the Exchange
Capital Securities issued pursuant to this Exchange Offer in Exchange for Old
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Capital Securities are acquired in
the ordinary course of such holder's business
4
<PAGE> 6
and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act), of such Exchange Capital Securities. However,
any holder of Old Capital Securities who is an "affiliate" of the Corporation or
the Trust or who intends to participate in the Exchange Offer for the purpose of
distributing Exchange Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A under the
Securities Act ("Rule 144A") or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for Exchange Capital
Securities, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for Exchange Capital Securities in the Exchange Offer will be
required to represent that (i) such holder is not an "affiliate" of the
Corporation or the Trust, (ii) any Exchange Capital Securities to be received by
such holder are being acquired in the ordinary course of its business, (iii)
such holder has no arrangement or understanding with any person to participate
in a distribution (within the meaning of the Securities Act) of such Exchange
Capital Securities, and (iv) if such holder is not a broker-dealer, such holder
is not engaged in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities. In addition,
the Corporation and the Trust may require such holder, as condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Corporation and the Trust (or an agent thereof) in writing, information as to
the number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of
whom such holder holds the Old Capital Securities to be exchanged pursuant to
the Exchange Offer. Each broker-dealer that receives Exchange Capital Securities
for its own account pursuant to the Exchange Offer must acknowledge that the Old
Capital Securities tendered by it for exchange were acquired for its own account
as the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Capital
Securities. The Letter of Transmittal acknowledges that by so stating and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Corporation and the Trust believe that broker-dealers who own Old Capital
Securities acquired for their own accounts as a result of market-making
activities or other trading activities ("Participating Broker-Dealers"), may
fulfill their prospectus delivery requirements with respect to the Exchange
Capital Securities received upon exchange of such Old Capital Securities (other
than Old Capital Securities which represent an unsold allotment from the
original sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the Prospectus prepared for
this Exchange Offer so long as it contains a description of the plan of
distribution with respect to the resale of such Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer during the period referred to below
in connection with resales of Exchange Capital Securities received in exchange
for Old Capital Securities where such Old Capital Securities were acquired by
such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such Exchange Capital Securities for the period ending 90-days after the
Expiration Date (as defined below) (subject to extension under certain limited
circumstances described below) or, if earlier, when all such Exchange Capital
Securities have been disposed
5
<PAGE> 7
of by such Participating Broker-Dealer. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Capital Securities received in exchange for Old
Capital Securities pursuant to the Exchange Offer must notify the Corporation or
the Trust, or cause the Corporation or the Trust to be notified, on or prior to
the Expiration Date, that it is a Participating Broker-Dealer. Such notice may
be given in the space provided for that purpose in the Letter of Transmittal or
may be delivered to the Exchange Agent at one of the addresses set forth herein
under "The Exchange Offer -- Exchange Agent." Any Participating Broker-Dealer
who is an "affiliate" of the Corporation or the Trust may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of Exchange Capital Securities."
Each Participating Broker-Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that upon receipt of notice from the Corporation or
the Trust of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or which causes this Prospectus to omit to state
a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of Exchange Capital Securities (or the Exchange Guarantee or
the Exchange Junior Subordinated Debentures, as applicable) pursuant to this
Prospectus until the Corporation or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Corporation or the Trust has given notice that the sale of the Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) may be resumed, as the case may be. If
the Corporation or the Trust gives such notice to suspend the sale of the
Exchange Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable), it shall extend the 90-day period
referred to above during which Participating Broker-Dealers are entitled to use
this Prospectus in connection with the resale of Exchange Capital Securities by
the number of days during the period from and including the date of the giving
of such notice to and including the date when Participating Broker-Dealers shall
have received copies of the amended or supplemented Prospectus necessary to
permit resales of the Exchange Capital Securities or to and including the date
on which the Corporation or the Trust has given notice that the sale of Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The Exchange Capital
Securities will be a new issue of securities for which there currently is no
market. Although the Initial Purchasers have orally informed the Corporation and
the Trust that each of them currently intends to make a market in the Exchange
Capital Securities, they are not obligated to do so, and any such market making
may be discontinued by any or all of them at any time without notice.
Accordingly, there can be no assurance as to the development or liquidity of any
market for the Exchange Capital Securities. The Corporation and the Trust
currently do not intend to apply for listing of the Exchange Capital Securities
on any securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System ("NASDAQ").
The Corporation and the Trust have agreed to keep the Registration
Statement, of which this Prospectus is a part, effective for a period of 30
calendar days (or longer if required by applicable law or in order to allow
Participating Broker-Dealers to satisfy their prospectus delivery requirements)
after notice of the Exchange Offer is mailed to holders of the Old Securities.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Trust Agreement
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Corporation nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for
6
<PAGE> 8
registration under the Securities Act of the Old Capital Securities held by
them. To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. See "Risk Factors -- Consequences of Failure to
Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on May , 1998 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the terms and provisions of
the Registration Rights Agreement. Old Capital Securities may be tendered in any
integral multiple of $1,000 Liquidation Amount (one Old Capital Security). The
Corporation has agreed to pay all expenses of the Exchange Offer. See "The
Exchange Offer -- Fees and Expense." Holders of the Old Capital Securities whose
Old Capital Securities are accepted for exchange will not receive Distributions
on such Old Capital Securities and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
after February 5, 1998. See "The Exchange Offer -- Distributions on Exchange
Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use Of
Proceeds" and "Plan of Distribution."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
7
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................... 9
Incorporation of Certain Documents By Reference............. 9
Summary..................................................... 11
Risk Factors................................................ 18
Use of Proceeds............................................. 24
Ratios of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 24
Accounting Treatment........................................ 25
Capitalization.............................................. 26
Summary Financial Data...................................... 27
Orion Capital Corporation................................... 29
Orion Capital Trust II...................................... 29
The Exchange Offer.......................................... 30
Description of the Exchange Securities...................... 39
Description of the Old Securities........................... 60
Relationship Among the Exchange Capital Securities, the
Exchange Junior Subordinated Debentures, the Exchange
Guarantee and the Trust Agreement......................... 60
Certain Federal Income Tax Consequences..................... 62
ERISA Considerations........................................ 66
Plan of Distribution........................................ 66
Validity of Exchange Securities............................. 67
Experts..................................................... 67
</TABLE>
8
<PAGE> 10
AVAILABLE INFORMATION
Orion is subject to the informational requirements of the Exchange Act, and
in accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information filed
by Orion with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission in New York (Seven World Trade Center, Suite 1300, New York, New York
10048) and Chicago (500 West Madison Street, Suite 1400, Chicago, Illinois
60661). Copies of such materials also may be obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be inspected at the offices of
the New York Stock Exchange, Inc. (20 Broad Street, New York, New York 10005).
Orion is an electronic filer, and the Commission maintains a Web site that
contains certain reports, proxy and information statements and other information
regarding registrants (including Orion) that file electronically with the
Commission. The address of the Commission's Web site is: http://www.sec.gov.
Orion and the Trust have filed with the Commission a Registration Statement
on Form S-4 (of which this Prospectus is a part) under the Securities Act with
respect to the Exchange Securities being offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. Statements made in this Prospectus as to the
contents of any contract, agreement, instrument or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract, agreement, instrument or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto.
No separate financial statements of the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the Exchange Capital Securities because the
Trust is a newly formed special purpose entity, has no significant operating
history or independent operations and is not engaged in and does not propose to
engage in any activity other than holding as trust assets the Old Junior
Subordinated Debentures and the Exchange Junior Subordinated Debentures and
issuing the Trust Securities. See "Orion Capital Trust II" and "Description of
the Exchange Securities." The Corporation and the Trust intend to apply to the
Securities and Exchange Commission pursuant to Staff Accounting Bulletin No. 53
("SAB 53") for exemption from the periodic reporting requirements of the
Exchange Act and confirmation that the Corporation need not include either
separate financial statements of the Trust or summarized financial information
with respect to the Trust in its periodic reports filed pursuant to the Exchange
Act. See "Accounting Treatment."
The Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the Registration Statement, although it
intends to seek and expects to receive exemptions therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's Annual Report on Form 10-K for the year ended December
31, 1997 filed with the Commission by Orion (File No. 1-7801) is incorporated
herein by reference and made a part hereof.
All documents filed by Orion pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Exchange Securities being offered hereby
shall be deemed to be incorporated by reference in this Prospectus and made a
part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other document subsequently filed with the Commission which also is or
is deemed to be incorporated by reference herein or in any Prospectus Supplement
modifies or supersedes such
9
<PAGE> 11
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or to the
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or to the document. Orion hereby undertakes to
provide without charge to each person to whom a copy of this Prospectus is
delivered, upon written or oral request of any such person, a copy of any and
all documents that have been incorporated by reference in this Prospectus, other
than exhibits to any such documents unless such exhibits themselves are
specifically incorporated by reference in such document. Such requests should be
directed to the Secretary of Orion Capital Corporation, 9 Farm Springs Road,
Farmington, Connecticut 06032, telephone number (860) 674-7337.
10
<PAGE> 12
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
ORION CAPITAL CORPORATION
Orion Capital Corporation is a property and casualty insurance holding
company. The Corporation's insurance subsidiaries and affiliates are authorized
to underwrite and sell most types of property and casualty insurance. The
Corporation's insurance businesses are concentrated in niche insurance markets,
particularly workers' compensation, professional liability, nonstandard
automobile insurance and underwriting ocean marine, inland marine and property
insurance through underwriting pools. For the five-year period ended December
31, 1997, the Corporation's return on equity from operating earnings (earnings
after taxes, excluding the effects of the adoption of new accounting principles,
extraordinary items and after-tax realized investment gains) averaged 13.9% per
year. The combined ratio for the Corporation's insurance operations, computed on
the basis of generally accepted accounting principles, has steadily improved
from 103.2% in 1993 to 99.7% in 1997.
ORION CAPITAL TRUST II
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Declaration of Trust executed by the Corporation as Sponsor and The
Bank of New York (Delaware) as Delaware Trustee, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on February 2, 1998.
The Trust's business and affairs are conducted by the Issuer Trustees: the
Property Trustee, the Delaware Trustee and the three individual Administrative
Trustees who are employees or officers of or affiliated with the Corporation.
The Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) effecting the Exchange Offer, (iii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures
issued by the Corporation, (iv) making Distributions to holders of the Trust
Securities as provided in the Trust Agreement and (v) engaging in only those
other activities necessary, advisable or incidental thereto (such as registering
the transfer of the Trust Securities). Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Trust, and payments under the Junior
Subordinated Debentures will be the sole revenue of the Trust. All of the Common
Securities will be owned by the Corporation.
THE EXCHANGE OFFER
The Exchange Offer......... Up to $125,000,000 aggregate Liquidation Amount of
Exchange Capital Securities are being offered in
exchange for a like aggregate Liquidation Amount
of Old Capital Securities. Old Capital Securities
may be tendered in the Exchange Offer for
exchange in whole or in part in any integral
multiple of $1,000 (one Old Capital Security)
notwithstanding the requirement, applicable to
all other transfers of a minimum transfer amount
of $100,000 in Liquidation Amount. The
Corporation and the Trust are making the Exchange
Offer in order to satisfy their obligations under
the Registration Rights Agreement relating to the
Old Capital Securities. For a description of the
procedures for tendering Old Capital Securities,
see "The Exchange Offer -- Procedures for
Tendering Old Capital Securities."
Expiration Date............ 5:00 p.m., New York City time, on May , 1998,
unless the Exchange Offer is extended by the
Corporation or the Trust (in which case the
Expiration Date will be the latest date and time
to which the Exchange Offer is extended). See
"The Exchange Offer -- Terms of the Exchange
Offer."
11
<PAGE> 13
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not conditioned
upon any minimum Liquidation Amount of Old
Capital Securities being tendered. See "The
Exchange Offer -- Conditions to the Exchange
Offer."
Offer...................... The Corporation and the Trust expressly reserve the
right in their sole and absolute discretion,
reasonably exercised in accordance with
applicable law and the terms of this Exchange
Offer, at any time and from time to time, (i) to
delay the acceptance of the Old Capital
Securities for exchange, (ii) to terminate the
Exchange Offer if certain specified conditions
have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain
all Old Capital Securities tendered pursuant to
the Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to
withdraw their tendered Old Capital Securities,
or (iv) to waive any condition or otherwise amend
the terms of the Exchange Offer in any respect.
See "The Exchange Offer -- Terms of the Exchange
Offer."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
the Exchange Agent in conformity with certain
procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained
therein and forward the same by mail, facsimile
or hand delivery, together with any other
required documents, to the Exchange Agent, either
with the Old Capital Securities to be tendered or
in compliance with the specified procedures for
guaranteed delivery of Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See
"The Exchange Offer -- Procedures for Tendering
Old Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Corporation or the Trust. Such
documents should only be sent to the Exchange
Agent.
Resales of Exchange Capital
Securities............... The Corporation and the Trust are making the
Exchange Offer in reliance on the position of the
Division of Corporation Finance of the Commission
as set forth in certain interpretive letters
addressed to third parties in other transactions.
However, neither the Corporation nor the Trust
has sought its own interpretive letter and there
can be no assurance that the staff of the
Division of Corporation Finance of the Commission
would make a similar determination with respect
to the Exchange Offer as it has in such
interpretive letters to third parties. Based on
these interpretations by the staff of the
Division of Corpora-
12
<PAGE> 14
tion Finance of the Commission, and subject to
the two immediately following sentences, the
Corporation and the Trust believe that Exchange
Capital Securities issued pursuant to this
Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without
further compliance with the registration and
prospectus delivery requirements of the
Securities Act provided that such Exchange
Capital Securities are acquired in the ordinary
course of such holder's business and that such
holder is not participating, and has no
arrangement or understanding with any person to
participate, in a distribution (within the
meaning of the Securities Act) of such Exchange
Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the
Corporation or the Trust or who intends to
participate in the Exchange Offer for the purpose
of distributing the Exchange Capital Securities,
or any broker-dealer who purchased the Old
Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not
be able to rely on the interpretation of the
staff of the Division of Corporation Finance of
the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted
or entitled to tender such Old Capital Securities
in the Exchange Offer and (c) must comply with
the registration and prospectus delivery
requirements of the Securities Act in connection
with any sale or other transfer of such Old
Capital Securities unless such sale is made
pursuant to an exemption from such requirements.
In addition, as described below, if any
broker-dealer holds Old Capital Securities
acquired for its own account as a result of
market-making or other trading activities and
exchanges such Old Capital Securities for
Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resales of such Exchange
Capital Securities.
Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for Exchange
Capital Securities in the Exchange Offer will be
required to represent that (i) such holder is not
an "affiliate" of the Corporation or the Trust,
(ii) any Exchange Capital Securities to be
received by such holder are being acquired in the
ordinary course of its business, (iii) such
holder has no arrangement or understanding with
any person to participate in a distribution
(within the meaning of the Securities Act) of
such Exchange Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder
is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the
Securities Act) of such Exchange Capital
Securities. Each broker-dealer that receives
Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge
that the Old Capital Securities tendered by it
for exchange were acquired for its own account as
the result of market-making activities or other
trading activities and must agree that it will
deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale
of such Exchange Capital Securities. The Letter
of Transmittal acknowledges that, by so stating
and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act.
13
<PAGE> 15
Based on the position taken by the staff of the
Division of Corporation Finance of the Commission
in the interpretive letters referred to above,
the Corporation and the Trust believe that
Participating Broker-Dealers who acquire Old
Capital Securities for their own accounts as a
result of market-making activities or other
trading activities may fulfill their prospectus
delivery requirements with respect to the
Exchange Capital Securities received upon
exchange of such Old Capital Securities (other
than Old Capital Securities which represent an
unsold allotment from the original sale of the
Old Capital Securities) with a prospectus meeting
the requirements of the Securities Act, which may
be the Prospectus prepared for this Exchange
Offer so long as it contains a description of the
plan of distribution with respect to the resale
of such Exchange Capital Securities.
Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by
a Participating Broker-Dealer in connection with
resales of Exchange Capital Securities received
in exchange for Old Capital Securities where such
Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account
as a result of market-making or other trading
activities. Subject to certain provisions set
forth in the Registration Rights Agreement and to
the limitations described below under "The
Exchange Offer -- Resales of Exchange Capital
Securities," the Corporation and the Trust have
agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by
a Participating Broker-Dealer in connection with
resales of such Exchange Capital Securities for a
period of 90 days after the Expiration Date
(subject to extension under certain limited
circumstances) or, if earlier, when all such
Exchange Capital Securities have been disposed of
by such Participating Broker-Dealer. See "Plan of
Distribution." Any Participating Broker-Dealer
who is an "affiliate" of the Corporation or the
Trust may not rely on such interpretive letters
and must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any resale
transaction. See " The Exchange Offer -- Resales
of Exchange Capital Securities."
Effect of Not Accepting the
Exchange Offer........... Old Capital Securities which are not tendered in
the Exchange Offer will continue to have all the
rights presently accruing to them except the
right to an increased Distribution rate on the
Old Capital Securities in certain events if the
Corporation and the Trust do not or cannot
fulfill certain obligations under the
Registration Rights Agreement (which obligations
are satisfied upon the effectiveness of the
Registration Statement of which this Prospectus
is a part and consummation of the Exchange
Offer). See "Risk Factors -- Consequences of a
Failure to exchange Old Capital Securities." The
Old Capital Securities will vote as a single
class with Exchange Capital Securities. However,
the Old Capital Securities will continue to be
subject to restrictions on transfer and, except
for limited exceptions for certain
broker-dealers, will have no registration rights.
To the extent that Old Capital Securities are not
tendered and accepted in the Exchange Offer, a
holder's ability to freely sell untendered Old
Capital Securities could be adversely affected.
14
<PAGE> 16
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is The Bank of New York (the "Exchange
Agent"). The addresses, and telephone and
facsimile numbers, of the Exchange Agent are set
forth in "The Exchange Offer -- Exchange Agent"
and in the Letter of Transmittal.
Use of Proceeds............ Neither the Corporation nor the Trust will receive
any cash proceeds from the issuance of the
Exchange Capital Securities offered hereby. See
"Use Of Proceeds."
Certain Federal Income Tax
Consequences; ERISA
Considerations........... Holders of Old Capital Securities should review the
information set forth under "Certain Federal
Income Tax Consequences" and "ERISA
Considerations" prior to tendering Old Capital
Securities in the Exchange Offer.
THE EXCHANGE SECURITIES
Securities Offered......... Up to 125,000 of the Trust's Exchange Capital
Securities (Liquidation Amount $1,000 per
Exchange Capital Security) which have been
registered under the Securities Act. The Exchange
Capital Securities will be issued and the Old
Capital Securities were issued under the Trust
Agreement. The Exchange Capital Securities and
any Old Capital Securities which remain
outstanding after consummation of the Exchange
Offer will vote together as a single class for
purposes of determining whether holders of the
requisite percentage in outstanding Liquidation
Amount thereof have taken certain actions or
exercised certain rights under the Trust
Agreement. See "Description of Exchange
Securities -- Description of Exchange Capital
Securities -- Voting Rights; Amendment of the
Trust Agreement." The terms of the Exchange
Capital Securities are identical in all material
respects to the terms of the Old Capital
Securities, except that the Exchange Capital
Securities have been registered under the
Securities Act and will not be subject to the
$100,000 minimum Liquidation Amount transfer
restriction and certain other restrictions on
transfer applicable to the Old Capital Securities
and will not provide for any increase in the
Distribution rate thereon which is payable on the
Old Capital Securities if the Corporation and the
Trust do not or cannot fulfill certain
obligations under the Registration Rights
Agreement (which obligations are satisfied upon
the effectiveness of the Registration Statement
of which this Prospectus is a part and
consummation of the Exchange Offer) See "The
Exchange Offer -- Purpose of the Exchange Offer,"
"Description of Exchange Securities" and
"Description of Old Securities."
Distribution Dates......... April 15 and October 15 of each year, commencing
October 15, 1998.
Extension Periods.......... So long as no Debenture Event of Default has
occurred and is continuing, Distributions on the
Exchange Capital Securities may be deferred for
the duration of any Extension Period elected by
the Corporation with respect to the payment of
interest on the Exchange Junior Subordinated
Debentures. No Extension Period will exceed 10
consecutive semi-annual periods or extend beyond
the Stated Maturity. The Corporation has no
current intention to exercise its right to defer
payment of interest on the Exchange Junior
Subordinated Debentures.
15
<PAGE> 17
See "Description of Exchange Securities --
Description of Exchange Junior Subordinated
Debentures -- Option to Extend Interest Payment
Date" and "Certain Federal Income Tax
Consequences -- Interest Income and Original
Issue Discount."
Ranking.................... The Exchange Capital Securities will rank pari
passu, and payments thereon will be made pro
rata, with the Old Capital Securities and Common
Securities except as described under "Description
of Exchange Securities -- Description of Exchange
Capital Securities -- Subordination of Common
Securities." The Exchange Junior Subordinated
Debentures will rank pari passu with the Old
Junior Subordinated Debentures and all other
junior subordinated debentures to be issued by
the Corporation (collectively, with the Old
Junior Subordinated Debentures, the "Other
Debentures"), which may be issued and sold (if at
all) to Other Trusts, and will be unsecured and
subordinate and junior in right of payment to all
Senior Indebtedness to the extent and in the
manner set forth in the Indenture. See
"Description of Exchange Securities --
Description of Exchange Junior Subordinated
Debentures." The Exchange Guarantee will rank
pari passu with the Old Guarantee and all other
guarantees issued by the Corporation with respect
to capital securities issued or to be issued by
Other Trusts (the "Other Guarantees"). The
Guarantee and the Common Guarantee will be (i)
subordinate and junior in right of payment to all
other liabilities of the Corporation; (ii) pari
passu with (A) the most senior preferred or
preference stock now or hereafter issued by the
Corporation, and (B) any guarantee now or
hereafter entered into by the Corporation in
respect of any capital securities or common
securities of any Other Trusts; and (iii) senior
to the Corporation's common stock. See
"Description of Exchange Securities --
Description of Exchange Guarantee -- Status of
the Guarantee."
