<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 20, 1998.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MMI COMPANIES, INC. MMI CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER) IN ITS CHARTER)
DELAWARE DELAWARE
(STATE OF OTHER JURISDICTION OF (STATE OF OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
6331 6159
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
36-3263253 52-2073764
(I.R.S. EMPLOYER IDENTIFICATION (I.R.S. EMPLOYER IDENTIFICATION
NUMBER) NUMBER)
540 LAKE COOK ROAD
DEERFIELD, IL 60015-5290
(847) 940-7550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
COPIES TO:
WAYNE A. SINCLAIR, ESQ. JOHN E. MCGOVERN, JR.
SENIOR VICE PRESIDENT AND GENERAL WILDMAN, HARROLD, ALLEN & DIXON
COUNSEL 225 WEST WACKER DRIVE
MMI COMPANIES, INC. SUITE 3000
540 LAKE COOK ROAD, DEERFIELD, CHICAGO, IL 60606
ILLINOIS 60015-5290 (312) 201-2000
(847) 940-7550
(NAME, ADDRESS AND TELEPHONE NUMBER OF
AGENT FOR SERVICE)
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 being offered in
connection with the formation of a holding company and there is compliance
with general instruction G, please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PER CAPITAL OFFERING REGISTRATION
REGISTERED REGISTERED(1) SECURITY(2) PRICE(2) FEE(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7 5/8% Series B Capital
Securities of MMI
Capital Trust I........ $125,000,000 100% $125,000,000 $36,875
- --------------------------------------------------------------------------------
7 5/8% Series B Junior
Subordinated Deferrable
Interest Debentures due
December 15, 2027 of
MMI Companies, Inc.(3).
- --------------------------------------------------------------------------------
MMI Companies, Inc.
Exchange Guarantee with
respect to 7 5/8%
Series B Capital
Securities(4)..........
---------------------------------------------------
Total(5)(6)............. $125,000,000 100% $125,000,000 $36,875
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933.
(2) Equals the aggregate liquidation amount of the securities being
registered.
(3) No separate consideration will be received for the 7 5/8% Series B Junior
Subordinated Deferrable Interest Debentures due December 15, 2027 of MMI
Companies, Inc. distributed upon any liquidation of MMI Capital Trust I.
(4) No separate consideration will be received for the MMI Companies, Inc.
Exchange Guarantee.
(5) This Registration Statement is deemed to cover rights of holders of 7 5/8%
Series B Junior Subordinated Deferrable Interest Debentures due December
15, 2027 under the Indenture, the rights of holders of 7 5/8% Series B
Capital Securities of MMI Capital Trust I under an Amended and Restated
Declaration of Trust, the rights of holders of such 7 5/8% Series B
Capital Securities under the Exchange Guarantee and certain backup
undertakings as described herein.
(6) Such amount represents the liquidation amount of 7 5/8% Series B Capital
Securities to be exchanged hereunder and the principal amount of 7 5/8%
Series B Junior Subordinated Deferrable Interest Debentures due December
15, 2027 that may be distributed to holders of such 7 5/8% Series B
Capital Securities upon any liquidation of MMI Capital Trust I.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 20, 1998
PROSPECTUS
MMI CAPITAL TRUST I
OFFER TO EXCHANGE ITS 7 5/8% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES B CAPITAL SECURITY)
WHICH ARE BEING REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING 7 5/8% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES A CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
MMI COMPANIES, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998 UNLESS EXTENDED.
-----------
MMI Capital Trust I, a trust created under the laws of the State of Delaware
(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, this "Prospectus") and in the accompanying Letter of Transmittal
(which together constitute the "Exchange Offer"), to exchange up to
$125,000,000 aggregate Liquidation Amount of its 7 5/8% Series B Capital
Securities (the "Exchange Capital Securities") which are being registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like Liquidation Amount of its outstanding 7 5/8% Series A
Capital Securities (the "Original Capital Securities"), of which $125,000,000
aggregate Liquidation Amount are issued and outstanding. Pursuant to the
Exchange Offer, MMI Companies, Inc., a Delaware corporation ("MMI" 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 Original Capital Securities (the "Original Guarantee") for a like guarantee
in respect of the Exchange Capital Securities (the "Exchange Guarantee") and
(ii) all of its 7 5/8% Series A Junior Subordinated Deferrable Interest
Debentures due December 15, 2027 (the "Original Junior Subordinated
Debentures") for a like aggregate principal amount of its 7 5/8% Series B
Junior Subordinated Deferrable Interest Debentures due December 15, 2027 (the
"Exchange Junior Subordinated Debentures"), which Exchange Guarantee and
Exchange Junior Subordinated Debentures also are being registered under the
Securities Act.
The Original Capital Securities, the Original Guarantee and the Original
Junior Subordinated Debentures are collectively referred to herein as the
"Original 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 Trust sold the Original Capital Securities in an offering exempt from the
registration requirements of the Securities Act, which was consummated on
December 23, 1997 (the "Closing Date").
(Continued on following page)
-----------
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of the Original Capital Securities on , 1998.
SEE "RISK FACTORS" COMMENCING ON PAGE 19 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL 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 January , 1998.
<PAGE>
(Continued from the Previous Page)
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Original Securities, except that (i) the
Exchange Securities are being registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable
to the Original Securities, (ii) the Exchange Capital Securities will not
contain the $100,000 minimum Liquidation Amount transfer restriction, (iii)
the Exchange Capital Securities will not provide for any increase in the
Distribution rate thereon and (iv) the Exchange Junior Subordinated Debentures
will not provide for any increase in the interest rate thereon. See
"Description of Exchange 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 dated as of
December 23, 1997 (the "Registration Rights Agreement") among the Corporation,
the Trust and the Initial Purchasers (as defined herein). In the event that
the Exchange Offer is consummated, any Original Capital Securities which
remain outstanding after consummation of the Exchange Offer and the Exchange
Capital Securities issued in 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.
The Exchange Capital Securities and the Original Capital Securities
(collectively, the "Capital Securities") represent undivided beneficial
interests in the assets of the Trust. The Corporation is the owner of all of
the beneficial interests represented by common securities of the Trust (the
"Common Securities," and together with the Capital Securities, the "Trust
Securities"). The Chase Manhattan Bank is the Property Trustee (the "Property
Trustee") of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in the Junior Subordinated
Debentures (as defined herein). The Junior Subordinated Debentures will mature
on December 15, 2027 (the "Stated Maturity Date"). 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 used herein, (i) the "Indenture" means the Indenture, dated as of
December 23, 1997, as amended and supplemented from time to time, between the
Corporation and The Chase Manhattan Bank, as trustee (the "Debenture
Trustee"), relating to the Junior Subordinated Debentures, (ii) the "Trust
Agreement" means the Amended and Restated Declaration of Trust dated as of
December 23, 1997 relating to the Trust among the Corporation, as Sponsor, The
Chase Manhattan Bank, as Property Trustee, Chase Manhattan Bank Delaware, an
affiliate of the Property Trustee, as Delaware Trustee (the "Delaware
Trustee"), the Administrative Trustees named therein (collectively, with the
Property Trustee and Delaware Trustee, the "Issuer Trustees"), and holders,
from time to time, of the Trust Securities, (iii) the "Guarantee" means the
Guarantee Agreement relating to the Capital Securities between the Corporation
and The Chase Manhattan Bank, as trustee (the "Guarantee Trustee") and (iv)
the "Common Guarantee" means the Guarantee Agreement relating to the Common
Securities between the Corporation and The Chase Manhattan Bank, as trustee.
In addition, as the context may require, (i) "Junior Subordinated Debentures"
includes the Original Junior Subordinated Debentures and the Exchange Junior
Subordinated Debentures and (ii) "Guarantee" includes the Original 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 The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. 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. The
Exchange Capital Securities will be issued, and may be transferred, only in
integral multiples of $1,000. See "Description of Exchange Securities--
Description of Exchange Capital Securities--Restrictions on Transfer."
Holders of the Capital Securities and the Common Securities will be entitled
to receive cumulative cash distributions arising from the payment of interest
on the Junior Subordinated Debentures, accruing from the date of original
issuance and payable semi-annually in arrears on June 15 and December 15 of
each year, commencing June 15, 1998, at the annual rate of 7 5/8% of the
Liquidation Amount of $1,000 per Trust Security
2
<PAGE>
("Distributions"). So long as no Debenture Event of Default (as defined
herein) 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 (i) no Extension Period may extend beyond the Stated Maturity
Date, (ii) any Extension Period will terminate as to all Junior Subordinated
Debentures upon an acceleration thereof (subject to reinstatement, upon cure
or waiver as provided in the Indenture (as defined herein)) and (iii) any
Extension Period will terminate as to any Junior Subordinated Debenture to be
redeemed on a Redemption Date (as defined herein). See "Description of Junior
Subordinated Debentures--Debenture Events of Default." Upon the termination of
any such 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 Trust
Securities will also be deferred and the Corporation 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, preferred and preference 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. During an Extension Period, interest on the
Junior Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Trust Securities are entitled will
continue to accumulate) at the rate of 7 5/8% per annum, compounded semi-
annually, and holders of Trust Securities will be required to accrue interest
income for United States federal income tax purposes prior to receipt of the
cash attributable to such income. 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."
The Corporation will, through the Guarantee, the Common Guarantee, the Trust
Agreement, the Junior Subordinated Debentures and the Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guarantee all of the Trust's obligations under the Trust Securities. See
"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 Capital Securities." The obligations of the Corporation
under the Guarantee, the Common Guarantee and 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 Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated
Maturity Date upon repayment of the Junior Subordinated Debentures at a
redemption price equal to the principal amount of, plus accrued interest on,
the Junior Subordinated Debentures (the "Maturity Redemption Price"), and (ii)
in whole but not in part, at any time upon the occurrence and continuation of
a Tax Event (as defined herein) or an Investment Company Event (as defined
herein) at a redemption price equal to the Special Event Prepayment Price (as
defined below). The Maturity Redemption Price or the Special Event Redemption
Price may be referred to herein as the "Redemption Price." See "Description of
Exchange Securities--Description of Exchange Capital Securities--Redemption."
The Junior Subordinated Debentures will be prepayable prior to the Stated
Maturity Date at the option of the Corporation at any time upon the occurrence
and continuation of a Tax Event or an Investment Company Event (each, a
"Special Event") at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (a)
3
<PAGE>
100% of the principal amount thereof or (b) the sum, as determined by a
Quotation Agent (as hereinafter defined), of the present values of the
remaining scheduled payments of principal and interest on the Junior
Subordinated Debentures to the Stated Maturity Date, 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 (as defined herein) plus,
in either case, accrued interest thereon to the date of prepayment. See
"Description of Exchange Securities--Description of Exchange Junior
Subordinated Debentures--Special Event Prepayment."
The Corporation will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities of creditors of the Trust as required by
applicable law, 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 having received an opinion of counsel to the
effect that such distribution will not be a taxable event 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 Distributions thereon to the date of
payment. See "Description of Exchange Securities--Description of Exchange
Capital Securities--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures."
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Original Capital Securities. The Exchange Capital
Securities will be a new issue of securities for which there currently is no
market. Although Salomon Brothers Inc, ABN AMRO Chicago Corporation and
BancAmerica Robertson Stephens, the initial purchasers of the Original Capital
Securities (the "Initial Purchasers"), have informed the Corporation and the
Trust that they each currently intend to make a market in the Exchange Capital
Securities, they are not obligated to do so, and any such market-making may be
discontinued 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 Nasdaq.
Any Original 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
Original 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 registration under the Securities Act of
the Original Capital Securities held by them. To the extent that Original
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Original Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 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 Original 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 Original 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. Original Capital
Securities may be
4
<PAGE>
tendered in whole or in part having an aggregate Liquidation Amount of not
less than $100,000 (100 Capital Securities) or any integral multiple of $1,000
Liquidation Amount (one Capital Security) in excess thereof, provided that, if
any Original Capital Securities are tendered for exchange in part, the
untendered Liquidation Amount thereof must be $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in excess thereof. The
Corporation has agreed to pay all expenses of the Exchange Offer. See "The
Exchange Offer--Fees and Expenses." Holders of the Original Capital Securities
whose Original Capital Securities are accepted for exchange will not receive
Distributions on such Original Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Original Capital
Securities accumulated from and after December 23, 1997. Accordingly, holders
of Exchange Capital Securities as of the record date for the payment of
Distributions on June 15, 1998 will be entitled to receive Distributions
accumulated from and after December 23, 1997. See "The Exchange Offer--
Description of Exchange Capital Securities--Distributions."
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."
For North Carolina Residents:
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT ACCOUNT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(ERISA), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
CODE) (EACH, A PLAN), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A PLAN ASSET ENTITY), AND NO
PERSON INVESTING PLAN ASSETS OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASE AND HOLDING IS
COVERED BY THE EXEMPTIVE RELIEF PROVIDED BY U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION (PTCE) 96-23, 95-60, 91-38, 90-1, OR
84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE AND
HOLDING AND, IN THE CASE OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION
OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, SUCH PURCHASER HAS
COMPLIED WITH ANY REQUEST BY THE CORPORATION OR THE TRUST FOR AN OPINION OF
COUNSEL OR OTHER EVIDENCE WITH RESPECT TO THE APPLICABILITY OF SUCH EXEMPTION.
ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL
BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND/OR HOLDING THEREOF THAT
EITHER (A) THE PURCHASER AND HOLDER ARE NOT PLANS OR PLAN ASSET ENTITIES AND
ARE NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY
PLAN OR (B) THE PURCHASE AND HOLDING OF THE CAPITAL SECURITIES IS COVERED BY
THE EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION. PROSPECTIVE PURCHASERS MUST CAREFULLY CONSIDER
THE RESTRICTIONS ON PURCHASE SET FORTH IN "NOTICE TO INVESTORS" AND "ERISA
CONSIDERATIONS."
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 EXCHANGE
OFFER COVERED BY THIS PROSPECTUS. 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
5
<PAGE>
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR 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 ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
MMI INVESTOR RELATIONS, MMI COMPANIES, INC., 540 LAKE COOK ROAD, DEERFIELD, IL
60015, (847) 374-2254. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE NO LATER THAN FIVE BUSINESS DAYS PRIOR TO THE
EXPIRATION DATE (AS DEFINED HEREIN).
----------------
6
<PAGE>
AVAILABLE INFORMATION
On December 11, 1997 the Corporation acquired 99% of the issued and
outstanding Ordinary Shares, all of which are represented by American
Depositary Shares (the "Unionamerica ADSs"), of Unionamerica Holdings plc (the
"Unionamerica Acquisition"). Unionamerica Holdings plc is hereinafter referred
to singly, and, where the context so requires, with its subsidiaries, as
"Unionamerica." MMI intends to apply the compulsory acquisition procedures set
forth in the Companies Act 1985 of Great Britain to acquire all of the
remaining Unionamerica ADSs. Certain information about Unionamerica has been
incorporated by reference into this Prospectus. See "Incorporation of Certain
Documents by Reference" and "MMI Companies, Inc.--The Unionamerica
Acquisition."
As used in this Prospectus, unless the context otherwise requires, "MMI" and
the "Corporation" refer to MMI Companies, Inc. and its subsidiaries including
Unionamerica, and "Unionamerica" refers to Unionamerica Holdings plc and its
subsidiaries.
The Corporation and Unionamerica are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), except that Unionamerica intends to deregister under the Exchange Act
as promptly as possible. In accordance with the Exchange Act, the Corporation
and Unionamerica file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, DC 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, DC 20549 at prescribed rates. Such information
filed by MMI may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov.). In addition, such reports,
proxy statements and other information concerning MMI and Unionamerica may be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005, on which the common stock of the Corporation
is listed and traded and the Unionamerica ADSs are listed but not traded.
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 Capital Securities because the Trust is a newly
created special purpose entity, has no 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 Junior Subordinated
Debentures, issuing the Trust Securities and engaging in incidental
activities. See "MMI Capital Trust I," "Description of Exchange Securities--
Description of Exchange Capital Securities," and
"--Description of Exchange Junior Subordinated Debentures" and "--Description
of Guarantee." In addition, the Corporation does not expect that the Trust
will file reports, proxy statements and other information under the Exchange
Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Corporation and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission,
and reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Corporation, the
Trust and the Exchange Securities. Any statements contained herein concerning
the provisions of any document are not necessarily complete, and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission. Each
such statement is qualified in its entirety by such reference.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated into this
Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended December
31, 1996 as amended to date;
2. The Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997 as amended to date;
3. The Corporation's Current Reports on Form 8-K (i) dated June 17, 1997
and filed June 18, 1997; (ii) dated June 25, 1997 and filed June 27,
1997; and (iii) dated and filed with the Commission on December 23,
1997;
4. The Corporation's Proxy Statement for the Annual Meeting of Stockholders
held on April 17, 1997;
5. The description of the Corporation's common stock contained in its
Registration Statement on Form 8-A filed April 28, 1993 and all
amendments to date;
6. The description of the Corporation's Shareholder Rights Plan contained
in its Registration Statement on Form 8-A filed June 27, 1997;
7. Unionamerica's Annual Report on Form 10-K for the year ended December
31, 1996 as amended to date;
8. Unionamerica's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
9. Unionamerica's Current Report on Form 8-K dated June 2, 1997 and filed
with the Commission on June 11, 1997.
All documents subsequently filed by the Corporation pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of any offering of securities made by this Prospectus shall
be deemed to be incorporated by reference into this Prospectus and to be a
part of this Prospectus from the date of filing of such document. 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 subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any 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. Unless otherwise indicated, all references in this Prospectus to
documents "incorporated by reference" are to documents incorporated by
reference into this Prospectus. The Corporation will provide without charge to
any person to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of its documents incorporated by
reference herein (other than exhibits not specifically incorporated by
reference into the texts of such documents). Requests for such documents
should be directed to: MMI Investor Relations, MMI Companies, Inc., 540 Lake
Cook Road, Deerfield, IL 60015. Telephone requests may be directed to MMI
Investor Relations at (847) 374-2254.
8
<PAGE>
FORWARD-LOOKING INFORMATION
This Prospectus contains certain forward-looking information, including
information provided in "Unaudited Pro Forma Combined Condensed Financial
Statements." The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking information to encourage companies to
provide prospective information about themselves so long as such information
is identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. The Corporation
identifies the following important factors which could cause actual results to
differ materially from any such results which might be projected, forecast,
estimated or budgeted by the Corporation in forward-looking information. All
of such factors are difficult to predict and many are beyond the control of
the Corporation. Accordingly, while the Corporation believes that the
assumptions underlying the forward-looking information are reasonable, there
can be no assurance that such assumptions will approximate actual experience.
These important factors include, among others, those set forth under "Risk
Factors" and: (i) general economic and business conditions, changes in
interest rates and the performance of securities markets, each of which may
impact the profitability of the Corporation, the market value of the
Corporation's investment portfolio, the credit quality of the Corporation's
loan portfolio and the demand for insurance; (ii) changes in U.S. and non-U.S.
laws and regulatory developments affecting financial institutions, generally,
and insurance and reinsurance companies, specifically; (iii) industry
consolidation and increased competition; (iv) the impact on the Corporation's
insurance subsidiaries of losses of significant magnitude; and (v) the
integration of the Corporation's and Unionamerica's operations in a timely and
cost effective manner. Investors are also directed to consider other risks and
uncertainties discussed in documents filed by the Corporation and Unionamerica
with the Commission. The Corporation disclaims any obligation to update
forward-looking information, including information provided in "Unaudited Pro
Forma Condensed Combined Financial Information."
9
<PAGE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information (including financial information) appearing elsewhere in this
Prospectus or incorporated by reference herein. The information contained in
this Prospectus reflects the Unionamerica Acquisition. The Corporation and
Unionamerica are insurance holding companies. Each conducts its operations
through its subsidiaries and has no direct operations, and the principal assets
of each are the shares of capital stock of their subsidiaries.
Unless otherwise indicated, financial information and operating statistics
applicable to the Corporation and Unionamerica set forth in this Prospectus or
incorporated by reference herein are based upon United States generally-
accepted accounting principles ("GAAP").
See "Risk Factors," immediately following this Prospectus Summary, for
certain information that should be considered by holders in deciding whether to
tender Original Capital Securities in the Exchange Offer.
MMI COMPANIES, INC.
OVERVIEW
MMI offers a comprehensive set of specialized insurance products and
consulting services that are designed to assist healthcare providers to manage
the business, clinical, insurable and financial risks associated with the
delivery of healthcare. Since MMI's formation in 1983, the Corporation has,
through acquisitions and internal growth, substantially increased its insurance
assets and capital as well as the breadth of its products and services and its
capacity to deliver them. According to A.M. Best Company ("A.M. Best"), as of
December 31, 1996 MMI ranked as the 8th largest medical malpractice insurer in
the United States based on direct premiums written. The Corporation's business
is organized into three operating groups, consisting of the Insurance Group,
the Strategic Management Consulting Group and the Healthcare Services Group.
MMI's principal property and casualty insurance subsidiaries other than
Unionamerica are rated "A" (Excellent), by A.M. Best.
UNIONAMERICA ACQUISITION
On December 11, 1997 the Corporation acquired 99% of the issued and
outstanding Ordinary Shares of Unionamerica, all of which are represented by
Unionamerica ADSs. MMI intends to apply the compulsory acquisition procedures
set forth in the Companies Act 1985 of Great Britain to acquire all of the
remaining Unionamerica ADSs. Founded in 1971, Unionamerica is a specialty
casualty and property reinsurer and insurer operating in the London-based
reinsurance and insurance market. Unionamerica's core business is professional
indemnity reinsurance (including malpractice reinsurance for groups of
healthcare providers, lawyers and other professionals), as well as casualty
reinsurance and insurance for a variety of U.S. single industry and/or single
state risks. In addition, Unionamerica selectively underwrites other risks
where it has underwriting expertise and when management believes market
conditions relating to pricing and terms are attractive. In 1997 these
coverages primarily included individual property risk, automobile physical
damage and property catastrophe coverages. Unionamerica's principal property
and casualty insurance subsidiary, Unionamerica Insurance Company Limited, is
rated "A-" (Excellent), by A.M. Best.
MMI CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the Trust Agreement executed by the Corporation, as Sponsor, The Chase
Manhattan Bank, as Property Trustee, and Chase Manhattan Bank Delaware, as
Delaware Trustee and the three individual Administrative Trustees named
therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on December 15, 1997. The Trust's activities are conducted
by the Issuer Trustees which are the Property Trustee, the Delaware Trustee,
and the three individual Administrative Trustees who are officers of the
Corporation. The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, (ii) using the proceeds from the sale of the
Trust Securities
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<PAGE>
to acquire the Junior Subordinated Debentures issued by the Corporation, and
(iii) engaging in only those other activities necessary, advisable or
incidental thereto. Accordingly, the Junior Subordinated Debentures are 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 are 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 Original
Capital Securities. Original Capital
Securities may be tendered for exchange
in whole or in part in a Liquidation
Amount of $100,000 (100 Capital
Securities) or any integral multiple of
$1,000 (one Capital Security) in excess
thereof, provided that, if any Original
Capital Securities are tendered for
exchange in part, the untendered
Liquidation Amount thereof must be
$100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess
thereof. The Corporation and the Trust
are making the Exchange Offer in order to
satisfy their obligations under the
Registration Rights Agreement relating to
the Original Capital Securities. For a
description of the procedures for
tendering Original Capital Securities,
see "The Exchange Offer--Procedures for
Tendering Original Capital Securities."
Expiration Date................. 5:00 p.m., New York time, on ,
1998, unless the Exchange Offer is
extended by the Corporation (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."
Conditions to the Exchange The Exchange Offer is subject to certain
Offer........................... 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 Original Capital Securities
being tendered. See "The Exchange Offer--
Conditions to the Exchange Offer."
Offer........................... The Corporation and the Trust reserve the
right in their sole and absolute
discretion, subject to applicable law, at
any time and from time to time (i) to
delay the acceptance of the Original
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
Original Capital Securities tendered
pursuant to the Exchange Offer, subject,
however, to the right of holders of
Original Capital Securities to withdraw
their tendered Original 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."
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<PAGE>
Withdrawal Rights............... Tenders of Original 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 (as defined herein) in
conformity with certain procedures set
forth in "The Exchange Offer--Withdrawal
Rights."
Procedures for tendering
Original Capital Securities....
Brokers, dealers, commercial banks, trust
companies and other nominees who hold
Original Capital Securities through The
Depository Trust Company ("DTC") may
effect tenders by book-entry transfer in
accordance with DTC's Automated Tender
Offer Program ("ATOP"). Holders of such
Original 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 Original Capital
Securities. In order for Original Capital
Securities to be tendered by a means
other than by book-entry transfer, a
Letter of Transmittal must be completed
and signed in accordance with the
instructions contained therein. The
Letter of Transmittal and any other
documents required by the Letter of
Transmittal must be delivered to The
Chase Manhattan Bank (the "Exchange
Agent") by mail, facsimile, hand delivery
or overnight courier and either such
Original Capital Securities must be
delivered to the Exchange Agent or
specified procedures for guaranteed
delivery must be complied with. See "The
Exchange Offer--Procedures for Tendering
Original Capital Securities."
Letters of Transmittal and certificates
representing Original Capital Securities
should not be sent to the Corporation. Such
documents should be sent only to the Exchange
Agent.
Resales of Exchange Capital The Trust is making the Exchange Offer in
Securities...................... reliance upon 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 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 upon 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 Original 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
12
<PAGE>
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 Original 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 Original 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 Original 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 Original Capital
Securities unless such sale is made
pursuant to an exemption from such
requirements. In addition, as described
below, if any broker-dealer holds
Original Capital Securities acquired for
its own account as a result of market-
making or other trading activities and
exchanges such Original 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 Original Capital
Securities who wishes to exchange
Original Capital Securities for Exchange
Capital Securities in the Exchange Offer
will be required to represent that (i) it
is not an "affiliate" of the Corporation
or the Trust, (ii) any Exchange Capital
Securities to be received by it are being
acquired in the ordinary course of its
business, (iii) it 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
Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that
receives Exchange Capital Securities for
its own account pursuant to the Exchange
Offer must acknowledge that it acquired
the Original Capital
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<PAGE>
Securities 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 states that by so
acknowledging 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 acquired Original
Capital Securities 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 Original Capital Securities
(other than Original Capital Securities
which represent an unsold allotment from
the initial sale of the Original Capital
Securities) with a prospectus meeting the
requirements of the Securities Act, which
may be the prospectus prepared for an
exchange offer so long as it contains a
description of the plan of distribution
with respect to the resale 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 it will deliver a prospectus in
connection with any resale of such
Exchange Capital Securities. The Letter
of Transmittal states that by so
acknowledging and by delivery of a
prospectus, a broker-dealer will not be
deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it
may be amended or supplemented from time
to time, may be used by a broker-dealer
in connection with resales of Exchange
Capital Securities received in exchange
for Original Capital Securities acquired
by such broker-dealer as a result of
market-making activities or other trading
activities. The Trust and the Corporation
have agreed that, prior to the close of
business on the 180th day following the
Expiration Date this Prospectus will be
available to any broker-dealer for use in
connection with any such resale. 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 Original 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 in "The
Exchange Offer
14
<PAGE>
--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."