Redemption................. The Trust Securities will be subject to mandatory
redemption in a Like Amount, (i) in whole but not
in part, on the Stated Maturity upon repayment of
the Junior Subordinated Debentures, (ii) in whole
but not in part, at any time contemporaneously
with the optional prepayment of the Junior
Subordinated Debentures by the Corporation upon
the occurrence and continuation of a Special
Event and (iii) in whole or in part
contemporaneously with the optional prepayment by
the Corporation of the Junior Subordinated
Debentures, at the applicable Redemption Price.
See "Description of Exchange Securities --
Description of Exchange Capital Securities --
Redemption."
Ratings.................... The Old Capital Securities are rated "BBB" by
Standard & Poor's Ratings Services, "BBB" by Duff
& Phelps Credit Rating Co., and "baa3" by Moody's
Investors Service.
The Exchange Capital Securities are expected to
have the same ratings as the Old Capital
Securities.
Absence of Market for the
Exchange Capital
Securities............... The Exchange Capital Securities will be a new issue
of securities for which there currently is no
market. Although each of Donaldson Lufkin &
Jenrette Securities Corporation, Lehman Brothers
Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Initial
16
<PAGE> 18
Purchasers") has orally informed the Trust and
the Corporation that it currently intends to make
a market in the Exchange Capital Securities, the
Initial Purchasers are not obligated to do so,
and any such market making may be discontinued at
any time by any or all of them without notice.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the
Exchange Capital Securities. The Trust and the
Corporation do not intend to apply for listing of
the Old Capital Securities or the Exchange
Capital Securities on any securities exchange or
for quotation through The Nasdaq Stock Market.
See "Plan of Distribution."
17
<PAGE> 19
RISK FACTORS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the following
matters.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Corporation under the Junior Subordinated Debentures
will be unsecured and rank subordinate and junior in right of payment to all
Senior Indebtedness (as defined in "Description of Exchange Securities --
Description of Exchange Junior Subordinated Debentures -- Subordination"). At
December 31, 1997, the aggregate principal amount of outstanding Senior
Indebtedness of the Corporation was approximately $210 million. Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary upon such subsidiary's liquidation
or reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution) is subject to the prior
claims of creditors of that subsidiary, except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Junior Subordinated Debentures will be effectively subordinated
to all existing and future liabilities of the Corporation's subsidiaries, and
holders of Junior Subordinated Debentures should look only to the assets of the
Corporation for payments on the Junior Subordinated Debentures. The Guarantee
and the Common Guarantee will be (i) subordinate and junior in right of payment
to all other liabilities of the Corporation; (ii) pari passu with (A) the most
senior preferred or preference stock now or hereafter issued by the Corporation,
and (B) any guarantee now or hereafter entered into by the Corporation in
respect of the capital securities or common securities of any Other Trusts; and
(iii) senior to the Corporation's common stock. At December 31, 1997, the
Corporation's subsidiaries had total liabilities of approximately $2.8 billion.
In addition, since the Corporation's insurance subsidiaries are subject to
regulatory control by various state insurance departments, the ability of such
subsidiaries to pay dividends to the Corporation without prior regulatory
approval is limited by applicable laws and regulations. None of the Indenture,
the Guarantee or the Trust Agreement places any limitation on the amount of
secured or unsecured debt, including Senior Indebtedness, that may be incurred
by the Corporation. See "Description of Exchange Securities -- Description of
Exchange Junior Subordinated Debentures -- Subordination" and "Description of
Exchange Securities -- Description of Exchange Guarantee -- Status of the
Exchange Guarantee."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at the rate of 7.701% per
annum, compounded semi-annually, but not exceeding the interest rate then
accruing on the Junior Subordinated Debentures) from the relevant payment date
for such Distributions during any Extension Period.
Prior to the termination of any Extension Period, the Corporation may
further extend an Extension Period, provided that such extension does not cause
such Extension Period to exceed 10 consecutive semi-annual periods or to extend
beyond the Stated Maturity. Upon the termination of any Extension Period and the
payment of all interest then accrued and unpaid on the Junior Subordinated
Debentures (together with interest thereon at the annual rate of 7.701%,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period, subject to the above
requirements. There is no limitation on the number of times that the Corporation
may elect to begin an Extension Period. See "Description of Exchange
Securities -- Description of Exchange Capital Securities --
18
<PAGE> 20
Distributions" and "Description of Exchange Securities -- Description of
Exchange Junior Subordinated Debentures -- Option to Extend Interest Payment
Date."
The Corporation has no current intention to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. However, should the
Corporation exercise this right, each holder of Trust Securities will be
required to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Trust Securities for United States
federal income tax purposes. As a result, each such holder of Capital Securities
will be required to include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash related to such income from the Trust if the holder disposes of
the Capital Securities prior to the record date for the payment of Distributions
thereafter. See "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount" and "-- Sales of Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its Capital
Securities. In addition, merely as a result of the existence of the
Corporation's right to defer payments of interest on the Junior Subordinated
Debentures, the market price of the Capital Securities may be more volatile than
the market prices of other securities on which OID accrues and that are not
subject to such deferrals.
OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable, in whole or in part,
at any time at the option of the Corporation, at a prepayment price (the
"Optional Prepayment Price") equal to the greater of (i) 100% of the principal
amount to be prepaid or (ii) the sum, as determined by a Quotation Agent, of the
present values of the remaining scheduled payments of principal to be prepaid
and interest thereon discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in either case, accrued and unpaid interest thereon to the
date of prepayment and any Additional Sums (as defined herein).
CONDITIONAL RIGHT TO SHORTEN MATURITY AND SPECIAL EVENT PREPAYMENT
If a Tax Event (as defined below) occurs, then the Corporation will have
the right, prior to the termination of the Trust, either (i) to shorten the
Stated Maturity of the Junior Subordinated Debentures to the minimum extent
required, but not less than 20 years from the date of original issuance thereof,
such that in the written opinion of counsel experienced in such matters
delivered to the Corporation, after shortening the maturity, interest paid on
the Junior Subordinated Debentures will be deductible for federal income tax
purposes (the action referred to above being referred to herein as a "Tax Event
Maturity Shortening") or (ii) to prepay the Junior Subordinated Debentures, as
described below. Prospective investors should be aware that the Corporation's
exercise of its right to shorten the maturity of the Junior Subordinated
Debentures will be a taxable event to holders of Capital Securities if the
Junior Subordinated Debentures are treated as equity for purposes of United
States federal income taxation before the maturity is shortened. See
"Description of Exchange Securities -- Description of Exchange Capital
Securities -- Conditional Right to Shorten Maturity and Special Event
Redemption" and "Description of Exchange Securities -- Description of Exchange
Junior Subordinated Debentures -- Conditional Right to Shorten Maturity and
Special Event Prepayment."
If a Tax Event or an Investment Company Event (as defined below) occurs,
then the Corporation will have the right, within 90 days following the
occurrence of such Tax Event or Investment Company Event, as the case may be, to
prepay the Junior Subordinated Debentures in whole (but not in part) in the
manner set forth under "Description of Exchange Securities -- Description of
Exchange Junior Subordinated Debentures -- Conditional Right to Shorten Maturity
and Special Event Prepayment," and therefore to cause a mandatory redemption of
the Capital Securities prior to the Stated Maturity (the circumstances under
which the Corporation has the right so to prepay the Junior Subordinated
Debentures in connection with a Tax Event
19
<PAGE> 21
being referred to herein as a "Conditional Tax Redemption Event"). Each of a
Conditional Tax Redemption Event or an Investment Company Event are sometimes
referred to herein as a "Special Event."
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of counsel to the Corporation experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein or as
a result of any administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Old Capital Securities under the Trust Agreement, or as a result of a final
determination, as evidenced by the execution of a Form 870 AD (or successor
forms), arising from an audit or examination by the Internal Revenue Service,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by the Corporation on the Junior Subordinated
Debentures is not, or within 90 days of such opinion, will not be, deductible by
the Corporation, in whole or in part, for United States federal income tax
purposes or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges (each of the circumstances referred to in clauses
(i), (ii) and (iii) being referred to herein as an "Adverse Tax Consequence").
An "Investment Company Event" means that the Corporation shall have
received an opinion of an independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), to
the effect that, as a result of the occurrence of a change in law or regulation
or a change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in Investment Company Act Law"), there is more than an insubstantial risk that
the Trust is or will be considered an "investment company" which is required to
be registered under the Investment Company Act, which Change in Investment
Company Act Law becomes effective on or after the date of this Prospectus.
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The Corporation, as the holder of all of the outstanding Common Securities,
will have the right at any time to terminate the Trust and cause a Like Amount
of the Junior Subordinated Debentures to be distributed to the holders of the
Trust Securities in liquidation of the Trust, subject to the Corporation's
having received an opinion by independent tax counsel experienced in such
matters to the effect that the holders will not recognize any gain or loss for
United States federal income tax purposes as a result of the dissolution of the
Trust and such distribution to holders of Capital Securities. See "Description
of Exchange Securities -- Description of Capital Securities -- Liquidation of
the Trust and Distribution of Exchange Junior Subordinated Debentures."
POSSIBLE TAX LEGISLATION
In the past the Clinton Administration has proposed tax provisions which,
if applicable to the Junior Subordinated Debentures, would have prevented the
Corporation from deducting interest thereon for United States federal income tax
purposes. Congress has not enacted these provisions. There can be no assurance
that future legislative proposals, future regulations or official administrative
pronouncements, or future judicial decisions will not affect the ability of the
Corporation to deduct interest on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. The
occurrence of a Tax Event may result in the prepayment of the Junior
Subordinated Debentures for cash, in which event the holders of the Capital
Securities would receive cash in redemption of their Capital Securities. See
"Description of the Exchange Securities -- Description of the Exchange Capital
Securities -- Redemption" and "-- Description of Junior Subordinated
Debentures -- Conditional Right to Shorten Maturity and Special Event
Prepayment."
20
<PAGE> 22
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures distributed to the holders of Capital Securities
if a termination of the Trust were to occur. Accordingly, the Capital Securities
or the Junior Subordinated Debentures may trade at a discount from the price
that the investor paid to purchase the Capital Securities offered hereby.
RIGHTS UNDER THE JUNIOR SUBORDINATED DEBENTURES
Because holders of Capital Securities may receive Junior Subordinated
Debentures in liquidation of the Trust and because Distributions are otherwise
limited to payments on the Junior Subordinated Debentures, prospective
purchasers of Capital Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein. See
"Description of Exchange Securities -- Description of Exchange Junior
Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE; DIRECT ACTION FOR PAYMENT
The Bank of New York will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The Bank of
New York will also act as Property Trustee under the Trust Agreement and as
Debenture Trustee under the Indenture. The Bank of New York (Delaware) will act
as Delaware Trustee under the Trust Agreement. The Old Guarantee and the
Exchange Guarantee each will guarantee to the holders of the Capital Securities
the following payments, to the extent not paid by the Trust: (i) any accumulated
and unpaid Distributions required to be paid on the Capital Securities, to the
extent that the Trust has funds on hand legally available therefor at such time,
(ii) the applicable Redemption Price with respect to any Capital Securities
called for redemption, to the extent that the Trust has funds on hand legally
available therefor at such time, and (iii) upon a voluntary or involuntary
termination and liquidation of the Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Capital Securities), the lesser of
(a) the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions to the date of payment, to the extent that the Trust has funds on
hand legally available therefor at such time and (b) the amount of assets of the
Trust remaining available for distribution to holders of the Capital Securities
upon a termination and liquidation of the Trust.
The holders of a majority in Liquidation Amount of the Capital Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee. Any holder of the Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. If the Corporation defaults on
its obligation to pay amounts payable under the Junior Subordinated Debentures,
the Trust will not have sufficient funds for the payment of Distributions or
amounts payable on redemption of the Capital Securities or otherwise, and, in
such event, holders of the Capital Securities will not be able to rely upon the
Guarantee for payment of such amounts. Instead, in the event a Debenture Event
of Default shall have occurred and be continuing and such event is attributable
to the failure of the Corporation to pay principal of (or premium, if any) or
interest on the Junior Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Capital Securities may institute a
legal proceeding directly against the Corporation for enforcement of payment to
such holder of the principal of (or premium, if any) or unpaid interest on such
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Capital Securities of such holder (a "Direct Action").
Notwithstanding any payments made to a holder of Capital Securities by the
Corporation in connection with a Direct Action, the Corporation shall remain
obligated to pay the principal of (and premium, if any) and interest on the
Junior Subordinated Debentures, and the Corporation shall be subrogated to the
rights of the holder of such Capital Securities with respect to payments on the
Capital Securities to the extent of any payments made by the Corporation to such
holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or to assert directly any
other rights in
21
<PAGE> 23
respect of the Junior Subordinated Debentures. See "Description of Exchange
Securities -- Description of Exchange Junior Subordinated Debentures --
Enforcement of Certain Rights by Holders of Capital Securities," "Description of
Exchange Securities -- Description of Exchange Junior Subordinated Debentures --
Debenture Events of Default" and "Description of Exchange Securities --
Description of Exchange Guarantee." The Trust Agreement provides that each
holder of Capital Securities by acceptance thereof agrees to the provisions of
the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, the dissolution,
termination or liquidation of the Trust, and the exercise of the Trust's rights
as holder of Junior Subordinated Debentures. Holders of Capital Securities will
not be entitled to vote to appoint, remove or replace the Property Trustee or
the Delaware Trustee, and such voting rights are vested exclusively in the
holder of the Common Securities except upon the occurrence of certain events
described herein. The Property Trustee, the Administrative Trustees and the
Corporation, as the holder of all of the outstanding Common Securities, may
amend the Trust Agreement without the consent of holders of Capital Securities
to ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust unless such action materially adversely affects the
interests of such holders. See "Description of Exchange Securities --
Description of Exchange Capital Securities -- Voting Rights; Amendment of the
Trust Agreement" and "-- Removal of Issuer Trustees."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions for certain broker-dealers). The Corporation and the Trust do
not intend to register under the Securities Act any Old Capital Securities which
remain outstanding after consummation of the Exchange Offer (subject to such
limited exceptions, if applicable). To the extent that Old Capital Securities
are not tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected.
The Exchange Securities and any Old Securities which remain outstanding
after consummation of the Exchange Offer will vote together as a single class
for purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Trust Agreement. See "Description of Exchange
Securities -- Description of Exchange Capital Securities -- Voting Rights;
Amendment of the Trust Agreement."
The Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by July
5, 1998 or declared effective by August 4, 1998, additional Distributions will
thereupon accrue on the Old Capital Securities commencing on July 6, 1998 or
August 5, 1998 as the case may be, at a rate of 0.25% per annum of the
Liquidation Amount of such Old Capital Securities until the Exchange Offer is
consummated. Upon the effectiveness of the Registration Statement of which this
Prospectus is a part and the consummation of the Exchange Offer, the Trust and
the Corporation will have satisfied their obligations in this regard and holders
of Old Capital Securities will not be entitled to any such additional
Distributions or any further registration rights under the Registration Rights
Agreement, except under limited circumstances with respect to certain
broker-dealers. See "Description of Old Capital Securities."
22
<PAGE> 24
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Corporation believes
such securities are currently owned by, a relatively small number of beneficial
owners. The Old Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability if they are not
exchanged for the Exchange Capital Securities. Although the Exchange Capital
Securities may be resold or otherwise transferred by holders who are not
affiliates of the Corporation or the Trust without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. Old Capital Securities
may be transferred by the holders thereof only in blocks having a Liquidation
Amount of not less than $100,000 (100 Old Capital Securities). Exchange Capital
Securities may be transferred by the holders thereof in blocks having a
Liquidation Amount of $1,000 (one Exchange Capital Security) or integral
multiples thereof. The Corporation and the Trust have been orally advised by the
Initial Purchasers that each of the Initial Purchasers presently intends to make
a market in the Exchange Capital Securities. However, the Initial Purchasers are
not obligated to do so and any market-making activity with respect to the
Exchange Capital Securities may be discontinued by any or all of them at any
time without notice. In addition, such market-making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. Accordingly, no assurance can be given that an active
public or other market will develop for the Exchange Capital Securities or the
Old Capital Securities or as to the liquidity of or the trading market for the
Exchange Capital Securities or the Old Capital Securities. If an active public
market does not develop, the market price and liquidity of the Exchange Capital
Securities may be adversely affected.
If a public trading market develops for the Exchange Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, applicable income tax treatments, the
Corporation's results and the market for similar securities. Depending on
prevailing interest rates, the market for similar securities and other factors,
including the financial condition of the Corporation, the Exchange Capital
Securities may trade at a discount.
Notwithstanding the registration of the Exchange Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Corporation or the Trust may publicly offer for sale or
resell the Exchange Capital Securities only in compliance with the provisions of
Rule 144 under the Securities Act.
Each broker-dealer that receives Exchange Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents. Therefore,
holders of the Old Capital Securities desiring to tender such Old Capital
Securities in exchange for Exchange Capital Securities should allow sufficient
time to ensure timely delivery. Neither the Corporation nor the Trust is under
any duty to give notification of defects or irregularities with respect to the
tenders of Old Capital Securities for exchange.
FLUCTUATION AND UNCERTAINTY OF PROPERTY AND CASUALTY INSURANCE INDUSTRY RESULTS
The results of companies in the property and casualty insurance industry
historically have been subject to significant fluctuations and uncertainties.
The industry's profitability can be affected significantly by volatile and
unpredictable developments (including catastrophes); changes in reserves
resulting from the general claims and legal environments as different types of
claims arise and judicial interpretations relating to the scope of insurers'
liability develop; fluctuations in interest rates and other changes in the
investment environment which affect returns on invested capital; and
inflationary pressures that affect the size of losses.
23
<PAGE> 25
The demand for property and casualty insurance can also vary significantly,
generally rising as the overall level of economic activity increases and falling
as such activity decreases. The property and casualty insurance industry
historically has been cyclical, and the industry as a whole has been in a soft
market since the late 1980s primarily due to premium rate competition, which has
resulted in lower underwriting profitability. The Corporation's results of
operations may be adversely affected by these fluctuations and uncertainties.
UNCERTAINTY REGARDING ADEQUACY OF LOSS RESERVES
The Corporation maintains loss reserves to cover its estimated ultimate
liability for losses and loss adjustment expenses with respect to reported and
unreported claims incurred as of the end of each accounting period. Reserves do
not represent an exact calculation of liability, but instead represent
estimates, generally involving actuarial projections at a given time, of what
the Corporation expects the ultimate settlement and administration of claims
will cost based on its assessment of facts and circumstances then known,
estimates of future trends in claims severity, frequency, judicial theories of
liability and other factors. These variables are affected by both internal and
external events, such as changes in claims handling procedures, economic
inflation, judicial trends and legislative changes. Many of these items are not
directly quantifiable, particularly on a prospective basis. Additionally, there
may be significant reporting lags between the occurrence of the insured event
and the time it is actually reported to the insurer. Reserve estimates are
continually refined in a regular ongoing process as experience develops and
further claims are reported and settled. Adjustments to reserves are reflected
in the results of the periods in which such estimates are changed. Because
establishment of reserves is an inherently uncertain process involving estimates
of future losses, there can be no certainty that currently established reserves
will prove adequate in light of subsequent actual experience. The inherent
uncertainties of estimating loss reserves are generally greater for casualty
coverages than for property coverages, due primarily to the longer period of
time that typically elapses before a definitive determination of ultimate loss
can be made, changing theories of legal liability involving certain types of
claims and changing political climates.
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. In consideration
for issuing the Exchange Capital Securities in exchange for Old Capital
Securities as described in this Prospectus, the Trust will receive Old Capital
Securities in the same Liquidation Amount. The Old Capital Securities
surrendered in exchange for the Exchange Capital Securities will be retired and
cancelled.
The proceeds to the Trust (without giving effect to expenses of the
offering payable by the Corporation) from the offering of the Old Capital
Securities were $125,000,000. All of the proceeds from the sale of Old Capital
Securities were invested by the Trust in the Junior Subordinated Debentures. The
Corporation used approximately $100,000,000 of the net proceeds from the sale of
the Old Junior Subordinated Debentures to retire bank indebtedness of Guaranty
National, a wholly-owned subsidiary of the Corporation, and the balance will be
used for general corporate purposes, which may include investments in and
advances to subsidiaries, the financing of growth and expansion, the financing
of future acquisitions, and the financing of other business opportunities.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the historical ratios of earnings to
combined fixed charges and preferred stock dividends of the Corporation for the
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- --------------------------------
1993 1994 1995 1996 1997
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
4.7 4.6 5.0 5.0 4.6
</TABLE>
24
<PAGE> 26
The ratios of earnings to combined fixed charges and preferred stock
dividends represent the number of times fixed charges (interest, debt expense,
preferred stock dividends, minority interest of subsidiary trust preferred
securities and one-third of all rent and related costs, considered to represent
an appropriate interest factor, charged to income) are covered by income before
income taxes, minority interest expense, cumulative effect of changes in
accounting principles and fixed charges.
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the
Corporation's consolidated financial statements with the Capital Securities
included on its balance sheet as "Company-obligated mandatorily redeemable
preferred capital securities of subsidiary trust holding solely the Junior
Subordinated Debentures of Orion." An audited footnote to the Corporation's
annual consolidated financial statements will indicate that (a) the Trust is
wholly owned by the Corporation, (b) its sole assets are the $125,000,000
aggregate principal amount of 7.701% Junior Subordinated Debentures due April
15, 2028 and (c) the Corporation has given its partial guarantee, which when
taken together with the Corporation's obligations under the Trust Agreement, the
Junior Subordinated Debentures, and the Indenture pursuant to which the Capital
Securities are issued including its obligations to pay costs, expenses, debts
and liabilities of the Trust (other than with respect to the Capital
Securities), provides a full and unconditional guarantee of amounts due on the
Capital Securities. The Corporation will record Distributions payable on the
Capital Securities as a minority interest expense net of federal income tax
benefits in its consolidated statement of earnings.
25
<PAGE> 27
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation as of December 31, 1997 and as adjusted to give effect to the
consummation of the offering of the Capital Securities and the application of
the proceeds thereof. The following data should be read in conjunction with the
financial information included in the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1997, which are incorporated herein by
reference. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Borrowings under bank loan agreement (1).................. $ 100,000 $ 0
6 1/2% Term loan.......................................... 938 938
9 1/8% Senior notes due 2002.............................. 109,919 109,919
7 1/4% Senior notes due 2005.............................. 99,371 99,371
---------- ----------
Total debt........................................ 310,228 210,228
---------- ----------
Company-obligated mandatorily redeemable preferred capital
securities of subsidiary trusts holding solely the junior
subordinated debentures of Orion:
8.73% due January 1, 2037................................. 125,000 125,000
7.701% due April 15, 2028................................. 0 125,000
---------- ----------
125,000 250,000
---------- ----------
Stockholders' equity:
Common stock.............................................. 30,675 30,675
Capital surplus........................................... 152,114 152,114
Net unrealized investment gains........................... 113,592 113,592
Net unrealized foreign exchange translation losses........ (4,398) (4,398)
Retained earnings(2)...................................... 469,512 469,358
Treasury stock at cost.................................... (34,332) (34,332)
Deferred compensation on restricted stock................. (4,053) (4,053)
---------- ----------
Total stockholders' equity........................ 723,110 722,956
---------- ----------
Total capitalization.............................. $1,158,338 $1,183,184
========== ==========
</TABLE>
- ---------------
(1) As described herein, $100,000,000 of the proceeds from the Old Capital
Securities offering, for which Exchange Capital Securities are hereby
offered, were used by the Corporation to repay the borrowings under a bank
loan agreement.
(2) Upon retirement of the bank indebtedness of Guaranty National, deferred debt
issuance costs of $154,000, net of taxes, were expensed.
26
<PAGE> 28
SUMMARY FINANCIAL DATA
The summary below should be read in connection with the financial
information included in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1997.
In November, 1991, the Corporation reduced its ownership of Guaranty
National from 100% to 49.3%. The Corporation owned slightly less than 50% of
Guaranty National from November, 1991 until the Corporation increased its
ownership to approximately 81% in July, 1996 and to 100% in December, 1997. For
the years ended December 31, 1996 and 1997, Guaranty National is included in the
financial statements of the Corporation on a consolidated basis with minority
interest recorded for the portion of Guaranty National earnings that are
attributable to shares not owned by the Corporation until Guaranty National
became a wholly-owned subsidiary of the Corporation. For 1993 through 1995, the
Corporation's investment in Guaranty National is accounted for using the equity
method. All common stock and per-common-share data of the Corporation presented
has been restated to give effect to a two-for-one split of its common stock
effected through a stock dividend declared June 5, 1997.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Gross premiums written......... $ 780,128 $ 812,344 $ 926,729 $1,606,131 $1,593,304
Premiums earned................ 617,404 691,223 749,003 1,300,752 1,357,680
Net investment income.......... 91,803 84,915 99,040 145,391 164,908
Realized investment gains
(losses).................... 9,478 3,437 11,885 24,180 47,775
Total revenues......... 720,155 780,947 874,280 1,493,449 1,590,535
Earnings before federal income
taxes, minority interest
expense, and cumulative
effect of accounting
changes..................... 72,505 71,546 88,035 127,356 176,180
Earnings before cumulative
effect of accounting
changes..................... 56,988 55,245 67,622 86,631 115,806
Net earnings................... 68,813 55,245 67,622 86,631 115,806
Operating earnings(a).......... 51,100 52,818 59,914 72,944 85,691
Net earnings per share:
Basic....................... 2.37 1.94 2.41 3.16 4.24
Diluted..................... 2.34 1.93 2.38 3.12 4.15
Operating earnings per
share(a):
Basic....................... 1.75 1.85 2.13 2.66 3.14
Diluted..................... 1.74 1.84 2.11 2.63 3.07
RATIOS:
GAAP combined ratios:
Loss........................ 74.4% 72.1% 68.4% 67.9% 66.7%
Expense..................... 26.8 27.0 29.0 30.1 31.2
Policyholders' dividends.... 2.0 2.1 2.9 1.8 1.8
---------- ---------- ---------- ---------- ----------
Combined.................. 103.2% 101.2% 100.3% 99.8% 99.7%
========== ========== ========== ========== ==========
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
Statutory combined ratios:
Loss........................ 74.4% 71.5% 67.7% 67.3% 66.7%
Expense..................... 25.6 27.4 29.2 31.2 31.4
Policyholders' dividends.... 2.1 2.2 2.0 1.5 1.9
---------- ---------- ---------- ---------- ----------
Combined.................. 102.1% 101.1% 98.9% 100.0% 100.0%
========== ========== ========== ========== ==========
Industry statutory combined
ratios(b)................... 106.9% 108.5% 106.5% 105.9% 101.8%
========== ========== ========== ========== ==========
Ratio of statutory net premiums
written to policyholders'
surplus..................... 1.4 1.6 1.5 2.0 1.8
========== ========== ========== ========== ==========
BALANCE SHEET DATA (AT END OF
PERIOD):
Total cash and investments..... $1,328,969 $1,325,241 $1,606,445 $2,321,374 $2,553,008
Total assets................... 2,117,454 2,112,761 2,473,588 3,464,357 3,884,058
Total policy liabilities....... 1,412,285 1,450,835 1,596,033 2,304,402 2,443,796
Notes payable and debentures... 160,372 152,382 209,148 310,904 310,228
Minority interest.............. -- -- -- 45,231 --
Company-obligated mandatorily
redeemable preferred capital
securities of subsidiary
trust holding solely junior
subordinated debentures of
Orion....................... -- -- -- -- 125,000
Stockholders' equity........... 394,195 365,088 490,903 576,733 723,110
Book value per common share.... 13.71 13.00 17.59 20.94 26.19
Statutory policyholders'
surplus..................... 460,986 458,676 521,510 670,572 789,036
</TABLE>
- ---------------
(a) Earnings after taxes, excluding the effects of the adoption of new
accounting principles and after-tax realized investment gains.
(b) Source: A.M. Best Company.
28
<PAGE> 30
ORION CAPITAL CORPORATION
The Corporation is a property and casualty insurance holding company. The
Corporation's insurance subsidiaries and affiliates are authorized to underwrite
and sell most types of property and casualty insurance. The Corporation's
insurance businesses are concentrated in niche insurance markets, particularly
workers compensation, professional liability, nonstandard automobile insurance
and underwriting ocean marine, inland marine and property insurance through
underwriting pools. The Corporation provides workers compensation insurance
products through the EBI Companies. The Corporation sells its professional
liability insurance through the DPIC Companies and writes specialty property and
casualty insurance, commercial lines and collateral protection, principally
through Orion Specialty. The Corporation provides underwriting management and
related services principally in ocean marine, inland marine and property
insurance coverages through Wm. H. McGee & Co., Inc. and writes nonstandard
personal automobile insurance business through Guaranty National. The
Corporation owns approximately 24.7% of the outstanding common stock of
Intercargo Corporation, an insurance holding company whose subsidiaries
specialize in international trade and transportation coverages.
The Corporation's insurance, brokerage and management subsidiaries are
licensed to transact business throughout the United States and in all Canadian
provinces. They obtain substantially all of their business from independent
insurance agents and brokers. The Corporation and its majority-owned
subsidiaries have approximately 3,600 employees, substantially all of whom are
employed in insurance-related operations.
For the five-year period ended December 31, 1997, the Corporation's return
on equity from operating earnings (earnings after taxes, excluding the effects
of the adoption of new accounting principles and after-tax realized investment
gains) averaged 13.9% per year. The combined ratio for the Corporation's
insurance operations, computed on the basis of generally accepted accounting
principles, has steadily improved from 103.2% in 1993 to 99.7% in 1997.
ORION CAPITAL TRUST II
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Declaration of Trust executed by the Corporation as Sponsor and The
Bank of New York (Delaware) as Delaware Trustee, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on February 2, 1998.
The Trust has a term of 35 years, but may terminate earlier as provided in the
Trust Agreement. The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, (ii) effecting the Exchange Offer, (iii) using the
proceeds from the sale of Trust Securities to acquire the Junior Subordinated
Debentures, (iv) making Distributions to holders of the Trust Securities as
provided in the Trust Agreement and (v) engaging in only those other activities
necessary, advisable or incidental thereto (such as registering the transfer of
the Trust Securities). Accordingly, the Junior Subordinated Debentures will be
the sole assets of the Trust, and payments under the Junior Subordinated
Debentures will be the sole revenues of the Trust.
All of the Common Securities are owned by the Corporation. The Common
Securities will rank pari passu, and payments will be made thereon pro rata with
the Capital Securities, except that upon the occurrence and continuance of an
event of default under the Trust Agreement resulting from a Debenture Event of
Default, the rights of the Corporation as holder of the Common Securities to
payments in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Capital
Securities. See "Description of Exchange Securities -- Description of Exchange
Capital Securities -- Subordination of Common Securities." The Corporation has
acquired Common Securities in a Liquidation Amount equal to $4,000,000.
The Trust's business and affairs are conducted by the Property Trustee and
its Administrative Trustees, each appointed by the Corporation as holder of the
Common Securities. The trustees for the Trust will be The Bank of New York as
the Property Trustee, The Bank of New York (Delaware) as the Delaware Trustee,
and three individual trustees as the Administrative Trustees who are employees
or officers of or affiliated with the Corporation (collectively, the "Issuer
Trustees"). The Bank of New York, as Property Trustee, will act as sole
indenture trustee under the Trust Agreement. The Bank of New York will also act
as indenture trustee under
29
<PAGE> 31
the Guarantee and the Indenture. See "Description of Exchange Securities --
Description of Exchange Guarantee" and "Description of Exchange Securities --
Description of Exchange Junior Subordinated Debentures." The holder of the
Common Securities of the Trust or, if an Event of Default under the Trust
Agreement has occurred and is continuing, the holders of a majority in
Liquidation Amount of the Capital Securities will be entitled to appoint, remove
or replace the Property Trustee and/or the Delaware Trustee. In no event will
the holders of the Capital Securities have the right to vote to appoint, remove
or replace the Administrative Trustees; such voting rights will be vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the Trust Agreement. The Corporation will
pay all fees, expenses, debts and obligations (other than with respect to the
Trust Securities) related to the Trust and the offering of the Capital
Securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of the Trust. The principal executive office of the Trust is 9 Farm
Springs Road, Farmington, Connecticut 06032 and its telephone number is (860)
674-7337.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Corporation and the Trust agreed to file and
to use their reasonable efforts to cause to become effective with the Commission
a registration statement with respect to the exchange of the Old Capital
Securities for other capital securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the Registration
Rights Agreement has been filed as an Exhibit to the Registration Statement of
which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Rights Agreement. The form
and terms of the Exchange Capital Securities are the same as the form and terms
of the Old Capital Securities except that the Exchange Capital Securities have
been registered under the Securities Act and will not be subject to the $100,000
minimum Liquidation Amount transfer restriction and certain other restrictions
on transfer applicable to the Old Capital Securities. The Exchange Capital
Securities will not provide as do the Old Capital Securities that if a
registration statement relating to the Exchange Offer has not been filed by July
5, 1998 or has not been declared effective by August 4, 1998, then additional
Distributions will accrue on the Old Capital Securities commencing on July 6,
1998 or August 5, 1998, as the case may be, at a rate of 0.25% per annum of the
Liquidation Amount of such Old Capital Securities until such events have
occurred. Upon the effectiveness of the Registration Statement of which this
Prospectus is a part and consummation of the Exchange Offer, the Corporation and
the Trust will have satisfied their obligations under the Registration Rights
Agreement and holders of Old Capital Securities will not be entitled to any such
additional Distributions or any further registration rights under the
Registration Rights Agreement, except under limited circumstances with respect
to certain broker-dealers. See "Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Old Capital Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
("DTC") who desires to deliver such Old Capital Securities by book-entry
transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Old Guarantee for the Exchange Guarantee
and the Old Debentures, in an amount corresponding to the Old Capital Securities
accepted for exchange, for a like aggregate principal amount of the Exchange
30
<PAGE> 32
Debentures. The Exchange Guarantee and Exchange Debentures have been registered
under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $125,000,000 aggregate Liquidation Amount of Exchange Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Trust will issue,
promptly after the Expiration Date, an aggregate Liquidation Amount of up to
$125,000,000 of Exchange Capital Securities in exchange for a like principal
amount of outstanding Old Capital Securities tendered and accepted in connection
with the Exchange Offer. Holders may tender their Old Capital Securities in any
integral multiple of $1,000 Liquidation Amount (one Old Capital Security); for
purposes of tenders of Old Capital Securities in the Exchange Offer, the
requirement for minimum transfers of $100,000 Liquidation Amount will be waived.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$125,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters
rights in connection with the Exchange Offer.
Old Capital Securities which are not tendered for or are tendered but not
accepted in connection with the Exchange Offer will remain outstanding and be
entitled to the benefits of the Trust Agreement, but will not be entitled to any
further registration rights under the Registration Rights Agreement, except
under limited circumstances with respect to certain broker-dealers. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY
ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER BASED ON SUCH HOLDER'S OWN FINANCIAL POSITION AND REQUIREMENTS.
The term "Expiration Date" means 5:00 p.m., New York City time, on May ,
1998 unless the Exchange Offer is extended by the Corporation or the Trust (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). The Corporation and the Trust have no
present expectation that the Expiration Date will be extended but if it is
extended for any reason each such extension will be for a minimum of five
business days from the date thereof.
The Corporation and the Trust expressly reserve the right in their sole and
absolute discretion, reasonably exercised in accordance with applicable law and
the terms of this Exchange Offer, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange
31
<PAGE> 33
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) if the Trust determines, in its sole and absolute discretion, that
any of the events or conditions referred to under "-- Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Old Capital Securities
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Old Capital Securities to withdraw their tendered Old Capital
Securities as described under "-- Withdrawal Rights" and (iv) to waive any
condition or otherwise amend the terms of the Exchange Offer in any respect. If
the Exchange Offer is amended in a manner determined by the Corporation and the
Trust to constitute a material change, or if the Corporation and the Trust waive
a material condition of the Exchange Offer, the Corporation and the Trust will
promptly disclose such amendment by means of a post-effective amendment to the
Registration Statement and distribution of a prospectus supplement to the
holders of the Old Capital Securities. The Corporation and the Trust will extend
the Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, Exchange Capital
Securities for Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation satisfactory
to the Exchange Agent and the Trust of a book-entry transfer of Old Capital
Securities into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Trust will
be deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting Exchange Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
offer is delayed (whether before or after the Trust's acceptance for exchange of
Old Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange, or exchange, Old Capital Securities tendered pursuant to
the Exchange offer, then, without prejudice to the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Trust and subject
to Rule 14e-1(c) under the Exchange Act, retain tendered Old Capital Securities
and such Old Capital Securities may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described under
"-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Trust will acquire good, marketable and unencumbered title to the
tendered Old
32
<PAGE> 34
Capital Securities, free and clear of all liens, restrictions, charges and
encumbrances, and that the Old Capital Securities tendered for exchange are not
subject to any adverse claims or proxies. The holder also will warrant and agree
that it will, upon request, execute and deliver any additional documents deemed
by the Trust or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment, and transfer of the Old Capital Securities tendered
pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under
"-- Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation must be received by the Exchange Agent, in each case
on or prior to the Expiration Date, or (iii) the guaranteed delivery procedures
set forth below must be complied with.
If less than all of a holder's Old Capital Securities are tendered, the
tendering holder should fill in the amount of Old Capital Securities being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Old Capital Securities delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
no later than two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duty executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "-- Exchange
Agent" on or prior to the Expiration Date, or the guaranteed delivery procedure
set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Old Capital Securities must be duly endorsed
or accompanied by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
33
<PAGE> 35
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or prior to the Expiration Date, or the
procedure for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Old Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
Exchange Capital Securities might not be made to all tendering holders at the
same time, and will depend upon when Old Capital Securities, book-entry
confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and subject
to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, which determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Corporation and the Trust,
be unlawful. The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth under "-- Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so
34
<PAGE> 36
indicate when signing and, unless waived by the Corporation and the Trust,
proper evidence satisfactory in their sole discretion to the Corporation and the
Trust of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF EXCHANGE CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Exchange Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor the
Trust sought its own interpretive letter and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject to
the two immediately following sentences, the Corporation and the Trust believe
that Exchange Capital Securities issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the Corporation or the Trust or who
intends to participate in the Exchange Offer for the purpose of distributing
Exchange Capital Securities, or any broker-dealer who purchased Old Capital
Securities from the Trust to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for Exchange Capital Securities, then such broker-dealer must deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resales of such Exchange Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for Exchange Capital Securities in the Exchange offer will be
required to represent that (i) such holder is not an "affiliate" of the
Corporation or the Trust, (ii) any Exchange Capital Securities to be received by
such holder are being acquired in the ordinary course of such holder's business,
(iii) such holder has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities.
In addition, the Corporation and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Corporation and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Exchange Act) on behalf of whom such holder holds the Old
Capital Securities to be exchanged pursuant to the Exchange Offer. Each
broker-dealer that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that the Old Capital Securities
tendered by it for exchange were acquired for its own account as the result of
market-making activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Capital Securities. The Letter of
Transmittal acknowledges that by so stating and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
35
<PAGE> 37
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Corporation and the Trust believe that Participating Broker-Dealers who own Old
Capital Securities acquired for their own accounts as a result of market-making
activities or other trading activities may fulfill their prospectus delivery
requirements with respect to the Exchange Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the Prospectus prepared for this Exchange Offer so long as it
contains a description of the plan of distribution with respect to the resale of
such Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer during the period referred to below
in connection with resales of Exchange Capital Securities received in exchange
for Old Capital Securities where such Old Capital Securities were acquired by
such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such Exchange Capital Securities for the period ending 90 days after the
Expiration Date (subject to extension under certain limited circumstances
described below) or, if earlier, when all such Exchange Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." A Participating Broker-Dealer who intends to use this Prospectus
in connection with the resale of Exchange Capital Securities received in
exchange for Old Capital Securities pursuant to the Exchange Offer must notify
the Corporation or the Trust, or cause the Corporation or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating Broker-
Dealer. Such notice may be given in the space provided for that purpose in the
Letter of Transmittal or may be delivered to the Exchange Agent at one of the
addresses set forth herein under "-- Exchange Agent." Any Participating
Broker-Dealer who is an "affiliate" of the Corporation or the Trust may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
Each Participating Broker-Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Corporation or
the Trust of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or which causes this Prospectus to omit to state
a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of Exchange Capital Securities (or the Exchange Guarantee or
the Exchange Debentures, as applicable) pursuant to this Prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Corporation
or the Trust has given notice that the sale of the Exchange Capital Securities
(or the Exchange Guarantee or the Exchange Debentures, as applicable) may be
resumed, as the case may be. If the Corporation or the Trust gives such notice
to suspend the sale of the Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Debentures, as applicable), it shall extend the 90-day
period referred to above during which Participating Broker-Dealers are entitled
to use this Prospectus in connection with the resale of Exchange Capital
Securities by the number of days during the period from and including the date
of the giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the amended or supplemented
Prospectus necessary to permit resales of the Exchange Capital Securities or to
and including the date on which the Corporation or the Trust has given notice
that the sale of Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Debentures, as applicable) may be resumed, as the case may be.
36
<PAGE> 38
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be tendered again at any subsequent time
on or prior to the Expiration Date by following any of the procedures described
above under "-- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties.
Neither the Corporation, the Trust, any affiliates or assigns of the Corporation
or the Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON EXCHANGE CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive Distributions on such Old Capital Securities and
will be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from April 15, 1998. Accordingly, holders of
Exchange Capital Securities as of the record date for the payment of
Distributions on October 15, 1998 will be entitled to receive Distributions
accumulated from April 15, 1998.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any Exchange Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions has occurred or exists or has not been
satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Capital Securities
issued pursuant to the Exchange Offer in exchange for Old Capital
Securities to be offered for resale, resold and otherwise transferred by
the holder thereof (other than broker-dealers and any such holder which is
an "affiliate" of the Corporation or the Trust within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such
Exchange Capital Securities are acquired in
37
<PAGE> 39
the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the
distribution of such Exchange Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would
reasonably be expected to impair its ability to proceed with the Exchange
Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Corporation or the Trust, threatened for that purpose any governmental
approval has not been obtained, which approval the Corporation or the Trust
shall, in its reasonable discretion, deem necessary for the consummation of
the Exchange Offer as contemplated hereby.
If the Corporation or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any such condition or otherwise amend the
terms of the Exchange offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Corporation or the
Trust will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities and will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: Facsimile Transmission Number: By Hand/Overnight Delivery:
101 Barclay Street, 7E (212) 571-3080 101 Barclay Street
New York, New York 10286 Corporation Trust Services Window
(212) 815-6333 (For Eligible Institutions Ground Level
Only)
Attn: Reorganization Section, Confirm by Telephone New York, New York 10286
Arwen Gibbons (212) 815-6333 Attn: Reorganization Section
Arwen Gibbons
For Information Call:
(212) 815-6333
</TABLE>
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Old Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Old Capital Securities in connection with the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or
38
<PAGE> 40
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE EXCHANGE SECURITIES
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Trust has issued the Old
Capital Securities and the Common Securities and will issue the Exchange Capital
Securities. The Exchange Capital Securities will represent preferred undivided
beneficial interests in the Trust and the holders thereof will be entitled to a
preference over the Common Securities in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust. See "-- Subordination of Common Securities." The Trust
Agreement has been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). This summary description of all the material
provisions of the Exchange Capital Securities, the Common Securities and the
Trust Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Exchange
Capital Securities, the Common Securities and the Trust Agreement, including the
definitions therein of certain terms.