In that regard, each Participating Broker-
Dealer who surrenders Original 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 180-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.
Exchange Agent.................. The exchange agent with respect to the
Exchange Offer is The Chase Manhattan Bank.
The addresses, and telephone and
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<PAGE>
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 or the Trust will
receive any cash proceeds from the issuance
of the Exchange Capital Securities offered
hereby. See "Use of Proceeds."
Certain United States Federal
Income Tax Consequences; ERISA
Considerations.................
Holders of Original Capital Securities should
review the Information set forth in "Certain
Federal Income Tax Consequences" and "ERISA
Considerations" prior to tendering Original
Capital Securities in the Exchange Offer.
THE EXCHANGE CAPITAL SECURITIES
Securities offered.............. Up to $125,000,000 aggregate principal
Liquidation Amount of the Trust's Exchange
Capital Securities which have been registered
under the Securities Act (Liquidation Amount
$1,000 per Exchange Capital Security). The
Exchange Capital Securities will be issued
and the Original Capital Securities were
issued under the Trust Agreement. The
Exchange Capital Securities and any Original
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
Original Capital Securities, except that the
Exchange Capital Securities have been
registered under the Securities Act and will
not be subject to certain restrictions on
transfer applicable to the Original Capital
Securities and will not provide for any
increase in the Distribution rate thereon.
See "The Exchange Offer--Purpose of the
Exchange Offer and Description of Exchange
Securities."
Distribution dates.............. June 15 and December 15 of each year,
commencing June 15, 1998.
Extension periods............... Distributions on Exchange Capital
Securities will 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 Date, each
extension period will terminate as to all
Exchange Junior Subordinated Debentures
upon an acceleration thereof (subject to
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<PAGE>
reinstatement, upon cure or waiver as
provided in the Indenture), and any
Extension Period will terminate as to any
Exchange Junior Subordinated Debenture to
be redeemed pursuant to the occurrence
and continuation of a Special Event on
the applicable Redemption Date. 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 Original Capital
Securities and the Common Securities
except as described in "Description of
Exchange Securities--Description of
Exchange Capital Securities--
Subordination of Common Securities." The
Exchange Junior Subordinated Debentures
will rank pari passu with the Original
Junior Subordinated Debentures and all
other junior subordinated debentures to
be issued by the Corporation ("Other
Debentures"), which will be issued and
sold (if at all) to other trusts to be
established by the Corporation (if any),
in each case similar to the Trust ("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 Original Guarantee and all other
guarantees (if any) to be issued by the
Corporation with respect to capital or
preferred securities (if any) issued by
Other Trusts ("Other Guarantees") and
will constitute an unsecured obligation
of the Corporation and will rank
subordinate and junior in right of
payment to all Senior Indebtedness to the
extent and in the manner set forth in the
Guarantee Agreement. See "Description of
Exchange Securities--Description of
Exchange 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 Date upon repayment of
the Junior Subordinated Debentures, at a
redemption price equal to the principal
amount of, plus accrued interest on, the
Junior Subordinated Debentures, and (ii)
in whole but not in part, at any time
upon the occurrence and continuation of a
Special Event at a Redemption Price equal
to the Special Event Prepayment Price.
See "Description of Exchange Securities--
Description of Exchange Capital
Securities--Redemption."
Ratings......................... The Original Capital Securities are rated
"a3" by Moody's Investors Service, Inc.
and "BBB+" by Standard & Poor's Rating
Services, a division of The McGraw Hill
Companies, Inc.
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<PAGE>
Transfer restrictions........... The Exchange Capital Securities will be
issued, and may be transferred, only in
minimum denominations of not less than
$1,000. See "Description of Exchange
Securities--Description of Exchange
Capital Securities--Restrictions on
Transfer." Any such transfer of Exchange
Capital Securities in denominations of
less than $1,000 shall be deemed to be
void and of no legal effect whatsoever.
Absence of market for the The Exchange Capital Securities will be a new
Capital Securities............. issue of securities for which there currently
is no market. Although the Initial Purchasers
have informed the Trust and the Corporation
that they each currently intend to make a
market in the Capital Securities, the Initial
Purchasers are not obligated to do so, and
any such market-making may be discontinued at
any time without notice. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the Capital
Securities. The Trust and the Corporation do
not intend to apply for listing of the
Capital Securities on any securities exchange
or for quotation through Nasdaq. See "Plan of
Distribution."
For additional information regarding the Capital Securities, see "Description
of Exchange Securities" and "Certain Federal Income Tax Consequences."
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RISK FACTORS
Holders of Original Capital Securities 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 Guarantee issued by it for the
benefit of the holders of Capital Securities, as well as under the Junior
Subordinated Debentures, will be unsecured and rank subordinate and junior in
right of payment to all Senior Indebtedness (as defined). In addition, in the
case of a bankruptcy or insolvency proceeding, the Corporation's obligations
under the Guarantee will also rank subordinate and junior in right of payment
to all liabilities (other than Other Guarantees) of the Corporation. At
September 30, 1997 the aggregate principal amount of outstanding Senior
Indebtedness was approximately $58 million and the aggregate principal amount
of Senior Indebtedness after giving effect to the Unionamerica Acquisition was
approximately $103 million. Immediately after the sale of the Original Capital
Securities and the application of the net proceeds thereof, the Corporation
did not have any Senior Indebtedness outstanding. However, the Corporation
intends to maintain a credit facility, borrowings under which, if incurred,
would constitute Senior Indebtedness. See "Description of Exchange
Securities--Description of Exchange Junior Subordinated Debentures--
Subordination." 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 or by any
subsidiary. See "Description of Exchange Securities--Description of Exchange
Guarantee--Status of the Exchange Guarantee" and "--Description of Exchange
Junior Subordinated Debentures--Subordination." The ability of the Trust to
pay amounts due on the Capital Securities is solely dependent upon the Trust's
receipt of payments on the Junior Subordinated Debentures from the Corporation
as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
So long as no Debenture Event of Default (as defined below) 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 (i)
no Extension Period may extend beyond the Stated Maturity Date, (ii) any
Extension Period will terminate as to all Junior Subordinated Debentures upon
an acceleration thereof (subject to reinstatement, upon cure or waiver as
provided in the Indenture), and (iii) any Extension Period will terminate as
to any Junior Subordinated Debenture to be redeemed on the applicable
Redemption Date. 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
5/8% per annum to the extent permitted by applicable law as respects the
Debentures, compounded semi-annually from the relevant payment date for such
Distributions during any such Extension Period.
Prior to the termination of any such Extension Period, the Corporation may
further extend such 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 Date. 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 5/8%, 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--
Distributions" and "--Description of Exchange Junior Subordinated Debentures--
Option to Extend Interest Payment Date."
Should the Corporation exercise its right to defer payments of interest on
the Junior Subordinated Debentures, each holder of Trust Securities will be
required to accrue income (as original issue discount
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("OID")) in respect of the deferred stated interest allocable to its Trust
Securities for United States federal income tax purposes, which will be
allocated but not distributed to holders of Trust Securities. As a result,
each such holder of Capital Securities will recognize 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 exercise its right to defer payments of interest on
the Junior Subordinated Debentures, 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 that are not subject to such deferrals.
Although the Corporation has the right to exercise its option to defer
payments of interest on the Junior Subordinated Debentures, the Corporation
has no current intention to defer payments of interest on such Junior
Subordinated Debentures.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event (as defined under
"Description of Exchange Securities--Description of Exchange Junior
Subordinated Debentures--Special Event Prepayment"), the Corporation will have
the right to prepay the Junior Subordinated Debentures in whole (but not in
part) at the Special Event Prepayment Price within 90 days following the
occurrence of such Special Event and therefore cause a mandatory redemption of
the Trust Securities at the Special Event Redemption Price. See "Description
of Exchange Securities--Description of Exchange Capital Securities--
Redemption" and "Certain Federal Income Tax Consequences."
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury proposed legislation that, among other
things, would have denied an issuer a deduction for United States federal
income tax purposes for the payment of interest on instruments with
characteristics similar to the Junior Subordinated Debentures. The Taxpayer
Relief Act of 1997, enacted on August 7, 1997, did not contain these
provisions. There can be no assurance, however, that developments such as a
change in law or applicable Regulations or a decided case will not occur after
the date hereof, which would adversely affect the tax treatment of the Junior
Subordinated Debentures, or that any legislation enacted after the date hereof
would not cause a Tax Event that may result in a redemption of the Junior
Subordinated Debentures at the Special Event Prepayment Price and,
consequently, the Trust Securities at the Special Event Redemption Price. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Redemption" and
"--Description of Exchange Junior Subordinated Debentures--Special Event
Prepayment."
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. 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 Exchange Capital Securities are also
making an investment decision with regard to the Exchange Junior Subordinated
Debentures and should carefully review all the information regarding the
Exchange Junior Subordinated Debentures contained herein. See "Description of
Exchange Securities--Description of Exchange Junior Subordinated Debentures."
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RIGHTS UNDER THE GUARANTEE
The Chase Manhattan Bank will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The Chase
Manhattan Bank will also act as Property Trustee and as Debenture Trustee
under the Indenture. Chase Manhattan Bank Delaware will act as Delaware
Trustee under the Trust Agreement. The Guarantee 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 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 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," "--Debenture Events of Default" and "--Description of Exchange
Guarantee." The Trust Agreement provides that each holder of Capital
Securities by acceptance thereof agrees to the provisions of the Indenture.
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving the Corporation that may adversely affect such holders.
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, 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
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upon the occurrence of certain events described herein. The Property Trustee
and the holders of all of the Common Securities may, subject to certain
conditions, amend the Trust Agreement without the consent of holders of
Capital Securities to cure any ambiguity or make other provisions not
inconsistent with other provisions of the Trust Agreement or to ensure that
the Trust (i) will not be classified as a corporation or any other entity
subject to taxation for United States federal income tax purposes or (ii) will
not be required to register as an "investment company" under the Investment
Company Act of 1940, as amended (the "Investment Company Act"). See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Voting Rights; Amendment of the Trust Agreement" and "--Removal of
Administrative Trustees."
INTEGRATION OF MMI AND UNIONAMERICA
MMI believes that the Unionamerica Acquisition will result in certain
benefits. Achieving these benefits will depend in part upon the integration of
the businesses of MMI and Unionamerica in an efficient manner, and there can
be no assurance that this will occur. The transition to a combined company
will require substantial attention from management. The diversion of
management attention and any difficulties encountered in the transition
process could have an adverse effect on the revenues and operating results of
the Corporation.
INDUSTRY FACTORS AND COMPETITION MAY INFLUENCE FUTURE RESULTS
The medical malpractice business environment is currently in a prolonged
soft market, where competitive pricing pressures have reduced the opportunity
for MMI to obtain rate increases and thereby revenue growth. Many factors
influence the financial results of the medical malpractice insurance and
reinsurance businesses, several of which are beyond the control of MMI. The
supply of insurance, or the industry's underwriting capacity, is determined
principally by the industry's level of capitalization, historical underwriting
results, returns on investment and perceived premium rate adequacy. MMI
competes with numerous insurance companies and consulting businesses, many of
which have greater financial resources than does MMI. These factors, together
with competitive pricing, could result in fluctuations in underwriting results
and net income.
UNDERWRITING LOSSES AND RESERVES ARE BASED UPON ESTIMATES
The reserves for losses and loss adjustment expenses established by MMI are
estimates of amounts needed to pay reported and unreported claims and related
loss adjustment expenses. The estimates are based on assumptions related to
the ultimate cost of settling such claims. If the reserves are inadequate, MMI
will be required to increase its reserves and thus reduce its net income in
the period in which the deficiency is identified. Unanticipated underwriting
losses or materially underestimated reserves could have a material adverse
effect on MMI.
ABILITY OF REINSURERS TO PAY CLAIMS
In order to reduce risk and to increase its underwriting capacity, MMI
obtains reinsurance from unaffiliated reinsurers, although it generally
retains a portion of each risk reinsured. MMI is subject to credit risk with
respect to its reinsurers because reinsurance does not relieve the ceding
company of liability to its insureds for the risks ceded to reinsurers.
Although MMI believes that its and Unionamerica's reinsurance is maintained
with financially stable reinsurers and that any reinsurance security
maintained is adequate to protect its interests, a reinsurer's insolvency or
inability to make payments under the terms of a reinsurance treaty could have
a material adverse effect on MMI.
HOLDING COMPANY STRUCTURE AND RESTRICTIONS ON INSURANCE SUBSIDIARIES
As a holding company, MMI depends on dividends and other permitted payments
from its subsidiaries to meet its cash needs, including servicing its debt
(including the Junior Subordinated Debentures) and paying stockholder
dividends. The Missouri and Illinois insurance laws and regulations impose
restrictions on the amount of dividends that may be paid to stockholders by
insurance companies domiciled in the respective states
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without prior approval of the Director of Insurance in such states. American
Continental Insurance Company, a subsidiary of MMI ("ACIC"), may not, without
the prior approval of the Missouri Director of Insurance, pay a dividend that,
together with any other dividends paid within the twelve month period ending
on the date when the dividend will be paid, exceeds the lesser of ACIC's net
investment income for the prior calendar year or ten percent of its statutory
surplus as of December 31 of the prior calendar year. Health Providers
Insurance Company, another MMI subsidiary ("HPIC"), may not, without the prior
approval of the Illinois Director of Insurance, pay a dividend that, together
with any other dividends paid within the twelve-month period ending on the
date when the dividend will be paid, exceeds the greater of ten percent of its
statutory surplus as of December 31 of the prior calendar year or net income
for the prior calendar year.
In connection with Unionamerica's authorization in the U.K., the Secretary
of State for Trade and Industry acting through the Insurance Directorate of
the U.K. Department of Trade and Industry ("DTI") has set forth Unionamerica
Insurance Company Limited's Notice of Requirements, the provisions of which
include, among other things, that Unionamerica Insurance Company Limited may
not pay any dividends unless it has given the DTI 14 days advance notice and
the DTI has not objected. The DTI has the power to prohibit or require
Unionamerica Insurance Company Limited to reduce the amount of a dividend,
restrict the amount of its writings and to prohibit transactions by
Unionamerica Insurance Company Limited with affiliates.
REGULATION
MMI's insurance subsidiaries, and Unionamerica and its subsidiaries, are
subject to supervision and regulation of their businesses and financial
condition by the jurisdictions in which they transact business. The primary
purpose of such supervision and regulation is the protection of the interests
of policyholders as opposed to the interests of the holders of securities of
MMI or the Trust. Such supervision and regulation generally derives from
statutes which delegate broad regulatory, supervisory and administrative
authority to insurance departments and other governmental entities. In
addition to state-imposed insurance laws and regulations, MMI is subject to
statutory accounting practices and the reporting format of the National
Association of Insurance Commissioners (the "NAIC"). The NAIC and many states
have adopted risk based capital formulae to establish minimum capital and
surplus requirements for insurance companies and a model act for regulation of
such companies. The risk based capital formula measures a company's asset
risk, insurance risk, interest rate risk and business risk. As of December 31,
1996, the surplus of each of MMI's insurance subsidiaries exceeded the minimum
requirements under the NAIC formula. The impact on MMI of any changes in these
laws, or of changes in or the adoption of any other laws or regulations,
cannot be predicted. Unionamerica Insurance Company Limited is a U.K.-
authorized insurance company subject to regulation and supervision in the U.K.
under U.K. domestic and European Community law. The U.K. Insurance Companies
Act 1982, as amended, imposes on U.K. insurance companies solvency and
liquidity standards and auditing and reporting requirements, and further
grants to the DTI powers to supervise, investigate and intervene in the
affairs of insurance companies. Unionamerica Insurance Company Limited is
subject to a Notice of Requirements issued by the DTI which, among other
things, restricts Unionamerica Insurance Company Limited from entering into
certain transactions with affiliates and sets a ceiling on the annual amount
of gross premiums that may be written by it. In addition, before it may pay
any dividend, Unionamerica Insurance Company Limited is required to give 14
days' advance notice to the DTI, which has the ability to reduce or prohibit
such payment. Unionamerica Insurance Company Limited is permitted to seek the
approval of the DTI for an increase in the gross premiums ceiling in respect
of one or more years and may do so depending on future business conditions.
Neither Unionamerica nor any of its subsidiaries is incorporated or licensed
as an insurance company in any jurisdiction of the U.S. Each state of the U.S.
regulates to an extent the purchase of insurance and reinsurance by its
citizens from alien insurers and reinsurers, such as Unionamerica. Recently,
insurance regulation in the U.S., particularly as it relates to alien insurers
and reinsurers, has been subject to increased scrutiny by the NAIC and
legislative and regulatory bodies.
CONSEQUENCES OF A FAILURE TO EXCHANGE ORIGINAL CAPITAL SECURITIES
The Original 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
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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.
Original 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
Original Capital Securities which remain outstanding will not be entitled to
any rights to have such Original Capital Securities registered under the
Securities Act or to any similar rights under the Registration Rights
Agreement (subject to certain limited exceptions). The Corporation and the
Trust do not intend to register under the Securities Act any Original Capital
Securities which remain outstanding after consummation of the Exchange Offer
(subject to such limited exceptions, if applicable). To the extent that
Original Capital Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Original Capital Securities could be
adversely affected.
The Exchange Capital Securities and any Original 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 of Capital Securities 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 Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
May 22, 1998 and declared effective by June 21, 1998, the Distribution rate
borne by the Original Capital Securities will increase by 0.25% per annum
until such registration statement has been filed or declared effective, as the
case may be. Upon consummation of the Exchange Offer, holders of Original
Capital Securities will not be entitled to any increase in the Distribution
rate thereon or any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Description of Exchange
Securities."
ABSENCE OF PUBLIC MARKET
The Original Capital Securities were issued to, and the Corporation believes
such securities are currently owned by, a relatively small number of
beneficial owners. The Original 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 the 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. Original Capital Securities may be transferred by
the holders thereof only in blocks having a Liquidation Amount of not less
than $100,000 (100 Capital Securities). The Corporation and the Trust have
been advised by the Initial Purchasers that the Initial Purchasers presently
intend 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 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 Original Capital Securities, or as to the liquidity of or
the trading market for the Exchange Capital Securities or the Original 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, the financial condition of the Corporation
and the market for similar securities. Depending on these and other factors,
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
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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
Original Capital Securities, where such Original 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
Subject to the conditions set forth in "The Exchange Offer--Conditions to
the Exchange Offer," delivery of Exchange Capital Securities in exchange for
Original 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) certificates for Original Capital Securities or a book-entry confirmation
of a book-entry transfer of Original Capital Securities into the Exchange
Agent's account at DTC, including an Agent's Message (as defined in "The
Exchange Offer--Acceptance for Exchange and Issuance of Exchange Capital
Securities") if the tendering holder does not deliver a Letter of Transmittal,
(ii) a completed and signed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry transfer,
an Agent's Message in lieu of the Letter of Transmittal, and (iii) any other
documents required by the Letter of Transmittal. Therefore, holders of
Original Capital Securities desiring to tender such Original Capital
Securities in exchange for Exchange Capital Securities should allow sufficient
time to ensure timely delivery. Neither the Corporation nor the Trust is under
a duty to give notification of defects or irregularities with respect to the
tenders of Original Capital Securities for exchange.
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MMI COMPANIES, INC.
GENERAL
MMI, through its subsidiaries, offers a comprehensive set of specialized
insurance products and consulting services that are designed to assist
healthcare providers to manage the business, clinical, insurable and financial
risks associated with the delivery of healthcare. Since MMI's formation in
1983, the Corporation has, through acquisitions and internal growth,
substantially increased its insurance assets and capital as well as the
breadth of its products and services and its capacity to deliver them.
According to A.M. Best, as of December 31, 1996 MMI ranked as the 8th largest
medical malpractice insurer in the United States based on direct premiums
written. The Corporation's business is organized into three operating groups:
The Insurance Group generates medical malpractice and life and health
insurance premiums by underwriting primarily professional and general
liability insurance and reinsurance for healthcare providers, including
hospitals, healthcare systems and physician groups. The Corporation markets
its products and services directly and through insurance brokers to facilitate
the development and maintenance of a close working relationship with its
healthcare industry clients. ACIC and HPIC, which are MMI's principal property
and casualty insurance subsidiaries (other than Unionamerica), are rated "A"
(Excellent), by A.M. Best.
The Strategic Management Consulting Group generates fee income by providing
healthcare clients with consulting services, including strategy development,
healthcare system integration and development, managed care strategy design
and implementation, hospital/physician alignment strategies, business process
reengineering, employee relations and human resource consulting services and
patient billing and coding services. The Corporation's principal strategic
consulting subsidiary is McManis Associates, a Washington, D.C.-based
management and research consulting firm founded in 1964 and acquired by MMI in
1993. Since being acquired by MMI, McManis Associates has increased its
capacity to provide consulting services to a wider geographic area by adding
senior consultants in certain of the Corporation's offices throughout the
United States.
The Healthcare Services Group generates fee income by providing clinical
risk modification services, education programs, information services, managed
care and third party administrative services and physician credentials
verification. Because of the close relationship between clinical and insurable
risks, the Corporation integrates its professional liability insurance with
its risk management services and does not offer such insurance or certain of
its risk management programs on a stand alone basis. Accordingly, insurance
clients are required to purchase a specific set of risk modification services
consisting of consulting, education and information in order to have access to
the Corporation's professional liability coverage.
At September 30, 1997 on a consolidated basis the Corporation had
stockholders' equity of approximately $276 million, total assets of $1.1
billion and 732 employees. For the year ended December 31, 1996 the
Corporation had total consolidated revenues of $243 million, which included
$164 million of premiums earned and $35 million of consulting and fee income,
and net income of $21 million.
STRATEGIC RATIONALE FOR THE UNIONAMERICA ACQUISITION
On December 11, 1997 MMI closed the Unionamerica Acquisition. MMI believes
that its target market, the healthcare industry, is undergoing structural
change and organizational consolidation. MMI further believes that the medical
malpractice industry is also undergoing consolidation, partly in response to
the dynamics of its target market. MMI believes that current market conditions
favor larger, strongly capitalized companies with multiple licenses, broad
distribution systems and a full complement of insurance and risk management
products and services. Consequently, a key element of MMI's business strategy
has been to seek growth through acquisition in order to achieve these
objectives.
MMI believes that the acquisition of Unionamerica offers MMI an opportunity
to improve its competitive position. A substantial portion of Unionamerica's
business involves operating as a reinsurer of medical malpractice insurance
companies throughout the United States. This distribution system affords MMI
an
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opportunity to increase significantly its medical malpractice assumed
reinsurance premium writings by virtue of the Unionamerica Acquisition. It is
MMI's present intention to retain the existing management and business plans
of Unionamerica and to continue to operate Unionamerica as a distinct business
entity at its present location in London.
The medical malpractice business environment is currently in a prolonged
soft market, where competitive pricing pressures have reduced the opportunity
for MMI to obtain rate increases and thereby revenue growth. Unionamerica's
business plan includes prospects for premium growth in areas outside of the
medical malpractice line of business, including both United States property
and casualty lines and London market and European property and casualty lines,
and MMI believes that Unionamerica's management has the background and
experience to manage such growth profitably.
DESCRIPTION OF UNIONAMERICA
Founded in 1971, Unionamerica is a specialty casualty and property reinsurer
and insurer operating in the London-based reinsurance and insurance market.
Unionamerica's core business is professional indemnity reinsurance (including
malpractice reinsurance for groups of healthcare providers, lawyers and other
professionals), as well as casualty reinsurance and insurance for a variety of
U.S. single industry and/or single state risks. In addition, Unionamerica
selectively underwrites other risks where it has underwriting expertise and
when management believes market conditions relating to pricing and terms are
attractive. In 1997 these coverages primarily included individual property
risk, automobile physical damage and property catastrophe coverages. The
claims paying ability of Unionamerica's principal property and casualty
insurance subsidiary, Unionamerica Insurance Company Limited, is rated "A"
(Good) by Standard & Poor's Rating Service. Unionamerica Insurance Company
Limited is rated "A-" (Excellent), by A.M. Best.
Of the $153 million of gross premiums written by Unionamerica in 1996
(stated before a prior year adjustment of $7 million, mainly as a result of
adjustments in estimates for Unionamerica's 1995 surplus lines premium
income), 80.1% were in specialty casualty lines, 63.7% were in reinsurance and
83.2% were attributable to U.S. insureds and reinsureds. At September 30, 1997
Unionamerica had stockholders' equity of $118 million, total assets of $776
million, and 66 employees, all of whom are located in London. In 1996
Unionamerica had revenues of $146 million, which included net premiums earned
of $117 million. Unionamerica's net income in 1996 totaled $19 million.
THE UNIONAMERICA ACQUISITION
On December 11, 1997 the Corporation acquired 99% of the issued and
outstanding Ordinary Shares of Unionamerica, all of which are represented by
Unionamerica ADSs. MMI intends to apply the compulsory acquisition procedures
set forth in the Companies Act 1985 of Great Britain to acquire all of the
remaining Unionamerica ADSs. Pursuant to the Unionamerica Acquisition, each
Unionamerica ADS was converted into the right to receive 0.836 shares of
common stock of MMI. MMI and Unionamerica intend that the Unionamerica
Acquisition will be treated as a tax-free reorganization and that it will be
accounted for as a pooling-of-interests under generally accepted accounting
principles ("GAAP").
Ian G. Sinclair and Robert A. Spass were elected to the MMI Board of
Directors effective January 1, 1998 and MMI has agreed to use its best efforts
at MMI's 1998 Annual Meeting to nominate and to cause them to be elected to
one full three-year term. Ian G. Sinclair is Chief Executive Officer of
Unionamerica Insurance Company Limited and Robert A. Spass is the former
Chairman of the Board of Directors of Unionamerica.