General
The Capital Securities (including the Old Capital Securities and the
Exchange Capital Securities) are limited to $125,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities will rank pari passu,
and payments will be made thereon pro rata, with the Common Securities except as
described under "-- Subordination of Common Securities." Legal title to the
Junior Subordinated Debentures will be held by the Property Trustee in trust on
behalf of the Trust for the benefit of the holders of the Capital Securities and
Common Securities. The Exchange Guarantee will not guarantee payment of
Distributions or amounts payable on redemption of the Exchange Capital
Securities or liquidation of the Trust when the Trust does not have funds on
hand legally available for such payments. See "Description of Exchange
Guarantee."
Distributions
Distributions on the Exchange Capital Securities will be cumulative, will
accumulate from April 15, 1998 and will be payable semi-annually in arrears on
April 15 and October 15 of each year, commencing on October 15, 1998, at the
annual rate of 7.701% of the Liquidation Amount to the holders of the Exchange
Capital Securities on the relevant record dates. The record date for each
Distribution will be the fifteenth day preceding the relevant Distribution Date
(as defined below). The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months and for any
period less than 6 months, the actual months elapsed and the actual days elapsed
in a partial month in a period. In the event that any date on which
Distributions are payable on the Exchange Capital Securities is not a Business
Day (as defined below), then payment of the Distribution 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), in each case with the
same force and effect as if made on such date (each date on which Distributions
are payable in accordance with the foregoing, a "Distribution Date"). A
"Business Day" shall mean any day other than a Saturday or a Sunday, or a day on
which banking institutions in The City of New York, New York are authorized or
required by law or executive order to remain closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer the
payment of interest on the Exchange Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity. Upon any such election, semi-annual
Distributions on the Exchange Capital Securities will be
39
<PAGE> 41
deferred by the Trust during such Extension Period. Distributions to which
holders of the Exchange Capital Securities are entitled during such Extension
Period will accumulate additional Distributions thereon at the rate per annum of
7.701% thereof, compounded semi-annually from the relevant Distribution Date, on
the basis of a 360-day year of twelve 30-day months and for any period less than
6 months, the actual months elapsed and the actual days elapsed in a partial
month in a period, but not exceeding the interest rate then accruing on the
Exchange Junior Subordinated Debentures. The term "Distributions," as used
herein, shall include any such additional Distributions.
Prior to the termination of any such Extension Period, the Corporation may
further extend it provided that no Extension Period may exceed 10 consecutive
semi-annual periods or extend beyond the Stated Maturity. Upon the termination
of any Extension Period and the payment of all amounts then due, and subject to
the foregoing limitations, the Corporation may elect to begin a new Extension
Period. The Corporation must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any such Extension
Period at least five Business Days prior to the earlier of (i) the date the
Distributions on the Capital Securities would have been payable except for the
election to begin or extend such Extension Period or (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or to holders of such Exchange Capital Securities of the record date or the date
such Distributions are payable but in any event not less than five Business Days
prior to such record date. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period. See "Description of
Exchange Junior Subordinated Debentures -- Option to Extend Interest Payment
Period" and "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary to, (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Exchange Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, (d) as a direct
result of, and only to the extent necessary to avoid the issuance of fractional
shares of the Corporation's capital stock following, a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or series
of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans). None of
the Corporation's subsidiaries will be prohibited from declaring and paying cash
distributions with respect to its capital stock or from making payments with
respect to its debt securities.
Although the Corporation may in the future exercise its right to defer
payments of interest on the Exchange Junior Subordinated Debentures, the
Corporation has no such current intention.
The revenue of the Trust available for distribution to holders of the
Exchange Capital Securities will be limited to payments under the Exchange
Junior Subordinated Debentures in which the Trust has invested the proceeds from
the issuance and sale of the Trust Securities. See "-- Description of Exchange
Junior Subordinated Debentures -- General." If the Corporation does not make
interest payments on the Exchange Junior Subordinated Debentures, the Property
Trustee will not have funds available to pay Distributions on the Exchange
Capital Securities. The payment of Distributions (if and to the extent the Trust
has funds on
40
<PAGE> 42
hand legally available for the payment of such Distributions) will be guaranteed
by the Corporation on a limited basis as set forth herein under "-- Description
of Exchange Guarantee."
Conditional Right to Shorten Maturity and Special Event Redemption
If a Tax Event occurs, then the Corporation will have the right, prior to
the termination of the Trust, either (i) to shorten the Stated Maturity of the
Exchange Junior Subordinated Debentures to the minimum extent required, but not
less than 20 years from the date of original issuance thereof, such that, in the
written opinion of counsel experienced in such matters delivered to the
Corporation, after shortening the maturity, interest paid on the Exchange Junior
Subordinated Debentures will be deductible for federal income tax purposes (the
action referred to above being referred to herein as a "Tax Event Maturity
Shortening") or (ii) to prepay the Exchange Junior Subordinated Debentures, as
described below.
If a Tax Event or an Investment Company Event occurs, then the Corporation
shall have the right, within 90 days following the occurrence of such Tax Event
or Investment Company Event, as the case may be, to prepay the Exchange Junior
Subordinated Debentures in whole (but not in part) in the manner and at the
price determined as set forth under "-- Description of Exchange Junior
Subordinated Debentures -- Conditional Right to Shorten Maturity and Special
Event Prepayment," and therefore to cause a mandatory redemption of the Exchange
Capital Securities prior to the Stated Maturity (the circumstances under which
the Corporation has the right so to prepay the Exchange Junior Subordinated
Debentures in connection with a Tax Event being referred to herein as a
"Conditional Tax Redemption Event"). Each of a Conditional Tax Redemption Event
or an Investment Company Event are sometimes referred to herein as a "Special
Event".
Redemption
Upon the repayment on the Stated Maturity or prepayment prior to the Stated
Maturity of the Exchange Junior Subordinated Debentures, the proceeds from such
repayment or prepayment shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days' notice of the date of redemption (the "Redemption Date"),
at the applicable Redemption Price, which shall be equal to (i) in the case of
the repayment of the Exchange Junior Subordinated Debentures on the Stated
Maturity, the Maturity Redemption Price of the Capital Securities (equal to the
principal of, and accrued and unpaid interest on, the Exchange Junior
Subordinated Debentures), (ii) in the case of the optional prepayment of the
Exchange Junior Subordinated Debentures upon the occurrence and continuation of
a Special Event, the Special Event Redemption Price (equal to the Special Event
Prepayment Price of the Capital Securities in respect of the Exchange Junior
Subordinated Debentures) and (iii) in the case of the optional prepayment of the
Exchange Junior Subordinated Debentures other than as contemplated in clause
(ii) above, the Optional Redemption Price of the Capital Securities (equal to
the Optional Prepayment Price in respect of the Junior Subordinated Debentures).
See "-- Description of Exchange Junior Subordinated Debentures -- Optional
Prepayment" and "-- Conditional Right to Shorten Maturity and Special Event
Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Exchange Junior Subordinated Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Exchange Junior
Subordinated Debentures upon the liquidation of the Trust, Exchange Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Exchange Junior
Subordinated Debentures are distributed.
The Corporation will have the option to prepay the Exchange Junior
Subordinated Debentures, (i) in whole or in part, at any time, at the applicable
Optional Prepayment Price and (ii) in whole but not in part, at any time, upon
the occurrence of a Special Event, at the Special Event Prepayment Price.
Liquidation of the Trust and Distribution of Exchange Junior Subordinated
Debentures
The Corporation, as the holder of all of the outstanding Common Securities,
will have the right at any time to dissolve the Trust and cause a Like Amount of
the Exchange Junior Subordinated Debentures to be
41
<PAGE> 43
distributed to the holders of the Trust Securities in liquidation of the Trust,
subject to the Corporation's having received an opinion from independent tax
counsel experienced in such matters to the effect that the holders will not
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and such distribution to holders of
Exchange Capital Securities.
The Trust shall automatically dissolve upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Exchange Junior Subordinated
Debentures to the holders of the Trust Securities if the Corporation, as
Sponsor, has given a written direction to the Property Trustee to terminate the
Trust (which direction is optional and, except as described above, wholly within
the discretion of the Corporation, as the holder of all of the outstanding
Common Securities); (iii) redemption of all of the Trust Securities as described
under "-- Redemption"; (iv) expiration of the term of the Trust; (v) the entry
of an order for the dissolution of the Trust by a court of competent
jurisdiction; and (vi) repayment of the Junior Subordinated Debentures.
If a dissolution occurs as described in clause (i), (ii), (iv) or (v)
above, the Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the holders of the Trust Securities a Like Amount
of the Exchange Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
holders will be entitled to receive out of the assets of the Trust legally
available for distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the Liquidation Amount plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets on hand legally available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Capital Securities and the Common Securities shall be paid
on a pro rata basis, except that if a Debenture Event of Default has occurred
and is continuing, the Capital Securities shall have a priority over the Common
Securities. See "-- Subordination of Common Securities."
If the Corporation elects not to prepay the Junior Subordinated Debentures
prior to maturity in accordance with their terms and either elects not to or is
unable to liquidate the Trust and distribute the Exchange Junior Subordinated
Debentures to holders of the Trust Securities, the Trust Securities will remain
outstanding until the repayment of the Junior Subordinated Debentures on the
Stated Maturity.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities, (i) the Trust
Securities will no longer be deemed to be outstanding, (ii) each registered
global certificate, if any, representing Trust Securities and held by DTC or its
nominee will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution and (iii) any certificates representing Trust Securities not held
by DTC or its nominee will be deemed to represent Exchange Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of such
Trust Securities, and bearing accrued and unpaid interest in an amount equal to
the accumulated and unpaid Distributions on such Trust Securities until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon the Corporation will issue to such holder, and the
Debenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures. See "-- Form, Denomination, Book-Entry Procedures and
Transfer."
There can be no assurance as to the market prices for the Exchange Capital
Securities or the Exchange Junior Subordinated Debentures that may be
distributed in exchange for the Trust Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Exchange Capital
Securities that an investor may purchase, or the Exchange Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price that the investor paid to purchase
the Exchange Capital Securities offered hereby.
42
<PAGE> 44
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Exchange Junior Subordinated Debentures. Any redemption of
Trust Securities shall be made and the applicable Redemption Price shall be
payable on the Redemption Date only to the extent that the Trust has funds
legally available for the payment of such applicable Redemption Price. See also
"-- Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Exchange
Capital Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are legally available, the Property Trustee will
deposit irrevocably with DTC funds sufficient to pay the applicable Redemption
Price with respect to the Exchange Capital Securities held by DTC or its
nominees. See "-- Form, Denomination, Book-Entry Procedures and Transfer." With
respect to the Exchange Capital Securities held in certificated form, the
Property Trustee, to the extent funds are legally available, will irrevocably
deposit with the paying agent for the Exchange Capital Securities funds
sufficient to pay the applicable Redemption Price and will give such paying
agent irrevocable instructions and authority to pay the applicable Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Exchange Capital Securities. See "-- Payment and Paying Agency." Notwithstanding
the foregoing, Distributions payable on or prior to the Redemption Date shall be
payable to the holders of such Exchange Capital Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit, all rights of the holders of the Exchange Capital Securities will
cease, except the right of the holders of the Exchange Capital Securities to
receive the applicable Redemption Price, but without interest on such Redemption
Price, and the Exchange Capital Securities will cease to be outstanding. In the
event that any Redemption Date of Exchange Capital Securities is not a Business
Day, then the applicable Redemption Price payable on such date will be paid 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
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the applicable Redemption
Price is improperly withheld or refused and not paid either by the Trust or by
the Corporation pursuant to the Exchange Guarantee as described under
"Description of Exchange Guarantee," (i) Distributions on Exchange Capital
Securities will continue to accumulate at the then applicable rate, from the
Redemption Date originally established by the Trust to the date such applicable
Redemption Price is actually paid, and (ii) the actual payment date will be the
Redemption Date for purposes of calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Exchange Capital Securities by tender, in
the open market or by private agreement.
If less than all of the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Trust Securities to be redeemed shall generally be allocated pro rata among the
Capital Securities and Common Securities based upon the relative Liquidation
Amounts of such classes.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless the Corporation defaults in payment of the applicable
Prepayment Price on, or in the repayment of, the Junior Subordinated Debentures,
on and after the Redemption Date Distributions will cease to accrue on the Trust
Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of the Capital Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default shall have occurred and be continuing, no payment of
any Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the
43
<PAGE> 45
redemption, liquidation or other acquisition of the Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all of the outstanding Capital Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the applicable
Redemption Price the full amount of such Redemption Price, shall have been made
or provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or Redemption
Price of, the Capital Securities then due and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities will be deemed to have waived any right to act with respect to
such Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Capital Securities and not on behalf of the
Corporation as holder of the Common Securities, and only the holders of the
Capital Securities will have the right to direct the Property Trustee to act on
their behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see "Description of
Exchange Junior Subordinated Debentures -- Debenture Events of Default")
constitutes an "Event of Default" under the Trust Agreement.
Within ninety days after the occurrence of any Event of Default actually
known to the Property Trustee, the Property Trustee shall transmit notice of
such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities as described under
"-- Liquidation of the Trust and Distribution of Exchange Junior Subordinated
Debentures" and "-- Subordination of Common Securities."
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any corporation into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Issuer Trustee shall
be a party, or any corporation succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, shall be the successor of such
Issuer Trustee under the Trust Agreement, provided such corporation shall be
otherwise qualified and eligible.
Mergers, Consolidations, Amalgamation or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other person,
except as described below. The Trust may, at the request of the Corporation as
the holder of all of the outstanding Common Securities, with the consent of the
Administrative Trustees but without the consent of
44
<PAGE> 46
the Property Trustee, the Delaware Trustee or the holders of the Capital
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of the Trust with respect to the Capital Securities or (b)
substitutes for the Capital Securities other securities having substantially the
same terms as the Capital Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Capital Securities rank in priority
with respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) the Corporation expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee with
respect to the Junior Subordinated Debentures, (iii) the Successor Securities
are listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Capital Securities are then listed or quoted, if any, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any two nationally recognized statistical rating organizations,
(v) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity), (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Corporation has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity), and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act, (viii) the Corporation or any permitted successor or
assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee and (ix) the Trust
shall not, except with the consent of holders of 100% in Liquidation Amount of
the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity not to be classified as a grantor
trust for United States federal income tax purposes.
Voting Rights; Amendment of the Trust Agreement
Except as described below and under "-- Removal of Issuer Trustees,"
"-- Mergers, Consolidations, Amalgamation or Replacements of the Trust" and
"Description of Exchange Guarantee -- Amendments and Assignment" and as
otherwise required by law and the terms of the Trust Securities and the Trust
Agreement, the holders of the Exchange Capital Securities will have no voting
rights.
The Trust Agreement may be amended from time to time by the Corporation as
the holder of all of the outstanding Common Securities, the Property Trustee and
the Administrative Trustees without the consent of the holders of the Trust
Securities or the Delaware Trustee (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement, which shall not be inconsistent
with the other provisions of the Trust Agreement, (ii) to modify, eliminate or
add to any provisions of the Trust Agreement to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Trust will not be required to register as
an "investment company" under the Investment Company Act, or (iii) to qualify or
maintain qualification of the Trust Agreement under the Trust Indenture Act;
provided, however, that in each case, such action shall not adversely affect in
any material respect the interests of the holders of the Trust Securities. Any
amendments of the Trust Agreement pursuant to the foregoing shall become
effective when notice thereof is sent to the holders of the Trust
45
<PAGE> 47
Securities. The Trust Agreement may be amended by the Issuer Trustees and the
Corporation as the holder of all of the outstanding Common Securities with the
consent of holders representing a majority (based upon Liquidation Amount) of
the outstanding Trust Securities and upon receipt by the Issuer Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Trust's status as a grantor trust for United States federal income
tax purposes or the Trust's exemption from status as an "investment company"
under the Investment Company Act, provided that, without the consent of each
holder of Trust Securities, the Trust Agreement may not be amended (i) to change
the amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) to restrict the right of
a holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee for the benefit of the holders of the Trust Securities, the Issuer
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or execute any
trust or power conferred on such Debenture Trustee with respect to the Junior
Subordinated Debentures, (ii) waive certain past defaults under the Indenture,
(iii) exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of the Junior Subordinated Debentures or (iv)
consent to any amendment, modification or termination of the Indenture or the
Junior Subordinated Debentures, where such consent shall be required, without in
each case obtaining the prior approval of the holders of a majority in
Liquidation Amount of all outstanding Capital Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior approval of each holder of
the Capital Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of such holders. The Property Trustee shall
notify each holder of Capital Securities of any notice of default with respect
to the Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of such holders of the Capital Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that there is no more than an
insubstantial risk that the Trust would not be classified for United States
federal income tax purposes as a grantor trust on account of such action.
Any required approval of holders of Exchange Capital Securities may be
given at a meeting of such holders convened for such purpose or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which holders of Exchange Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each holder of record of Exchange Capital Securities in the manner
set forth in the Trust Agreement.
No vote or consent of the holders of Exchange Capital Securities will be
required for the Trust to redeem and cancel the Exchange Capital Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of all the
outstanding Common Securities.
Form, Denomination, Book-Entry Procedures and Transfer
The Exchange Capital Securities initially will be represented by one or
more Exchange Capital Securities certificates in registered, global form
(collectively, the "Global Capital Securities"). The Global Capital Securities
will be deposited upon issuance with the Property Trustee as custodian for DTC,
in New York, New
46
<PAGE> 48
York, and registered in the name of DTC or its nominee, in each case for credit
to an account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below. See "-- Exchange of
Book-Entry Capital Securities for Certificated Capital Securities."
Depositary Procedures
DTC has advised the Trust and the Corporation that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial
Purchasers with portions of the Liquidation Amount of the Global Capital
Securities and (ii) ownership of such interests in the Global Capital Securities
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Capital Securities).
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
receive physical delivery of Capital Securities in certificated form and will
not be considered the registered owners or holders thereof under the Trust
Agreement for any purpose.
Payments in respect of the Global Capital Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Capital Securities, including the Global Capital Securities, are registered
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Capital Securities, or for maintaining, supervising or reviewing any of
DTC's records or any Participant's or Indirect Participant's records relating to
the beneficial ownership interests in the Global Capital Securities or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Trust and the
Corporation that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in Liquidation Amount of beneficial
interests in the relevant security as shown on the records of DTC unless DTC has
reason to believe it will not receive payment on such payment date. Payments by
the Participants and the Indirect Participants to the beneficial owners of
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. Neither the Trust or the Corporation nor the
Property Trustee will be liable for any delay by DTC or any of its
47
<PAGE> 49
Participants in identifying the beneficial owners of the Capital Securities, and
the Trust or the Corporation and the Property Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee for all
purposes.
Beneficial interests in the Global Capital Securities will trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
DTC has advised the Trust and the Corporation that it will take any action
permitted to be taken by a holder of Exchange Capital Securities only at the
direction of one or more Participants to whose account with DTC interests in the
Global Capital Securities are credited and only in respect of such portion of
the Liquidation Amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Trust Agreement, DTC reserves the right to exchange the Global
Capital Securities for Exchange Capital Securities in certificated form and to
distribute such Exchange Capital Securities to its Participants.
The information in this section concerning DTC, and its book-entry systems,
has been obtained from sources that the Trust and the Corporation believe to be
reliable, but neither the Trust nor the Corporation takes responsibility for the
accuracy thereof.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for Exchange Capital Securities
in registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) the Corporation in its sole discretion elects to cause the issuance of the
Exchange Capital Securities in certificated form or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default under the Trust Agreement.
In addition, beneficial interests in a Global Capital Security may be exchanged
for certificated Exchange Capital Securities upon request but only upon at least
20 days prior written notice given to the Property Trustee by or on behalf of
DTC in accordance with its customary procedures as in effect at that time. In
all cases, certificated Exchange Capital Securities delivered in exchange for
any Global Capital Security or beneficial interests therein will be registered
in the names, and issued in any approved denominations, requested by or on
behalf of DTC (in accordance with its customary procedures).
Payment and Paying Agency
The clearing agency for the Exchange Capital Securities (the "Clearing
Agency") shall initially be DTC. Payments in respect of the Exchange Capital
Securities held in global form shall be made to the Clearing Agency, which shall
credit the relevant accounts at the Clearing Agency on the applicable
Distribution Dates or, in respect of the Exchange Capital Securities that are
not held by the Clearing Agency, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
register. The paying agent for the Exchange Capital Securities (the "Paying
Agent") shall initially be the Property Trustee. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Property
Trustee and the Corporation. In the event that the Property Trustee shall no
longer be the Paying Agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Exchange Capital Securities.
48
<PAGE> 50
Registration of transfers of the Exchange Capital Securities will be
effected without charge by or on behalf of the Trust, subject to payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Exchange Capital Securities after they have been
called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative causes of
action, construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of the Capital Securities or the Common Securities are entitled
under the Trust Agreement to vote, then the Property Trustee shall take such
action as is directed by the Corporation and, if not so directed, shall take
such action as it deems advisable and in the best interests of the holders of
the Trust Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust (i) will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act, (ii) will continue to be classified for United States
federal income tax purposes as a grantor trust, and (iii) will cooperate with
the Corporation to ensure that the Junior Subordinated Debentures will be
treated as indebtedness of the Corporation for United States federal income tax
purposes. In this connection, the Corporation and the Administrative Trustees
are authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that the Corporation
and the Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the Exchange Junior
Subordinated Debentures will be issued under the Indenture between the
Corporation and the Debenture Trustee. The Indenture has been qualified under
the Trust Indenture Act. This summary of certain terms and provisions of the
Junior Subordinated Debentures and the Indenture does not purport to be
complete, and where reference is made to particular provisions of the Indenture,
such provisions, including the definitions of certain terms, some of which are
not otherwise defined herein, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act.
General
Concurrently with the issuance of the Trust Securities, the Trust invested
the proceeds thereof, together with the consideration paid by the Corporation
for the Common Securities, in Junior Subordinated Debentures issued by the
Corporation. Pursuant to the Exchange Offer, the Corporation will exchange
Exchange Junior Subordinated Debentures, in an amount corresponding to the Old
Capital Securities accepted for exchange, for a like aggregate principal amount
of the Old Junior Subordinated Debentures as soon as practicable after the date
hereof.