MMI is a Delaware corporation with its principal office located at 540 Lake
Cook Road, Deerfield, Illinois, 60015. MMI's telephone number is (847) 940-
7550.
27
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
for the year ended December 31, 1996 and for the nine-month period ended
September 30, 1997 is derived from the historical financial statements of MMI
and Unionamerica incorporated by reference in this Prospectus, reflects the
Unionamerica Acquisition and gives effect to the offering of the Original
Capital Securities. The following unaudited condensed combined balance sheet
combines the unaudited balance sheets of MMI and Unionamerica as of September
30, 1997 and gives effect to the offering of the Original Capital Securities.
The following unaudited condensed combined statements of income combine the
audited statements of income for MMI and Unionamerica for the year ended
December 31, 1996 as well as the unaudited statements of income for the nine-
month period ended September 30, 1997 and give effect to the offering of the
Original Capital Securities.
The pro forma combined financial information does not purport to represent
what the combined financial position or results of operations actually would
have been if the Unionamerica Acquisition and the offering of the Original
Capital Securities had been completed at the beginning of the periods
presented or which may be obtained in the future. Results for interim periods
are not necessarily indicative of results for the full year. The pro forma
adjustments are based upon available information and certain assumptions that
the Corporation currently believes are reasonable under the circumstances. The
information presented below should be read in conjunction with the historical
financial statements of MMI and Unionamerica incorporated by reference in this
Prospectus.
The pro forma financial information has been prepared assuming the
Unionamerica Acquisition is accounted for as a pooling-of-interests. Under the
pooling-of-interests method of accounting, the historical financial statements
of the combined companies are retroactively combined (after elimination of
intercompany transactions) as if the companies had always operated as a single
entity. The pro forma condensed combined statements of income are prepared
assuming the Unionamerica Acquisition and the offering of the Original Capital
Securities occurred at the beginning of the earliest period presented, and the
pro forma condensed combined balance sheet is prepared assuming the
Unionamerica Acquisition and the offering of the Original Capital Securities
occurred on the balance sheet date. The unaudited pro forma condensed combined
financial information has been included for information purposes only and was
prepared pursuant to the rules and regulations of the Commission.
28
<PAGE>
MMI COMPANIES, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
PRO FORMA
MMI UNIONAMERICA ADJUSTMENTS
COMPANIES, HOLDINGS AND NOTE PRO FORMA
INC. PLC ELIMINATIONS REFERENCE COMBINED
ASSETS ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash and investments
Fixed maturities...... $ 691,109 $406,049 $ $1,097,158
Equity securities..... 51,802 3,222 55,024
Cash and short-term
investments.......... 36,241 18,250 15,948 (a) 70,439
---------- -------- -------- ----------
779,152 427,521 15,948 1,222,621
Other assets
Premiums and fees
receivable........... 70,886 143,012 213,898
Reinsurance
recoverable on unpaid
losses............... 109,725 150,779 (7,212) (b) 253,292
Accrued investment
income............... 10,549 7,567 18,116
Deferred income taxes. 44,960 -- 44,960
Other................. 68,810 47,378 (929) (c) 115,259
---------- -------- -------- ----------
$1,084,082 $776,257 $ 7,807 $1,868,146
========== ======== ======== ==========
<CAPTION>
LIABILITIES,
MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C>
Liabilities
Policy liabilities
Loss and loss
adjustment expense
reserves........... $ 628,951 $483,599 $ (7,212) (b) $1,105,338
Unearned premium
reserves........... 72,441 84,339 (929) (c) 155,851
Future life policy
benefits........... 8,460 -- 8,460
---------- -------- -------- ----------
709,852 567,938 (8,141) 1,269,649
Accrued expenses and
other liabilities.... 19,120 24,064 43,184
Insurance balances
payable.............. 21,294 19,929 41,223
Long-term debt........ 58,000 45,000 (103,000) (a) --
---------- -------- -------- ----------
808,266 656,931 (111,141) 1,354,056
Minority interest....... -- 1,277 1,277
Corporation-obligated,
mandatorily
redeemable preferred
securities of
subsidiary trust
holding solely junior
subordinated
debentures of the
Corporation.......... -- -- 118,948 (a) 118,948
Stockholders' equity
Common Stock.......... 1,170 381 330 (d) 1,881
Other................. 274,646 117,668 (330) (d) 391,984
---------- -------- -------- ----------
275,816 118,049 -- 393,865
---------- -------- -------- ----------
$1,084,082 $776,257 $ 7,807 $1,868,146
========== ======== ======== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Information.
29
<PAGE>
MMI COMPANIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
PRO FORMA
MMI ADJUSTMENTS
COMPANIES, UNIONAMERICA AND NOTE PRO FORMA
INC. HOLDINGS PLC ELIMINATIONS REFERENCE COMBINED
---------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues
Insurance premiums
earned............... $118,621 $ 84,132 $ $202,753
Consulting and fee
income............... 38,800 -- 38,800
Net investment income. 35,568 21,647 57,215
Realized gains
(losses) on
investments.......... 2,303 (684) 1,619
-------- -------- ------- --------
Total revenues...... 195,292 105,095 300,387
Losses and expenses
Losses and loss
adjustment expenses.. 97,507 47,836 145,343
Insurance and
administrative
expenses............. 72,079 36,218 108,297
Interest expense...... 2,682 1,841 (4,523) (e) --
-------- -------- ------- --------
Total losses and
expenses........... 172,268 85,895 (4,523) 253,640
-------- -------- ------- --------
Income from
continuing
operations before
income taxes,
distributions on
Capital Securities
and extraordinary
loss............... 23,024 19,200 4,523 46,747
Income taxes............ 1,861 6,426 1,546 (e) 9,833
-------- -------- ------- --------
Income from
continuing
operations before
distributions on
Capital Securities
and extraordinary
loss............... 21,163 12,774 2,977 36,914
Distributions on Capital
Securities, net of
taxes.................. -- -- 4,745 (e) 4,745
-------- -------- ------- --------
Income from
continuing
operations before
extraordinary loss. 21,163 12,774 (1,768) 32,169
Extraordinary loss, net
of income taxes........ -- 267 267
-------- -------- ------- --------
Income from
continuing
operations
available to common
stockholders....... $ 21,163 $ 12,507 $(1,768) $ 31,902
======== ======== ======= ========
Income from continuing
operations before
extraordinary loss per
common and common
equivalent share....... $ 1.76 $ 1.44 $ 1.66
======== ======== ========
Income from continuing
operations per common
and common equivalent
share.................. $ 1.76 $ 1.41 $ 1.64
======== ======== ========
Weighted average number
of common and common
equivalent shares
outstanding............ 12,023 8,848 (1,451) 19,420
======== ======== ======= ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Information.
30
<PAGE>
MMI COMPANIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
PRO FORMA
MMI ADJUSTMENTS
COMPANIES, UNIONAMERICA AND NOTE PRO FORMA
INC. HOLDINGS PLC ELIMINATIONS REFERENCE COMBINED
---------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues
Insurance premiums
earned............... $164,409 $116,982 $ $281,391
Consulting and fee
income............... 34,535 -- 34,535
Net investment income. 44,274 29,407 73,681
Realized losses on
investments.......... (40) (850) (890)
-------- -------- ------- --------
Total revenues...... 243,178 145,539 388,717
Losses and expenses
Losses and loss
adjustment expenses.. 135,786 72,990 208,776
Insurance and
administrative
expenses............. 77,026 41,383 118,409
Interest expense...... 3,397 2,686 (6,083) (e) --
-------- -------- ------- --------
Total losses and
expenses........... 216,209 117,059 (6,083) 327,185
-------- -------- ------- --------
Income from
continuing
operations before
income taxes and
distributions on
Capital Securities. 26,969 28,480 6,083 61,532
Income taxes............ 854 9,375 2,075 (e) 12,304
-------- -------- ------- --------
Income from
continuing
operations before
distributions on
Capital Securities. 26,115 19,105 4,008 49,228
Distributions on Capital
Securities, net of
taxes.................. -- -- 6,326 (e) 6,326
-------- -------- ------- --------
Income from
continuing
operations
available to common
stockholders....... $ 26,115 $ 19,105 $(2,318) $ 42,902
======== ======== ======= ========
Income from continuing
operations per common
and common equivalent
share.................. $ 2.42 $ 2.18 $ 2.37
======== ======== ========
Weighted average number
of common and common
equivalent shares
outstanding............ 10,770 8,754 (1,436) 18,088
======== ======== ======= ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Information.
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(a) The following adjustments reflect the transactions contemplated by the
offering of the Original Capital Securities (dollars in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
Sources of funds:
Proceeds from offering of the Original Capital
Securities............................................ $124,551
Estimated issuance costs and settlement of interest
rate lock adjustments accounted for as a qualified
hedge................................................. 5,603
--------
$118,948
========
Use of funds:
Payment of bank debt................................... $103,000
Available for general corporate purposes............... 15,948
--------
$118,948
========
</TABLE>
(b) To eliminate loss and loss adjustment expense reserves ceded to
Unionamerica Insurance Company Limited by ACIC, a subsidiary of MMI. Pro
forma adjustments to the income statement to eliminate the effect of
reinsurance of ACIC by Unionamerica are not necessary because the income
statement is presented net of reinsurance and there is no material
difference in the carrying values of reinsurance balances between ACIC and
Unionamerica.
(c) To eliminate the effect of unearned premium reserves ceded by ACIC to
Unionamerica Insurance Company Limited.
(d) To adjust the pro forma aggregate par value of MMI common stock
outstanding to reflect the conversion of 100% of the outstanding
Unionamerica ADSs into the right to receive MMI common stock at an
exchange ratio of 0.836 shares of MMI common stock per Unionamerica ADS.
(e) The following adjustments reflect the transactions contemplated by the
offering of the Original Capital Securities (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
----------------- ------------------
<S> <C> <C>
Interest expense--to eliminate
interest expense due to payment of
bank debt.......................... $(6,083) $(4,523)
Income taxes--to record income tax
effect of the pro forma adjustment
above.............................. 2,075 1,546
Distributions on Capital Securities
at 7.625% (4.96% net of taxes) and
amortization of issuance costs,
loss on interest rate lock and
discount over 30 years............. 6,326 4,745
</TABLE>
32
<PAGE>
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain obligations of the
Corporation under the Registration Rights Agreement. Neither the Corporation
nor the Trust will receive any proceeds from the issuance of the Exchange
Capital Securities and the Exchange Guarantee offered hereby. The Corporation
has agreed to pay the expenses of the Exchange Offer. In consideration for
issuing the Exchange Capital Securities as contemplated in this Prospectus,
the Trust will receive, in exchange, Original Capital Securities in like
Liquidation Amount. The Original Capital Securities surrendered in exchange
for the Exchange Capital Securities will be retired and canceled and cannot be
re-issued.
The proceeds to the Trust (without giving effect to expenses of the offering
payable by the Corporation) from the offering of the Original Capital
Securities were approximately $125 million. All of the proceeds from the sale
of the Capital Securities were invested by the Trust in the Junior
Subordinated Debentures. The Corporation used approximately $103 million of
net proceeds from the sale of the Junior Subordinated Debentures to pay all of
the Corporation's previously existing bank debt of approximately $58 million
and Unionamerica's previously existing bank debt of approximately $45 million.
None of such bank debt of the Corporation was incurred within the last twelve
months; and $10 million of such Unionamerica bank debt was incurred within the
last twelve months to acquire a minority interest in JMA Holdings Limited, the
parent of Jago Managing Agency Limited. The remaining net proceeds of
approximately $16 million will be used for general corporate purposes, which
may include other acquisitions and investments in, or extensions of credit to,
MMI's subsidiaries. Pending such uses of the remaining net proceeds, the
Corporation will invest the remaining net proceeds of the offering of the
Original Capital Securities in short-term, interest-bearing obligations.
33
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND DISTRIBUTIONS ON CAPITAL SECURITIES
The following table sets forth the Corporation's ratios of earnings to fixed
charges and earnings to fixed charges and distributions on Capital Securities:
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (1).. 3.3 7.9 6.8 7.3 7.1 7.5
Pro forma ratio of earnings to fixed
charges and distributions on Capital
Securities (2)......................... -- -- -- -- 5.7 5.7
</TABLE>
- --------
(1) Does not include distributions on Capital Securities.
(2) Gives effect to the Unionamerica Acquisition.
For purposes of computing the ratios of earnings to fixed charges, earnings
represent income from continuing operations before income taxes and fixed
charges. Fixed charges include all interest expense, distributions on Capital
Securities (except where noted) and the proportion deemed representative of
the interest factor of rent expense. The table also presents the pro forma
ratios of earnings to fixed charges for the nine months ended September 30,
1997 and for the year ended December 31, 1996 as if the Unionamerica
Acquisition had been consummated as of the beginning of each period presented.
34
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Corporation as of September 30, 1997 and as adjusted to give effect to the
consummation of the offering of the Original Capital Securities (after giving
effect to the Initial Purchasers' compensation) and the Unionamerica
Acquisition on a pooling-of-interests basis. The issuance of Exchange Capital
Securities will have no effect on the capitalization of the Corporation. The
following data should be read in conjunction with the financial information
included in the Corporation's and Unionamerica's Quarterly Reports on Form 10-
Q for the quarter ended September 30, 1997 which are incorporated herein by
reference. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------
AS ADJUSTED FOR
OFFERING OF
ORIGINAL CAPITAL
SECURITIES AND
UNIONAMERICA
ACTUAL ACQUISITION
-------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Total long-term debt................................. $ 58,000 $ --
Corporation-obligated, mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated debentures of the
Corporation(1)...................................... -- 118,948
Total stockholders' equity........................... 275,816 393,865
-------- --------
Total capitalization................................. $333,816 $512,813
======== ========
</TABLE>
- --------
(1) The Trust is a subsidiary of the Corporation and holds the Junior
Subordinated Debentures as its sole asset.
35
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
MMI COMPANIES, INC.
The following table sets forth selected consolidated financial information
of MMI for each of the years in the five-year period ended December 31, 1996
and for each of the nine-month periods ended September 30, 1996 and 1997. The
balance sheet data as of December 31, 1992, 1993, 1994, 1995 and 1996 and the
premium and income data for the years ended December 31, 1992, 1993, 1994,
1995 and 1996 are derived from the audited consolidated financial statements
of MMI. The selected data as of and for each of the nine-month periods ended
September 30, 1996 and 1997 has been derived from the unaudited consolidated
financial statements of MMI. In the opinion of MMI's management, the unaudited
consolidated financial information includes all adjustments necessary for a
fair presentation of the financial position and results of operations for such
periods. Results for interim periods are not necessarily indicative of results
for the full year. The selected consolidated financial information should be
read in conjunction with MMI's consolidated financial statements and notes
thereto incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -----------------------
1992(1) 1993 1994(2) 1995 1996 1996 1997
--------- --------- --------- --------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
PREMIUMS AND INCOME DATA:
Gross premiums written... $136,744 $161,421 $184,791 $210,752 $ 214,326 $ 170,516 $ 171,491
Net premiums written..... 102,350 120,237 139,800 161,188 167,392 131,737 131,487
Net premiums earned...... 100,894 116,295 132,389 155,191 164,409 122,953 118,621
Consulting and fee
income.................. 5,924 6,962 18,602 22,336 34,535 25,044 38,800
Net investment income.... 28,603 29,836 29,067 39,850 44,274 32,620 35,568
Net realized gains
(losses) on investments. 6,653 1,771 (2,853) 1,367 (40) (186) 2,303
Total revenues........... 142,074 154,864 177,205 218,744 243,178 180,431 195,292
Income from continuing
operations(3)........... 6,683 14,181 15,051 22,695 26,115 19,935 21,163
Per share(4)............ 1.01 1.90 1.72 2.34 2.42 1.93 1.76
Cash dividends per common
share................... 0.11 0.12 0.16 0.20 0.24 0.18 0.21
Weighted average number
of common and common
equivalent shares(4).... 6,613 7,483 8,763 9,683 10,770 10,334 12,023
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and investments..... $414,775 $472,754 $498,177 $744,061 $ 789,530 $ 764,142 $ 779,152
Total assets............. 558,998 643,773 693,804 982,678 1,058,018 1,041,557 1,084,082
Loss and loss adjustment
expense reserves........ 384,621 419,679 448,672 638,815 631,573 630,959 628,951
Long-term debt........... 23,000 16,000 28,000 49,000 58,000 58,000 58,000
Net unrealized gains
(losses) on investments. -- -- (7,237) 18,490 12,791 6,746 16,593
Stockholders' equity..... 76,966 116,503 123,059 186,463 251,966 232,750 275,816
Book value per share..... 11.96 13.56 14.28 19.27 21.67 20.84 23.58
GAAP RATIOS (5):
Loss ratio............... 86.6% 87.3% 85.1% 83.8% 82.6% 82.8% 82.2%
Expense ratio............ 36.5 22.6 20.3 22.1 23.0 22.4 25.8
--------- --------- --------- --------- ---------- ---------- ----------
Combined ratio........... 123.1% 109.9% 105.4% 105.9% 105.6% 105.2% 108.0%
========= ========= ========= ========= ========== ========== ==========
</TABLE>
- --------
(1) For 1992, income from continuing operations, operating income and GAAP
ratios have been significantly affected by certain events relating to a
special assessment by the State of Florida ($2,224), option termination
expense ($557), a provision for reinsurance ($5,647) and interest income
on a tax refund ($715).
(2) MMI adopted a new standard on accounting for investments in 1994.
(3) Income from continuing operations excludes amounts relating to segments
that were discontinued in 1992. Losses from discontinued operations were
$7,024 in 1992 and $5,100 in 1996. (See Note 14 to the Consolidated
Financial Statements).
(4) Per share data and weighted average shares are presented on a fully
diluted basis.
(5) GAAP ratios have been derived from the financial statements of ACIC,
American Continental Life Insurance Company ("ACLIC"), and HPIC, from the
date of its acquisition in 1995, as prepared on a GAAP basis for inclusion
in MMI's consolidated financial statements. The loss ratio is the ratio of
loss and loss adjustment expenses to net premiums earned. The expense
ratio is the ratio of insurance segment insurance and administrative
expenses to net premiums earned. The combined ratio is the sum of the loss
ratio and the expense ratio. Events described in Note 1 resulted in an
increase in the GAAP combined ratio of 5.8 percentage points in 1992.
(6) MMI entered into business combinations as described in Note 2 to the
Consolidated Financial Statements and acquired McManis Associates, Inc. in
December 1993.
36
<PAGE>
UNIONAMERICA HOLDINGS PLC
The following table sets forth selected consolidated financial information
of Unionamerica for each of the years in the five-year period ended December
31, 1996 and for each of the nine-month periods ended September 30, 1996 and
1997. The balance sheet data as of December 31, 1993, 1994, 1995 and 1996 and
the premium and income data for the years ending December 31, 1992, 1993,
1994, 1995 and 1996 are derived from the audited consolidated financial
statements of Unionamerica. The selected information as of and for each of the
nine-month periods ended September 30, 1996 and 1997 and the balance sheet
data as of December 31, 1992 has been extracted from the unaudited
consolidated financial statements of Unionamerica. In the opinion of
Unionamerica's management, the unaudited consolidated financial information
includes all adjustments necessary for a fair presentation of the financial
position and results of operations for such periods. Results for interim
periods are not necessarily indicative of results for the full year. The
selected consolidated financial information should be read in conjunction with
Unionamerica's consolidated financial statements and notes thereto
incorporated by reference in this Prospectus. Unionamerica's functional
currency has been determined to be the U.S. dollar.
Unionamerica acquired Unionamerica Insurance Company Limited from
Continental Corporation on September 10, 1993 (the "UA Acquisition"). In this
selected financial data, the statement of operations data for 1993 has been
split into the pre-UA Acquisition period from January 1, 1993 to September 9,
1993 and the post-UA Acquisition period from September 10, 1993 to December
31, 1993. For convenience, these results have been combined on a pro forma
basis under the caption "Combined Pro Forma Year Ended December 31, 1993."
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
-------------------------
PERIOD FROM
JANUARY 1,
YEAR ENDED 1993 TO
DECEMBER 31, SEPTEMBER 9,
1992 1993
------------ ------------
<S> <C> <C>
PREMIUMS AND
INCOME DATA:
Gross premiums
written........ $130,407 $135,197
Net premiums
written........ 114,907 118,254
Net premiums
earned......... 111,805 89,684
Net investment
income......... 25,893 17,154
Net realized
gains (losses)
on
investments(1). 4,536 4,672
Total revenues.. 143,055 113,845
Income (loss)
before
extraordinary
loss(2)........ 14,050 13,964
Extraordinary
loss, net of
taxes(3)....... -- --
Net income
(loss)
available to
ordinary
shareholders...
Income (loss)
per ordinary
share:
Income (loss)
before
extraordinary
loss..........
Extraordinary
loss..........
Net income
(loss)
available to
ordinary
shareholders..
Dividend per
ordinary
share(4).......
Weighted average
number of
shares and
share
equivalents....
BALANCE SHEET
DATA (AT END OF
PERIOD):
Cash and
investments(5)(6). $361,417
Total assets(6). 498,772
Loss and loss
adjustment
expense
reserves(6).... 330,480
Long-term debt.. --
Redeemable
preference
shares......... --
Net unrealized
gains (losses)
on investments. --
Stockholders'
equity......... 93,357
Book value per
share.......... --
GAAP RATIOS:
Loss ratio...... 76.8% 76.9%
Expense ratio... 32.8 26.7
-------- --------
Combined ratio.. 109.6% 103.6%
- --------------------------------------------------
======== ========
<CAPTION>
SUCCESSOR COMPANY
-------------------------------------------------------------------------------
PERIOD FROM COMBINED NINE MONTHS
SEPTEMBER 10, PRO FORMA ENDED
1993 TO YEAR ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -------------------------------- -------------------
1993 1993 1994 1995 1996 1996 1997
------------- ------------ ---------- ---------- ---------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
PREMIUMS AND
INCOME DATA:
Gross premiums
written........ $ 10,756 $145,953 $ 140,401 $ 157,366 $ 145,897 $133,631 $135,457
Net premiums
written........ 10,742 128,996 124,584 137,207 122,725 112,431 112,230
Net premiums
earned......... 36,009 125,693 135,587 117,712 116,982 94,068 84,132
Net investment
income......... 6,217 23,371 22,083 23,086 29,407 22,570 21,647
Net realized
gains (losses)
on
investments(1). 701 5,373 (32,408) 325 (850) (989) (684)
Total revenues.. 43,060 156,905 125,262 141,123 145,539 115,649 105,095
Income (loss)
before
extraordinary
loss(2)........ 5,229 19,193 (6,791) 12,953 19,105 13,777 12,774
Extraordinary
loss, net of
taxes(3)....... -- -- -- (4,737) -- -- (267)
Net income
(loss)
available to
ordinary
shareholders... 4,792 (8,253) 6,699 19,105 13,777 12,507
Income (loss)
per ordinary
share:
Income (loss)
before
extraordinary
loss.......... 1.00 (1.85) 2.28 2.18 1.58 1.44
Extraordinary
loss.......... -- -- (0.94) -- -- (.03)
Net income
(loss)
available to
ordinary
shareholders.. 1.00 (1.85) 1.34 2.18 1.58 1.41
Dividend per
ordinary
share(4)....... -- -- 0.0125 0.0500 0.0375 0.0375
Weighted average
number of
shares and
share
equivalents.... 4,792 -- 4,464 5,018 8,754 8,738 8,848
BALANCE SHEET
DATA (AT END OF
PERIOD):
Cash and
investments(5)(6). $380,394 $350,872 $422,764 $425,393 $425,635 $427,521
Total assets(6). 793,977 712,607 765,118 750,790 782,595 776,257
Loss and loss
adjustment
expense
reserves(6).... 603,743 559,263 561,055 524,153 540,028 483,599
Long-term debt.. 76,000 69,000 40,000 35,000 37,500 45,000
Redeemable
preference
shares......... 15,437 16,899 -- -- -- --
Net unrealized
gains (losses)
on investments. (3,442) (2,233) 4,219 665 (1,053) 2,785
Stockholders'
equity......... 20,932 13,893 85,803 103,200 96,259 118,049
Book value per
share.......... -- 3.11 10.35 12.23 11.41 13.87
GAAP RATIOS:
Loss ratio...... 61.4% 72.5% 64.7% 64.8% 62.4% 63.8% 56.9%
Expense ratio... 31.2 28.0 31.4 33.8 36.9 35.1 43.0
------------- ------------ ---------- ---------- ---------- --------- ---------
Combined ratio.. 92.6% 100.5% 96.1% 98.6% 99.3% 98.9% 99.9%
- --------------------------------------------------
============= ============ ========== ========== ========== ========= =========
</TABLE>
- -------
Footnotes on following page.
37
<PAGE>
(1) In order to eliminate the ongoing effects on Unionamerica's results of
operations of the amortization of UA Acquisition-related purchase premium
on debt securities, Unionamerica sold substantially all of its debt
securities in 1994. As a result of such sales, Unionamerica realized the
remaining amount of such purchase premium $(28.2 million) as a realized
loss during the year.
(2) Net income (loss) for the post-UA Acquisition period does not reflect
issued or accrued dividends on Senior Preference Shares in issue from 1993
to 1995.
(3) The extraordinary loss in 1995 is in respect of the write-off of deferred
financing costs in 1995 in the amount of $3.3 million pre-tax ($2.2
million after-tax) upon the refinancing of Unionamerica's prior long term
debt together with a premium on early redemption of its subordinated loan
notes in the amount of $2.5 million pre-tax ($2.5 million after tax). The
extraordinary loss in 1997 is in respect of the write-off of deferred
financing costs, net of tax, of $0.3 million upon the refinancing of long-
term debt.
(4) Unionamerica declared its first dividend, a quarterly dividend, of $0.0125
per share of Unionamerica Common Stock on January 31, 1996 and has
declared quarterly dividends of $0.0125 per share of Unionamerica Common
Stock each quarter since that date.
(5) During 1995 Unionamerica received $63.1 million related to a commutation
with Accord Re.
(6) At December 31, 1993, and all subsequent reporting dates, both assets and
outstanding losses and loss adjustment expenses and unearned premiums were
grossed-up separately to account for reinsurance recoverables in
accordance with Statement of Financial Accounting Standards No. 113. Prior
periods have not been similarly presented.