49
<PAGE> 51
The Exchange Junior Subordinated Debentures will bear interest from April
15, 1998 at the annual rate of 7.701% of the principal amount thereof, payable
semi-annually in arrears on April 15 and October 15 of each year (each, an
"Interest Payment Date"), commencing October 15, 1998, to the person in whose
name each Exchange Junior Subordinated Debenture is registered, subject to
certain exceptions, at the close of business on the fifteenth day preceding the
relevant payment date. It is anticipated that, until the liquidation, if any, of
the Trust, each Exchange Junior Subordinated Debenture will be held in the name
of the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and for any period less than
6 months, the actual months elapsed and the actual days elapsed in a partial
month in a period. In the event that any date on which interest is payable on
the Exchange Junior Subordinated Debentures is not a Business Day, then payment
of the 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) with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of 7.701%
thereof, compounded semi-annually. The term "interest", as used herein, shall
include semi-annual interest payments, interest on semi-annual interest payments
not paid on the applicable Interest Payment Date and Additional Sums (as defined
below), as applicable.
The Exchange Junior Subordinated Debentures will be issued in denominations
of $1,000 and integral multiples thereof. The Exchange Junior Subordinated
Debentures will mature on April 15, 2028.
The Exchange Junior Subordinated Debentures will rank pari passu with the
Old Junior Subordinated Debentures and with all Other Debentures and will be
unsecured and subordinate and junior in right of payment to the extent and in
the manner set forth in the Indenture to all Senior Indebtedness. See
"-- Subordination." Because the Corporation is a non-operating holding company,
the right of the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the Exchange Capital Securities to benefit
indirectly from such distribution), is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Corporation may itself be
recognized as a creditor of that subsidiary. Accordingly, the Exchange Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of Exchange
Junior Subordinated Debentures should look only to the assets of the Corporation
for payments on the Exchange Junior Subordinated Debentures. In addition, since
many of the Corporation's subsidiaries are insurance companies subject to
regulatory control by various state insurance departments, the ability of such
subsidiaries to pay dividends to the Corporation without prior regulatory
approval is limited by applicable laws and regulations. The Indenture does not
limit the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Indebtedness. See "-- Subordination."
Form, Registration and Transfer
If the Exchange Junior Subordinated Debentures are distributed to the
holders of the Trust Securities, the Exchange Junior Subordinated Debentures may
be represented by one or more global certificates registered in the name of Cede
& Co. as the nominee of DTC. The depositary arrangements for such Exchange
Junior Subordinated Debentures are expected to be substantially similar to those
in effect for the Exchange Capital Securities. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of
Exchange Securities -- Description of Exchange Capital Securities -- Form,
Denomination, Book-Entry Procedures and Transfer."
Payment and Paying Agents
Payment of principal of and any interest on Exchange Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in The City of
New York or at the office of such Paying Agent or Paying Agents as the
Corporation may designate from time to time, except that at the option of the
Corporation payment of any interest may be made (i) by check mailed to the
address of the person entitled thereto as such
50
<PAGE> 52
address shall appear in the register for Exchange Junior Subordinated Debentures
or (ii) by transfer to an account maintained by the person entitled thereto as
specified in such register, provided that proper transfer instructions have been
received by the relevant Record Date. Payment of any interest on any Exchange
Junior Subordinated Debenture will be made to the person in whose name such
Exchange Junior Subordinated Debenture is registered at the close of business on
the Record Date for such interest, except in the case of defaulted interest. The
Corporation may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of or
interest on any Exchange Junior Subordinated Debenture and remaining unclaimed
for two years after such principal or interest has become due and payable shall,
at the request of the Corporation, be repaid to the Corporation and the holder
of such Exchange Junior Subordinated Debenture shall thereafter look, as a
general unsecured creditor, only to the Corporation for payment thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation will have the right under the Indenture at any time during the
term of the Exchange Junior Subordinated Debentures to defer the payment of
interest at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity. At the end of
such Extension Period, the Corporation must pay all interest then accrued and
unpaid (together with interest thereon at the annual rate of 7.701%, compounded
semi-annually, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Exchange Junior
Subordinated Debentures (and holders of Exchange Capital Securities while
Exchange Capital Securities are outstanding) will be required to include the
accruals of such interest in gross income for United States federal income tax
purposes (as original issue discount) prior to the receipt of cash attributable
to such interest. See "Certain Federal Income Tax Consequences -- Interest
Income and OID."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary to, (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Exchange Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, (d) as a direct
result of, and only to the extent necessary to avoid the issuance of fractional
shares of the Corporation's capital stock following, a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or series
of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans). None of
the Corporation's subsidiaries will be prohibited from declaring and paying cash
distributions with respect to its capital stock or from making payments with
respect to its debt securities.
Prior to the termination of any such Extension Period, the Corporation may
further extend it, provided that no Extension Period may exceed 10 consecutive
semi-annual periods or extend beyond the Stated Maturity. Upon the termination
of any such Extension Period and the payment of all amounts then due on any
Interest Payment Date, the Corporation may elect to begin a new Extension
Period, subject to the above
51
<PAGE> 53
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of any
Extension Period (or an extension thereof) at least five Business Days prior to
the earlier of (i) the date the Distributions on the Trust Securities would have
been payable except for the election to begin or extend such Extension Period or
(ii) the date the Administrative Trustees are required to give notice to any
securities exchange or to holders of Capital Securities of the record date or
the date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. The Property Trustee shall give notice
of the Corporation's election to begin or extend a new Extension Period to the
holders of the Capital Securities. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period.
Optional Prepayment
The Exchange Junior Subordinated Debentures will be prepayable, in whole or
in part, at any time at the option of the Corporation, at a prepayment price
(the "Optional Prepayment Price") equal to the greater of (i) 100% of the
principal amount to be prepaid or (ii) the sum, as determined by a Quotation
Agent, of the present values of the remaining scheduled payments of principal to
be prepaid and interest thereon discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in either case, accrued and unpaid interest
thereon to the date of prepayment and any Additional Sums (as defined herein).
Conditional Right to Shorten Maturity and Special Event Prepayment
If a Tax Event occurs, then the Corporation will have the right, prior to
the termination of the Trust, either (i) to shorten the Stated Maturity of the
Junior Subordinated Debentures to the minimum extent required, but not less than
20 years from the date of original issuance thereof, such that in the written
opinion of counsel experienced in such matters delivered to the Corporation,
after shortening the maturity, interest paid on the Junior Subordinated
Debentures will be deductible for federal income tax purposes or (ii) to prepay
the Junior Subordinated Debentures as described below.
If a Special Event (as defined below) shall occur and be continuing, the
Corporation may, at its option, prepay the Junior Subordinated Debentures in
whole (but not in part) at any time within 90 days of the occurrence of such
Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (i) 100% of the principal amount of such Junior
Subordinated Debentures or (ii) the sum, as determined by a Quotation Agent, of
the present values of the remaining scheduled payments of principal and interest
thereon discounted to the prepayment date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in each case, accrued and unpaid interest thereon to the date of
prepayment and any Additional Sums (as defined below).
A "Special Event" means a Conditional Tax Redemption Event (as defined
under "Description of the Exchange Capital Securities -- Conditional Right to
Shorten Maturity and Special Event Redemption") or an Investment Company Event,
as the case may be.
"Special Event Adjusted Treasury Rate" means, with respect to any
prepayment date, the rate per annum equal to the semi-annual equivalent yield to
maturity to the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such prepayment date plus (i) 1.55% if such
prepayment date occurs on or prior to February 1, 1999 and (ii) 0.50% in all
other cases.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date plus 0.30%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term to the Stated Maturity of the Junior
52
<PAGE> 54
Subordinated Debentures to be prepaid that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Junior Subordinated Debentures.
"Quotation Agent" means: (i) Donaldson, Lufkin & Jenrette Securities
Corporation and its successors; provided, however, that if the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Corporation shall substitute therefor another
Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by
the Debenture Trustee after consultation with the Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted to
the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such prepayment date.
"Additional Sums" as hereinafter used means the additional amounts as may
be necessary in order that the amount of Distributions then due and payable by
the Trust on the outstanding Capital Securities and Common Securities shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which the Trust has become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Exchange Junior
Subordinated Debentures to be prepaid at its registered address. Unless the
Corporation defaults in payment of the prepayment price, on and after the
prepayment date, interest ceases to accrue on such Exchange Junior Subordinated
Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Exchange Junior Subordinated Debentures the Additional
Sums.
Restrictions on Certain Payments; Covenants as to the Trust
The Corporation will covenant that if, at any time, (1) there shall have
occurred any event of which the Corporation has actual knowledge that (x) is, or
with the giving of notice or the lapse of time, or both, would be, a Debenture
Event of Default and (y) in respect of which the Corporation shall not have
taken reasonable steps to cure, (2) the Corporation shall be in default with
respect to its payment of any obligations under the Guarantee and the Junior
Subordinated Debentures are held by the Trust or (3) the Corporation shall have
given notice of its election of an Extension Period as provided in the Indenture
and shall not have rescinded such notice, and such Extension Period, or any
extension thereof, shall have commenced, then the Corporation will not, and will
not permit any subsidiary to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and preferred
stock), (ii) make any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any debt securities of the Corporation (including
Other Debentures) that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including under Other Guarantees) if such
guarantee ranks pari passu or
53
<PAGE> 55
junior in right of payment to the Junior Subordinated Debentures (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a direct result of, and only to the extent
necessary to avoid the issuance of fractional shares of the Corporation's
capital stock following, a reclassification of the Corporation's capital stock
or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of the Corporation's capital stock,
(e) the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, and (f) purchases of common stock
related to the issuance of common stock or rights under any of the Corporation's
benefit plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans).
The Corporation's covenants will not prevent its subsidiaries from
declaring and paying cash distributions with respect to capital stock of the
subsidiaries or from making payments with respect to debt securities of the
subsidiaries.
The Corporation has covenanted in the Indenture that, for so long as the
Exchange Junior Subordinated Debentures are issued to the Trust or a trustee of
the Trust, the Corporation will (i) directly or indirectly maintain ownership of
all of the outstanding Common Securities of the Trust, provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Corporation's ownership of the Common Securities, and (ii) use its reasonable
efforts to cause the Trust (a) to remain a business trust, except in connection
with a distribution of Capital Securities, the redemption of all of the Trust
Securities or certain mergers, consolidations or amalgamations each as permitted
by the Trust Agreement, and (b) consistent with the terms and provisions of the
Trust Agreement, to continue to be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes and (iii) use its reasonable efforts to cause each Holder to be treated
as owning an individual beneficial interest in the Capital Securities.
Modification of Indenture
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Corporation and the Debenture Trustee, with the consent of the
holders of a majority in principal amount of Junior Subordinated Debentures, to
modify the Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debentures; provided, that no such modification may, without the
consent of the holders of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity, or reduce the principal amount of the
Junior Subordinated Debentures, or reduce the rate or extend the time of payment
of interest thereon or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body): (i)
failure for 30 days to pay any interest on the Exchange Junior Subordinated
Debentures or any Other Debentures, when due (subject to the deferral of any due
date in the case of an Extension Period); or (ii) failure to pay any principal
of or premium, if any, on the Exchange Junior Subordinated Debentures or any
Other Debentures when due whether at maturity, upon redemption, by declaration
of acceleration of maturity or otherwise; or (iii) failure to observe or perform
in any material
54
<PAGE> 56
respect certain other covenants contained in the Indenture for 90 days after
written notice to the Corporation from the Debenture Trustee or the holders of
at least 25% in aggregate outstanding principal amount of Junior Subordinated
Debentures; or (iv) certain events in bankruptcy, insolvency or reorganization
of the Corporation.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the nonpayment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal or interest (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
Enforcement of Certain Rights by Holders of Capital Securities
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Corporation to pay principal of or
premium, if any, or interest on the Junior Subordinated Debentures on the due
date, a holder of Capital Securities may institute a Direct Action. The
Corporation may not amend the Indenture to remove the foregoing right to bring a
Direct Action without the prior written consent of the holders of all of the
Capital Securities. If the right to bring a Direct Action is removed following
the Exchange Offer, the Trust may become subject to the reporting obligations
under the Exchange Act. Notwithstanding any payments made to a holder of
Exchange Capital Securities by the Corporation in connection with a Direct
Action, the Corporation shall remain obligated to pay the principal of or
premium, if any, or interest on the Exchange Junior Subordinated Debentures, and
the Corporation shall be subrogated to the rights of the holder of such Exchange
Capital Securities with respect to payments on the Exchange Capital Securities
to the extent of any payments made by the Corporation to such holder in any
Direct Action.
The holders of the Exchange Capital Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Exchange Junior Subordinated Debentures unless
there shall have been an Event of Default under the Trust Agreement. See
"Description of Exchange Capital Securities -- Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Corporation shall not consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any person, and no
person shall consolidate with or merge into the Corporation or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to the Corporation, unless: (i) in case the Corporation consolidates
with or merges into another person or conveys or transfers its properties and
assets substantially as an entirety to any person, the successor person is
organized under the laws of the United States or any State or the District of
Columbia, and such successor person expressly assumes the Corporation's
obligations on the Junior Subordinated Debentures; (ii) immediately after giving
effect thereto, no Debenture Event of Default, and no event which, after notice
or lapse of time or both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as prescribed in
the Indenture are met.
55
<PAGE> 57
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Exchange Junior Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all Exchange Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity within one year, and the Corporation deposits or causes to be
deposited with the Debenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the Exchange
Junior Subordinated Debentures not previously delivered to the Debenture Trustee
for cancellation, for the principal and premium, if any, and interest to the
date of the deposit or to the Stated Maturity, as the case may be, then the
Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
Subordination
In the Indenture, the Corporation has covenanted and agreed that any
Exchange Junior Subordinated Debentures issued thereunder will be subordinate
and junior in right of payment to all Senior Indebtedness to the extent provided
in the Indenture. Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Indebtedness
will first be entitled to receive payment in full before the holders of Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the Junior Subordinated Debentures.
No payments on account of principal or premium, if any, or interest in
respect of the Junior Subordinated Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Senior Indebtedness" shall mean, with respect to the Corporation, (i) the
principal, premium, if any, and interest in respect of (A) Indebtedness for
Money Borrowed and (B) indebtedness evidenced by securities, notes, debentures,
bonds or other similar instruments issued by the Corporation, (ii) all capital
lease obligations of the Corporation, (iii) all obligations of the Corporation
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Corporation and all obligations of the Corporation under
any conditional sale or title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations,
contingent or otherwise of the Corporation in respect of any letter of credit,
banker's acceptance, security purchase facilities or similar credit transaction,
(v) all obligations in respect of interest rate swap, cap or other agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements, (vi) all obligations of
the type referred to in clauses (i) through (v) above of other persons for the
payment of which the Corporation is responsible or liable as obligor, guarantor
or otherwise and (vii) all obligations of the type referred to in clauses (i)
through (vi) above of other persons secured by any lien on any property or asset
of the Corporation (whether or not such obligation is assumed by the
Corporation), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Junior Subordinated Debentures and (2)
any indebtedness between or among the Corporation or its affiliates, including
all other debt securities and guarantees in respect of those debt securities
issued to (a) any other Orion Capital Trust or a trustee of such
56
<PAGE> 58
trust and (b) any other trust, or a trustee of such trust, partnership or other
entity affiliated with the Corporation that is a financing vehicle of the
Corporation (a "financing entity") in connection with the issuance by such a
financing entity of preferred securities or other securities that rank pari
passu with, or junior to, the Capital Securities. Such Senior Indebtedness shall
continue to be Senior Indebtedness and be entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Corporation for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments.
By reason of such subordination, in the event of an insolvency, creditors
of the Corporation who are holders of Senior Indebtedness, as well as certain
general creditors of the Corporation, may recover more, ratably, than the
holders of the Junior Subordinated Debentures. Additionally, the Corporation
currently conducts substantially all of its operations through subsidiaries, and
the holders of Junior Subordinated Debentures will be structurally subordinated
to the creditors of the Corporation's subsidiaries. The Corporation relies
primarily on dividends from such subsidiaries to meet its obligations for
payment of its corporate expenses and principal and interest on its outstanding
debt obligations. See "Risk Factors -- Ranking of Subordinated Obligations Under
the Exchange Guarantee and the Exchange Junior Subordinated Debentures."
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Governing Law
The Indenture and the Exchange Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the Indenture under
the Trust Indenture Act, the Debenture Trustee shall have and be subject to all
the duties and responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to such provisions, the Debenture Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Exchange Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF EXCHANGE GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Old Capital Securities for
the benefit of the holders from time to time of the Old Capital Securities. As
soon as practicable after the date hereof, the Exchange Guarantee will be
exchanged by the Corporation for the Old Guarantee for the benefit of the
holders from time to time of the Exchange Capital Securities. To the extent that
Old Capital Securities are not tendered and accepted pursuant to the Exchange
Offer for Exchange Capital Securities, the Corporation will continue to provide
such holders of Old Capital Securities with the guarantees set forth under the
Old Guarantee. The Bank of New York will act as trustee ("Guarantee Trustee")
under the Guarantee. The Guarantee has been qualified under the Trust Indenture
Act. This summary description of certain provisions of the Guarantee does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including the definitions
therein of certain terms, and the Trust Indenture Act. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Capital
Securities.
57
<PAGE> 59
General
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent summarized herein, the Guarantee Payments (as defined
below) to the holders of the Exchange Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Exchange Capital Securities, to the extent not paid by or on
behalf of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accumulated and unpaid Distributions required to be paid on
Exchange Capital Securities, to the extent that the Trust has funds on hand
legally available therefor at such time, (ii) the applicable Redemption Price
with respect to Exchange Capital Securities called for redemption, to the extent
that the Trust has funds on hand legally available therefor at such time, or
(iii) upon a voluntary or involuntary termination and liquidation of the Trust,
the lesser of (a) the Liquidation Distribution and (b) the amount of assets of
the Trust remaining available for distribution to holders of Exchange Capital
Securities. The Corporation's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Corporation to the
holders of the Exchange Capital Securities or by causing the Trust to pay such
amounts to such holders.
Because the Corporation is a holding company, the right of the Corporation
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the Exchange Guarantee will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and claimants should look only to the assets of the Corporation
for payments thereunder. See "Description of Exchange Securities -- Description
of the Exchange Junior Subordinated Debentures -- General." The Exchange
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Corporation, including Senior Indebtedness, whether under
the Indenture, any other indenture that the Corporation has entered into or may
enter into in the future or otherwise.
The Corporation will, through the Exchange Guarantee, the Trust Agreement,
the Exchange Junior Subordinated Debentures and the Indenture, taken together,
fully, irrevocably and unconditionally guarantee all of the Trust's obligations
under the Exchange Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Exchange Capital Securities. See "Relationship
Among the Exchange Capital Securities, the Exchange Junior Subordinated
Debentures and the Exchange Guarantee."
Status of the Guarantee
The Exchange Guarantee will constitute an unsecured obligation of the
Corporation. The Exchange Guarantee and the Common Guarantee will be (i)
subordinate and junior in right of payment to all other liabilities of the
Corporation; (ii) pari passu with (A) the most senior preferred or preference
stock now or hereafter issued by the Corporation, and (B) any guarantee now or
hereafter entered into by the Corporation, in respect of any capital securities
or common securities of any Other Trusts; and (iii) senior to the Corporation's
common stock.
The Exchange Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The Exchange
Guarantee will be held for the benefit of the holders of the Capital Securities.
The Exchange Guarantee will not be discharged except by payment of the Guarantee
Payments in full to the extent not paid by the Trust or upon distribution to the
holders of the Exchange Capital Securities of the Exchange Junior Subordinated
Debentures. The Exchange Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
58
<PAGE> 60
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Exchange Capital Securities (in which case no vote
will be required), the Exchange Guarantee may not be amended without the prior
approval of the holders of a majority of the Liquidation Amount of such
outstanding Exchange Capital Securities. The manner of obtaining any such
approval will be as set forth under "Description of Exchange Securities --
Description of the Exchange Capital Securities -- Voting Rights; Amendment of
the Trust Agreement." All guarantees and agreements contained in the Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the Exchange Capital Securities then outstanding.
Events of Default
An event of default under the Exchange Guarantee will occur upon the
failure of the Corporation to perform any of its payment or other obligations
thereunder. The holders of a majority in Liquidation Amount of the Exchange
Capital Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Exchange Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Exchange Guarantee.
Any holder of the Exchange Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Exchange Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the continuance of a default by
the Corporation in performance of the Exchange Guarantee, will undertake to
perform only such duties as are specifically set forth in the Exchange Guarantee
and, during the continuance of such a default, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee will be
under no obligation to exercise any of the powers vested in it by the Exchange
Guarantee at the request of any holder of the Exchange Capital Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
Termination of the Guarantee
The Exchange Guarantee will terminate and be of no further force and effect
upon full payment of the applicable Redemption Price of the Exchange Capital
Securities, upon full payment of the Liquidation Amount payable upon liquidation
of the Trust or upon distribution of Exchange Junior Subordinated Debentures to
the holders of the Capital Securities. The Exchange Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of the Exchange Capital Securities must restore payment of any sums paid
under the Exchange Capital Securities or the Exchange Guarantee.
Governing Law
The Exchange Guarantee will be governed by and construed in accordance with
the laws of the State of New York.
59
<PAGE> 61
DESCRIPTION OF OLD SECURITIES
The information contained in this section is relevant to holders of Old
Securities whose Old Securities are not tendered and accepted for exchange by
the Expiration Date of the Exchange Offer. See "Risk Factors -- Certain
Consequences of a Failure to Exchange Old Capital Securities."