38
<PAGE>
MMI CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the Trust Agreement executed by the Corporation, as Sponsor, The Chase
Manhattan Bank, as Property Trustee, Chase Manhattan Bank Delaware, as
Delaware Trustee, and the Administrative Trustees named therein, and (ii) the
filing of a certificate of trust with the Delaware Secretary of State on
December 15, 1997. The Trust exists for the exclusive purposes of (i) issuing
and selling the Trust Securities, (ii) using the proceeds from the sale of
Trust Securities to acquire the Junior Subordinated Debentures, and (iii)
engaging in only those other activities necessary, advisable or incidental
thereto. 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 will be
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, 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 approximately 3% of the total capital of the Trust. The Trust
has a term of 31 years, but may terminate earlier as provided in the Trust
Agreement. The Trust's activities are conducted by its trustees, each
appointed by the Corporation as holder of the Common Securities. The trustees
for the Trust are The Chase Manhattan Bank, as the Property Trustee, Chase
Manhattan Bank Delaware, as the Delaware Trustee, and three Administrative
Trustees who are officers of the Corporation.
The Chase Manhattan Bank, as Property Trustee, will act as sole indenture
trustee under the Trust Agreement. The Chase Manhattan Bank will also act as
indenture trustee under the Guarantee and the Indenture. See "Description of
Exchange Securities--Description of Exchange Guarantee" and "--Description of
Exchange Junior Subordinated Debentures." ChaseMellon Shareholder Services
LLC, an affiliate of The Chase Manhattan Bank, acts for MMI as (i) transfer
agent for its Common Stock and (ii) Agent under the Corporation's Shareholders
Rights Plan, and served as Information Agent in connection with the
Unionamerica Acquisition.
The holders of the Common Securities of the Trust are, 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 are 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 the Trust Securities) related to the Trust and the
Exchange Offer and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of the Trust. The principal executive office of the
Trust is 540 Lake Cook Road, Deerfield, IL 60015.
39
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Original 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
Original Capital Securities for capital securities with terms identical in all
material respects to the terms of the Original 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 Original Capital Securities except that the Exchange Capital
Securities have been registered under the Securities Act and will not be
subject to certain restrictions on transfer applicable to the Original Capital
Securities, and will not provide for any increase in the Distribution rate
thereon. In that regard, the Original Capital Securities provide, among other
things, that, if a registration statement relating to the Exchange Offer has
not been filed by May 22, 1998 and declared effective by June 21, 1998, the
Distribution rate borne by the Original Capital Securities will increase by
0.25% per annum until such registration statement is filed or declared
effective, as the case may be. Upon consummation of the Exchange Offer,
holders of Original Capital Securities will not be entitled to any increase in
the Distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Original Capital Securities"
and "Description of Exchange Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Original 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 Original 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 Original Capital Securities are held of record by The Depository Trust
Company ("DTC") who desires to deliver such Original Capital Securities by
book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the Expiration Date, the Original Guarantee for the Exchange
Guarantee and the Original Junior Subordinated Debentures, in an amount
corresponding to the Original Capital Securities accepted for exchange, for a
like aggregate principal amount of the Exchange Junior Subordinated
Debentures. The Exchange Guarantee and Exchange Junior Subordinated Debentures
are being registered under the Securities Act concurrently with the Exchange
Capital Securities.
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 Original 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 million of Exchange Capital Securities in
exchange for a like principal amount of outstanding Original Capital
Securities tendered and accepted in connection with the Exchange Offer.
Holders may tender their Original Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 (100 Capital Securities) or any
integral multiple of $1,000 Liquidation Amount (one Capital Security) in
excess thereof, provided that, if any Original Capital Securities are tendered
for exchange in part, the untendered Liquidation Amount thereof must be
$100,000 (100 Capital Securities) or any integral multiple of $1,000 in excess
thereof.
40
<PAGE>
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of
Original Capital Securities being tendered. As of the date of this Prospectus,
$125,000,000 aggregate Liquidation Amount of the Original Capital Securities
is outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original 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. See "Risk Factors--Consequences of a Failure to
Exchange Original Capital Securities" and "Description of Exchange
Securities."
If any tendered Original 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 Original Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Original 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 Original 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" hereunder.
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY
ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF ORIGINAL
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER. IN ADDITION, NO OTHER PERSON HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES MUST MAKE THEIR OWN
DECISIONS WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF ORIGINAL CAPITAL SECURITIES TO TENDER BASED ON SUCH
HOLDERS' OWN FINANCIAL POSITIONS AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 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 expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Original Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Original
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 in "--Conditions to the Exchange Offer" hereunder have
occurred or exist or have not been satisfied, (iii) to extend the Expiration
Date of the Exchange Offer and retain all Original Capital Securities tendered
pursuant to the Exchange Offer, subject, however, to the right of holders of
Original Capital Securities to withdraw their tendered Original Capital
Securities as described in "--Withdrawal Rights" hereunder, 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 prospectus
supplement that will be distributed to the holders of the Original Capital
Securities, and the Corporation and the Trust will extend the Exchange Offer
to the extent required by Rule 14e-1 under the Exchange Act.
41
<PAGE>
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 Exchange Capital Securities for Original Capital
Securities validly tendered and not withdrawn (pursuant to the withdrawal
rights described in "--Withdrawal Rights" hereunder) promptly after the
Expiration Date.
Subject to the conditions set forth in "--Conditions to the Exchange Offer"
hereunder, delivery of Exchange Capital Securities in exchange for Original
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)
certificates for Original Capital Securities or a book-entry confirmation of a
book-entry transfer of Original Capital Securities into the Exchange Agent's
account at DTC, including an Agent's Message if the tendering holder does not
deliver a Letter of Transmittal, (ii) a completed and signed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message in lieu of the
Letter of Transmittal, and (iii) 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 certificates for Original Capital Securities, book-entry confirmations
with respect to Original Capital Securities and other required documents are
received by the Exchange Agent.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Original Capital Securities into the Exchange Agent's
account at DTC. See "--Procedures for Tendering Original Capital Securities--
Book-Entry Transfer" hereunder. The term "Agent's Message" means a message,
transmitted by DTC to and received by the Exchange Agent and forming a part of
a book-entry confirmation, which states that DTC has received an express
acknowledgment from the tendering participant, which acknowledgment states
that such participant has received and agrees to be bound by the Letter of
Transmittal and that the Trust and the Corporation may enforce such Letter of
Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Corporation
and the Trust will be deemed to have accepted for exchange, and thereby
exchanged, Original Capital Securities validly tendered and not withdrawn as,
if and when the Trust gives oral or written notice to the Exchange Agent of
the Corporation's and the Trust's acceptance of such Original Capital
Securities for exchange pursuant to the Exchange Offer. The Exchange Agent
will act as agent for the Corporation and the Trust for the purpose of
receiving tenders of Original Capital Securities, Letters of Transmittal and
related documents, and as agent for tendering holders for the purpose of
receiving Original Capital Securities, Letters of Transmittal and related
documents and transmitting Exchange Capital Securities which will not be held
in global form by DTC or a nominee of DTC 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 Original Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before
or after the Corporation's and the Trust's acceptance for exchange of Original
Capital Securities) or the Corporation and the Trust extend the Exchange Offer
or are unable to accept for exchange or exchange Original Capital Securities
tendered pursuant to the Exchange Offer, then, without prejudice to the
Corporation's and the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Corporation and the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Original Capital Securities
and such Original Capital Securities may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described in "--
Withdrawal Rights" hereunder.
42
<PAGE>
Pursuant to an Agent's Message or a Letter of Transmittal, a holder of
Original Capital Securities will represent, warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Original Capital Securities, that the Trust will acquire
good, marketable and unencumbered title to the tendered Original Capital
Securities, free and clear of all liens, restrictions, charges and
encumbrances, and the Original 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 Original Capital
Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING ORIGINAL CAPITAL SECURITIES
Valid Tender
Except as set forth below, in order for Original Capital Securities to be
validly tendered by book-entry transfer, an Agent's Message or a completed and
signed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and in either case any other documents required by the
Letter of Transmittal, must be delivered to the Exchange Agent by mail,
facsimile, hand delivery or overnight courier at one of the Exchange Agent's
addresses set forth in "--Exchange Agent" hereunder on or prior to the
Expiration Date and either (i) such Original Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below or
(ii) the guaranteed delivery procedures set forth below must be complied with.
Except as set forth below, in order for Original Capital Securities to be
validly tendered by a means other than by book-entry transfer, a completed and
signed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of
Transmittal must be delivered to the Exchange Agent by mail, facsimile, hand
delivery or overnight courier at one of the Exchange Agent's addresses set
forth in "--Exchange Agent" hereunder on or prior to the Expiration Date and
either (i) such Original Capital Securities must be delivered to the Exchange
Agent on or prior to the Expiration Date or (ii) the guaranteed delivery
procedures set forth below must be complied with.
If less than all Original Capital Securities are tendered, a tendering
holder should fill in the amount of Original Capital Securities being tendered
in the appropriate box on the Letter of Transmittal. The entire amount of
Original 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 TO BE BY MAIL, THE USE OF 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 and DTC have confirmed that any Participant (as defined
in "Description of Exchange Securities--Description of Exchange Capital
Securities--Depositary Procedures") in DTC's book-entry transfer facility
system may utilize DTC's ATOP procedures to tender Original Capital
Securities. The Exchange Agent will establish an account with respect to the
Original Capital Securities at DTC for purposes of the Exchange Offer within
two business days after the date of this Prospectus. Any Participant may make
a book-entry delivery of the Original Capital Securities by causing DTC to
transfer such Original Capital Securities into the Exchange Agent's account at
DTC in accordance with DTC's ATOP procedures for transfer. However, although
delivery of Original Capital Securities may be effected through book-entry
transfer into the Exchange Agent's account at DTC, an Agent's Message or a
completed and signed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other documents required by the Letter
of Transmittal, must in any case
43
<PAGE>
be delivered to and received by the Exchange Agent at one of its addresses set
forth in "--Exchange Agent" hereunder 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 Original Capital Securities need not be endorsed and
signature guarantees on the Letter of Transmittal are unnecessary unless (a) a
certificate for the Original 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 Original 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.
Guaranteed Delivery
If a holder desires to tender Original Capital Securities pursuant to the
Exchange Offer and the certificates for such Original 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 Original
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 Original 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 mailed 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 Original 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 Original Capital Securities, or
of a book-entry confirmation with respect to such Original 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 Original Capital Securities, book-entry
confirmations with respect to Original Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Original 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.
44
<PAGE>
Determination of Validity
All questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Original Capital
Securities will be determined by the Corporation and the Trust, in their sole
discretion, whose 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 in "--Conditions to the Exchange Offer" hereunder or any condition or
irregularity in any tender of Original 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 Original 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 indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the Corporation and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
A beneficial owner of Original 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 upon
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 Original 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 Original 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 Original
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 Original 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 Original Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer
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holds Original Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Original 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 Original Capital Securities who wishes to exchange Original
Capital Securities for Exchange Capital Securities in the Exchange Offer will
be required to represent that (i) it is not an "affiliate" of the Corporation
or the Trust, (ii) any Exchange Capital Securities to be received by it are
being acquired in the ordinary course of its business, (iii) it 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
Capital Securities to be exchanged in the Exchange Offer. Each broker-dealer
that receives Exchange Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Original Capital
Securities 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 states that by
so acknowledging 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 upon 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 acquired Original 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 Original Capital Securities (other
than Original Capital Securities which represent an unsold allotment from the
initial sale of the Original Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for
an 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 during the period
referred to below in connection with resales of Exchange Capital Securities
received in exchange for Original Capital Securities where such Original
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 a period ending 180 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."
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of Exchange Capital Securities received in exchange
for Original 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 in "--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.
In that regard, each Participating Broker-Dealer who surrenders Original
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 (i) any fact which
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makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or (ii) any fact 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 (iii) 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 180-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.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original 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 in "--Exchange Agent"
hereunder on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Original Capital
Securities to be withdrawn, the aggregate principal amount of Original Capital
Securities to be withdrawn, and (if certificates for such Original Capital
Securities have been tendered) the name of the registered holder of the
Original Capital Securities as set forth on the Original Capital Securities,
if different from that of the person who tendered such Original Capital
Securities. If Original Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then, prior to the physical release of such
Original Capital Securities, the tendering holder must submit the serial
numbers shown on the particular Original 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 Original Capital Securities
tendered for the account of an Eligible Institution. If Original Capital
Securities have been tendered pursuant to the procedures for book-entry
transfer set forth in "--Procedures for Tendering Original Capital Securities"
hereunder, the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Original 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 Original Capital Securities may not be
rescinded. Original Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described above in "--Procedures for Tendering Original Capital
Securities." Any Original 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 Original Capital Securities whose Original Capital Securities are
accepted for exchange will not receive Distributions on such Original Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Original Capital Securities accumulated from and after
December 23, 1997. Accordingly, holders of Exchange Capital Securities as of
the record date for the payment of Distributions on June 15, 1998 will be
entitled to receive Distributions accumulated from and after December 23,
1997.
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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 Original Capital Securities for any
Exchange Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Original 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 Original Capital Securities
to be offered for resale, resold and otherwise transferred by holders
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 the ordinary course of such
holders' business and such holders have 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, or any
governmental approval has not been obtained, which approval the Corporation
or the Trust shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby; or
(d) the Corporation shall receive an opinion of counsel experienced in
such matters to the effect that there is more than an insubstantial risk
that consummation of the Exchange Offer would result in interest payable to
the Trust on the Junior Subordinated Debentures being not deductible by the
Corporation for United States federal income tax purposes.
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 Original 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 original Capital Securities and will extend the Exchange Offer
to the extent required by Rule 14e-1 under the Exchange Act.
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EXCHANGE AGENT
The Chase Manhattan Bank 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:
BY MAIL: BY FACSIMILE BY HAND:
The Chase Manhattan TRANSMISSION: The Chase Manhattan
Bank (FOR ELIGIBLE Bank
55 Water Street INSTITUTIONS 55 Water Street
Room 234, North ONLY) Room 234, North
Building (212) 638-7375 or Building
New York, NY 10041 (212) 344-9367 New York, NY 10041
Attn: Carlos Esteves Attn: Carlos Esteves
TO CONFIRM BY TELEPHONE OR
FOR INFORMATION:
(212) 638-0828
BY OVERNIGHT DELIVERY:
The Chase Manhattan Bank
55 Water Street
Room 234, North Building
New York, NY 10041
Attn: Carlos Esteves
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 Original Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Original 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 Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original 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 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.
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DESCRIPTION OF EXCHANGE SECURITIES
The terms of the Original Securities are identical in all material respects
to the Exchange Securities, except that (i) the Original 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), (ii) the Exchange
Capital Securities will not contain the $100,000 minimum Liquidation Amount
transfer restriction and certain other restrictions on transfer applicable to
Original Capital Securities, (iii) the Exchange Capital Securities will not
provide for any increase in the Distribution rate thereon and (iv) the
Exchange Junior Subordinated Debentures will not provide for any increase in
the interest rate thereon. The Original Securities provide that, in the event
that a registration statement relating to the Exchange Offer has not been
filed by May 22, 1998 and been declared effective by June 21, 1998, or, in
certain limited circumstances, in the event a shelf registration statement
with respect to the resale of the Original Capital Securities is not declared
effective by the time required by the Registration Rights Agreement, then
liquidated damages ("Additional Interest") will accrue at the rate of 0.25%
per annum on the principal amount of the Original Junior Subordinated
Debentures and Distributions will accrue at the rate of 0.25% per annum on the
Liquidation Amount of the Original Capital Securities, for the period from the
occurrence of such event until such time as such registration statement has
been filed or declared effective, as the case may be. The Exchange Securities
are not, and upon consummation of the Exchange Offer the Original Securities
will not be, entitled to any such Additional Interest or Distributions.
Accordingly, holders of Original Capital Securities should review the
information set forth in "Risk Factors--Consequences of a Failure to Exchange
Original Capital Securities" and "Description of Exchange Securities."
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
The Capital Securities represent preferred beneficial interests in the Trust
and the holders thereof are 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 of certain 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 Trust Agreement, including the definitions therein of
certain terms.
General
The Exchange Capital Securities will be limited to $125,000,000 aggregate
Liquidation Amount at any one time outstanding. The Exchange 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 for the benefit of the holders of the
Trust 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 Guarantee."
Distributions
Distributions on the Capital Securities will be cumulative, will accumulate
from December 23, 1997 and will be payable semi-annually in arrears on June 15
and December 15 of each year, commencing June 15, 1998, at the annual rate of
7 5/8% of the Liquidation Amount to the holders of record of the Exchange
Capital Securities on the June 1 or December 1 immediately preceding such
date. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year consisting of twelve 30-day months. In the event
that any date on which Distributions are payable on the Capital Securities is
not a Business Day (as defined below), payment of the Distributions 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 to any such delay), in each
case with the same force
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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 or Chicago, Illinois 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 (i) no
Extension Period may extend beyond the Stated Maturity Date, (ii) any
Extension Period will terminate as to all Junior Subordinated Debentures upon
an acceleration thereof (subject to reinstatement, upon cure or waiver as
provided in the Indenture), and (iii) any Extension Period will terminate as
to any Junior Subordinated Debenture to be redeemed pursuant to the occurrence
and continuation of a Special Event on the applicable Redemption Date. Upon
any such election, semi-annual Distributions on the Capital Securities will be
deferred by the Trust during any such Extension Period. Distributions to which
holders of the Exchange Capital Securities are entitled during any such
Extension Period will accumulate additional Distributions thereon at the rate
per annum of 7 5/8% thereof, compounded semi-annually, to the extent permitted
by applicable law, from the relevant Distribution Date. 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 such 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 Date. Upon the termination of any such
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 to begin any such
Extension Period at least five Business Days prior to the earlier of (i) the
date the Distributions on the Exchange Capital Securities would have been
payable if the election to begin such Extension Period had not been made 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. So long as no
Debenture Event of Default has occurred and is continuing, there is no
limitation on the number of times that the Corporation may elect to begin an
Extension Period. The Property Trustee will give notice of the Corporation's
election to commence or continue an Extension Period to the holders of the
Exchange Capital Securities. See "--Description of Exchange Junior
Subordinated Debentures--Option to Extend Interest Payment Date" and "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (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, preferred and preference stock) or (ii) make any
payment of principal of or premium, if any, or interest 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 shareholders' 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) the purchase of fractional shares resulting from 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, and (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).
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Although the Corporation may in the future exercise its option 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
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust will invest 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 Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Capital Securities. The
payment of Distributions (if and to the extent the Trust has funds on 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."
Redemption
Upon the repayment on the Stated Maturity Date or payment of the Special
Event Prepayment Price prior to the Stated Maturity Date of the 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 a 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 Junior
Subordinated Debentures on the Stated Maturity Date, the Maturity Redemption
Price (equal to the principal of, and accrued interest on, the Junior
Subordinated Debentures) and (ii) in the case of the optional prepayment of
the Junior Subordinated Debentures upon the occurrence and continuation of a
Special Event, the Special Event Redemption Price (equal to the Special Event
Prepayment Price in respect of the Junior Subordinated Debentures). See "--
Description of Exchange Junior Subordinated Debentures--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 Junior Subordinated Debentures to be paid in accordance
with their terms and (ii) with respect to a distribution of Junior
Subordinated Debentures upon the liquidation of the Trust, Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
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.
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, with respect to the Exchange
Capital Securities held by DTC or its nominees, the Property Trustee will
deposit irrevocably with DTC funds sufficient to pay the applicable Redemption
Price. 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 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,
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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 Guarantee as described under "--Description of
Guarantee," 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, in which case 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 Capital Securities by tender, in
the open market or by private agreement.
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 Redemption 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.
Liquidation of the Trust and Distribution of Junior Subordinated Debentures
The Corporation will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Such right is
subject to the Corporation having received an opinion of counsel to the effect
that such distribution will not be a taxable event to holders of Capital
Securities.
The Trust shall automatically dissolve, and its affairs shall be wound up,
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
Junior Subordinated Debentures to the holders of the Trust Securities, if the
Corporation, as Sponsor, has given 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 Sponsor); (iii)
redemption of all of the Trust Securities as described under "--Redemption";
(iv) expiration of the term of the Trust; and (v) the entry of an order for
the dissolution of the Trust by a court of competent jurisdiction.
If a dissolution occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously
as the Issuer 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
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."
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 be exchanged for a
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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 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.
There can be no assurance as to the market prices for the Capital Securities
or the 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 Capital Securities that an investor may purchase, or
the 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 Capital Securities offered hereby.
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 an
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 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 five Business 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 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
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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, Amalgamations 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 and except as described in "--Liquidation of the
Trust and Distribution of Junior Subordinated Debentures." The Trust may, at
the request of the Corporation, as Sponsor, with the consent of the
Administrative Trustees but without the consent of the holders of the Capital
Securities, the Delaware Trustee or the Property Trustee, 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, 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 nationally recognized statistical rating organization, (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, (vi) such successor entity has a purpose substantially
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 with
respect to any dilution of the holders' interest 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
of 1940, as amended (the "Investment Company Act"), and (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. Notwithstanding the foregoing, 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
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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.
In addition, the Property Trustee will be required pursuant to the Indenture
to exchange, as a part of the Exchange Offer, the Junior Subordinated
Debentures for the Exchange Debentures, which will have terms identical to the
Junior Subordinated Debentures except for the transfer restrictions under the
Securities Act, the $100,000 minimum aggregate principal amount transfer
restrictions and the provision for an increase in the interest rate thereon
under certain circumstances.
Voting Rights; Amendment of the Trust Agreement
Except as provided in the following paragraph and under "--Mergers,
Consolidations, Amalgamations or Replacements of the Trust" and "--Description
of Exchange Guarantee--Amendments and Assignment" and as otherwise required by
law and the Trust Agreement, the holders of the Capital Securities will have
no voting rights.
The Trust Agreement may be amended from time to time by the Corporation, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities (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, or (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; provided, however, that such action shall not adversely affect in any
material respect the interests of the holders of the Trust Securities, and any
amendments of the Trust Agreement shall become effective when notice thereof
is given to the holders of the Trust Securities. The Trust Agreement may be
amended by the Issuer Trustees and the Corporation (i) with the consent of
holders representing a majority (based upon Liquidation Amount) of the
outstanding Trust Securities, and (ii) 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 to
(i) change the amount or timing of any Distribution on or redemption of 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) restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date. The Exchange
Capital Securities and any Original 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.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, 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 executing 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
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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 the Trust will not be
classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee 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 Capital Securities will be required for
the Trust to redeem and cancel the 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 the purposes
of such vote or consent, be treated as if they were not outstanding.
Form, Denomination, Book-Entry Procedures and Transfer
The Exchange Capital Securities initially will be represented by one or more
Capital Securities 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
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, and such transfer shall be reflected only when reflected
in the securities register maintained by or on behalf of the Trust. 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."
Other Capital Securities will be issued only in registered, certificated
(i.e., non-global) form. Other Capital Securities may not be exchanged for
beneficial interests in any Global Capital Securities except in the limited
circumstances described below. See "--Exchange of Certificated Capital
Securities for Book-Entry Capital Securities."
Exchange Capital Securities (including beneficial interests in the
restricted Global Capital Securities) may be transferred only in blocks with a
Liquidation Amount of $1,000 and integral multiples of $1,000 in excess
thereof. In addition, transfer of beneficial interests in the Global Capital
Securities will be subject to the applicable rules and procedures of DTC and
its direct or indirect participants, which may change from time to time.
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
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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, ownership of 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).
Investors in the Global Capital Securities may hold their interests therein
directly through DTC if they are Participants in such system, or indirectly
through organizations which are Participants in such system. All interests in
a Global Capital Security may be subject to the procedures and requirements of
DTC. The laws of some states require that certain persons take physical
delivery in certificated form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Capital Security to such
persons will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in the Global
Capital Securities to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests. For certain other restrictions on the transferability of the
Capital Securities, see "--Exchange of Book-Entry Capital Securities for
Certificated Capital Securities" and "--Exchange of Certificated Capital
Securities for Book-Entry 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. Investors who hold their interests in the Global
Capital Securities indirectly through Participants in DTC will be limited to
proceeding against such Participants in the event of any claim relating to
their beneficial ownership in the Global Capital Securities; and in the event
that such a Participant becomes bankrupt or insolvent, such remedy may be
limited to the amount available to a customer under SIPC insurance.
Payments in respect of the Global Capital Securities 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 nor the
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Corporation nor the Property Trustee will be liable for any delay by DTC or
any of its Participants in identifying or paying 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.
Secondary market trading activity in interests in the Global Capital
Securities will 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 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 legended Capital Securities in certificated form
and to distribute such 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.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Capital Securities among participants in DTC, they
are under no obligation to perform or to continue to perform such procedures,
and such procedures may be discontinued at any time. Neither the Trust or the
Corporation nor the Property Trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
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
Securities 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 customary
procedures. In all cases, certificated 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 the Depositary (in accordance with its customary
procedures).
Exchange of Certificated Capital Securities for Book-Entry Capital Securities
Prior to registration under the Securities Act, Other Capital Securities
(Original Capital Securities sold to institutional accredited investors in
exempt transactions not made in reliance upon Rule 144A), which will be issued
in certificated form, may not be exchanged for beneficial interests in any
Global Capital Security unless such exchange occurs in connection with a
transfer of such Other Capital Securities and the transferor first delivers to
the Property Trustee a written certificate (in the form provided in the Trust
Agreement) to the effect that such transfer will comply with the appropriate
transfer restrictions applicable to such Capital Securities.
Payment and Paying Agency
Payments in respect of the Exchange Capital Securities held in global form
shall be made (i) to the Depositary, which shall credit the relevant accounts
at the Depositary on the applicable Distribution Dates or (ii)
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in respect of the Exchange Capital Securities that are not held by the
Depositary, 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 (the "Paying Agent") shall initially be the Property Trustee and
any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. 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.
Restrictions on Transfer
The Exchange Capital Securities will be issued and may be transferred only
in blocks having a Liquidation Amount of $1,000 and integral multiples of
$1,000 in excess thereof. Any such transfer of Exchange Capital Securities in
a denomination of less than $1,000 shall be deemed to be void and of no legal
effect whatsoever. Any such transferee shall be deemed not to be the holder of
such Exchange Capital Securities for any purpose, including but not limited to
the receipt of Distributions on such Exchange Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Exchange Capital Securities. Registration of transfers of the Exchange Capital
Securities will be effected without charge by or on behalf of the Trust, but
upon 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 will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a
corporation for United States federal income tax purposes and so 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.
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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 EXCHANGE JUNIOR SUBORDINATED DEBENTURES
The Original Junior Subordinated Debentures were issued and the Exchange
Junior Subordinated Debentures will be issued under an Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Corporation and The Chase Manhattan Bank, as trustee (the "Debenture
Trustee"). The Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). This summary of certain terms
and provisions of the Exchange 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 the Original Junior Subordinated Debentures
issued by the Corporation. The Exchange Junior Subordinated Debentures will
bear interest at the annual rate of 7 5/8% of the principal amount thereof,
payable semi-annually in arrears on June 15 and December 15 of each year
(each, an "Interest Payment Date"), commencing June 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 June 1 or December 1
immediately preceding such Interest Payment Due. 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. 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 5/8% 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 December 15, 2027 (the "Stated Maturity Date").
The Exchange Junior Subordinated Debentures will rank pari passu with the
Original Junior Subordinated Debentures and all Other Debentures 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
"--Subordination." 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 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
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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. or other nominee of DTC. The depositary arrangements for such
Exchange Junior Subordinated Debentures are expected to be substantially
similar to those in effect for the 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 Capital Securities--Form, Denomination, Book-Entry
Procedures and Transfer."
Payment and Paying Agents
Payment of principal of (and premium, if any) 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 except in
the case of Exchange Junior Subordinated Debentures in global form, (i) by
check mailed to the address of the Person entitled thereto as such address
shall appear in the register for Exchange Junior Subordinated Debentures or
(ii) by wire 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 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; however, the Corporation will
at all times be required to maintain a Paying Agent in each Place of Payment
for the Exchange Junior Subordinated Debentures.
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 (and
premium, if any) or interest on any Exchange Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
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 (i) no Extension Period may extend beyond the Stated Maturity
Date, (ii) any Extension Period will terminate as to all Exchange Junior
Subordinated Debentures upon an acceleration thereof (subject to
reinstatement, upon cure or waiver as provided in the Indenture), and (iii)
any Extension Period will terminate as to any Exchange Junior Subordinated
Debenture to be redeemed pursuant to the occurrence and continuation of a
Special Event on the applicable Redemption Date. 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 5/8%, 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 the Trust Securities while Trust
Securities are outstanding) will be required to accrue interest income for
United States federal income tax purposes prior to the receipt of cash
attributable to such income. See "Certain Federal Income Tax Consequences--
Interest Income and Original Issue Discount."
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During any such Extension Period, the Corporation may not (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) or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including any Other Debentures) that rank
pari passu with or junior in right of payment to the 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 any Other Guarantees) if such guarantee ranks pari passu with or
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
shareholders' 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) the purchase of fractional shares
resulting from 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 and (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).
Prior to the termination of any such Extension Period, the Corporation may
further extend such 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 Date. 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 requirements. Although interest shall accrue, 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 Debenture 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.
Special Event Prepayment
If a Special Event 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
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 on the Junior Subordinated
Debentures to the Stated Maturity Date, 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 interest thereon to
the date of prepayment.
A "Special Event" means a Tax Event or an Investment Company Event.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of counsel 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 any amendment
to or change in an interpretation or application of such laws or regulations,
or any decided case, which amendment or change or case is effective or is
announced on or after the Issue Date, there is more than an insubstantial risk
that (i) the Trust would be 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
would not be deductible by the Corporation,
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in whole or in part, for United States federal income tax purposes, or (iii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
An "Investment Company Event" means the receipt by the Corporation and the
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of any amendment to, or change (including any announced
prospective change) in, the Investment Company Act or any regulations
thereunder, or any amendment to or change in interpretation or application of
such law or regulations, or any decided case, which amendment or change or
case is effective or is announced on or after the Issue Date, there is more
than an insubstantial risk that the Trust would be required to register as an
"investment company" under the Investment Company Act.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity date corresponding to the Stated Maturity Date
(if no maturity date is within three months before or after the Stated
Maturity Date, yields for the first two published maturities most closely
corresponding to the Stated Maturity Date shall be interpolated and the
Adjusted Treasury Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding to the nearest month) or (ii) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, 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, in either case (A) 1.25% if such prepayment date
occurs on or prior to December 23, 1998 and (B) 0.50% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date corresponding to the
Stated Maturity Date that would be utilized at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities with a maturity date corresponding to the Stated
Maturity Date. If no United States Treasury security has a maturity date which
is within three months before or after the Stated Maturity Date, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the calculation of the Adjusted Treasury Rate
pursuant to clause (ii) of the definition thereof shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using
such securities.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means: (i) initially, Salomon
Brothers Inc 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; or (ii) any other Primary Treasury Dealer
selected by 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 five 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
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Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing 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.
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 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 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 Junior Subordinated Debentures the Additional Sums.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount available to pay 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.
Restrictions on Certain Payments
The Corporation will also covenant that it will not, (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) or (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 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
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
shareholder'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) the purchase of fractional shares
resulting from 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 and (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), if at such time (1) there shall
have occurred and be continuing an Event of Default under the Trust Agreement,
(2) there shall have occurred and be continuing a Debenture Event of Default,
(3) there shall have occurred and be continuing a payment default under the
Trust Agreement or the Indenture, (4) if such Junior Subordinated Debentures
are held by the Trust, the Corporation shall be in default with respect to its
payment of any obligations under the Guarantee or (5) 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.
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 (or holders of a majority in liquidation amount of
Trust Securities when the Junior Subordinated Debentures are held by the
Property Trustee), 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) extend the
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Stated Maturity Date, 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 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 (or premium, if any) on the 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 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 of bankruptcy, insolvency or reorganization of the
Corporation.
The Debenture Trustee shall give notice to the holders of the Debentures
within 90 days after the occurrence of any of the events described in (i)
through (iv) above (irrespective of any periods of grace). 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 non-payment 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 premium, if any) on or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal (and premium, if any) 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 interest on or
principal (or premium, if any) of 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
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) or interest on the Junior
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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.
The holders of the 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 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.
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
Junior Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all 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
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 Date, 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
The Indenture provides that the Junior Subordinated Debentures issued
thereunder will be subordinate and junior in right of payment to all Senior
Indebtedness. No payment of principal (including redemption payments and
premium, if any) or interest on the Junior Subordinated Debentures may be made
at any time when (i) any Senior Indebtedness is not paid when due, (ii) any
applicable grace period with respect to such default has ended and such
default has not been cured or waived or ceased to exist, or (iii) the maturity
of any Senior Indebtedness has been accelerated because of a default and not
been rescinded.
Upon any 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, all Senior Indebtedness must be paid
in full before the holders of the Junior Subordinated Debentures are entitled
to receive or retain any payment in respect thereof.
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No payment on account 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.
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.
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, unless the terms thereof specifically provide
that it is not superior in right of payment to the Junior Subordinated
Debentures, and any deferrals, renewals or extensions 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, but shall not include (i) any trade accounts payable in the
ordinary course of business, (ii) any such indebtedness that by its terms
ranks pari passu with or junior in right of payment to the Junior Subordinated
Debentures, (iii) all other debt securities, and guarantees in respect of
those debt securities, issued to 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 financing entity of equity securities or other securities
guaranteed by the Corporation pursuant to an instrument that ranks pari passu
with or junior in right of payment to the Guarantee, and (iv) any other
indebtedness that would otherwise qualify as "Indebtedness for Money Borrowed"
to the extent that such indebtedness by its terms ranks pari passu with or
junior in right of payment to any of the indebtedness described in (i), (ii)
or (iii).
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. See "Risk
Factors--Ranking of Subordinated Obligations Under the Guarantee and the
Junior Subordinated Debentures; Holding Company Structure."
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.
Restrictions on Transfer
The Exchange Junior Subordinated Debentures will be issued, and may be
transferred only, in blocks having an aggregate principal amount of $1,000 and
integral multiples of $1,000 in excess thereof. Any such transfer of Exchange
Junior Subordinated Debentures in a block having an aggregate principal amount
of less than $1,000 shall be deemed to be void and of no legal effect
whatsoever. Any such transferee shall be deemed not to be the holder of such
Exchange Junior Subordinated Debentures for any purpose, including but not
limited to the receipt of payments on such Exchange Junior Subordinated
Debentures, and such transferee shall be deemed to have no interest whatsoever
in such Exchange Junior Subordinated Debentures.
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.
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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 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 Exchange Guarantee will be executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Exchange Capital Securities
for the benefit of the holders from time to time of the Exchange Capital
Securities. The Chase Manhattan Bank will act as indenture trustee ("Guarantee
Trustee") under the Exchange Guarantee. The Exchange Guarantee has been
qualified under the Trust Indenture Act. This summary of certain provisions of
the Exchange 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
Exchange Guarantee, including the definitions therein of certain terms, and
the Trust Indenture Act. The Guarantee Trustee will hold the Exchange
Guarantee for the benefit of the holders of the Exchange Capital Securities.
General
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth 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
Exchange 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.
The Exchange Guarantee will rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent provided therein. See "--Status of
the Exchange Guarantee" and "--Description of Exchange Junior Subordinated
Debentures--General." Because the Corporation is a holding company, the right
of any 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 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 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.
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No single document standing alone or operating in conjunction with fewer
than all of the other documents constitutes such a full, irrevocable and
unconditional 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 Capital Securities. See
"Relationship Among the Exchange Capital Securities, the Exchange Junior
Subordinated Debentures and the Exchange Guarantee."
Status of the Exchange Guarantee
The Exchange Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Senior Indebtedness in the same manner as Exchange Junior Subordinated
Debentures, except in the case of a bankruptcy or insolvency proceeding in
respect of the Corporation, in which case the Exchange Guarantee will rank
subordinate and junior in right of payment to all liabilities (other than
Other Guarantees) of the Corporation.
The Exchange Guarantee will rank pari passu with all Other Guarantees issued
by the Corporation. 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 Exchange 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 Exchange 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.
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 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.
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Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and 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, after default with respect to the Exchange Guarantee,
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 Exchange 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 Exchange 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.
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RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES, THE EXCHANGE JUNIOR
SUBORDINATED DEBENTURES AND THE EXCHANGE GUARANTEE
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 payments 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 will be
subordinate and junior in right of payment to all Senior Indebtedness.
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 Special Event
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 Indenture, the Trust Agreement or the Exchange Guarantee.
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 undivided
beneficial interests in the assets of 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 a
Capital Security and a holder of a Junior Subordinated Debenture is that a
holder of a Junior Subordinated
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Debenture will be entitled to receive from the Corporation the principal
amount of and interest on Junior Subordinated Debentures held, while a holder
of Capital Securities is entitled to receive Distributions from the Trust (or,
in certain circumstances, from the Corporation under the Guarantee) if and to
the extent the Trust has funds on hand legally available for the payment of
such Distributions.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary termination and
liquidation of the Trust, the holders of the Trust Securities will be entitled
to receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of Exchange Securities--Description of Exchange Capital
Securities--Liquidation of the Trust and Distribution of 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 (and
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.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Wildman, Harrold, Allen & Dixon, counsel to the
Corporation and the Trust ("Tax Counsel"), the following is a summary of the
material United States federal income tax consequences of the exchange of
Original Capital Securities for Exchange Capital Securities and the ownership
and disposition of Exchange Capital Securities held as "capital assets" as
that term is defined in the Internal Revenue Code of 1986, as amended (the
"Code") by a holder who purchased such Original Capital Securities upon
initial issuance and who is the beneficial owner of such Capital Securities.
This summary 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
(including pension funds), 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. 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 upon 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.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Original Securities for Exchange Securities should not be a
taxable event to holders for United States federal income tax purposes. The
exchange of Original Capital Securities for Exchange Capital Securities
pursuant to the Exchange Offer should not be taxable for United States federal
income tax purposes because the Exchange Capital Securities should not be
considered to differ materially in kind or extent from the Original Capital
Securities and because the exchange will occur by operation of the terms of
the Original Capital Securities. Accordingly, the Exchange Capital Securities
should have the same issue price as the Original Capital Securities and a
holder should have the same adjusted tax basis and holding period in the
Exchange Capital Securities as the holder had in the Original Capital
Securities immediately before the exchange. Moreover, a holder which had
acquired Original Capital Securities with either market discount or bond
premium will be treated as holding Exchange Capital Securities with the same
amount of market discount or bond premium and will be required to include such
market discount in or deduct such bond premium from its income in the same
manner as on the Original Capital Securities. Holders are urged to consult
their tax advisors regarding the applicability of the market discount and bond
premium rules.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Corporation intends to, and by acceptance of an Original Capital
Security each holder covenanted to, treat the Junior Subordinated Debentures
as debt for U.S. federal income tax purposes. In connection with the issuance
of the Junior Subordinated Debentures, Tax Counsel rendered its opinion
generally to the effect that, under the law in effect at the time of issuance
of the Original Capital Securities and assuming full compliance with the terms
of the Indenture (and certain other documents), and based upon certain facts
and assumptions contained in such opinion and certain representations of the
Corporation to Tax Counsel, the Original Junior Subordinated Debentures will
be classified for United States federal income tax purposes as indebtedness of
the Corporation. In connection with the issuance of the Exchange Junior
Subordinated Debentures, Tax Counsel will render its opinion generally to the
effect that under the law in effect at the time of the issuance of the
Exchange Junior Subordinated Debentures and assuming that there has been full
compliance with the terms of the Indenture (and certain other documents), and
based upon certain facts and assumptions in such opinion and certain
representations of the Corporation to Tax Counsel, the Exchange 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
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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 Capital Securities, Tax Counsel
rendered its opinion generally to the effect that, under the law in effect at
the time of issuance of the opinion and assuming full compliance with the
terms of the Trust Agreement and the Indenture (and certain other documents),
and based upon 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 (and not the Trust) generally will 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 any interest (or OID accrued) with
respect to its allocable share of those Junior Subordinated Debentures.
Even if the Trust were to be denied grantor trust status, it would not be
treated as a corporation for U.S. federal income tax purposes under the
"check-the-box" Regulations. Treas. Reg. (S)(S) 301.7701-3 and 301.7701-4.
Those Regulations provide that, if there is no election to the contrary, a
trust that has multiple beneficiaries and that is treated as a "business
entity" will be classified as a partnership for federal income tax purposes.
If the Corporation were to exercise its right to terminate the Trust and to
cause the Junior Subordinated Debentures to be distributed to the holders of
the Trust Securities in liquidation of the Trust, the distribution could give
rise to gain to the holders if the Trust were treated as a partnership for
federal income tax purposes and if the Junior Subordinated Debentures
constituted "marketable securities" as that term is defined in the Code. Based
upon the relevant portions of the current Code, the regulations, and
applicable administrative and judicial interpretations thereof, all of which
are subject to change, the Junior Subordinated Debentures should not
constitute "marketable securities" for this purpose. Accordingly, if the Trust
is characterized as a partnership for federal income tax purposes, there would
be no material difference in the federal income tax treatment of the holders
(other than possibly the Non-U.S. holders as described below under "Non-U.S.
Holders"). However, there can be no assurance that the IRS would not assert
that the Junior Subordinated Debentures are marketable securities for this
purpose.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under certain Regulations applicable to debt instruments, a "remote"
contingency 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 upon the
advice of Tax Counsel in reliance on such representation, 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
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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 dealing with the issue of remoteness 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.
The interest on the Junior Subordinated Debentures may be adjusted under the
terms of the Exchange Offer in certain circumstances and upon the occurrence
of a Special Event the Junior Subordinated Debentures may be redeemed early.
See "Description of Exchange Securities--Description of Exchange Junior
Subordinated Debentures--Special Event Prepayment." If, based upon all the
facts and circumstances, one or more such contingencies are more likely than
not to occur, the Junior Subordinated Debentures could also be deemed to have
been issued with OID. The Corporation believes that the possibility that any
of these contingencies will occur is remote. Accordingly, the Corporation
takes the position, based upon the advice of its Tax Counsel in accordance
with such representation, that the Junior Subordinated Debentures will not be
issued with OID. However, it is possible that the IRS would take a contrary
position.
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.
Holders of Capital Securities other than initial holders may be considered
to have acquired their undivided interests in the Junior Subordinated
Debentures with market discount or acquisition premium (as each phrase is
defined for income tax purposes).
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
The Corporation will have the right at any time to liquidate the Trust and
cause the Junior Subordinated Debentures to be distributed to the holders of
the Trust Securities. 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, as
a result of a change in law the Trust were 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 redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Capital Securities.
Under current law, such a redemption 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."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities 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, OID, or market discount which has not
yet been included in income,
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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 if the
Capital Securities have been held for more than one year. Under current law,
long-term capital gain generally is subject to a maximum marginal rate of tax
of 28% if the capital asset has been held for more than one year but not more
than 18 months, and a maximum marginal rate of tax of 20% if the capital asset
has been held for more than eighteen months.
The Taxpayer Relief Act of 1997 reduces the maximum rates on long-term
capital gains recognized on capital assets held by individual taxpayers for
more than 18 months as of the date of disposition (and would further reduce
the maximum rates on such gains in the year 2001 and thereafter for certain
individual taxpayers who meet specified conditions). Holders should consult
their own tax advisors concerning these tax law changes.
The Capital Securities may trade at a price that does not accurately reflect
the value of accrued but unpaid interest 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
Debentures are deemed to have been issued with OID) which disposes of its
Capital Securities between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, possibly, OID), and to add such amount to its
adjusted tax basis in its 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.
FUTURE TAX LAW CHANGES
On February 6, 1997, as part of the fiscal 1998 budget proposal submitted to
Congress, the Clinton Administration proposed certain changes to federal
income tax law which would, among other things, deny an issuer an interest
deduction for federal income tax purposes on certain instruments similar to
the Junior Subordinated Debentures (the "Clinton Proposal"). The Clinton
Proposal was not enacted as part of the Taxpayer Relief Act of 1997. However,
there can be no assurance that developments such as a change in law or
applicable Regulations or a decided case will not occur after the date hereof
that would adversely affect the tax treatment of the Junior Subordinated
Debentures, or that any legislation enacted would not cause a Tax Event that
may result in the redemption of the Junior Subordinated Debentures at the
Special Event Prepayment Price and, consequently, the Trust Securities at the
Special Event Redemption Price. See "Description of Exchange Securities--
Description of Exchange Capital Securities--Redemption" and "--Description of
Exchange Junior Subordinated Debentures--Special Event Prepayment." Any such
change after the date hereof and on or before the date the Exchange Capital
Securities are issued could affect Tax Counsel's opinion described above.
NON-U.S. HOLDERS
For purposes of this discussion, a "Non-U.S. Holder" is any holder 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 a citizen or
individual resident (or is treated as a citizen or individual resident) of the
United States for federal income tax purposes, 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, or a trust or estate the income of which is includable in
its gross income for federal income tax purposes without regard to its source.
For taxable years beginning after December 31, 1996 (or for the immediately
preceding taxable year, if the trustee of a trust so elects), a trust is a
U.S. Holder for federal income tax purposes if, and only if, (i) a court
within the United States is able to exercise primary supervision over the
administration of the trust and (ii) one or more United States trustees have
the authority to control all substantial decisions of the trust.
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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 Non-U.S. 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) the beneficial owner of the Capital Securities is not
a bank whose receipt of interest with respect to the Capital Securities (or
the Junior Subordinated Debentures) is described in Section 881(c)(3)(A) of
the Code and (d) either (1) 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 (2) 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 Non-U.S. 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.
If the Trust were denied grantor trust status and instead were treated as a
trade or business conducted as a partnership for U.S. federal income tax
purposes, it is possible that a Non-U.S. Holder could be subject to federal
income tax (including withholding) with respect to income (including OID)
generated by the Junior Subordinated Debentures.
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% 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.
78
<PAGE>
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA) subject to Title I of ERISA, (b) plans (as
defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the
Code, including individual retirement accounts and Keogh plans, (c) entities
whose underlying assets include plan assets by reason of a plan's investment
in such entities (each of (a), (b) and (c), a "Plan") and (d) persons who have
certain specified relationships to such Plans ("Parties in Interest" under
ERISA and "Disqualified Persons" under the Code). Moreover, based on the
reasoning of the United States Supreme Court in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank, 114 S. Ct. 517 (1993), an
insurance company's general account may be deemed to include the assets of the
Plans investing in the general account (e.g., through the purchase of an
annuity contract), and the insurance company might be treated as a Party in
Interest and a Disqualified Person with respect to such Plans by virtue of
such investment. ERISA also imposes certain duties on persons who are
fiduciaries of Plans, and both ERISA and the Code prohibit certain
transactions involving "plan assets" between a Plan and Parties in Interest or
Disqualified Persons with respect to such Plans.
Each of the Corporation (the obligor with respect to the Exchange Junior
Subordinated Debentures held by the Trust), the Property Trustee and
affiliates of either of them may be considered a Party in Interest or a
Disqualified Person with respect to many Plans. The purchase and/or holding of
Exchange Capital Securities by (or on behalf of) a Plan with respect to which
the Corporation, the Property Trustee or any affiliate of either of them 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 Exchange 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).
A Plan fiduciary considering the purchase of Exchange Capital Securities
should also be aware that the assets of the Trust may be considered "plan
assets" for ERISA purposes. In such event, service providers with respect to
the assets of the Trust may become Parties in Interest or Disqualified Persons
with respect to investing Plans, and any discretionary authority exercised
with respect to the Junior Subordinated Debentures by such persons could be
deemed to constitute a prohibited transaction under ERISA or the Code. In
order to minimize the likelihood that such prohibited transactions will occur,
each investing Plan (and each person acting on behalf of, or investing with
the assets of, a 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 Property Trustee. However,
none of the Corporation, the Property Trustee or any affiliate of either of
them can guarantee that such prohibited transactions will not occur.
Any purchaser proposing to acquire Exchange Capital Securities with assets
of any Plan should consult with its legal counsel concerning the impact of
ERISA and the Code and the potential consequences of acquiring and holding
Exchange Capital Securities with respect to its specific circumstances.
Moreover, each Plan fiduciary should take into account, among other
considerations, whether the fiduciary has the authority to make the
investment; the composition of the Plan's portfolio with respect to
diversification by type of asset; the Plan's funding objectives; the tax
effects of the investment; whether under the general fiduciary standards of
investment prudence and diversification an investment in Exchange Capital
Securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio; and whether the Exchange Capital Securities will be traded with
sufficient regularity to permit such fiduciary to satisfy ERISA's annual
valuation requirement.
79
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities for its own
account pursuant to 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 a broker-dealer in connection with resales of Exchange Capital
Securities received in exchange for Original Capital Securities where such
Original Capital Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust and the
Corporation have agreed that, starting on the Expiration Date and ending on
the close of business on the 180th day following the Expiration Date, this
Prospectus, as amended or supplemented, will be made available to any broker-
dealer for use in connection with any such resale. In addition, until
, 1998, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.
VALIDITY OF EXCHANGE SECURITIES
The validity of the Exchange Guarantee and the Exchange Junior Subordinated
Debentures will be passed upon for MMI and the Trust by Wildman, Harrold,
Allen & Dixon, Chicago, Illinois. Certain matters of Delaware law relating to
the validity of the Exchange Capital Securities will be passed upon on behalf
of the Trust by Richards, Layton & Finger, P.A., Wilmington, Delaware, special
Delaware counsel to the Trust and MMI. Certain matters relating to United
States federal income tax considerations will be passed upon for MMI by
Wildman, Harrold, Allen & Dixon. Wildman, Harrold, Allen & Dixon has, from
time to time, represented one of the Initial Purchasers, and may represent
such party in the future, in connection with matters unrelated to the offering
of the Exchange Capital Securities.
INDEPENDENT AUDITORS
The consolidated financial statements of the Corporation and subsidiaries,
at December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, in the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1996, as amended, have been incorporated by
reference into this Prospectus and the Registration Statement and have been
audited by Ernst & Young LLP, independent auditors, as stated in their report
therein and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The consolidated financial statements of Unionamerica Holdings plc and
subsidiaries as of and for the year ended December 31, 1996, included in
Unionamerica's Annual Report on Form 10-K for the year ended December 31,
1996, have been incorporated by reference into this Prospectus and the
Registration Statement and have been audited by KPMG Audit plc, Chartered
Accountants and Registered Auditors, as stated in their report appearing
therein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. The consolidated
financial statements of Unionamerica Holdings plc and subsidiaries as of
December 31, 1995 and for each of the years in the two-year period ended
December 31, 1995, included in Unionamerica's Annual Report on Form 10-K for
the year ended December 31, 1996, have been audited by KPMG, Chartered
Accountants and Registered Auditors, as stated in their report appearing
therein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
80
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED 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 AF-
FAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES OR 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 IN SUCH JURISDICTION.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 7
Incorporation of Certain Documents by Reference........................... 8
Forward-Looking Information............................................... 9
Prospectus Summary........................................................ 10
Risk Factors.............................................................. 19
MMI Companies, Inc........................................................ 26
Unaudited Pro Forma Condensed Combined Financial Information.............. 28
Use of Proceeds........................................................... 33
Ratios of Earnings to Fixed Charges and Earnings to Fixed Charges and
Distributions on Capital Securities...................................... 34
Capitalization............................................................ 35
Selected Consolidated Financial Information............................... 36
MMI Capital Trust I....................................................... 39
The Exchange Offer........................................................ 40
Description of Exchange Securities........................................ 50
Relationship Among the Exchange Capital Securities, the Exchange Junior
Subordinated Debentures and the Exchange Guarantee....................... 73
Certain Federal Income Tax Consequences................................... 75
ERISA Considerations...................................................... 80
Plan of Distribution...................................................... 81
Validity of Exchange Securities........................................... 81
Independent Auditors...................................................... 81
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MMI CAPITAL TRUST I
OFFER TO EXCHANGE ITS
7 5/8% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES B CAPITAL SECURITY) WHICH ARE BEING
REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING
7 5/8% SERIES A CAPITAL SECURITIES (LIQUIDATION AMOUNT $1,000 PER SERIES A
CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, TO THE EXTENT
DESCRIBED HEREIN, BY
MMI COMPANIES, INC.