The terms of the Old Securities are identical in all material respects to
the Exchange Securities, except that (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the applicable Registration
Rights Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances with respect to certain
broker-dealers), (ii) the Old Capital Securities contain a $100,000 minimum
Liquidation Amount transfer restriction (which will be waived in respect of
tenders of Old Capital Securities in the Exchange Offer) and certain other
restrictions on transfer, (iii) the Old Capital Securities provide for
additional Distributions which will terminate as set forth below, (iv) the Old
Junior Subordinated Debentures contain a $100,000 minimum principal amount
transfer restriction and (v) the Old Junior Subordinated Debentures provide for
additional interest which will terminate as set forth below. The Old Securities
provide that, in the event that a registration statement relating to the
Exchange Offer has not been filed by July 5, 1998 or has not been declared
effective by August 4, 1998 or, in certain limited circumstances, in the event a
shelf registration statement (the "Shelf Registration Statement") with respect
to the resale of the Old Capital Securities is not declared effective by August
4, 1998, then additional interest will accrue (in addition to the stated
interest rate on the Old Junior Subordinated Debentures) at the rate of 0.25%
per annum on the principal amount of the Old Junior Subordinated Debentures and
additional Distributions will accrue (in addition to the stated Distribution
rate on the Old Capital Securities) at the rate of 0.25% per annum on the
Liquidation Amount of the Old Capital Securities, for the period from July 6, or
August 5, as the case may be, until such time as such events have occurred. Upon
the effectiveness of the Registration Statement of which this Prospectus is a
part and upon consummation of the Exchange Offer, the Trust and the Corporation
will have satisfied their obligations in this regard and the Old Securities will
not be entitled to any such additional interest or additional Distributions.
Accordingly, holders of Old Capital Securities should review the information set
forth under "Risk Factors -- Certain Consequences of a Failure to Exchange Old
Capital Securities" and "Description of Exchange Securities."
RELATIONSHIP AMONG THE EXCHANGE CAPITAL
SECURITIES, THE EXCHANGE JUNIOR SUBORDINATED
DEBENTURES, THE EXCHANGE GUARANTEE AND THE TRUST AGREEMENT
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Exchange Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by the Corporation
as and to the extent set forth under "Description of Exchange Securities --
Description of Exchange Guarantee." Taken together, the Corporation's
obligations under the Exchange Junior Subordinated Debentures, the Indenture,
the Trust Agreement and the Exchange Guarantee will provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payment of Distributions and
other amounts due on the Exchange Capital Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee of the Trust's obligations under the Exchange Capital Securities. If
and to the extent that the Corporation does not make the required payments on
the Exchange Junior Subordinated Debentures, the Trust will not have sufficient
funds to make the related payments, including Distributions, on the Exchange
Capital Securities. The Exchange Guarantee will not cover any such payment when
the Trust does not have sufficient funds on hand legally available therefor. In
such event, the remedy of a holder of Exchange Capital Securities is to
institute a Direct Action. The obligations of the Corporation under the Exchange
Guarantee and the Common Guarantee will be subordinate and junior in right of
payment to all Senior Indebtedness and all other liabilities of the Corporation.
60
<PAGE> 62
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Exchange Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Exchange Capital Securities,
primarily because: (i) the aggregate principal amount or Prepayment Price of the
Exchange Junior Subordinated Debentures will be equal to the sum of the
Liquidation Amount or Redemption Price, as applicable, of the Exchange Capital
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Exchange Junior Subordinated Debentures will match the
Distribution rate and Distribution and other payment dates for the Trust
Securities; (iii) the Corporation shall pay for all and any costs, expenses and
liabilities of the Trust except the Trust's obligations to holders of Trust
Securities under such Trust Securities; and (iv) the Trust Agreement will
provide that the Trust is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF EXCHANGE CAPITAL SECURITIES
A holder of any Exchange Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the Exchange
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the Trust or any other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Trust Agreement. However, in
the event of payment defaults under or acceleration of Senior Indebtedness, the
subordination provisions of the Indenture will provide that no payments may be
made in respect of the Exchange Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Exchange Junior
Subordinated Debentures would constitute an Event of Default under the Trust
Agreement.
LIMITED PURPOSE OF THE TRUST
The Exchange Capital Securities will represent preferred beneficial
interests in the Trust, and the Trust exists for the sole purpose of issuing and
selling the Trust Securities, using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures and engaging in only
those other activities necessary, advisable or incidental thereto. A principal
difference between the rights of a holder of an Exchange Capital Security and a
holder of an Exchange Junior Subordinated Debenture is that a holder of an
Exchange Junior Subordinated Debenture will be entitled to receive from the
Corporation the principal of and premium, if any, and interest on Exchange
Junior Subordinated Debentures held, while a holder of Exchange Capital
Securities is entitled to receive Distributions from the Trust (or, in certain
circumstances, from the Corporation under the Exchange Guarantee) if and to the
extent the Trust has funds on hand legally available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary dissolution and liquidation
of the Trust, the holders of the Trust Securities will be entitled to receive
out of assets held by the Trust, after satisfaction of any liabilities to
creditors, the Liquidation Distribution in cash. See "Description of Exchange
Securities -- Description of Exchange Capital Securities -- Liquidation of the
Trust and Distribution of Exchange Junior Subordinated Debentures." Upon any
voluntary or involuntary liquidation or bankruptcy of the Corporation, the
Property Trustee, as holder of the Exchange Junior Subordinated Debentures,
would be a subordinated creditor of the Corporation, subordinated in right of
payment to all Senior Indebtedness as set forth in the Indenture, but entitled
to receive payment in full of principal, premium, if any, and interest, before
any stockholders of the Corporation receive payments or distributions. Since the
Corporation will be the guarantor under the Exchange Guarantee and will agree to
pay for all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of its Trust Securities), the positions of a holder
of Exchange Capital Securities and a holder of Exchange Junior Subordinated
Debentures relative to other creditors and to stockholders of the Corporation in
the event of liquidation or bankruptcy of the Corporation are expected to be
substantially the same.
61
<PAGE> 63
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Donovan Leisure Newton & Irvine LLP, special tax counsel
to the Corporation and the Trust ("Tax Counsel"), the following is a summary of
certain of the material United States federal income tax consequences of the
purchase, ownership and disposition of Capital Securities held as capital assets
(generally, assets held for investment) by a holder who purchases Old Capital
Securities upon original issuance. It does not deal with special classes of
holders such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, or persons that will hold the Capital Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment, or as other than a
capital asset, or, except to the extent described below, foreign taxpayers. This
summary also does not address the tax consequences to persons that have a
functional currency other than the U.S. dollar or the tax consequences to
shareholders, partners or beneficiaries of a holder of Capital Securities.
Further, it does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any foreign
government that may be applicable to the Capital Securities. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder, the administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis. Each investor is urged to consult his tax advisor as to the
particular tax consequences of purchasing, owning, and disposing of the Capital
Securities, including the application and effect of United States federal,
state, local, foreign and other tax laws.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Old Capital Securities for Exchange Capital Securities will
not be a taxable event to holders for United States federal income tax purposes.
Accordingly a holder will have the same adjusted basis and holding period in the
Exchange Capital Securities as the holder had in the Old Capital Securities
immediately before the exchange.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Old Junior Subordinated Debentures,
Tax Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture and
certain other documents, and based on certain facts and assumptions contained in
such opinion, the Old Junior Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the Corporation. An
opinion of Tax Counsel, however, is not binding on the Internal Revenue Service
(the "IRS") or the courts. Prospective investors should note that no rulings
have been or are expected to be sought from the IRS with respect to any of these
issues and no assurance can be given that the IRS will not take contrary
positions. Moreover, no assurance can be given that any of the opinions
expressed herein will not be challenged by the IRS or, if challenged, that such
a challenge would not be successful.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Old Capital Securities, Tax Counsel
has rendered its opinion generally to the effect that, under then current law
and assuming full compliance with the terms of the Trust Agreement and the
Indenture and certain other documents, and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Capital Securities will generally be considered the
owner of an undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income as ordinary income any
interest income (or original issue discount ("OID")) paid or accrued with
respect to its allocable share of those Junior Subordinated Debentures.
62
<PAGE> 64
INTEREST INCOME AND OID
Under Treasury regulations (the "Regulations") promulgated under the OID
provisions of the Code, a "remote" contingency, within the meaning of the
Regulations, that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Corporation
believes that the likelihood of its exercising its option to defer payments of
interest is "remote" since exercising that option would prevent the Corporation
from declaring dividends on any class of its equity securities. Accordingly, the
Corporation intends to take the position, based on the advice of Tax Counsel,
that the Junior Subordinated Debentures will not be considered to be issued with
OID and, accordingly, stated interest on the Junior Subordinated Debentures
generally will be taxable to a holder as ordinary income at the time it is paid
or accrued in accordance with such holder's method of accounting.
Under the Regulations, if the Corporation were to exercise its option to
defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, if the option to defer the payment of interest
was determined not to be "remote", the Junior Subordinated Debentures would be
treated as having been originally issued with OID. In such event, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for on an economic accrual basis regardless of
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Corporation will have the right at any time to dissolve the Trust and
cause a Like Amount of the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Under current
law, such a distribution, for United States federal income tax purposes, would
be treated as a nontaxable event to each holder, and each holder would receive
an aggregate tax basis in the Junior Subordinated Debentures equal to such
holder's aggregate tax basis in its Capital Securities. A holder's holding
period in the Junior Subordinated Debentures so received in liquidation of the
Trust would include the period during which the Capital Securities were held by
such holder. If, however, the Trust is characterized for United States federal
income tax purposes as an association taxable as a corporation at the time of
its dissolution, the distribution of the Junior Subordinated Debentures may
constitute a taxable event to holders of Capital Securities and a holder's
holding period in Junior Subordinated Debentures would begin on the date such
Junior Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of Exchange
Securities -- Description of Exchange Capital Securities"), the Junior
Subordinated Debentures may be prepaid in cash and the proceeds of such
prepayment distributed to holders in redemption of their Capital Securities.
Under current law, such a prepayment would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed Capital Securities,
and a holder could recognize gain or loss as if it sold such redeemed Capital
Securities for cash. See "-- Sales of Capital Securities."
63
<PAGE> 65
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including a holder whose Capital
Securities are redeemed either upon the Stated Maturity or upon an optional
prepayment of the Junior Subordinated Debentures by the Corporation) will
recognize gain or loss equal to the difference between its adjusted tax basis in
the Capital Securities and the amount realized on the sale of such Capital
Securities (other than with respect to accrued and unpaid interest which has not
yet been included in income, which will be treated as ordinary income). A
holder's adjusted tax basis in the Capital Securities generally will be its
initial purchase price increased by OID (if any) previously includable in such
holder's gross income to the date of disposition and decreased by payments (if
any) received on the Capital Securities in respect of OID. Such gain or loss
generally will be a capital gain or loss and generally will be a long-term
capital gain or loss. The recently enacted Taxpayer Relief Act of 1997 made
certain changes to the Code with respect to the taxation of capital gains of
taxpayers other than corporations. Under the Taxpayer Relief Act of 1997,
capital gain realized on the disposition of an asset held for more than one year
but not more than 18 months is taxed at a maximum rate of 28% and capital gain
realized on the disposition of an asset held for more than 18 months is taxed at
a maximum rate of 20%. Capital gain on the disposition of assets held for not
more than one year continues to be taxed at the rate applicable to ordinary
income (i.e., up to 39.6%).
Capital Securities may trade at a price that does not accurately reflect
the value of accrued but unpaid interest (or OID if the Junior Subordinated
Debentures are treated as having been issued, or reissued, with OID) with
respect to the underlying Junior Subordinated Debentures. A holder who uses the
accrual method of accounting for tax purposes (and a cash method holder, if the
Junior Subordinated Debenture are deemed to have been issued, or reissued, with
OID) who disposes of his Capital Securities will be required to include in
ordinary income (i) any portion of the amount realized that is attributable to
accrued but unpaid interest or (ii) any OID on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income, and to
add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Debentures deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include
all accrued but unpaid interest) a holder will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
CONDITIONAL RIGHT TO SHORTEN MATURITY
Prospective investors should be aware that the Corporation's exercise of
its right to shorten the maturity of the Junior Subordinated Debentures will be
a taxable event to holders of Capital Securities if the Junior Subordinated
Debentures are treated as equity for purposes of United States federal income
taxation before the maturity is shortened. See "Description of Exchange
Securities -- Description of Exchange Capital Securities -- Conditional Right to
Shorten Maturity and Special Event Redemption" and "Description of Exchange
Securities -- Description of Exchange Junior Subordinated
Debentures -- Conditional Right to Shorten Maturity and Special Event
Prepayment."
POSSIBLE TAX LEGISLATION
In the past the Clinton Administration has proposed tax provisions which,
if applicable to the Junior Subordinated Debentures, would have prevented the
Corporation from deducting interest thereon for United States federal income tax
purposes. Congress has not enacted these provisions. There can be no assurance
that future legislative proposals, future regulations or official administrative
pronouncements, or future judicial decisions will not affect the ability of the
Corporation to deduct interest on the Junior Subordinated Debentures.
Accordingly, there can be no assurance that a Tax Event will not occur. The
occurrence of a Tax Event may result in the prepayment of the Junior
Subordinated Debentures for cash, in which event the holders of the Capital
Securities would receive cash in redemption of their Capital Securities. See
"Description of the Capital Securities -- Redemption" and "Description of Junior
Subordinated Debentures -- Special Event Prepayment."
64
<PAGE> 66
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or which is (i) a
citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for federal income tax purposes, (ii) a
corporation or partnership created or organized (or treated as created or
organized for federal income tax purposes) in or under the laws of the United
States or any political subdivision thereof, (iii) an estate the income of which
is includable in its gross income for federal income tax purposes without regard
to its source or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States trustees have the authority to control all substantial
decisions of the trust.
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of the Corporation entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (c) either (A) the beneficial owner of the Capital Security certifies to the
Trust or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Capital Security in such capacity, certifies to the
Trust or its agent, under penalties of perjury, that such statement has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and furnishes the Trust or its agent with a copy
thereof; and (ii) a United States Alien Holder of a Capital Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Capital Security (except that under the 1997
Final Regulations, as defined herein, withholding of United States federal
income tax may apply to payments on a taxable sale or other disposition of a
Capital Security in respect of OID by a United States Alien Holder who does not
provide appropriate certification to the withholding agent with respect to such
transaction).
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
65
<PAGE> 67
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the Exchange Junior
Subordinated Debentures held by the Trust, and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA. Any
purchaser proposing to acquire Exchange Capital Securities with assets of any
Plan should consult with its counsel. The purchase and/or holding of Exchange
Capital Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975 of
the Code (including individual retirement arrangements and other plans described
in Section 4975(e)(1) of the Code) and with respect to which the Corporation,
the Property Trustee or any affiliate is a service provider (or otherwise is a
party in interest or a disqualified person) may constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code, unless such
Capital Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager). The acquisition of Exchange Capital Securities by any
person who is, or who in acquiring such Exchange Capital Securities is using the
assets of, an ERISA Plan shall be deemed to constitute a representation by such
person to the Trust that such person is eligible for exemptive relief available
pursuant to either one of PTE 90-1, PTE 91-38, PTE 84-14, PTE 96-23, PTE 95-60
or another applicable exemption with respect to the acquisition and holding of
such Exchange Capital Securities. In addition, a Plan fiduciary considering the
purchase of Exchange Capital Securities should be aware that the assets of the
Trust may be considered "plan assets" for ERISA purposes. In this case, any
person exercising discretion with respect to the Exchange Junior Subordinated
Debentures would be a fiduciary and a party in interest with respect to the
investing Plans. To avoid certain prohibited transactions under ERISA and the
Code that could thereby result, each investing Plan, by purchasing the Exchange
Capital Securities, will be deemed to have directed the Trust to invest in the
Exchange Junior Subordinated Debentures and to have appointed the Trustees.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Capital
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of Exchange Capital Securities received in
exchange for Old Capital Securities if such Old Capital Securities were acquired
by such Participating Broker-Dealers for their own accounts as result of
market-making activities or other trading activities. The Corporation and the
Trust have agreed that this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of such Exchange Capital Securities for a period ending 90 days
after the Expiration Date (subject to extension under certain limited
circumstances described herein) or, if earlier, when all such Exchange Capital
Securities have been disposed of by such Participating Broker-Dealer. However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Capital Securities received in exchange for Old
Capital Securities pursuant to the Exchange Offer must notify the Corporation or
the Trust, or cause the Corporation or the Trust to be notified, on or prior to
the Expiration Date, that it is a Participating Broker-Dealer. Such notice may
be given in the space provided for that purpose in the Letter of Transmittal or
may be delivered to the Exchange Agent at one of the addresses set forth herein
under "The Exchange Offer -- Exchange Agent." See "The Exchange Offer -- Resales
of Exchange Capital Securities."
66
<PAGE> 68
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. Exchange Capital
Securities received by broker-dealers for their own accounts in connection with
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Capital Securities.
Any broker-dealer that resells Exchange Capital Securities that were
received by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such sale of Exchange Capital Securities
and any commissions or concessions received by any such person may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
VALIDITY OF EXCHANGE SECURITIES
Certain matters relating to the validity of the Exchange Capital
Securities, the Exchange Guarantee and the Exchange Junior Subordinated
Debentures will be passed upon for the Corporation by Donovan Leisure Newton &
Irvine LLP, New York, New York. Certain matters relating to the validity of the
Exchange Capital Securities under Delaware law will be passed on by Potter
Anderson & Corroon, LLP, Wilmington, Delaware. Certain matters relating to
United States federal income tax considerations will be passed upon for the
Corporation by Shereff, Friedman, Hoffman & Goodman, LLP, New York, New York.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from Orion's Annual
Report on Form 10-K for the year ended December 31, 1997 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
67
<PAGE> 69
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE TRUST
OR BY THE INITIAL PURCHASERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR
THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 9
Incorporation of Certain Documents By
Reference........................... 9
Summary............................... 11
Risk Factors.......................... 18
Use of Proceeds....................... 24
Ratios of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................ 24
Accounting Treatment.................. 25
Capitalization........................ 26
Summary Financial Data................ 27
Orion Capital Corporation............. 29
Orion Capital Trust II................ 29
The Exchange Offer.................... 30
Description of the Exchange
Securities.......................... 39
Description of the Old Securities..... 60
Relationship Among the Exchange
Capital Securities, the Exchange
Junior Subordinated Debentures, the
Exchange Guarantee and the Trust
Agreement........................... 60
Certain Federal Income Tax
Consequences........................ 62
ERISA Considerations.................. 66
Plan of Distribution.................. 66
Validity of Exchange Securities....... 67
Experts............................... 67
</TABLE>
======================================================
======================================================
$125,000,000
ORION CAPITAL TRUST II
7.701% EXCHANGE CAPITAL
SECURITIES
FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED
HEREIN, BY
ORION CAPITAL
CORPORATION
------------------------
PROSPECTUS
------------------------
April , 1998
======================================================
<PAGE> 70
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Orion is a Delaware corporation. Reference is made to Section 145 of the
Delaware General Corporation Law as to indemnification by Orion of its officers
and directors. The general effect of such law is to empower a corporation to
indemnify any of its officers and directors against certain expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person to be indemnified in connection with certain
actions, suits or proceedings (threatened, pending or completed) if the person
to be indemnified acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Article VII of Orion's Restated Certificate of Incorporation, as amended
and Article IX of Orion's By-Laws, as amended, provide for the indemnification
of Orion's officers and directors in accordance with the Delaware General
Corporation Law, and include, as permitted by the Delaware General Corporation
Law, certain limitations on the potential personal liability of members of
Orion's Board of Directors for monetary damages as a result of actions taken in
their capacity as Board members.
Orion has entered into indemnification agreements (approved by its
stockholders) with each of its directors and senior officers which, among other
things, contractually confirm the indemnity provided under Orion's Restated
Certificate of Incorporation, its By-Laws and the Delaware General Corporation
Law.
The directors and officers of Orion are covered by insurance policies
indemnifying them against certain liabilities arising under the Securities Act
which might be incurred by them in such capacities.
The Trust Agreement limits the liability to the Trust and certain other
persons, and provides for indemnification by the Trust or Orion, of Trustees,
their officers, directors and employees and certain other persons.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The documents listed hereunder are filed as exhibits hereto.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Indenture dated as of February 5, 1998, between Orion
Capital Corporation and The Bank of New York, as Trustee of
Orion's 7.701% Junior Subordinated Deferrable Interest
Debentures; filed as Exhibit 4(viii) to the Company's Annual
Report on Form 10-K for 1997
4.2 Form of Exchange Debenture Certificate
4.3 Certificate of Trust of Orion Capital Trust II, dated as of
February 2, 1998; filed as Exhibit 4(xi) to the Company's
Annual Report on Form 10-K for 1997
4.4 Declaration of Trust of Orion Capital Trust II, dated as of
February 2, 1998; filed as Exhibit 4(xiii) to the Company's
Annual Report on Form 10-K for 1997
4.5 Amended and Restated Declaration of Trust of Orion Capital
Trust II, dated as of February 5, 1998; filed as Exhibit
4(xv) to the Company's Annual Report on Form 10-K for 1997
4.6 Form of Exchange Capital Security Certificate
4.7 Form of Exchange Guarantee relating to the Exchange Capital
Securities
4.8 Registration Rights Agreement
5.1 Opinion of Donovan Leisure Newton & Irvine LLP as to the
legality of the Exchange Junior Subordinated Debentures and
the Exchange Guarantee to be issued by Orion Capital
Corporation
5.2 Opinion of Potter Anderson & Corroon LLP as to the legality
of the Exchange Capital Securities to be issued by Orion
Capital Trust II
8.1 Tax Opinion of Shereff, Friedman, Hoffman & Goodman, LLP
</TABLE>
II-1
<PAGE> 71
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Donovan Leisure Newton & Irvine LLP (included in
Exhibit 5.1)
23.3 Consent of Potter Anderson & Corroon LLP (included in
Exhibit 5.2)
23.4 Consent of Shereff, Friedman, Hoffman & Goodman, LLP
(included in Exhibit 8.1)
24.1 Powers of Attorney for Orion Capital Corporation
24.2 Powers of Attorney for Orion Capital Trust II
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Debenture Trustee under the Indenture
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Property Trustee under the Amended and Restated Declaration
of Trust
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Guarantee Trustee under the Exchange Guarantee
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
</TABLE>
The following financial statement schedules are filed as part of this
Registration Statement:
None.