-------
PROSPECTUS
-------
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
MMI, being incorporated under the General Corporation Law of the State of
Delaware, as amended from time to time (the "DGCL"), is empowered by Selection
145 of the DGCL, subject to the procedures and limitations stated therein, to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
or her in connection with any threatened, pending or completed action, suit or
proceeding to which such person is made a party or threatened to be made a
party by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise ("Corporate
Persons"). Section 145 provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
Article XIII of MMI's by-laws provides for indemnification and insurance on
behalf of the Corporate Persons. Article XIII provides that MMI will indemnify
any Corporate Person who is or was a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (an "Action") by
reason of the fact that he or she is or was a Corporate Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such Action, if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of MMI
and, with respect to any criminal Action, had no reasonable cause to believe
his or her conduct was unlawful. With respect to an Action by or in the right
of MMI, Article XIII also provides that no indemnification shall be made in
respect of any claim, issue or matter as to which the Corporate Person is
adjudged to be liable for negligence or misconduct in the performance of his
or her duty to MMI, except to the extent that, the court in which the Action
was brought determines upon application that in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses as the court shall deem proper. To the extent that a Corporate
Person has been successful in the defense of any Action, or in the defense of
any claim, issue or matter therein, Article XIII provides that he or she will
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith. Any indemnification
under Article XIII (unless ordered by a court) will be made only as authorized
in the specific case, upon a determination, reasonably made, that
indemnification is proper in the circumstances because the Corporate Person
has met the applicable standards of conduct. Such determination may be made
(i) by the board of directors of MMI by a majority vote of a quorum consisting
of directors who were not parties to such Action, or (ii) if such quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders of MMI by a majority vote of a quorum consisting of stockholders
who were not parties to such action. Also, Article XIII provides that MMI will
pay the expenses incurred in defending an Action in advance of the final
disposition of such Action as authorized by the board of directors of MMI in
the specific case upon receipt of an undertaking by or on behalf of the
Corporate Person to repay such amount. The indemnification provided by Article
XIII is not exclusive of any other rights of indemnification to which
Corporate Persons may be entitled. Article XIII also authorizes MMI to
purchase insurance on behalf of any Corporate Person against any liability
incurred by him or her in, or arising out of, his or her status as a Corporate
Person, whether or not MMI would have the power to indemnify him or her
against such liability.
Article Ninth of MMI's certificate of incorporation eliminates, to the
fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of
the DGCL, as the same may be amended or supplemented, or any corresponding
provision of the DGCL, the personal liability of directors. That paragraph
allows corporations incorporated under the DGCL to eliminate the personal
liability of a director to the corporation or its stockholders
II-1
<PAGE>
for monetary damages for a breach of fiduciary duty as a director. However,
that paragraph does not allow corporations to limit the liability of a
director (i) for any breach of his or her duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payment of a dividend or unlawful stock purchase or redemption, or
(iv) for any transaction for which the director derived an improper personal
benefit.
MMI maintains liability insurance for its directors and officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<S> <C>
4.1 Indenture of MMI Companies, Inc. relating to the Junior Subordinated
Debentures
4.2 Form of Certificate of Exchange Junior Subordinated Debentures
4.3 Certificate of Trust of MMI Capital Trust I
4.4 Amended and Restated Declaration of Trust of MMI Capital Trust I
4.5 Form of Exchange Capital Security Certificate for MMI Capital Trust I
4.6 Form of Exchange Guarantee of MMI Companies, Inc. relating to the Exchange
Capital Securities
4.7 Registration Rights Agreement
5.1 Opinion and Consent of Richards, Layton & Finger, P.A., special Delaware
counsel to MMI Companies, Inc. and MMI Capital Trust I, as to legality of
the Exchange Capital Securities to be issued by MMI Capital Trust I
5.2 Opinion and Consent of Wildman, Harrold, Allen & Dixon, as to legality of
the Exchange Junior Subordinated Debentures and the Exchange Guarantee to
be issued by MMI Companies, Inc.
8 Opinion and Consent of Wildman, Harrold, Allen & Dixon, special tax
counsel, as to certain federal income tax matters
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of KPMG Audit plc
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.1)
23.4 Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit 5.2)
23.5 Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit 8)
24.1 Power of Attorney
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
Property Trustee under the Amended and Restated Declaration of Trust of
MMI Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank under the
Exchange Guarantee for the benefit of the holders of Exchange Capital
Securities of MMI Capital Trust I
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
</TABLE>
- --------
*To be filed by amendment.
II-2
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
All schedules are omitted because they are inapplicable or the requested
information is shown in the financial statements of the registrant or related
notes thereto.
ITEM 22. UNDERTAKINGS
Each of the Undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant'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 herein, 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
each Registrant pursuant to the provisions, or otherwise, each Registrant has
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 each Registrant of expenses incurred or paid by a
director, officer of controlling person or each Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, each Registrant will, unless in the opinion of its counsel the
matter has been settled by the 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.
Each of the Undersigned Registrants hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
Each of the Undersigned Registrants hereby undertakes 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>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
DEERFIELD, STATE OF ILLINOIS, ON THE 20TH DAY OF JANUARY, 1998.
MMI Companies, Inc.
/s/ B. Frederick Becker
By___________________________________
B. Frederick Becker
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED BELOW ON THE 20TH DAY OF JANUARY, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ B. Frederick Becker Chairman, Chief Executive Officer and
___________________________________________ Director (Principal Executive Officer)
B. Frederick Becker
/s/ Paul M. Orzech Executive Vice President and Chief
___________________________________________ Financial Officer (Principal Financial
Paul M. Orzech Officer)
/s/ Joseph R. Herman Senior Vice President and Controller
___________________________________________ (Principal Accounting Officer)
Joseph R. Herman
Director
___________________________________________
Richard R. Barr
* Director
___________________________________________
George B. Caldwell
* Director
___________________________________________
K. James Ehlen, M.D.
* Director
___________________________________________
F. Laird Facey, M.D.
* Director
___________________________________________
William M. Kelley
* Director
___________________________________________
Andrew D. Kennedy
* Director
___________________________________________
Timothy R. McCormick
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director
___________________________________________
Gerald L. McManis
* Director
___________________________________________
Scott S. Parker
* Director
___________________________________________
Edward C. Peddie
* Director
___________________________________________
Joseph D. Sargent
Director
___________________________________________
Ian G. Sinclair
</TABLE>
<TABLE>
<S> <C>
Director
___________________________________________
Robert A. Spass
</TABLE>
<TABLE>
<S> <C>
* Director
___________________________________________
Alan C. Guy
</TABLE>
/s/ B. Frederick Becker
*By:_________________________________
B. Frederick Becker
Attorney-in-fact
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
DEERFIELD, STATE OF ILLINOIS, ON THE 20TH DAY OF JANUARY, 1998.
MMI Capital Trust I
/s/ Joseph R. Herman
By___________________________________
Joseph R. Herman
Administrative Trustee
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED BELOW ON THE 20TH DAY OF JANUARY, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Joseph R. Herman Administrative Trustee
___________________________________________
Joseph R. Herman
/s/ Scott T. Veech Administrative Trustee
___________________________________________
Scott T. Veech
Administrative Trustee
___________________________________________
Wayne A. Sinclair
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION PAGE
------- -------------------- ----
<C> <S> <C>
4.1 Indenture of MMI Companies, Inc. relating to the Junior
Subordinated Debentures
4.2 Form of Certificate of Exchange Junior Subordinated Debentures
4.3 Certificate of Trust of MMI Capital Trust I
4.4 Amended and Restated Declaration of Trust of MMI Capital Trust
I
4.5 Form of Exchange Capital Security Certificate for MMI Capital
Trust I
4.6 Form of Exchange Guarantee of MMI Companies, Inc. relating to
the Exchange Capital Securities
4.7 Registration Rights Agreement
5.1 Opinion and Consent of Richards, Layton & Finger, P.A., special
Delaware counsel to MMI Companies, Inc. and MMI Capital Trust
I, as to legality of the Exchange Capital Securities to be
issued by MMI Capital Trust I
5.2 Opinion and Consent of Wildman, Harrold, Allen & Dixon as to
legality of the Exchange Junior Subordinated Debentures and the
Exchange Guarantee to be issued by MMI Companies, Inc.
8 Opinion and Consent of Wildman, Harrold, Allen & Dixon, special
tax counsel, as to certain federal income tax matters
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of KPMG Audit plc
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.1)
23.4 Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit
5.2)
23.5 Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit
8)
24.1 Power of Attorney
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
to act as Property Trustee under the Amended and Restated
Declaration of Trust of MMI Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
under the Exchange Guarantee for the benefit of the holders of
Exchange Capital Securities of MMI Capital Trust I
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
</TABLE>
- --------
*To be filed by amendment.
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
--------------------------
MMI COMPANIES, INC.
--------------------------
INDENTURE
Dated as of December 23, 1997
--------------------------
THE CHASE MANHATTAN BANK,
as Trustee
--------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
- --------------------------------------------------------------------------------
<PAGE>
TIE SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as
of December 23, 1997 between MMI Companies, Inc. and The Chase Manhattan Bank,
as Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1)................................................... 6.9
(a)(2)................................................... 6.9
310(a)(3)................................................... N/A
(a)(4)................................................... N/A
310(a)(5)................................................... 6.10, 6.11
310(b)...................................................... 6.8
310(c)...................................................... N/A
311(a) and (b).............................................. 6.13
311(c)...................................................... N/A
312(a)...................................................... 4.1, 4.2(a)
312(b) and (c).............................................. 4.2
313(a)...................................................... 4.4
313(b)(1)................................................... 4.4
313(b)(2)................................................... 4.4
313(c)...................................................... 4.4
313(d)...................................................... 4.4
314(a)...................................................... 3.5, 4.3
314(b)...................................................... N/A
314(c)(1) and (2)........................................... 6.7, 13.6
314(c)(3)................................................... N/A
314(d)...................................................... N/A
314(e)...................................................... 13.6
314(f)...................................................... N/A
315(a)(c) and (d)........................................... 6.1
315(b)...................................................... 5.8
315(e)...................................................... 5.9
316(a)(1)................................................... 5.7
316(a)(2)................................................... N/A
316(a) last sentence........................................ 7.4
316(b)...................................................... 9.2
316(c)...................................................... 7.1
317(a)...................................................... 5.2, 5.5
317(b)...................................................... 6.5
318(a)...................................................... 13.8
</TABLE>
- ----------------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
THIS TABLE IS NOT PART OF THE INDENTURE AS EXECUTED.
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS
1.1. Definitions.......................................................... 1
ARTICLE II. SECURITIES
2.1. Forms Generally...................................................... 11
2.2. Execution and Authentication......................................... 12
2.3. Form and Payment..................................................... 12
2.4. Legends.............................................................. 13
2.5. Global Debenture..................................................... 13
2.6. Interest............................................................. 15
2.7. Transfer and Exchange................................................ 16
2.8. Replacement Debentures............................................... 18
2.9. Temporary Debentures................................................. 18
2.10. Cancellation........................................................ 19
2.11. Defaulted Interest.................................................. 19
2.12. CUSIP Numbers....................................................... 20
ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY
3.1. Payment of Principal or Redemption Price and Interest................ 21
3.2. Offices for Notices and Payments, etc................................ 21
3.3. Appointments to Fill Vacancies in Trustee's Office................... 22
3.4. Provision as to Paying Agent......................................... 22
3.5. Certificate to Trustee............................................... 23
3.6. Statement as to Default.............................................. 23
3.7. Compliance with Consolidation Provisions............................. 23
3.8. Limitation on Dividends.............................................. 23
3.9. Covenants as to MMI Trust............................................ 24
3.10. Payment of Expenses................................................. 25
3.11. Payment Upon Resignation or Removal................................. 25
3.12. Calculation of Original Issue Discount.............................. 26
ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
4.1. Debentureholders' Lists.............................................. 26
4.2. Preservation and Disclosure of Lists................................. 26
4.3. Reports by Company................................................... 28
4.4. Reports by the Trustee............................................... 29
ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
5.1. Events of Default.................................................... 29
5.2. Payment of Debentures on Default; Suit Therefor...................... 32
5.3. Application of Moneys Collected by Trustee........................... 34
5.4. Proceedings by Debentureholders...................................... 34
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5.5. Proceedings by Trustee.............................................. 36
5.6. Remedies Cumulative and Continuing.................................. 36
5.7. Direction of Proceedings and Waiver of Defaults by Majority of
Debentureholders.................................................. 36
5.8. Notice of Defaults.................................................. 37
5.9. Undertaking to Pay Costs............................................ 37
ARTICLE VI. CONCERNING THE TRUSTEE
6.1. Duties and Responsibilities of Trustee.............................. 38
6.2. Reliance on Documents, Opinions, etc................................ 39
6.3. No Responsibility for Recitals, etc................................. 40
6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
Registrar May Own Debentures...................................... 41
6.5. Moneys to be Held in Trust.......................................... 41
6.6. Compensation and Expenses of Trustee................................ 41
6.7. Officers' Certificate as Evidence................................... 42
6.8. Conflicting Interest of Trustee..................................... 42
6.9. Eligibility of Trustee.............................................. 42
6.10. Resignation or Removal of Trustee................................... 43
6.11. Acceptance by Successor Trustee..................................... 44
6.12. Succession by Merger, etc........................................... 45
6.13. Limitation on Rights of Trustee as a Creditor....................... 46
6.14. Authenticating Agents............................................... 46
ARTICLE VII. CONCERNING THE SECURITYHOLDERS
7.1. Action by Debentureholders.......................................... 47
7.2. Proof of Execution by Debentureholders.............................. 48
7.3. Who Are Deemed Absolute Owners...................................... 48
7.4. Debentures Owned by Company Deemed Not Outstanding.................. 49
7.5. Revocation of Consents; Future Holders Bound........................ 49
ARTICLE VIII. SECURITYHOLDERS' MEETINGS
8.1. Purposes of Meetings................................................ 50
8.2. Call of Meetings by Trustee......................................... 50
8.3. Call of Meetings by Company or Debentureholders..................... 51
8.4. Qualifications for Voting........................................... 51
8.5. Regulations......................................................... 51
8.6. Voting.............................................................. 52
ARTICLE IX. AMENDMENTS
9.1. Without Consent of Debentureholders................................. 52
9.2. With Consent of Debentureholders.................................... 54
9.3. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures........................................... 55
9.4. Notation on Debentures.............................................. 55
9.5. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee................................................. 55
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ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
10.1. Company May Consolidate, etc., on Certain Terms..................... 56
10.2. Successor Corporation to be Substituted for Company................. 56
10.3. Opinion of Counsel to be Given Trustee.............................. 57
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE
11.1. Discharge of Indenture.............................................. 57
11.2. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee.......................................... 58
11.3. Paying Agent to Repay Moneys Held................................... 58
11.4. Return of Unclaimed Moneys.......................................... 59
11.5. Defeasance and Discharge............................................ 59
11.6. Conditions to Defeasance............................................ 59
ARTICLE XII IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
12.1. Indenture and Debentures Solely Corporate Obligations............... 61
ARTICLE XIII MISCELLANEOUS PROVISIONS
13.1. Successors.......................................................... 61
13.2. Official Acts by Successor Corporation.............................. 61
13.3. Surrender of Company Powers......................................... 61
13.4. Addresses for Notices, etc.......................................... 62
13.5. Governing Law....................................................... 62
13.6. Evidence of Compliance with Conditions Precedent.................... 62
13.7. Business Days....................................................... 63
13.8. Trust Indenture Act to Control...................................... 63
13.9. Table of Contents, Headings, etc.................................... 63
13.10. Execution in Counterparts........................................... 63
13.11. Separability........................................................ 63
13.12. Acknowledgment of Rights............................................ 63
ARTICLE XIV REDEMPTION OF SECURITIES
14.1. Special Event Redemption............................................ 64
14.2. No Sinking Fund..................................................... 65
14.3. Notice of Redemption; Selection of Debentures....................... 65
14.4. Payment of Debentures on the Maturity Date.......................... 65
ARTICLE XV SUBORDINATION OF SECURITIES
15.1. Agreement to Subordinate............................................ 66
15.2. Default on Senior Indebtedness...................................... 66
15.3. Liquidation; Dissolution; Bankruptcy................................ 67
15.4. Subrogation......................................................... 68
15.5. Trustee to Effectuate Subordination................................. 69
15.6. Notice by the Company............................................... 69
15.7. Rights of the Trustee; Holders of Senior Indebtedness............... 71
15.8. Subordination May Not Be Impaired................................... 71
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ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD
16.1. Extension of Interest Payment Period................................ 72
16.2. Notice of Extension................................................. 73
TESTIMONIUM
SIGNATURES
EXHIBIT A (FORM OF DEBENTURE).............................................. A-1
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THIS INDENTURE, dated as of December 23, 1997, between MMI Companies, Inc.,
a Delaware corporation (hereinafter sometimes called the "Company"), and The
Chase Manhattan Bank, a New York banking corporation, as trustee (hereinafter
sometimes called the "Trustee"),
W I T N E S S E T H:
In consideration of the premises, and the purchase of the Debentures by the
holders thereof, the Company covenants and agrees with the Trustee for the equal
and proportionate benefit of the respective holders from time to time of the
Debentures, as follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions
The terms defined in this Section 1.1 (except as herein otherwise expressly
provided or unless the context otherwise requires) for all purposes of this
Indenture shall have the respective meanings specified in this Section 1.1. All
other terms used in this Indenture which are defined in the Trust Indenture Act,
or which are by reference therein defined in the Securities Act, shall (except
as herein otherwise expressly provided or unless the context otherwise requires)
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Declaration: (i)
Clearing Agency; (ii) Delaware Trustee; (iii) Property Trustee; (iv)
Administrative Trustees; (v) Direct Action; (vi) Purchase Agreement; (vii)
Distributions; (viii) Series A Capital Securities and (ix) Series B Capital
Securities. All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted at the time of any
computation. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. Headings are used for convenience of
reference only and do not affect interpretation. The singular includes the
plural and vice versa.
"Additional Interest" shall have the meaning set forth in Section 2.6(c).
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately
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prior week, appearing in the most recently published statistical release
designated "H.15 (519)" or any successor publication which is published weekly
by the Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the Stated
Maturity Date (if no such maturity is within three months before or after the
Stated Maturity Date, yields for the two published maturities most closely
corresponding to the Stated Maturity Date shall be interpolated, and the
Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, 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 redemption
date plus, in either case, (a) 1.25% if such redemption date occurs on or prior
to December 23, 1998, and (b) 0.50% in all other cases.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding the power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% 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, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents of the Trustee which
at the time shall be appointed and acting pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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"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 or in Chicago,
Illinois, are authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests in the
assets of MMI Trust which rank pari passu with the Common Securities issued by
MMI Trust; provided, however, that if an Event of Default has occurred and is
continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the holders of the Capital Securities shall be paid in full
the Distributions and the liquidation, redemption and other payments to which
they are entitled. References to "Capital Securities" shall include collectively
any Series A Capital Securities and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that the Company
may enter into with The Chase Manhattan Bank in its capacity as trustee of MMI
Trust or other Persons that operates directly or indirectly for the benefit of
holders of Capital Securities of MMI Trust and shall include a Series A Capital
Securities Guarantee and a Series B Capital Securities Guarantee with respect to
the Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in the assets
of MMI Trust which rank pari passu with Capital Securities issued by MMI Trust;
provided, however, that if an Event of Default has occurred and is continuing,
no payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the holders of the Capital Securities shall be paid in full the
Distributions and the liquidation, redemption and other payments to which they
are entitled.
"Common Securities Guarantee" shall mean any guarantee that the Company may
enter into with any Person or Persons that operates directly or indirectly for
the benefit of holders of Common Securities of MMI Trust.
"Common Stock" shall mean the common stock, par value $0.10 per share, of
the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting
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solely of changes in par value or from par value to no par value, or from no par
value to par value.
"Company" shall mean MMI Companies, Inc., a Delaware corporation, and,
subject to the provisions of Article X, shall include its successors and
assigns.
"Company Request" or "Company Order" shall mean a written request or order
signed in the name of the Company by an Officer.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date corresponding to the
Stated Maturity Date that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities with a maturity date corresponding to the Stated Maturity Date.
If no United States Treasury security has a maturity date which is within three
months before or after the Stated Maturity Date, the two most closely
corresponding United States Treasury securities shall be used as the Comparable
Treasury Issue, and the calculation of the Adjusted Treasury Rate pursuant to
clause (ii) of the definition thereof shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means, with respect to any redemption date
pursuant to Section 14.1, (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 redemption 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 five Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in Section 16.1.
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debentures" means, collectively, the Series A Debentures and the Series B
Debentures.
"Debentureholder", "holder of Debentures", or other similar terms, shall
mean any Person in whose name at the time a particular Debenture is registered
on the register kept by the
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Company or the Trustee for that purpose in accordance with the terms hereof.
"Debenture Register" shall mean (i) prior to a Dissolution Event, the list
of holders provided to the Trustee pursuant to Section 4.1, and (ii) following a
Dissolution Event, any security register maintained by a security registrar for
the Debentures appointed by the Company following the execution of a
supplemental indenture providing for transfer procedures as provided for in
Section 2.7(a).
"Declaration" means the Amended and Restated Declaration of Trust of MMI
Trust, dated as of the Issue Date, as amended.
"Default" means any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 16.1.
"Definitive Debentures" shall mean those Debentures issued in fully
registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Debentures of any series for which
the Company shall determine that such Debentures will be issued as a Global
Debenture, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Exchange Act
or other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to Section 2.5(d).
"Dissolution Event" means the dissolution of the Trust pursuant to the
Declaration, and the distribution of the Debentures held by the Property Trustee
to the holders of the Trust Securities issued by the Trust pro rata in
accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.1, continued
for the period of time, if any, and after the giving of the notice, if any,
therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Company to exchange Series B Debentures
for Series A Debentures and to exchange a Series B Capital Securities Guarantee
for a Series A Capital Securities Guarantee and (ii) by MMI Trust to exchange
Series B Capital Securities for Series A Capital Securities.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.1.
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"Federal Reserve" shall mean the Board of Governors of the Federal Reserve
System.
"Global Debenture" means, with respect to the Debentures, a Debenture
registered in the name of the Depositary or its nominee.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, but shall not include (i) any trade accounts payable in the
ordinary course of business, (ii) any such indebtedness that by its terms ranks
pari passu with or junior in right of payment to the Debentures, (iii) all other
debt securities, and guarantees in respect of those debt securities, issued to
any other trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing vehicle of the Company (a
"financing entity") in connection with the issuance by such financing entity of
equity securities or other securities guaranteed by the Company pursuant to an
instrument that ranks pari passu with or junior in right of payment to the
Guarantee, and (iv) any other indebtedness that would otherwise qualify as
"Indebtedness for Money Borrowed" to the extent that such indebtedness by its
terms ranks pari passu with or junior in right of payment to any of the
Indebtedness described in clauses (i), (ii) or (iii) above.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
"interest" means and includes, unless the context clearly otherwise
requires, interest, Deferred Interest, Compounded Interest, Liquidated Damages
and Additional Interest.
"Interest Payment Date" shall have the meaning set forth in Section 2.6.
"Investment Company Event" means the receipt by the Company and the Trust
of an Opinion of 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 written change,
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" or a company "controlled" by an "investment company" that is required
to be registered under the Investment Company Act, which change becomes
effective on or after the date of the issuance of the Capital Securities.
"Issue Date" means December 23, 1997.
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"Liquidated Damages" shall have the meaning set forth in the Registration
Rights Agreement.
"Maturity Date" shall mean the Stated Maturity Date, the date of redemption
upon the occurrence of a Special Event, or the date upon which all of the
principal and interest on the Debentures becomes due and payable upon an Event
of Default pursuant to Section 5.1 hereof.
"MMI Trust" shall mean MMI Capital Trust I, a Delaware business trust
created for the purpose of issuing its undivided beneficial interests in its
assets in connection with the issuance of Debentures under this Indenture.
"Mortgage" shall mean and include any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.5.
"Officer" shall mean any of the Chairman, the Chief Executive Officer, the
President, the Chief Financial Officer, a Vice President, the Treasurer, any
Assistant Treasurer, the Controller and any Assistant Controller, or the
Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two Officers and
delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be an
employee of the Company, and who shall be acceptable to the Trustee.
"Other Debentures" means all junior subordinated debentures issued by the
Company from time to time and sold to trusts or other financing entities to be
established by the Company (if any), in each case similar to MMI Trust.
"Other Guarantees" means all guarantees issued by the Company with respect
to capital securities (if any) and issued to other trusts established by the
Company (if any), in each case similar to MMI Trust.
The term "outstanding" when used with reference to Debentures, shall,
subject to the provisions of Section 7.4, mean, as of any particular time, all
Debentures authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except
(a) Debentures theretofore cancelled by the Trustee or the Authenticating
Agent or delivered to the Trustee for cancellation;
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(b) Debentures for whose payment moneys in the necessary amount shall have
been deposited in trust with the Trustee or with any paying agent (other than
the Company) or shall have been set aside and segregated in trust by the Company
(if the Company shall act as its own paying agent); provided that, if such
Debentures, or portions thereof, are to be redeemed prior to maturity thereof,
notice of such redemption shall have been given as provided in Article XIV or
provision satisfactory to the Trustee shall have been made for giving such
notice; and
(c) Debentures in lieu of or in substitution for which other Debentures
shall have been authenticated and delivered pursuant to the terms of Section 2.8
unless proof satisfactory to the Company and the Trustee is presented that any
such Debentures are held by bona fide holders in due course.
"Person" shall mean any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Debenture" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 2.8 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"Principal Office of the Trustee", or other similar term, shall mean the
office of the Trustee, at which at any particular time its corporate trust
business shall be principally administered.
"Property Trustee" shall have the same meaning as set forth in the
Declaration.
"Purchase Agreement" shall mean the Purchase Agreement dated December 18,
1997 among the Company, MMI Trust and the initial purchasers named therein.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
"Redemption Price" means the Special Event Redemption Price.
"Reference Treasury Dealer" means (i) initially, Salomon Brothers Inc 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 Company shall substitute therefor another Primary Treasury Dealer,
or (ii) any other Primary Treasury Dealer selected by the Company.