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of Orion's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934), that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise,
II-2
<PAGE> 72
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first-class mail or equally
prompt means. This includes information contained in documents filed subsequent
to the effective date of the Registration Statement through the date responding
to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on the 22nd day of April,
1998.
ORION CAPITAL CORPORATION
By: /s/ W. MARSTON BECKER
--------------------------------------
W. Marston Becker
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C>
Date: April 22, 1998 /s/ W. MARSTON BECKER*
-----------------------------------------------------
W. Marston Becker
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: April 22, 1998 /s/ DONALD W. EBBERT, JR.*
-----------------------------------------------------
Donald W. Ebbert, Jr.
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: April 22, 1998 /s/ BERTRAM J. COHN*
-----------------------------------------------------
Bertram J. Cohn
Director
*By: /s/ MICHAEL P. MALONEY
------------------------------------------------
Michael P. Maloney
Attorney-in-fact
</TABLE>
II-4
<PAGE> 74
<TABLE>
<S> <C>
Date: April 22, 1998 /s/ GORDON F. CHEESBROUGH*
-----------------------------------------------------
Gordon F. Cheesbrough
Director
Date: April 22, 1998 /s/ JOHN C. COLMAN*
-----------------------------------------------------
John C. Colman
Director
Date: April 22, 1998 /s/ DAVID H. ELLIOTT*
-----------------------------------------------------
David H. Elliott
Director
Date: April 22, 1998 /s/ VICTORIA R. FASH*
-----------------------------------------------------
Victoria R. Fash
Director
Date: April 22, 1998 /s/ ROBERT H. JEFFREY*
-----------------------------------------------------
Robert H. Jeffrey
Director
Date: April 22, 1998 /s/ GORDON W. KREH*
-----------------------------------------------------
Gordon W. Kreh
Director
Date: April 22, 1998 /s/ WARREN R. LYONS*
-----------------------------------------------------
Warren R. Lyons
Director
Date: April 22, 1998 /s/ JAMES K. MCWILLIAMS*
-----------------------------------------------------
James K. McWilliams
Director
Date: April 22, 1998 /s/ RONALD W. MOORE*
-----------------------------------------------------
Ronald W. Moore
Director
Date: April 22, 1998 /s/ ROBERT B. SANBORN*
-----------------------------------------------------
Robert B. Sanborn
Director
*By: /s/ MICHAEL P. MALONEY
------------------------------------------------
Michael P. Maloney
Attorney-in-fact
</TABLE>
II-5
<PAGE> 75
<TABLE>
<S> <C>
Date: April 22, 1998 /s/ WILLIAM J. SHEPHERD*
-----------------------------------------------------
William J. Shepherd
Director
Date: April 22, 1998 /s/ JOHN R. THORNE*
-----------------------------------------------------
John R. Thorne
Director
Date: April 22, 1998 /s/ WILLIAM B. WEAVER*
-----------------------------------------------------
William B. Weaver
Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on the 22nd day of April,
1998.
ORION CAPITAL TRUST II
<TABLE>
<S> <C>
Date: April 22, 1998 By: /s/ W. MARSTON BECKER
-------------------------------------------------
W. Marston Becker
Administrative Trustee
Date: April 22, 1998 By: /s/ CRAIG A. NYMAN
-------------------------------------------------
Craig A. Nyman
Administrative Trustee
Date: April 22, 1998 By: /s/ MICHAEL P. MALONEY
-------------------------------------------------
Michael P. Maloney
Administrative Trustee
*By: /s/ MICHAEL P. MALONEY
-------------------------------------------------
Michael P. Maloney
Attorney-in-fact
</TABLE>
II-6
<PAGE> 76
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
4.1 Indenture dated as of February 5, 1998, between Orion
Capital Corporation and The Bank of New York, as Trustee of
Orion's 7.701% Junior Subordinated Deferrable Interest
Debentures; filed as Exhibit 4(viii) to the Company's Annual
Report on Form 10-K for 1997
4.2 Form of Exchange Debenture Certificate
4.3 Certificate of Trust of Orion Capital Trust II, dated as of
February 2, 1998; filed as Exhibit 4(xi) to the Company's
Annual Report on Form 10-K for 1997
4.4 Declaration of Trust of Orion Capital Trust II, dated as of
February 2, 1998; filed as Exhibit 4(xiii) to the Company's
Annual Report on Form 10-K for 1997
4.5 Amended and Restated Declaration of Trust of Orion Capital
Trust II, dated as of February 5, 1998; filed as Exhibit
4(xv) to the Company's Annual Report on Form 10-K for 1997
4.6 Form of Exchange Capital Security Certificate
4.7 Form of Exchange Guarantee relating to the Exchange Capital
Securities
4.8 Registration Rights Agreement
5.1 Opinion of Donovan Leisure Newton & Irvine LLP as to the
legality of the Exchange Junior Subordinated Debentures and
the Exchange Guarantee to be issued by Orion Capital
Corporation
5.2 Opinion of Potter Anderson & Corroon LLP as to the legality
of the Exchange Capital Securities to be issued by Orion
Capital Trust II
8.1 Tax Opinion of Shereff, Friedman, Hoffman & Goodman, LLP
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Donovan Leisure Newton & Irvine LLP (included in
Exhibit 5.1)
23.3 Consent of Potter Anderson & Corroon LLP (included in
Exhibit 5.2)
23.4 Consent of Shereff, Friedman, Hoffman & Goodman, LLP
(included in Exhibit 8.1)
24.1 Powers of Attorney for Orion Capital Corporation
24.2 Powers of Attorney for Orion Capital Trust II
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Debenture Trustee under the Indenture
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Property Trustee under the Amended and Restated Declaration
of Trust
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Guarantee Trustee under the Exchange Guarantee
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
</TABLE>
<PAGE> 1
Exhibit 4.2
FORM OF EXCHANGE DEBENTURE
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE.
UNLESS (A) THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND (B) ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]
<PAGE> 2
No. E _____ CUSIP No.
ORION CAPITAL CORPORATION
7.701% EXCHANGE JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE APRIL 15, 2028
Orion Capital Corporation, a Delaware corporation (the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to The Bank of New
York, as Property Trustee, or registered assigns, the principal sum of
$129,000,000 on April 15, 2028 (the "Stated Maturity"), unless the Stated
Maturity is shortened under certain circumstances described herein or this
Debenture is previously prepaid, and to pay interest on the outstanding
principal amount hereof from February 5, 1998, 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, semi-annually (subject to deferral as set forth
herein) in arrears on April 15 and October 15 of each year, commencing April 15,
1998, at the rate of 7.701% 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 semi-annually. 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 and, for any period less than 6 months, the actual months
elapsed and the actual days elapsed in a partial month in such period. In the
event that any date on which the principal of (or premium, if any) or interest
on this Security is payable is not a Business Day, then payment 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), 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
-2-
<PAGE> 3
installment, which shall be the 15th day preceding the relevant interest payment
date. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the 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 holders 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 more fully provided in the Indenture.
The principal of (and premium, if any) and 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
(i) check mailed to the holder at such address as shall appear in the Security
Register or (ii) by transfer to an account maintained by the Person entitled
thereto, provided that proper written transfer instructions have been received
by the relevant record date. Notwithstanding the foregoing, so long as the
Holder of this Security is The Bank of New York, as Property Trustee under the
Amended and Restated Declaration of Trust dated as of February 5, 1998, or a
successor Property Trustee (the "Property Trustee"), 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 the Property Trustee.
The indebtedness evidenced by this Security is unsecured and, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of Senior Indebtedness, 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
-3-
<PAGE> 4
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, 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 provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to he
executed.
ORION CAPITAL CORPORATION
By:_______________________________
Name:
Title:
-4-
<PAGE> 5
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated _______________________________
THE BANK OF NEW YORK, as Trustee
By: _______________________________
Authorized Signatory
-5-
<PAGE> 6
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of February
5, 1998 (the "Indenture"), duly executed and delivered between the Company and
The Bank of New York, as Trustee (the "Trustee"), to which Indenture reference
is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities.
Upon the occurrence and continuation of a Special Event, the Company
shall have the right to prepay this Security in whole (but not in part) at the
Special Event Prepayment Price. "Special Event Prepayment Price" shall mean,
with respect to any prepayment of the Securities following a Special Event, an
amount in cash equal to the greater of (i) 100% of the principal amount to be
prepaid or (ii) the sum, as determined by a Quotation Agent, of the present
values of the remaining scheduled payments of principal and interest thereon
discounted to the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months and, for any period less than 6 months,
the actual months elapsed and the actual days elapsed in a partial month in such
period) at the Special Event Adjusted Treasury Rate, plus, in each case, any
accrued and unpaid interest thereon, including Compounded Interest, Additional
Interest and Additional Sums, if any, to the date of such prepayment.
In addition, the Company shall have the right to prepay this
Security, in whole or in part, at any time (an "Optional Prepayment"), at the
Optional Prepayment Price equal to the greater of (i) 100% of the principal
amount to be prepaid or (ii) the sum, as determined by a Quotation Agent, of the
present values of the remaining scheduled payments of principal to be prepaid
and interest thereon discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months and, for any period
less than 6 months, the actual months elapsed and the actual days elapsed in a
partial month in such period) at the Adjusted Treasury Rate, plus, in either
case, accrued and unpaid interest thereon to the date of prepayment and any
Additional Sums.
The Special Event Prepayment Price and the Optional Prepayment
Price, as the case requires, shall be paid prior to 12:00 noon, New York time,
on the date of such prepayment or at such earlier time as the Company
determines, provided, that the Company shall deposit with the Trustee an amount
sufficient to pay the applicable Prepayment Price by 10:00 a.m., New York City
time, on the date such Prepayment Price
-6-
<PAGE> 7
is to be paid. Any prepayment pursuant to this paragraph will be made upon not
less than 30 days nor more than 60 days notice. If the Securities are only
partially prepaid by the Company pursuant to an Optional Prepayment, the
Securities to be prepaid will be chosen by lot or by any other method utilized
by the Trustee; provided that, as to Securities registered as a Global Security
at the time of prepayment, the Depositary shall determine the particular
Securities to be prepaid in accordance with its procedures.
In the event of prepayment of this Security in part only, a new
Security or Securities for the unprepaid portion hereof will be issued in the
name of the holder hereof upon the cancellation hereof.
If a Tax Event occurs, then the Company will have the right, prior
to the termination of the Trust, either (i) to shorten the Stated Maturity of
this Security to the minimum extent, but not earlier than April 15, 2018, such
that, in the written opinion of counsel experienced in such matters delivered to
the Company, after shortening the Stated Maturity, interest paid on the
Securities shall be deductible for federal income tax purposes or (ii) to prepay
the Securities.
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 a majority in principal amount of
the Securities at the time outstanding, as defined in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of
modifying in any manner the rights of the holders of the Securities; provided,
however, that no such supplemental indenture shall, without the consent of each
holder of Securities then outstanding and affected thereby, (i) extend the
Stated Maturity of any Securities, or reduce the principal amount thereof, or
reduce any amount payable on prepayment thereof, or reduce the rate or extend
the time of payment of interest thereon (subject to Article XVI of the
Indenture), or make the principal of, or interest or premium on, the
Securities payable in any coin or
-7-
<PAGE> 8
currency other than U.S. dollars, or impair or affect the right of any holder of
Securities to institute suit for the payment thereof, or (ii) reduce the
aforesaid percentage of Securities, the holders of which are required to consent
to any such supplemental indenture. The Indenture also contains provisions
permitting the holders of a majority in principal amount of the Securities at
the time outstanding affected thereby, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture, and its
consequences, except a Default in the payment of the principal of or premium, if
any, or interest on any of the Securities or a Default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the 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 heretofore 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.
As long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time and from time to time during the term
of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (an "Extension Period"), during which Extension Period no
interest shall be due and payable, provided that no Extension Period may extend
beyond the Stated Maturity of the Securities. At the end of the Extension
Period, the Company shall pay all interest then accrued and unpaid, together
with deferred interest thereon at the rate specified for the Securities (to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extension Period, the Company may further
defer payments of interest by further extending such Extension Period,
provided that such Extension
-8-
<PAGE> 9
Period, together with all such previous and further extensions within such
Extension Period, shall not exceed 10 consecutive semi-annual periods, including
the first semi-annual period during such Extension Period, or extend beyond the
Stated Maturity of the Securities. Upon the termination of any such Extension
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extension Period, subject to
the foregoing requirements.
The Company has agreed that, if at any time (i) there shall have
occurred any event of which the Company has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be, an Event of
Default and (b) in respect of which the Company shall not have taken reasonable
steps to cure, (ii) if such Securities are held by Orion Capital Trust II, the
Company shall be in default with respect to its payment of any obligations under
the Capital Securities Guarantee, or (iii) the Company shall have given notice
of its election of the exercise of its right to extend the interest payment
period and any such extension shall be continuing, then the Company will not,
and will not permit any Subsidiary to,
(i) declare or pay any dividends or distributions on, or prepay,
purchase, acquire, or make a liquidation payment with respect to, any of
the Company's capital stock) (which includes common and preferred stock);
(ii) make any payment of principal, interest or premium, if any, on
or repay or repurchase or prepay any debt securities of the Company that
rank pari passu with or junior in right of payment to the Securities; or
(iii) make any guarantee payments with respect to any guarantee by
the Company of the debt securities or any Subsidiary of the Company if
such guarantee ranks pari passu or junior in right of payment to the
Securities
other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the Company, (b)
any declaration of a dividend in connection with the implementation of a
stockholder rights plan, or the issuance of stock under any such plan in the
future, or the prepayment or repurchase of any such rights pursuant thereto, (c)
payments under the Capital Securities Guarantee, (d) as a direct result of, and
-9-
<PAGE> 10
only to the extent necessary to avoid the issuance of fractional shares of the
Company's capital stock following, a reclassification of the Company's capital
stock or the exchange or the conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock, (e)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the exchange or conversion of such capital stock or the security
being exchanged or converted, and (f) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees or any of the Company's dividend
reinvestment plans. None of the Company's Subsidiaries will be prohibited from
declaring and paying cash distributions with respect to its capital stock or
from making payments with respect to its debt securities.
The Company will have the right at any time to dissolve Orion
Capital Trust II and cause the Securities held by the Property Trustee to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form without coupons
in denominations of $1,000.00 and any integral multiple thereof. As provided in
the Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable by
the 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 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 registrar may deem
and treat the 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
-10-
<PAGE> 11
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
registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or 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 Person, 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.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
-11-
<PAGE> 1
Exhibit 4.6
FORM OF EXCHANGE CAPITAL SECURITY
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: THIS 7.701% EXCHANGE
CAPITAL SECURITY OF ORION CAPITAL TRUST II (THE "CAPITAL SECURITY") IS A GLOBAL
EXCHANGE CAPITAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE
"CLEARING AGENCY") OR A NOMINEE OF THE CLEARING AGENCY. THIS CAPITAL SECURITY IS
EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON (OTHER
THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A
NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE
CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY
BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
<PAGE> 2
Certificate No. E-_____ No. of Exchange Capital Securities
125,000
CUSIP NO.
Certificate Evidencing Exchange Capital Securities
of
ORION CAPITAL TRUST II
7.701% Exchange Capital Securities
(Liquidation Amount $1,000 per Exchange Capital Security)
ORION CAPITAL TRUST II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that _______ (the
"Holder") is the registered owner of _________ capital securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 7.701% Exchange Capital Securities (Liquidation Amount $1,000 per
Exchange Capital Security) (the "Capital Securities"). The Capital Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed, in proper
form for transfer and otherwise complying with the terms and conditions of the
Declaration (as hereinafter defined). The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are set forth herein, on the reverse hereof and in
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of February 5, 1998, as the same may be amended from time to time (the
"Declaration"), and shall in all respects be subject to the provisions thereof,
including the designation of the terms of the Capital Securities as set forth in
Annex I to the Declaration. Each capitalized term used but not defined herein or
in any legend form or certificate hereon shall have the meaning given it in the
Declaration. The Sponsor will provide a copy of the Declaration, the Exchange
Guarantee and the Indenture to any Holder without charge upon written request to
the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Exchange Guarantee to the extent provided therein.
-2-
<PAGE> 3
By its acceptance hereof, the Holder agrees to treat, for United
States federal income tax purposes, the Exchange Debentures as indebtedness and
the Capital Securities as evidence of indirect beneficial ownership in the
Exchange Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this __
day of __________, 1998.
ORION CAPITAL TRUST II
By:_____________________________
Michael P. Maloney
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated: February 5, 1998.
THE BANK OF NEW YORK
as Property Trustee
By:_____________________________
Name:
Title:
-3-
<PAGE> 4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 7.701% (the "Coupon Rate") of the Liquidation Amount of $1,000
per Capital Security, such rate being the rate of interest payable on the
Exchange Debentures to be held by the Property Trustee. Distributions not due
during an Extension Period (including the first semi-annual period during such
period) in arrears for more than one semi-annual period will bear interest
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions", as used herein, includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Exchange Debentures held by the Property Trustee and to the extent the
Property Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from February 5, 1998 and will be payable
semi-annually in arrears on April 15 and October 15 of each year, commencing on
April 15, 1998, except as otherwise described below and in the Declaration.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than 6 months, the actual months
elapsed and the actual days elapsed in a partial month in such period.
As long as no Event of Default has occurred and is continuing, the
Debenture Issuer has the right under the Indenture, at any time and from time to
time during the term of the Exchange Debentures, to defer payments of interest
by extending the interest payment period on the Exchange Debentures for a period
not exceeding 10 consecutive semi-annual periods, including the first such
semi-annual period during such extension period (an "Extension Period"), during
which Extension Period no interest shall be due and payable, provided that no
Extension Period shall extend beyond the Stated Maturity of the Exchange
Debentures. Upon any such election, semi-annual Distributions on the Capital
Securities will be deferred by the Trust during the term of the Extension
Period. Distributions will continue to accumulate interest thereon (to the
extent permitted by applicable law, but not
-4-
<PAGE> 5
exceeding the rate of interest then accruing on the Exchange Debentures) at the
Coupon Rate compounded semi-annually during any such Extension Period. Before
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period, provided that such Extension Period, together with
all such previous and further extensions within such Extension Period, may not
exceed 10 consecutive semi-annual periods or extend beyond the Stated Maturity
of the Exchange Debentures. Payments of Distributions that have accumulated
during any Extension Period will be payable to Holders as they appear on the
books and records of the Trust on the record date for the first scheduled
Distribution payment date following the expiration of such Extension Period.
Upon the expiration of any Extension Period and the payment of all accrued and
unpaid interest and any additional amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
The Administrative Trustees shall, at the direction of the Sponsor,
at any time dissolve the Trust and cause the Exchange Debentures to be
distributed to the holders of the Securities in liquidation of the Trust or,
simultaneously with any redemption of the Exchange Debentures, cause a Like
Amount of the Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification
number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
-5-
<PAGE> 6
and irrevocably appoints
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:___________________
Signature:__________________________________
(Sign exactly as your name appears
on the other side of this Capital Security Certificate)
Signature Guarantee:____________________________
___________________________
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
-6-
<PAGE> 1
Exhibit 4.7
-----------------------------------------------
CAPITAL SECURITIES GUARANTEE AGREEMENT
ORION CAPITAL CORPORATION
DATED AS OF FEBRUARY 5, 1998
-----------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I. DEFINITIONS AND INTERPRETATION Page
SECTION 1.1. Definitions and Interpretation...........................
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.........................
SECTION 2.2. List of Holders of Securities............................
SECTION 2.3. Reports by the Capital Securities
Guarantee Trustee......................................
SECTION 2.4. Periodic Reports to Capital
Securities Guarantee Trustee...........................
SECTION 2.5. Evidence of Compliance with
Conditions Precedent...................................
SECTION 2.6. Events of Default; Waiver................................
SECTION 2.7. Event of Default; Notice.................................
SECTION 2.8. Conflicting Interests....................................
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Capital
Securities Guarantee Trustee...........................
SECTION 3.2. Certain Rights of Exchange Capital
Securities Guarantee Trustee...........................
SECTION 3.3. Not Responsible for Recitals or
Issuance of Capital Securities
Guarantee..............................................
ARTICLE IV. CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1. Capital Securities Guarantee
Trustee; Eligibility...................................
SECTION 4.2. Appointment, Removal and Resignation
of Capital Securities
Guarantee Trustee......................................
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee................................................
SECTION 5.2. Waiver of Notice and Demand..............................
SECTION 5.3. Obligations Not Affected.................................
SECTION 5.4. Rights of Holders........................................
SECTION 5.5. Guarantee of Payment.....................................
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.6. Subrogation..............................................
SECTION 5.7. Independent Obligations..................................
ARTICLE VI. LIMITATION OF TRANSACTION; SUBORDINATION
SECTION 6.1. Limitation of Transactions...............................
SECTION 6.2. Ranking..................................................
ARTICLE VII. TERMINATION
SECTION 7.1. Termination..............................................
ARTICLE VIII. INDEMNIFICATION
SECTION 8.1. Exculpation..............................................
SECTION 8.2. Indemnification..........................................
ARTICLE IX. MISCELLANEOUS
SECTION 9.1. Successors and Assigns...................................
SECTION 9.2. Amendments...............................................
SECTION 9.3. Notices..................................................
SECTION 9.4. Benefit..................................................
SECTION 9.5. Governing Law............................................