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"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date pursuant to Section 14.1, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) at 5:00 p.m., New York City time, on the third Business Day
preceding such redemption date, quoted in writing to the Trustee by such
Reference Treasury Dealer.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Issue Date, by and among the Company, MMI Trust and the Initial
Purchasers named therein as such agreement may be amended, modified or
supplemented from time to time.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, with direct responsibility for
the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Restricted Debenture" shall mean Debentures that bear or are required to
bear the Securities Act legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or under any similar rule or regulation hereafter
adopted by the Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean, all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of this Indenture or thereafter
created, assumed or incurred, unless the terms thereof specifically provide that
it is not superior in right of payment to the Debentures (or to any Other
Debentures), and any deferrals, renewals or extensions thereof.
"Series A Debentures" means the Company's 7 5/8% Series A Junior
Subordinated Deferrable Interest Debentures due December 15, 2027, as
authenticated and issued under this Indenture.
"Series B Debentures" means the Company's Series B 7 5/8% Junior
Subordinated Deferrable Interest Debentures due December 15, 2027, as
authenticated and issued under this Indenture.
"Special Event" means a Tax Event or an Investment Company Event, as the
case may be.
"Special Event Redemption Price" shall mean, with respect to any redemption
of the Debentures pursuant to Section 14.1 hereof,
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an amount in cash equal to the greater of (i) 100% of the principal amount to be
redeemed or (ii) the sum, as determined by a Quotation Agent, of the present
values of the remaining scheduled payments of principal and interest on the
Debentures to the Stated Maturity Date, together with scheduled payments of
interest on the Debentures from the redemption date to and including the Stated
Maturity Date, discounted to the redemption 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 (but in the case of clause (ii) above without
duplication), any accrued and unpaid interest thereon, including Compounded
Interest, Liquidated Damages and Additional Interest, if any, to the date of
such redemption.
"Stated Maturity Date" shall mean December 15, 2027.
"Subsidiary" shall mean with respect to any Person, (i) any corporation at
least a majority of whose outstanding voting stock is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries
and (iii) any limited partnership of which such Person or any of its
Subsidiaries is a general partner. For the purposes of this definition, "voting
stock" means shares, interests, participations or other equivalents in the
equity interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of such
Person, other than shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.
"Tax Event" shall mean the receipt by MMI Trust and the Company of an
Opinion of Counsel 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 any amendment to or change
in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory agency, which
amendment or change is effective or announced after the Issue Date (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), there is more than an
insubstantial risk that (i) MMI Trust would be subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable to MMI Trust on the Debentures would not be deductible by the
Company for United States federal income tax purposes or (iii) MMI Trust will be
subject to more than a de
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minimis amount of other taxes, duties or other governmental charges.
"Trustee" shall mean the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article VI hereof, shall
also include its successors and assigns as Trustee hereunder. The term "Trustee"
as used with respect to a particular series of the Debentures shall mean the
trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture Act of 1939 as
in force at the date of execution of this Indenture, except as provided in
Section 9.3.
"Trust Securities" shall mean the Capital Securities and the Common
Securities, collectively.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
ARTICLE II.
SECURITIES
2.1. Forms Generally
The Debentures and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, the terms of which are incorporated in
and made a part of this Indenture. The Debentures may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject or usage. Each Debenture shall be dated the date of its
authentication. The Debentures shall be issued in denominations of $1,000 and
integral multiples thereof.
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2.2. Execution and Authentication
Two Officers shall sign the Debentures for the Company by manual or
facsimile signature in the manner set forth in Exhibit A. If an Officer whose
signature is on a Debenture no longer holds that office at the time the
Debenture is authenticated, the Debenture shall nevertheless be valid when
authenticated as provided herein.
A Debenture shall not be valid until authenticated by the manual signature
of an authorized officer of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Debenture has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Debentures shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for original issue up
to, and the aggregate principal amount of Debentures outstanding at any time may
not exceed the sum of $128,866,000 principal amount of the Debentures.
The Debentures are issuable in two Series, the "7 5/8% Junior Subordinated
Deferrable Interest Debentures, Series A" and the "7 5/8% Junior Subordinated
Deferrable Interest Debentures, Series B." The Series A Debentures and the
Series B Debentures shall be of equal rank, without preference as to any payment
or obligation under this Indenture. As of the Issue Date and up until the
consummation of the Exchange Offer, the Trustee shall authenticate and deliver
only Series A Debentures. Series B Debentures shall be authenticated and
delivered only as provided in Section 2.7.
2.3. Form and Payment
Except as provided in Section 2.5, the Debentures shall be issued in fully
registered certificated form without interest coupons. The principal or
Redemption Price of and interest on the Debentures issued in certificated form
will be payable, the transfer of such Debentures will be registrable and such
Debentures will be exchangeable for Debentures bearing identical terms and
provisions at the office or agency of the Company maintained for such purpose
under Section 3.2; provided, however, that payment of interest with respect to
the Debentures may be made at the option of the Company (i) by check mailed to
the holder at such address as shall appear in the Debenture Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper transfer instructions have been received in writing by the relevant
record date. Notwithstanding the foregoing, so long as the holder of any
Debentures is the Property Trustee, the payment of the principal or Redemption
Price of and interest (including Compounded Interest and Additional Interest, if
any) on such Debentures held
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by the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
2.4. Legends
(a) Except as permitted by subsection (b) of this Section 2.4 or as
otherwise determined by the Company in accordance with applicable law, each
Debenture shall bear the applicable legends relating to restrictions on transfer
pursuant to the securities laws in substantially the form set forth on Exhibit A
hereto.
(b) The Company shall issue and the Trustee shall authenticate Series B
Debentures in exchange for Series A Debentures accepted for exchange in the
Exchange Offer, which Series B Debentures shall not bear the legends required by
subsection (a) above, in each case unless the holder of such Series A Debentures
is either (i) a broker-dealer who purchased such Series A Debentures directly
from the Company for resale pursuant to Rule 144A or any other available
exemption under the Securities Act, (ii) a Person participating in the
distribution of the Series B Debentures or (iii) a Person who is an affiliate
(as defined in Rule 144 under the Securities Act) of the Company.
2.5. Global Debenture
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form, the
related Definitive Debentures shall be presented to the Trustee (if an
arrangement with the Depositary has been maintained) by the Property Trustee in
exchange for one or more Global Debentures (as may be required pursuant to
Section 2.7) in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Debentures to be registered in the name of the
Depositary, or its nominee, and delivered by the Trustee to the Depositary for
crediting to the accounts of its participants pursuant to the instructions of
the Administrative Trustees; the Company upon any such presentation shall
execute one or more Global Debentures in such aggregate principal amount and
deliver the same to the Trustee for authentication and delivery in accordance
with this Indenture; and payments on the Debentures issued as a Global Debenture
will be made to the Depositary; and
(ii) if any Capital Securities are held in certificated form, the
related Definitive Debentures may be presented to the Trustee by the Property
Trustee and any Capital Security certificate which represents Capital Securities
other than Capital Securities in book-entry form ("Non Book-Entry Capital
Securities") will be deemed to represent beneficial interests in Debentures
presented to the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry Capital
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Securities until such Capital Security certificates are presented to the
Debenture registrar for transfer or reissuance, at which time such Capital
Security certificates will be cancelled and a Debenture, registered in the name
of the holder of the Capital Security certificate or the transferee of the
holder of such Capital Security certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Security certificate cancelled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance with the
Indenture.
Upon the issuance of such Debentures pursuant to clauses (i) or (ii)
of this subsection 2.5(a), Debentures with an equivalent aggregate principal
amount that were presented by the Property Trustee to the Trustee will be deemed
to have been cancelled.
(b) The Global Debentures shall represent the aggregate amount of
outstanding Debentures from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Debentures represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Debenture to reflect the amount of any
increase or decrease in the amount of outstanding Debentures represented thereby
shall be made by the Trustee, in accordance with instructions given by the
Company as required by this Section 2.5.
(c) The Global Debentures may be transferred, in whole but not in part,
only to the Depositary, another nominee of the Depositary, or to a successor
Depositary selected or approved by the Company or to a nominee of such successor
Depositary.
(d) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or the Depositary has ceased to be
a clearing agency registered under the Exchange Act, and a successor Depositary
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such condition, as the case may be, the Company will
execute, and the Trustee, upon written notice from the Company, will
authenticate and make available for delivery the Definitive Debentures, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
If there is an Event of Default, the Depositary shall have the right to exchange
the Global Debentures for Definitive Debentures. In addition, the Company may at
any time determine that the Debentures shall no longer be represented by a
Global Debenture. In the event of such an Event of Default or such a
determination, the Company shall execute, and subject to Section 2.7, the
Trustee, upon receipt of an Officers' Certificate evidencing such determination
by the Company, will authenticate and make available for delivery the Definitive
Debentures, in authorized denominations, and in an aggregate principal amount
equal to the
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principal amount of the Global Debenture, in exchange for such Global Debenture.
Upon the exchange of the Global Debenture for such Definitive Debentures, in
authorized denominations, the Global Debenture shall be cancelled by the
Trustee. Such Definitive Debentures issued in exchange for the Global Debenture
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive
Debentures to the Depositary for delivery to the Persons in whose names such
Definitive Debentures are so registered.
2.6. Interest
(a) Each Debenture will bear interest at the rate of 7 5/8% per annum,
except as provided in Section 2.6(e), from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from the Issue Date, until the principal thereof becomes due
and payable, and at the rate of 7 5/8% per annum on any overdue principal or
Redemption Price of and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest,
compounded semi-annually, payable (subject to the provisions of Article XVI)
semi-annually in arrears on June 15 and December 15 of each year (each, an
"Interest Payment Date") commencing on June 15, 1998, to the Person in whose
name such Debenture or any Predecessor Debenture is registered at the close of
business on the regular record date for such interest installment, which shall
be the June 1 or December 1 immediately preceding the relevant Interest Payment
Date.
(b) Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period of less than a full calendar month, the
number of days elapsed in such month. In the event that any Interest Payment
Date falls on a day that is not a Business Day, then payment of interest payable
on such date will be made on the next succeeding day which 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, with the same force and effect
as if made on such date.
(c) During such time as the Property Trustee is the holder of any
Debentures, the Company shall pay any additional amounts on the Debentures as
may be necessary in order that the amount of Distributions then due and payable
by MMI Trust on the outstanding Capital Securities shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
MMI Trust has become subject as a result of a Tax Event or an Investment Company
Act Event, including taxes, duties and
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other governmental charges on amounts paid pursuant to this Section 2.6(c)
("Additional Interest").
(d) Notwithstanding Section 2.6(c) above, neither the Company nor the
Trust will be responsible for, nor will the Company or the Trust be required to
compensate holders of or investors in the Capital Securities (or Debentures that
may be distributed by the Trust) for, any withholding taxes that are imposed on
interest payments on the Debentures or on Distributions with respect to the
Capital Securities.
(e) The interest rate payable on the Debentures may be adjusted from time
to time in accordance with the Registration Rights Agreement in payment of any
Liquidated Damages thereunder.
2.7. Transfer and Exchange
(a) Transfer Restrictions. The Series A Debentures, and those Series B
Debentures with respect to which any Person described in Section 2.4(b)(i), (ii)
or (iii) is the beneficial owner, may not be transferred except in compliance
with the legend contained in Exhibit A unless otherwise determined by the
Company in accordance with applicable law. Upon any distribution of the
Debentures following a Dissolution Event, the Company and the Trustee shall
enter into a supplemental indenture pursuant to Section 9.1 to provide for the
transfer restrictions and procedures with respect to the Debentures
substantially similar to those contained in the Declaration with respect to the
Capital Securities to the extent applicable in the circumstances existing at
such time.
(b) General Provisions Relating to Transfers and Exchanges. Upon
surrender for registration of transfer of any Debenture at the office or agency
of the Company maintained for the purpose pursuant to Section 3.2, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Debentures of the same
series, of any authorized denominations and of a like aggregate principal
amount.
At the option of the holder, Debentures of any series may be exchanged for
other Debentures of the same series, of any authorized denominations and of a
like aggregate principal amount, upon surrender of the Debentures to be
exchanged at such office or agency. Whenever any Debentures are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Debentures which the holder making the exchange is entitled to
receive.
Every Debenture presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and
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the Debenture registrar duly executed by the holder thereof or such holder's
attorney duly authorized in writing; such instrument shall include a signature
guaranty by an "eligible guarantor institution" that is a bank, stockbroker,
savings and loan association or credit union meeting the requirements of the
Debenture 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 Debenture registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
All Definitive Debentures and Global Debentures issued upon any
registration of transfer or exchange of Definitive Debentures or Global
Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Debentures or Global Debentures surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith.
The Company shall not be required to (i) issue, register the transfer of or
exchange Debentures during a period beginning at the opening of business 15 days
before the day of mailing of a notice of redemption or any notice of selection
of Debentures for redemption under Article XIV hereof and ending at the close of
business on the day of such mailing; or (ii) register the transfer of or
exchange any Debenture so selected for redemption in whole or in part, except
the unredeemed portion of any Debenture being redeemed in part.
(c) Exchange of Series A Debentures for Series B Debentures. The Series A
Debentures may be exchanged for Series B Debentures pursuant to the terms of the
Exchange Offer. The Trustee shall make the exchange as follows:
The Company shall present the Trustee with an Officers' Certificate
certifying the following:
(A) upon issuance of the Series B Debentures, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Series A Debentures properly tendered in
the Exchange Offer that are represented by a Global Debenture and the principal
amount of Series A Debentures properly tendered in the Exchange Offer that are
represented by Definitive Debentures, the name of each holder of such Definitive
Debentures, the principal amount properly tendered in the Exchange Offer by each
such holder and the name and address to
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which Definitive Debentures for Series B Debentures shall be registered and sent
for each such holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Debentures have been
registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters set
forth in Section 3(p) of the Registration Rights Agreement and (iii) a Company
Order, shall authenticate (A) a Global Debenture for Series B Debentures in
aggregate principal amount equal to the aggregate principal amount of Series A
Debentures represented by a Global Debenture indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive Debentures
representing Series B Debentures registered in the names of, and in the
principal amounts indicated in, such Officers' Certificate.
If the principal amount of the Global Debenture for the Series B Debentures
is less than the principal amount of the Global Debenture for the Series A
Debentures, the Trustee shall make an endorsement on such Global Debenture for
Series A Debentures indicating a reduction in the principal amount represented
thereby.
The Trustee shall deliver such Definitive Debentures for Series B
Debentures to the holders thereof as indicated in such Officers' Certificate.
2.8. Replacement Debentures
If any mutilated Debenture is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Debenture, the Company shall issue and the Trustee shall
authenticate a replacement Debenture if the Trustee's requirements for
replacements of Debentures are met. An indemnity bond must be supplied by the
holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any agent thereof or any authenticating agent
from any loss that any of them may suffer if a Debenture is replaced. The
Company or the Trustee may charge for its expenses in replacing a Debenture.
Every replacement Debenture is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Debentures duly issued hereunder.
2.9. Temporary Debentures
Pending the preparation of Definitive Debentures, the Company may execute,
and upon receipt of a Company Order the Trustee shall authenticate and make
available for delivery,
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temporary Debentures that are printed, lithographed, typewritten or otherwise
reproduced, in any authorized denomination, substantially of the tenor of the
Definitive Debentures in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Debentures may determine, as conclusively evidenced by their
execution of such Debentures.
If temporary Debentures are issued, the Company shall cause Definitive
Debentures to be prepared without unreasonable delay. The Definitive Debentures
shall be printed, lithographed or engraved, or provided by any combination
thereof, or in any other manner permitted by the rules and regulations of any
applicable securities exchange on which the Debentures may be listed, all as
determined by the officers executing such Definitive Debentures. After the
preparation of Definitive Debentures, the temporary Debentures shall be
exchangeable for Definitive Debentures upon surrender of the temporary
Debentures at the office or agency maintained by the Company for such purpose
pursuant to Section 3.2 hereof, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debentures, the Company shall execute,
and the Trustee shall authenticate and make available for delivery, in exchange
therefor the same aggregate principal amount of Definitive Debentures of
authorized denominations. Until so exchanged, the temporary Debentures shall in
all respects be entitled to the same benefits under this Indenture as Definitive
Debentures.
2.10. Cancellation
The Company at any time may deliver Debentures to the Trustee for
cancellation. The Trustee and no one else shall cancel all Debentures
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or dispose of cancelled Debentures in accordance
with its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The Company
may not issue new Debentures to replace Debentures that have been redeemed or
paid or that have been delivered to the Trustee for cancellation.
2.11. Defaulted Interest
Any interest on any Debenture that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the holder on the relevant
regular record date by virtue of having been such holder, and such Defaulted
Interest shall be paid by the Company, at its election, as provided in clause
(a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on Debentures
to the Persons in whose names such Debentures (or
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their respective Predecessor Debentures) are registered at the close of business
on a special record date for the payment of such Defaulted Interest, which shall
be fixed in the following manner: the Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each such
Debenture and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than 15 nor less than 10 days
prior to the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such special record date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Debentureholder at his or her address as it
appears in the Debenture Register, not less than 10 days prior to such special
record date. Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Persons in whose names such Debentures (or their
respective Predecessor Debentures) are registered on such special record date
and shall be no longer payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on any
Debentures in any other lawful manner not inconsistent with the requirements of
any securities exchange on which such Debentures may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
2.12. CUSIP Numbers
The Company in issuing the Debentures may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Debentureholders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Debentures or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Debentures, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
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ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY
3.1. Payment of Principal or Redemption Price and Interest
The Company covenants and agrees for the benefit of the holders of the
Debentures that it will duly and punctually pay or cause to be paid the
principal or Redemption Price of and interest on the Debentures at the place, at
the respective times and in the manner provided herein. Except as provided in
Section 2.3, each installment of interest on the Debentures may be paid by
mailing checks for such interest payable to the order of the holders of the
Debentures entitled thereto as they appear in the Debenture Register. The
Company further covenants to pay any and all amounts including, without
limitation, Liquidated Damages, if any, on the dates and in the manner required
under the Registration Rights Agreement.
3.2. Offices for Notices and Payments, etc.
So long as any of the Debentures remain outstanding, the Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Debentures may be presented for payment, an office or agency where the
Debentures may be presented for registration of transfer and for exchange as in
this Indenture provided and an office or agency where notices and demands to or
upon the Company in respect of the Debentures or of this Indenture may be
served. The Company will give to the Trustee written notice of the location of
any such office or agency and of any change of location thereof. Until otherwise
designated from time to time by the Company in a notice to the Trustee, any such
office or agency for all of the above purposes shall be the Principal Office of
the Trustee. In case the Company shall fail to maintain any such office or
agency in the Borough of Manhattan, The City of New York, or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the Principal
Office of the Trustee.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside the Borough of Manhattan, The
City of New York, where the Debentures may be presented for payment,
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof.
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3.3. Appointments to Fill Vacancies in Trustee's Office
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
3.4. Provision as to Paying Agent
(a) If the Company shall appoint a paying agent other than the Trustee
with respect to the Debentures, it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provision of this Section 3.4,
(1) that it will hold all sums held by it as such agent for the
payment of the principal or Redemption Price of or interest on the Debentures
(whether such sums have been paid to it by the Company or by any other obligor
on the Debentures of such series) in trust for the benefit of the holders of the
Debentures;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Debentures) to make any payment of the
principal or Redemption Price of or interest on the Debentures when the same
shall be due and payable;
(3) that it will at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by it as such paying agent; and
(4) that it will not remove or impair the rights of any Holder of
Capital Securities to bring a Direct Action in certain circumstances, as
provided in Section 15.1.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal or Redemption Price of or interest on the
Debentures, set aside, segregate and hold in trust for the benefit of the
holders of the Debentures a sum sufficient to pay such principal or Redemption
Price and interest so becoming due and will notify the Trustee of any failure to
take such action and of any failure by the Company (or by any other obligor
under the Debentures) to make any payment of the principal or Redemption Price
of or interest on the Debentures when the same shall become due and payable.
(c) Anything in this Section 3.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Debentures hereunder, or for any other reason, pay
or cause to be paid to the Trustee all sums held in trust for the Debentures by
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the Trustee or any paying agent hereunder, as required by this Section 3.4, such
sums to be held by the Trustee upon the trusts herein contained.
(d) Anything in this Section 3.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
Sections 11.3 and 11.4.
3.5. Certificate to Trustee
The Company will deliver to the Trustee on or before 120 days after each
December 31, commencing with December 31, 1997, so long as Debentures are
outstanding hereunder, an Officers' Certificate, one of the signers of which
shall be the principal executive, principal financial or principal accounting
officer of the Company stating that in the course of the performance by the
signers of their duties as officers of the Company they would normally have
knowledge of any default by the Company in the performance of any covenants
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
3.6. Statement as to Default
The Company shall deliver to the Trustee, as soon as possible and in any
event within five days after the Company becomes aware of the occurrence of any
Event of Default or an event which, with notice or the lapse of time or both,
would constitute an Event of Default, an Officers' Certificate setting forth the
details of such Event of Default or default and the action which the Company
proposes to take with respect thereto.
3.7. Compliance with Consolidation Provisions
The Company will not, while any of the Debentures remain outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other Person unless the provisions of
Article X hereof are complied with.
3.8. Limitation on Dividends
The Company will not (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Company's capital stock (which includes common and preferred stock) or
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Company (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Company of any securities of any Subsidiary of the Company (including any
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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 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 shareholder'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 required in order to avoid the
issuance of fractional shares of capital stock, following a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock; and (e) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged) if at such time
(i) an Event of Default shall have occurred and be continuing, (ii) 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 constitute an
Event of Default and (b) in respect of which the Company shall not have taken
reasonable steps to cure, (iii) the Company shall be in default with respect to
its payment obligations under the Capital Securities Guarantee or (iv) the
Company shall have given notice of its election of the exercise of its right to
extend the interest payment period, or any extension thereof, pursuant to
Section 16.1 and shall not have rescinded such notice, and such exercise of its
right to extend the interest payment period, or any extension thereof, shall
have commenced.
3.9. Covenants as to MMI Trust
In the event Debentures are issued to MMI Trust or a trustee of such trust
in connection with the issuance of Trust Securities by MMI Trust, for so long as
such Trust Securities remain outstanding, the Company will (i) maintain 100%
direct ownership of the Common Securities of MMI Trust; provided, however, that
any successor of the Company permitted pursuant to Article X, may succeed to the
Company's ownership of such Common Securities, (ii) not cause, as sponsor of MMI
Trust, or permit, as a holder of Common Securities, the dissolution, winding up
or termination of the Trust, except in connection with a distribution of the
Debentures to holders of Trust Securities, the payment of the Debentures on the
Maturity Date, or as otherwise provided in the Declaration, (iii) use its best
efforts to cause MMI Trust (a) to remain a business trust, except in connection
with a distribution of Debentures, the redemption of all of the Trust Securities
or certain mergers, consolidations or amalgamations, each as permitted by the
Declaration and (b) to otherwise continue to be treated as a grantor trust and
not an association taxable as a corporation for United States federal income tax
purposes and
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(iv) use its best efforts to cause each holder of Trust Securities to be treated
as owning an undivided beneficial interest in the Debentures.
3.10. Payment of Expenses
In connection with the offering, sale and issuance of the Debentures to MMI
Trust and in connection with the sale of the Trust Securities by MMI Trust, the
Company, in its capacity as borrower with respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and issuance
of the Debentures, including commissions to the initial purchasers payable
pursuant to the Purchase Agreement, fees and expenses in connection with any
exchange offer or other action to be taken pursuant to the Registration Rights
Agreement and compensation of the Trustee in accordance with the provisions of
Section 6.6;
(b) pay all costs and expenses of MMI Trust (including, but not limited
to, costs and expenses relating to the organization of MMI Trust, the offering,
sale and issuance of the Trust Securities (including commissions to the initial
purchasers payable pursuant to the Purchase Agreement), the fees and expenses of
the Property Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of MMI Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of assets of MMI Trust);
(c) be primarily and fully liable for any indemnification obligations
arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding taxes
attributable to MMI Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of MMI Trust; and
(e) pay all other fees, expenses, debts and obligations (other than
payments of principal or Redemption Price of or interest on the Trust
Securities) related to MMI Trust.
3.11. Payment Upon Resignation or Removal
Upon termination of this Indenture or the removal or resignation of the
Trustee, unless otherwise stated, the Company shall pay to the Trustee all
amounts accrued and owing to such Trustee to the date of such termination,
removal or resignation. Upon termination of the Declaration or the removal or
resignation
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of the Delaware Trustee or the Property Trustee, as the case may be, pursuant to
Section 5.7 of the Declaration, the Company shall pay to the Delaware Trustee or
the Property Trustee, as the case may be, all amounts accrued and owing to such
Trustee to the date of such termination, removal or resignation.
3.12. Calculation of Original Issue Discount
The Company shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods), if any, accrued on
outstanding Debentures as of the end of such year and (ii) such other specific
information relating to such original issue discount as may then be relevant
under the Internal Revenue Code of 1986, as amended from time to time.
ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
4.1. Debentureholders' Lists
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Debentures, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Debentureholders as of such record date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company, of any such request, a list of similar
form and content with respect to the Debentureholders as of a date not more than
15 days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the Trustee is
in possession thereof by reason of its acting as Debenture registrar.
4.2. Preservation and Disclosure of Lists
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of the
Debentures (1) contained in the most recent list furnished to it as provided in
Section 4.1 or (2) received by it in the capacity of Debentures registrar (if so
acting) hereunder. The Trustee may destroy any list furnished to it as provided
in Section 4.1 upon receipt of a new list so furnished.
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(b) In case three or more holders of Debentures (hereinafter referred
to as "applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Debenture for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other holders of
Debentures or with holders of all Debentures with respect to their rights under
this Indenture and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within 5 Business Days after the receipt of such application, at its election,
either:
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions of subsection (a)
of this Section 4.2, or
(2) inform such applicants as to the approximate number of
holders of all Debentures, whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.2, and as to the approximate cost of mailing to
such Debentureholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Debentureholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.2 a copy of the form of proxy or other
communication which is specified in such request with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall (i) mail to such applicants and
(ii) if this Indenture has been qualified under the Trust Indenture Act, file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of the holders of Debentures of
such series or all Debentures, as the case may be, or would be in violation of
applicable law. Such written statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Debentureholders with reasonable promptness after the entry of such order and
the renewal of such tender; otherwise the
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Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Each and every holder of Debentures, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any paying agent shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Debentures in accordance with the provisions of subsection (b) of this
Section 4.2, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b) except for its
negligence or bad faith.
4.3. Reports by Company
(a) The Company covenants and agrees to file with the Trustee, within 15
days after the date on which the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as said
Commission may from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the applicable rules and regulations prescribed
from time to time by said Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all holders of
Debentures, as the names and addresses of such holders appear upon the Debenture
Register, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section 4.3 as may be
required by applicable rules and regulations prescribed from time to time by the
Commission.
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(d) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the Debentures to
qualify for an exemption under Rule 144A under the Securities Act, the Company
shall, upon request, provide the information required by clause (d)(4)
thereunder to each Holder and to each beneficial owner and prospective purchaser
of Debentures identified by any holder of Restricted Debentures, unless such
information is furnished to the Commission pursuant to Section 13 or 15(d) of
the Exchange Act.
4.4. Reports by the Trustee
(a) The Trustee shall transmit to Debentureholders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee
shall, within 60 days after each May 31 following the date of this Indenture,
commencing May 31, 1998, deliver to Debentureholders a brief report which
complies with the provisions of such Section 313(a).
(b) The Trustee shall transmit to Debentureholders the reports required to
be so transmitted at the times required pursuant to Section 313(b) of the Trust
Indenture Act.
(c) A copy of each such report shall, at the time of such transmission to
Debentureholders, be filed by the Trustee with each stock exchange or automated
quotation system, if any, upon which the Debentures are listed, with the
Commission, with the Company and such other Persons at such times as are
required pursuant to Section 313(c) of the Trust Indenture Act. The Company will
promptly notify the Trustee when the Debentures are listed on any stock exchange
or automated quotation system.
ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
5.1. Events of Default
One or more of the following events of default shall constitute an "Event
of Default" hereunder (whatever the reason for such Event of Default and whether
it shall be voluntary or be
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effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest upon any Debenture or any Other
Debentures when it becomes due and payable, and continuance of such default for
a period of 30 days; provided, however, that a valid extension of an interest
payment period by the Company in accordance with the terms hereof shall not
constitute a default in the payment of interest for this purpose; or
(b) default in the payment of all or any part of the principal or
Redemption Price of any Debenture or any Other Debentures as and when the same
shall become due and payable either at maturity, upon redemption, by declaration
or otherwise; or
(c) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the holders of not less than
25% in aggregate principal amount of the outstanding Debentures a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part of
its property, or ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
If an Event of Default with respect to Debentures at the time outstanding
occurs and is continuing, then in every such case the Trustee or the holders of
not less than 25% in aggregate
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principal amount of the Debentures then outstanding may declare the principal
amount of all Debentures to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the holders of the
outstanding Debentures), and upon any such declaration the same shall become
immediately due and payable.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal of the Debentures shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, (i) the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay (A) all
matured installments of interest upon all the Debentures and the principal or
Redemption Price of any and all Debentures which shall have become due otherwise
than by acceleration (with interest upon such principal or Redemption Price of,
and, to the extent that payment of such interest is enforceable under applicable
law, on overdue installments of interest, at the same rate as the rate of
interest specified in the Debentures to the date of such payment or deposit) and
(B) such amount as shall be sufficient to cover reasonable compensation to the
Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of negligence or
bad faith and all other amounts due to the Trustee under Section 6.6 and to the
Delaware Trustee and the Property Trustee under the Declaration, and (ii) any
and all Events of Default under the Indenture, other than the non-payment of the
principal of the Debentures which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or otherwise remedied
as provided herein, then the holders of a majority in aggregate principal amount
of the Debentures then outstanding, by written notice to the Company and to the
Trustee, may rescind and annul such declaration and its consequences, but no
such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon and provided,
that no such waiver or rescission and annulment shall apply to any 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 Debenture.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Trustee and the holders of the Debentures shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the Trustee and the holders of the Debentures shall
continue as though no such proceeding had been taken.
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5.2. Payment of Debentures on Default; Suit Therefor
The Company covenants that (a) in case default shall be made in the payment
of any installment of interest upon any of the Debentures as and when the same
shall become due and payable, and such default shall have continued for a period
of 30 days, or (b) in case default shall be made in the payment of the principal
or Redemption Price of any of the Debentures as and when the same shall have
become due and payable, whether at maturity of the Debentures or upon redemption
or by declaration or otherwise, then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Debentures, the
whole amount that then shall have become due and payable on all such Debentures
for principal, Redemption Price or interest, or both, as the case may be, with
interest upon the overdue principal or Redemption Price, and (to the extent that
payment of such interest is enforceable under applicable law and, if the
Debentures are held by MMI Trust or a trustee of such trust, without duplication
of any other amounts paid by MMI Trust or a trustee in respect thereof) upon the
overdue installments of interest at the rate borne by the Debentures; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including a reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabilities incurred by
the Trustee hereunder other than through its negligence or bad faith and all
other amounts due to the Trustee under Section 6.6 and to the Delaware Trustee
and the Property Trustee under the Declaration.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the
Debentures and collect in the manner provided by law out of the property of the
Company or any other obligor on the Debentures wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Debentures under Title
11, United States Code, or any other applicable law, or in case a receiver or
trustee shall have been appointed for the property of the Company or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Company or other obligor upon the Debentures, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal or Redemption Price of the Debentures shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand
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pursuant to the provisions of this Section 5.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of the principal or Redemption Price and interest
owing and unpaid in respect of the Debentures and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of negligence or
bad faith and all other amounts due to the Trustee under Section 6.6 and to the
Delaware Trustee and the Property Trustee under the Declaration) and of the
Debentureholders allowed in such judicial proceedings relative to the Company or
any other obligor on the Debentures, or to the creditors or property of the
Company or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Debentures in any election
of a trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
Debentureholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Debentureholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith and all other amounts due to the
Trustee under Section 6.6 and to the Delaware Trustee and the Property Trustee
under the Declaration.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any holder thereof or to authorize the Trustee to
vote in respect of the claim of any Debentureholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Debentures, may be enforced by the Trustee without the possession of
any of the Debentures, or the production thereof on any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express
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trust, and any recovery of judgment shall be for the ratable benefit of the
holders of the Debentures.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Debentures, and it shall not be necessary to make any holders of the
Debentures parties to any such proceedings.
5.3. Application of Moneys Collected by Trustee
Any moneys collected by the Trustee shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Debentures in respect of which moneys have
been collected, and stamping thereon the payment, if only partially paid, and
upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection applicable to the
Debentures and reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all advances
made, by the Trustee except as a result of its negligence or bad faith and all
other amounts due to the Trustee under Section 6.6 and to the Delaware Trustee
and the Property Trustee under the Declaration;
Second: To the payment of all Senior Indebtedness of the Company if and to
the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon Debentures
for principal or Redemption Price of and interest on the Debentures, in respect
of which or for the benefit of which money has been collected, ratably, without
preference of priority of any kind, according to the amounts due on such
Debentures for principal or Redemption Price and interest, respectively; and
Fourth: To the Company.
5.4. Proceedings by Debentureholders
No holder of any Debenture shall have any right by virtue of or by availing
of any provision of this Indenture to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such holder previously shall have given to the Trustee written notice of an
Event of Default and of the continuance thereof with respect to the Debentures
specifying such Event of Default, as hereinbefore provided, and unless also the
holders of not less than 25% in aggregate principal amount of the Debentures
then outstanding shall have made written request upon the Trustee to
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institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action, suit or
proceeding, it being understood and intended, and being expressly covenanted by
the taker and holder of every Debenture with every other taker and holder and
the Trustee, that no one or more holders of Debentures shall have any right in
any manner whatever by virtue of or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of any other holder of
Debentures, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Debentures.
Notwithstanding any other provisions in this Indenture, however, the right
of any holder of any Debenture to receive payment of the principal or Redemption
Price of and interest on such Debenture, on or after the same shall have become
due and payable, or to institute suit for the enforcement of any such payment,
shall not be impaired or affected without the consent of such holder and by
accepting a Debenture hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Debenture with every other such
taker and holder and the Trustee, that no one or more holders of Debentures
shall have any right in any manner whatsoever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of the
holders of any other Debentures, or to obtain or seek to obtain priority over or
preference to any other Such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Debentures. For the protection and enforcement
of the provisions of this Section, each and every Debentureholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
The Company and the Trustee acknowledge that pursuant to the Declaration,
the holders of Capital Securities are entitled, in the circumstances and subject
to the limitations set forth therein, to commence a Direct Action with respect
to any Event of Default under this Indenture and the Debentures.
Notwithstanding any payments made to such holder of Trust Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal or Redemption Price of and interest on the Debentures held
by the Property Trustee, and the Company shall be subrogated to the rights of
the holder of such Trust Securities to the extent of any payments made by the
Company to such holder in any Direct Action.
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5.5. Proceedings by Trustee
In case an Event of Default occurs with respect to Debentures and is
continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
5.6. Remedies Cumulative and Continuing
All powers and remedies given by this Article V to the Trustee or to the
Debentureholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any other powers and remedies available to the Trustee or the
holders of the Debentures, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to the Debentures, and no delay
or omission of the Trustee or of any holder of any of the Debentures to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and remedy given by this Article V or by
law to the Trustee or to the Debentureholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Debentureholders.
5.7. Direction of Proceedings and Waiver of Defaults by Majority of
Debentureholders
The holders of a majority in aggregate principal amount of the Debentures
at the time outstanding shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine that the
action so directed would be unjustly prejudicial to the holders not taking part
in such direction or if the Trustee being advised by counsel determines that the
action or proceeding so directed may not lawfully be taken or if the Trustee in
good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or Responsible Officers shall
determine that the action or proceedings so directed would involve the Trustee
in personal liability. Prior to any declaration accelerating the
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maturity of the Debentures, the holders of a majority in aggregate principal
amount of the Debentures at the time outstanding may on behalf of the holders of
all of the Debentures waive any past default or Event of Default and its
consequences except a default (a) in the payment of principal, Redemption Price
of or interest on any of the Debentures or (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Debenture affected. Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of this Indenture and the
Company, the Trustee and the holders of the Debentures shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 5.7, said default or Event of Default shall
for all purposes of the Debentures and this Indenture be deemed to have been
cured and to be not continuing.
5.8. Notice of Defaults
The Trustee shall, within 90 days after the occurrence of a default with
respect to the Debentures mail to all Debentureholders, as the names and
addresses of such holders appear upon the Debenture register, notice of all
defaults known to the Trustee, unless such defaults shall have been cured before
the giving of such notice (the term "defaults" for the purpose of this Section
5.8 being hereby defined to be the events specified in clauses (a), (b), (c),
(d) and (e) of Section 5.1, not including periods of grace, if any, provided for
therein, and irrespective of the giving of written notice specified in clause
(c) of Section 5.1).
5.9. Undertaking to Pay Costs
All parties to this Indenture agree, and each holder of any Debenture by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 5.9 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Debentureholder, or group of
Debentureholders, holding in the aggregate more than 10% in aggregate principal
amount of the Debentures outstanding, or to any suit instituted by any
Debentureholder for the enforcement of the payment of the
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principal, Redemption Price of or interest on any Debenture against the Company
on or after the same shall have become due and payable.
ARTICLE VI.
CONCERNING THE TRUSTEE
6.1. Duties and Responsibilities of Trustee
With respect to the holders of the Debentures issued hereunder, the
Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured or
waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred
(1) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
but, in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers
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of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith, in accordance with the direction of
the Debentureholders pursuant to Section 5.7, relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
6.2. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, note, debenture or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein may be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed), and any Board
Resolution may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered to be taken or omitted by
it hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
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(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the occurrence of an
Event of Default (that has not been cured or waived), to exercise such of the
rights and powers vested in it by this Indenture, and to use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
coupon or other paper or document, unless requested in writing to do so by the
holders of a majority in aggregate principal amount of the outstanding
Debentures; provided, however, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity against such
expense or liability as a condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed by it with due care.
(h) the Trustee shall not be charged with knowledge of any Default or
Event of Default with respect to the Debentures unless either (1) a Responsible
Officer shall have actual knowledge of such Default or Event of Default or (2)
written notice of such Default or Event of Default shall have been given to the
Trustee by the Company or any other obligor on the Debentures or by any Holder
of the Debentures.
6.3. No Responsibility for Recitals, etc.
The recitals contained herein and in the Debentures (except in the
certificate of authentication of the Trustee or the Authenticating Agent) shall
be taken as the statements of the Company, and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Debentures. The Trustee and
the Authenticating Agent shall not be accountable
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for the use or application by the Company of any Debentures or the proceeds of
any Debentures authenticated and delivered by the Trustee or the Authenticating
Agent in conformity with the provisions of this Indenture.
6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar
May Own Debentures
The Trustee or any Authenticating Agent or any paying agent or any transfer
agent or any Debenture registrar, in its individual or any other capacity, may
become the owner or pledgee of Debentures with the same rights it would have if
it were not Trustee, Authenticating Agent, paying agent, transfer agent or
Debenture registrar.
6.5. Moneys to be Held in Trust
Subject to the provisions of Section 11.4, all moneys received by the
Trustee or any paying agent shall, until used or applied as herein provided, be
held in trust for the purpose for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
and any paying agent shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
So long as no Event of Default shall have occurred and be continuing, all
interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company, signed by an Officer.
6.6. Compensation and Expenses of Trustee
The Company, as borrower, covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as shall
be agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Company will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on the part of the Trustee and arising out of or
in connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim of liability in the
premises. The obligations of the Company under this Section 6.6
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to compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to that
of the Debentures upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the holders of particular
Debentures.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.l(d) or Section
5.1(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or removal of
the Trustee and the termination of this Indenture.
6.7. Officers' Certificate as Evidence
Except as otherwise provided in Sections 6.1 and 6.2, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
6.8. Conflicting Interest of Trustee
If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
6.9. Eligibility of Trustee
The Trustee hereunder shall at all times be a bank or trust company
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 other Person permitted to act as trustee by the Trust Indenture Act and
authorized under law to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000) and
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subject to supervision or examination by federal, state, territorial, or
District of Columbia authority. If such bank or trust company or other
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.9 the combined capital and surplus of such
bank or trust company or other corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
The Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee.
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.9, the Trustee shall resign immediately in
the manner and with the effect specified in Section 6.10.
6.10. Resignation or Removal of Trustee
(a) The Trustee, or any trustee or trustees hereafter appointed, may at any
time resign giving written notice of such resignation to the Company and by
mailing notice thereof to the holders of the Debentures at their addresses as
they shall appear on the Debenture register. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee or trustees
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 60 days after the mailing of such notice of resignation to the
Debentureholders, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Debentureholder
who has been a bona fide holder of a Debenture for at least six months may,
subject to the provisions of Section 5.9, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of Section
6.8 after written request therefor by the Company or by any Debentureholder who
has been a bona fide holder of a Debenture or Debentures for at least six
months, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Company or by any such Debentureholder, or
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(3) the Trustee shall become incapable of acting, or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property shall
be appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee, or, subject to the provisions of Section 5.9, any
Debentureholder who has been a bona fide holder of a Debenture for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may at any time remove the Trustee and
nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within 10 days after such nomination the Company objects thereto
or if no successor trustee shall have been so appointed and shall have accepted
appointment within 30 days after such removal, in which case the Trustee so
removed or any Debentureholder, upon the terms and conditions and otherwise as
in subsection (a) of this Section 6.10 provided, may petition any court of
competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 6.11.
6.11. Acceptance by Successor Trustee
Any successor trustee appointed as provided in Section 6.10 shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the retiring trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 6.6, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act and shall duly
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assign, transfer and deliver to such successor trustee all property and money
held by such retiring trustee thereunder. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain a lien
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 6.11, the Company shall mail notice of the succession of such trustee
hereunder to the holders of Debentures at their addresses as they shall appear
on the Debenture Register. If the Company fails to mail such notice within 10
days after the acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Company.
6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any Debentures shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Debentures so
authenticated; and in case at that time any of the Debentures shall not have
been authenticated, any successor to the Trustee may authenticate such
Debentures either in the name of any predecessor hereunder or in the name of the
successor trustee; and in all such cases such certificates shall have the full
force which the Debentures or this Indenture elsewhere provides that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
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6.13. Limitation on Rights of Trustee as a Creditor
The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship described in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent included therein.
6.14. Authenticating Agents
There may be one or more Authenticating Agents appointed by the Trustee
upon the request of the Company with power to act on its behalf and subject to
its direction in the authentication and delivery of Debentures issued upon
exchange or transfer thereof as fully to all intents and purposes as though any
such Authenticating Agent had been expressly authorized to authenticate and
deliver Debentures: provided, that the Trustee shall have no liability to the
Company for any acts or omissions of the Authenticating Agent with respect to
the authentication and delivery of Debentures. Any such Authenticating Agent
shall at all times be a corporation organized and doing business under the laws
of the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $5,000,000 and being 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 the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section 6.14 without the execution or filing of
any paper or any further act on the part of the parties hereto or such
Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such
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Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent eligible under this Section 6.14, shall give
written notice of such appointment to the Company and shall mail notice of such
appointment to all Debentureholders as the names and addresses of such holders
appear on the Debenture Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating Agent from
time to time reasonable compensation for its services. Any Authenticating Agent
shall have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
If an appointment is made pursuant to this Section, the Debentures may have
endorsed thereon an alternative certificate of authentication in the following
form:
This is one of the Series ___ Debentures referred to in the within-
mentioned Indenture.
[Name of Trustee]
- --------------------------
As Trustee
By________________________
As Authenticating Agent
By_______________________
Authorizing Officer
ARTICLE VII.
CONCERNING THE SECURITYHOLDERS
7.1. Action by Debentureholders
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Debentures may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the holders of such specified percentage
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have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Debentureholders in Person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Debentures voting in favor thereof at any meeting of such Debentureholders duly
called and held in accordance with the provisions of Article VII, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Debentureholders.
If the Company shall solicit from the Debentureholders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company
may, at its option, as evidenced by an Officers' Certificate, fix in advance a
record date for the determination of Debentureholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action or to revoke any such action, but the Company shall have no obligation to
do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action or revocation may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of Outstanding Debentures have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the Outstanding Debentures shall be computed as of
the record date, provided, however, that no such authorization, agreement or
consent by such Debentureholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
7.2. Proof of Execution by Debentureholders
Subject to the provisions of Sections 6.1, 6.2 and 8.5, proof of the
execution of any instrument by a Debentureholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Debentures shall be proved by the Debenture
Register or by a certificate of the Debenture registrar. The Trustee may require
such additional proof of any matter referred to in this Section as it shall deem
necessary.
The record of any Debentureholders' meeting shall be proved in the manner
provided in Section 8.6.
7.3. Who Are Deemed Absolute Owners
Prior to due presentment for registration of transfer of any Debenture, the
Company, the Trustee, any Authenticating Agent, any paying agent, any transfer
agent and any Debenture registrar may deem the Person in whose name such
Debenture shall be
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registered upon the Debenture Register to be, and may treat him or her as, the
absolute owner of such Debenture (whether or not such Debenture shall be
overdue) for the purpose of receiving payment of or on account of the principal
or Redemption Price of and (subject to Section 2.6) interest on such Debenture
and for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
Debenture registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent other sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.
7.4. Debentures Owned by Company Deemed Not Outstanding
In determining whether the holders of the requisite aggregate principal
amount of Debentures have concurred in any direction, consent or waiver under
this Indenture, Debentures which are owned by the Company or any other obligor
on the Debentures or by any Affiliate of the Company or any other obligor on the
Debentures shall be disregarded and deemed not to be outstanding for the purpose
of any such determination; provided that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, consent or
waiver, only Debentures which the Trustee actually knows are so owned shall be
so disregarded. Debentures so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Debentures and that the pledgee is not the Company or any Affiliate of
Company or any such other obligor. In the case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee. The ownership of Debentures by MMI Trust and of Trust
Securities by the Company or any other obligor on the Debentures or any
Affiliate of the foregoing shall be disregarded for purposes of this Section
7.4; provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only Debentures
which the Trustee actually knows are so owned shall be so disregarded.
7.5. Revocation of Consents; Future Holders Bound
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.1, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action, any holder of a Debenture (or any
Debenture issued in whole or in part in exchange or substitution therefor),
subject to Section 7.1, the serial number of which is shown by the evidence to
be included in the Debentures the holders of which have consented to such action
may, by filing written notice with the Trustee at its principal office and upon
proof of
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holding as provided in Section 7.2, revoke such action so far as concerns such
Debenture (or so far as concerns the principal amount represented by any
exchanged or substituted Debenture). Except as aforesaid any such action taken
by the holder of any Debenture shall be conclusive and binding upon such holder
and upon all future holders and owners of such Debenture, and of any Debenture
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Debenture or any Debenture issued
in exchange or substitution therefor.
ARTICLE VIII.
SECURITYHOLDERS' MEETINGS
8.1. Purposes of Meetings
A meeting of Debentureholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Debentureholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.2; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such Debentures
under any other provision of Indenture or under applicable law.
8.2. Call of Meetings by Trustee
The Trustee may at any time call a meeting of Debentureholders to take any
action specified in Section 8.1, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Debentureholders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed to holders of Debentures at their addresses as
they shall appear on the Debentures Register. Such notice shall be mailed not
less than 20 nor more than 180 days prior to the date fixed for the meeting.
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8.3. Call of Meetings by Company or Debentureholders
In case at any time the Company pursuant to a Board Resolution, or the
holders of at least 10% in aggregate principal amount of the Debentures then
outstanding, shall have requested the Trustee to call a meeting of
Debentureholders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or such Debentureholders may determine the time and the place
in said Borough of Manhattan for such meeting and may call such meeting to take
any action authorized in Section 8.1, by mailing notice thereof as provided in
Section 8.2.
8.4. Qualifications for Voting
To be entitled to vote at any meeting of Debentureholders a person shall
(a) be a holder of one or more Debentures or (b) a person appointed by an
instrument in writing as proxy by a holder of one or more Debentures. The only
persons who shall be entitled to be present or to speak at any meeting of
Debentureholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
8.5. Regulations
Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Debentureholders, in regard to proof of the holding of Debentures and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Debentureholders as provided in Section 8.3, in which case the
Company or the Debentureholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.4, at any meeting each holder of
Debentures or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Debentures held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Debenture
challenged as not outstanding and ruled by the chairman of the meeting to be
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not outstanding. The chair of the meeting shall have no right to vote other than
by virtue of Debentures held by him or her or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Debentureholders. Any meeting of Debentureholders duly called pursuant to the
provisions of Section 8.2 or 8.3 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.
8.6. Voting
The vote upon any resolution submitted to any meeting of holders of
Debentures shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Debentures held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Debentureholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.2. The record shall show the serial numbers of the
Debentures voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. The holders of the Series A Debentures
and the Series B Debentures shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE IX.
AMENDMENTS
9.1. Without Consent of Debentureholders
The Company, when authorized by a Board Resolution, and the Trustee may
from time to time and at any time amend the Indenture, without the consent of
the Debentureholders, for one or more of the following purposes:
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(a) to evidence the succession of another corporation to the Company, or
successive successions, and the assumption by the successor corporation of the
covenants, agreements and obligations of the Company pursuant to Article X;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the Debentureholders as the
Board of Directors and the Trustee shall consider to be for the protection of
the Debentureholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants, restrictions or
conditions a default or an Event of Default permitting the enforcement of all or
any of the remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction or
condition, such amendment may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture or to make such other provisions in regard to matters or questions
arising under this Indenture; provided that any such action shall not, as
evidenced by an Opinion of Counsel, materially adversely affect the interests of
the holders of the Debentures;
(d) to evidence and provide for the acceptance of appointment hereunder by
a successor trustee with respect to the Debentures;
(e) to make provision for transfer procedures, certification, book-entry
provisions, the form of restricted securities legends, if any, to be placed on
Debentures, minimum denominations and all other matters required pursuant to
Section 2.7 or otherwise necessary, desirable or appropriate in connection with
the issuance of Debentures to holders of Capital Securities in the event of a
distribution of Debentures by MMI Trust following a Dissolution Event;
(f) to qualify or maintain qualification of this Indenture under the Trust
Indenture Act; or
(g) to make any change that does not, as evidenced by an Opinion of
Counsel, adversely affect the rights of any Debentureholder in any material
respect.
The Trustee is hereby authorized to join with the Company in the execution
of any supplemental indenture to effect such amendment, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the
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conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of this Section
9.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Debentures at the time outstanding, notwithstanding any of
the provisions of Section 9.2.
9.2. With Consent of Debentureholders
With the consent (evidenced as provided in Section 7.1) of the holders of a
majority in aggregate principal amount of the Debentures at the time
outstanding, the Company, when authorized by a Board Resolution, and the Trustee
may from time to time and at any time amend the Indenture for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
holders of the Debentures; provided, however, that no such amendment shall
without the consent of the holders of each Debenture then outstanding and
affected thereby (i) extend the Stated Maturity Date of any Debenture, or reduce
the rate or extend the time of payment of interest thereon (except as
contemplated by Article XVI), or reduce the principal amount or the Redemption
Price thereof, or make the principal or the Redemption Price thereof or any
interest thereon payable in any coin or currency other than that provided in the
Debentures, or impair or affect the right of any Debentureholder to institute
suit for payment thereof, or (ii) reduce the aforesaid percentage of Debentures
the holders of which are required to consent to any such amendment to the
Indenture.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any supplemental indenture effecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Debentureholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Debentureholders as their names and addresses appear upon the
Debenture Register. Any failure of the Trustee to mail such
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notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Debentureholders under
this Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
9.3. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures
Any supplemental indenture executed pursuant to the provisions of this
Article IX shall comply with the Trust Indenture Act. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Debentures shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
9.4. Notation on Debentures
Debentures authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of this
Article IX may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee shall
so determine, new Debentures so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee or the Authenticating Agent and delivered
in exchange for the Debentures then outstanding.
9.5. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee
The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive
an Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant hereto complies with the
requirements of this Article IX.
The Trustee may receive an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article is authorized or
permitted by, and conforms to, the terms of this Article and that it is proper
for the Trustee under the provisions of this Article to join in the execution
thereof.
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ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
10.1. Company May Consolidate, etc., on Certain Terms
Nothing contained in this Indenture or in any of the Debentures shall
prevent any consolidation or merger of the Company with or into any other Person
(whether or not an Affiliate of the Company), or successive consolidations or
mergers in which the Company, or its successor or successors, as the case may
be, shall be a party or parties, or shall prevent any sale, conveyance, transfer
or lease of the property of the