</TABLE>
-ii-
<PAGE> 4
CAPITAL SECURITIES GUARANTEE AGREEMENT
This EXCHANGE CAPITAL SECURITIES GUARANTEE AGREEMENT (the
"Capital Securities Guarantee"), dated as of February 5, 1998, delivered by
Orion Capital Corporation, a Delaware corporation (the "Guarantor"), and The
Bank of New York, a New York banking corporation, as trustee (the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of Orion
Capital Trust II, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of February 5, 1998, the Guarantor as
Sponsor, and the holders from time to time of undivided beneficial interests in
the assets of the Issuer, the Issuer is issuing on the date hereof 125,000
capital securities, having an aggregate liquidation amount of $125,000,000, such
capital securities being designated as the 7.701% Capital Securities
(collectively the "Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Capital Securities Guarantee, to pay to the Holders
of the Capital Securities the Guarantee Payments (as defined below). The
Guarantor agrees to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor has executed and delivered a guarantee
agreement with substantially identical terms to this Capital Securities
Guarantee, for the benefit of the holders of the Original Capital Securities (as
defined herein) (the "Original Capital Securities Guarantee") and a guarantee
agreement, with substantially identical terms to this Capital Securities
Guarantee, for the benefit of the holders of the Common Securities (as defined
herein), except that if an Event of Default (as defined in the Declaration) has
occurred and is continuing, the rights of holders of the Common Securities to
receive Guarantee Payments under the Common Securities Guarantee are subordinate
to the rights of holders of Capital Securities and the Original Capital
Securities to receive Guaranty Payments under this Capital Securities Guarantee
and the Original Capital Securities Guarantee.
<PAGE> 5
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Capital Securities Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Capital Securities
Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Capital Securities Guarantee have the same meaning
when used in this Capital Securities Guarantee unless otherwise defined
in this Capital Securities Guarantee;
(c) a term defined anywhere in this Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Capital Securities Guarantee" or
"this Capital Securities Guarantee" are to this Capital Securities
Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Capital
Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Capital Securities Guarantee, unless
otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
-2-
<PAGE> 6
"Affiliate" shall mean, with respect to a specified Person,
(a) any Person directly or indirectly owning, controlling or holding the power
to vote 20% or more of the outstanding voting securities or other ownership
interests of the specified Person, (b) any Person 20% or more of whose
outstanding voting securities or other ownership interests are directly or
indirectly owned, controlled or held with power to vote by the specified Person,
(c) any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person, and (d) a partnership in which the
specified Person is a general partner; provided, however, that Intercargo
Corporation shall not be deemed to be an Affiliate of the Company or Orion
Capital Trust II.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
"Original Capital Securities: means the $125,000,000 aggregate
principal amount of 7.701% Capital Securities (liquidation amount $1,000 per
Capital Security) issued by the Issuer February 5, 1998.
"Capital Securities Guarantee Trustee" means The Bank of New
York, a New York banking corporation, until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Capital Securities Guarantee Agreement and thereafter means
each such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at The Bank of New York, 101 Barclay Street, Floor 21W, New
York, New York 10286.
"Covered Person" means any Holder or beneficial owner of
Capital Securities.
-3-
<PAGE> 7
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the 7.701% Junior Subordinated Deferrable Interest
Debentures due April 15, 2028 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Exchange Debentures" means the series of subordinated debt
securities of the Guarantor designated the 7.701% Exchange Junior Subordinated
Deferrable Interest Debentures due April 15, 2028 held by the Property Trustee
(as defined in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payments or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Capital Securities to the extent the Issuer has funds on hand legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price") to the extent the Issuer has funds on hand legally available therefor at
such time, with respect to any Capital Securities called for redemption by the
Issuer, and (iii) upon a voluntary or involuntary dissolution or liquidation of
the Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Capital Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accumulated and
unpaid Distributions on the Capital Securities to the date of payment, to the
extent the Issuer has funds on hand legally available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer. If an Event of Default (as defined in the
Indenture) has occurred and is continuing, no Guarantee Payments under the
Common Securities Guarantee with respect to the Common Securities shall be made
until the Holders of Capital Securities shall be paid in full the Guarantee
Payments to which they are entitled under this Capital Securities Guarantee.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Capital Securities;
-4-
<PAGE> 8
provided, however, that, in determining whether the holders of the requisite
percentage of Capital Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee
Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"Indenture" means the Indenture, dated as of February 5, 1998,
between the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee.
"Majority in Liquidation Amount of the Capital Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Capital Securities, voting separately as a class, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Capital
Securities.
"Officers' Certificate" means, with respect to any person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President (however designated), the Secretary or
an Assistant Secretary of the Guarantor. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express
-5-
<PAGE> 9
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Debentures" means only those junior subordinated
debentures issued by the Guarantor from time to time and sold to trusts to be
established by the Guarantor (if any), which are in each case similar to the
Issuer.
"Other Guarantees" means any guarantee now or hereafter to be
entered into by the Guarantor in respect to any capital securities or common
securities of any other trust similar to the Issuer, or of any trustee of such
trust, or of a partnership or other entity affiliated with the Guarantor that is
a financing vehicle of the Guarantor.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" when used with respect to the Capital
Securities Guarantee Trustee, means the chairman or any vice chairman of the
board of directors, the chairman or any vice chairman of the executive committee
of the board of directors, the chairman of the trust committee, the president,
any vice president, any assistant vice president, the cashier, any assistant
cashier, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer or assistant officer of the Capital
Securities Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Successor Capital Securities Guarantee Trustee" means a
successor Capital Securities Guarantee Trustee possessing the qualifications to
act as Capital Securities Guarantee Trustee under Section 4.1.
-6-
<PAGE> 10
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
This Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and if and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 List of Holders of Securities
(a) The Guarantor shall provide the Capital Securities
Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise
the registrar of the Capital Securities) with a list, in such form as the
Capital Securities Guarantee Trustee may reasonably require, of the names and
addressees of the Holders of the Capital Securities ("List of Holders") as of
such date, (i) within one Business Day after each record date, and (ii) at any
other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Capital Securities Guarantee Trustee; provided, that the Guarantor
shall not be obligated to provide such List of Holders at any time when the List
of Holders does not differ from the most recent List of Holders given to the
Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
-7-
<PAGE> 11
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
On or before February 4 of each year, commencing February 4,
1999, the Capital Securities Guarantee Trustee shall provide to the Holders of
the Capital Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Capital Securities Guarantee Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act. Delivery of such reports, information and
documents to the Capital Securities Guarantee Trustee is for informational
purposes only and the Capital Securities Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Capital
Securities Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Capital Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in Liquidation Amount of
Capital Securities may, by vote, on behalf of the Holders of
-8-
<PAGE> 12
all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Capital Securities Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders of the Capital
Securities, notices of all defaults actually known to a Responsible Officer of
the Capital Securities Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of default
in the payment of any Guarantee Payment, the Capital Securities Guarantee
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Capital Securities Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
holders of the Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice, or a Responsible Officer
of the Capital Securities Guarantee Trustee charged with the administration of
the Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
-9-
<PAGE> 13
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders, and the
Capital Securities Guarantee Trustee shall not transfer this Capital Securities
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee upon
acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Successor Capital Securities Guarantee Trustee. The right,
title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not documents
have been executed and delivered pursuant to the appointment of such Successor
Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee has occurred and is
continuing, the Capital Securities Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Capital Securities Guarantee, and no implied
covenants shall be read into this Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Capital Securities Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
-10-
<PAGE> 14
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Capital Securities Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the
Capital Securities Guarantee Trustee shall be determined
solely by the express provisions of this Capital Securities
Guarantee, and the Capital Securities Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Capital
Securities Guarantee, and no implied covenants or obligations
shall be read into this Capital Securities Guarantee against
the Capital Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part
of the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Capital Securities Guarantee Trustee and conforming to
the requirements of this Capital Securities Guarantee; but in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall
not be liable for any error of judgment made in good faith by a Responsible
Officer of the Capital Securities Guarantee Trustee, unless it shall be proved
that the Capital Securities Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall
not be liable with respect to any action taken
-11-
<PAGE> 15
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of not less than a Majority in Liquidation Amount of the Capital
Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Capital Securities Guarantee Trustee, or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Capital Securities Guarantee; and
(iv) no provision of this Capital Securities
Guarantee shall require the Capital Securities Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Capital Securities Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Securities Guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document reasonably believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Capital Securities Guarantee may be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith
-12-
<PAGE> 16
on its part, request evidence as to such matter from the Guarantor,
which evidence shall be promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall
have no duty to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may
consult with counsel of its selection, and the advice or opinion of
such counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or any
of its Affiliates and may include any of its employees. The Capital
Securities Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Capital Securities
Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall
be under no obligation to exercise any of the rights or powers vested
in it by this Capital Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the Capital
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Capital Securities Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Capital Securities
Guarantee in the case of an Event of Default.
(vii) The Capital Securities Guarantee Trustee shall
not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request,
-13-
<PAGE> 17
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital Securities
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, nominees, custodians
or attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Securities
Guarantee Trustee or its agents hereunder shall bind the Holders, and
the signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Securities Guarantee Trustee so to act or as to its compliance
with any of the terms and provisions of this Capital Securities
Guarantee, both of which shall be conclusively evidenced by the Capital
Securities Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in Liquidation Amount of the Capital Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Capital Securities Guarantee Trustee shall
not be liable for any action taken, suffered, or omitted to be taken by
it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Capital Securities Guarantee.
-14-
<PAGE> 18
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Capital Securities
Guarantee
The recitals contained in this Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or
Person permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements
of the supervising or
-15-
<PAGE> 19
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible so to act under Section 4.1(a), the Capital
Securities Guarantee Trust shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities Guarantee
Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Guarantee Trustee and
delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without the need for prior or subsequent accounting) by
an instrument in writing executed by the Capital Securities Guarantee Trustee
and delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
-16-
<PAGE> 20
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the
-17-
<PAGE> 21
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
(a) The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(i) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition relating to
the Capital Securities to be performed or observed by the Issuer;
(ii) the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of
the Capital Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Capital Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(iii) any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders pursuant to
the terms of the Capital Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(iv) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;
(v) any invalidity of, or defect or deficiency in,
the Capital Securities;
(vi) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
-18-
<PAGE> 22
(vii) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.
(b) There shall be no obligation of the Holders to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Capital Securities Guarantee or exercising
any trust or power conferred upon the Capital Securities Guarantee Trustee under
this Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to
enforce this Capital Securities Guarantee, any Holder of Capital Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Capital Securities Guarantee Trustee's rights under this Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Issuer or any other person or entity before proceeding directly
against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Capital Securities Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any
-19-
<PAGE> 23
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Capital Securities Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Capital Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a)(i) through (vii), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTION; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, if at
any time (i) there shall have occurred any event of which the Guarantor has
actual knowledge that (x) with the giving of notice or the lapse of time, or
both, would constitute an Event of Default and (y) in respect of which the
Guarantor shall not have taken reasonable steps to cure, (ii) the Guarantor
shall be in default with respect to its payment of any obligations under this
Capital Securities Guarantee and the Debentures held by the Property Trustee, or
(iii) the Guarantor shall have given notice of its election of the exercise of
its right to defer payment of interest pursuant to Section 16.01 of the
Indenture and any such extension shall be continuing, then the Guarantor shall
not
(1) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect
to any of the Guarantor's capital stock (which includes common and
preferred stock);
(2) make any payment of principal, premium, if any, or
interest on or repay or repurchase or redeem any debt
-20-
<PAGE> 24
securities of the Guarantor (including any Other Debentures) that rank
pari passu with or junior in right of payment to the Debentures; or
(3) make any guarantee payments with respect to any guarantee
by the Guarantor of the debt securities of any subsidiary of the
Guarantor (including Other Guarantees) if such guarantee ranks pari
passu or junior in right of payment to the Debentures
other than (a) dividends or distributions in shares of, or options, warrants,
rights to subscribe for or purchase shares of common stock of the Guarantor, (b)
any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Capital Securities Guarantee, (d) as a direct result of, and
only to the extent necessary to avoid the issuance of fractional shares of the
Guarantor's capital stock following, a reclassification of the Guarantor's
capital stock or the exchange or the conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock, (e) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, and (f) purchases of common
stock related to the issuance of common stock or rights under any of the
Guarantor's benefit plans for its directors, officers or employees or any of the
Guarantor's dividend reinvestment plans.
SECTION 6.2 Ranking
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor (other than obligations in
respect of Other Guarantees), (ii) pari passu with (A) the most senior preferred
or preference stock now or hereafter issued by the Guarantor, and (B) with the
Original Capital Securities Guarantee, any Other Guarantee and the Common
Securities Guarantee, and (iii) senior to the Guarantor's common stock.
-21-
<PAGE> 25
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Capital Securities, or (ii) upon liquidation of the Issuer, the full payment of
the amounts payable in accordance with the Declaration or the distribution of
the Debentures to the Holders of all of the Capital Securities. Notwithstanding
the foregoing, this Capital Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been
-22-
<PAGE> 26
selected with reasonable care by or on behalf of the Guarantor, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Capital
Securities might properly be paid.
SECTION 8.2 Indemnification
(a) The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Capital Securities Guarantee.
(b) Each Indemnified Person shall give prompt notice to the
Guarantor of any action threatened or commenced against it in respect of which
any indemnity is sought hereunder, enclosing a copy of all papers served on, and
notices and demands delivered to, such Indemnified Person, if any, but failure
so to notify the Guarantor shall not relieve the Guarantor from any liability
which it may have under this Section 8.2, except to the extent that it is
materially prejudiced by such failure. The Guarantor shall be entitled to assume
the defense of any such action or proceeding with counsel reasonably
satisfactory to the Indemnified Person who shall not, except with the consent of
the Indemnified Person, be counsel to the Guarantor. Upon assumption by the
Guarantor of the defense of any such action or proceeding, the Indemnified
Person shall have the right to participate in such action or proceeding and to
retain its own counsel, but the Guarantor shall not be liable for any legal fees
or expenses subsequently incurred by such Indemnified Person in connection with
the defense thereof unless (i) the Guarantor has agreed to pay such fees and
expenses, (ii) the Guarantor shall have failed to employ counsel reasonably
satisfactory to the Indemnified Person in a timely manner, or (iii) the
Indemnified Person shall have been advised by counsel (who shall not be employed
by such Indemnified Person and who shall be reasonably satisfactory to the
Guarantor) that such
-23-
<PAGE> 27
representation would constitute an actual or potential conflict of interests for
counsel selected by the Guarantor. The Guarantor shall not consent to the terms
of any compromise or settlement of any action defended by the Guarantor in
accordance with the foregoing without the prior consent of the Indemnified
Person, and the Indemnified Person shall not consent to the terms of any
compromise or settlement of any action being defended by the Guarantor in
accordance with the foregoing without the prior consent of the Guarantor.
Notwithstanding the immediately preceding sentence, if at any time an
Indemnified Person shall have requested the Guarantor to reimburse the
Indemnified Person for fees and expenses of counsel as contemplated above, the
Guarantor agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more
than 30 business days after receipt by the Guarantor of the aforesaid request
and (ii) the Guarantor shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Capital Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in Liquidation Amount of the
Capital Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Capital Securities apply to the giving of
such approval.
-24-
<PAGE> 28
SECTION 9.3 Notices
All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustees at the Issuer's mailing address set forth below (or such other
address as to which the Issuer may give notice to the Holders of the
Capital Securities):
Orion Capital Trust II
9 Farm Springs Rd.
Farmington, CT 06032
Attention: Michael P. Maloney
Administrative Trustee
Telecopy: (860) 674-6890
with a copy to
Donovan Leisure Newton & Irvine LLP
30 Rockefeller Plaza
New York, New York 10112
Attn: John J. McCann, Esq.
Fax: (212) 632-3315
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth
below (or such other address as to which the Capital Securities
Guarantee Trustee may give notice to the Holders of the Capital
Securities);
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 815-5915
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as to which the
Guarantor may give notice to the Holders of the Capital Securities):
-25-
<PAGE> 29
Orion Capital Corporation
9 Farm Springs Rd.
Farmington, CT 06032
Attention: Michael P. Maloney, Esq.
Senior Vice President, General
Counsel and Secretary
Telecopy: (860) 674-6890
(d) If given to any Holder of Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery, such notice or other document shall be deemed to have been delivered
on the date of such refusal.
SECTION 9.4 Benefit
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.6 Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
-26-
<PAGE> 30
THIS CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
ORION CAPITAL CORPORATION,
as Guarantor
By: ____________________________________
Michael P. Maloney, Esq.
Senior Vice President, General
Counsel and Secretary
THE BANK OF NEW YORK, as
Capital Securities Guarantee
Trustee
By: ____________________________________
Name:
Title:
-27-
<PAGE> 1
EXHIBIT 12.1
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1993 1994 1995 1996 1997
----------------------------------------------
(000s omitted except for ratios and percentages)
<S> <C> <C> <C> <C> <C>
Earnings before equity in
earnings of affiliates,
federal income taxes,
minority interest expense and
cumulative effect of adoption
of new accounting principle... $63,118 $59,960 $ 82,531 $127,745 $167,561
Dividends from affiliates....... 3,135 3,295 2,597 302 342
Fixed charges deducted from
earnings(a)................... 17,280 17,689 21,134 31,622 32,792
------- ------- -------- -------- --------
Earnings available for payment
of fixed charges.............. $83,533 $80,944 $106,262 $159,669 $200,695
======= ======= ======== ======== ========
Fixed charges:
Interest expense.............. $13,288 $13,849 $ 16,430 $ 25,014 $ 25,081
Portion of rent deemed to be
interest.................... 3,992 3,840 4,704 6,608 7,711
Minority interest of
subsidiary trust preferred
securities.................. 10,549
------- ------- -------- -------- --------
Total fixed charges........... $17,280 $17,689 $ 21,134 $ 31,622 $ 43,341
======= ======= ======== ======== ========
Ratio of earnings to fixed
charges....................... 4.8 4.6 5.0 5.0 4.6
======= ======= ======== ======== ========
Preferred stock dividends....... $ 409 $ -- $ -- $ -- $ --
Effective tax rate.............. 21.4% 22.8% 23.2% 25.2% 25.8%
------- ------- -------- -------- --------
Earnings required for
preferred stock dividends..... $ 520 $ -- $ -- $ -- $ --
======= ======= ======== ======== ========
Earnings available for payment
of fixed charges and
preferred stock dividend
requirements.................. $83,533 $80,944 $106,262 $159,669 $200,695
======= ======= ======== ======== ========
Combined fixed charges and
preferred stock dividend
requirements.................. $17,800 $17,689 $ 21,134 $ 31,622 $ 43,341
======= ======= ======== ======== ========
Ratio of earnings to combined
fixed charges and preferred
stock dividends............... 4.7 4.6 5.0 5.0 4.6
======= ======= ======== ======== ========
</TABLE>
(a) Represents interest expense and the portion of rent deemed to be interest.
<PAGE> 1
Exhibit 23.1
We consent to the incorporation by reference in this Registration Statement of
Orion Capital Corporation on Form S-4 of our report dated February 11, 1998
appearing in the Annual Report on Form 10-K of Orion Capital Corporation for
the year ended December 31, 1997, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
April 17, 1998
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ GORDON F. CHEESBROUGH
Gordon F. Cheesbrough
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ JOHN C. COLMAN
John C. Colman
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ DAVID H. ELLIOTT
David H. Elliott
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ ROBERT H. JEFFREY
Robert H. Jeffrey
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ GORDON W. KREH
Gordon W. Kreh
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ WARREN R. LYONS
Warren R. Lyons
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ JAMES K. MCWILLIAMS
James K. McWilliams
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ BERTRAM J. COHN
Bertram J. Cohn
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ DONALD W. EBBERT, JR.
Donald W. Ebbert, Jr.
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ W. MARSTON BECKER
W. Marston Becker
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, her true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for her and in her name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ VICTORIA R. FASH
Victoria R. Fash
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ RONALD W. MOORE
Ronald W. Moore
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ ROBERT W. SANBORN
Robert W. Sanborn
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ WILLIAM J. SHEPHERD
William J. Shepherd
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ JOHN R. THORNE
John R. Thorne
<PAGE> 16
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Orion Capital Corporation (the "Corporation") hereby constitutes and
appoints Michael P. Maloney, Esq. and Craig A. Nyman, and each of them, his true
and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Corporation's Registration Statement under the
Securities Act of 1933, as amended, on Form S-4 or any other appropriate form,
relating to the registration of $125,000,000 aggregate principal amount of
Exchange Capital Securities (liquidation amount $1,000 per Exchange Capital
Security) of Orion Capital Trust II, and to sign any and all amendments
(including post-effective amendments) to such Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ WILLIAM B. WEAVER
William B. Weaver
<PAGE> 1
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Administrative
Trustee of Orion Capital Trust II (the "Trust") hereby constitutes and appoints
Michael P. Maloney, Esq. his true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution for him and in
his name, place and stead, in any and all capacities, to sign the Trust's
Registration Statement under the Securities Act of 1933, as amended, on Form S-4
or any other appropriate form, relating to the registration of $125,000,000
aggregate principal amount of Exchange Capital Securities (liquidation amount
$1,000 per Exchange Capital Security) of the Trust and to sign any and all
amendments (including post-effective amendments) to such Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ CRAIG A. NYMAN
Craig A. Nyman
Administrative Trustee
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Administrative
Trustee of Orion Capital Trust II (the "Trust") hereby constitutes and appoints
Michael P. Maloney, Esq. his true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution for him and in
his name, place and stead, in any and all capacities, to sign the Trust's
Registration Statement under the Securities Act of 1933, as amended, on Form S-4
or any other appropriate form, relating to the registration of $125,000,000
aggregate principal amount of Exchange Capital Securities (liquidation amount
$1,000 per Exchange Capital Security) of the Trust and to sign any and all
amendments (including post-effective amendments) to such Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ W. MARSTON BECKER
W. Marston Becker
Administrative Trustee
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Administrative
Trustee of Orion Capital Trust II (the "Trust") hereby constitutes and appoints
Michael P. Maloney, Esq. his true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution for him and in
his name, place and stead, in any and all capacities, to sign the Trust's
Registration Statement under the Securities Act of 1933, as amended, on Form S-4
or any other appropriate form, relating to the registration of $125,000,000
aggregate principal amount of Exchange Capital Securities (liquidation amount
$1,000 per Exchange Capital Security) of the Trust and to sign any and all
amendments (including post-effective amendments) to such Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: April 22, 1998
By: /s/ MICHAEL P. MALONEY
Michael P. Maloney
Administrative Trustee
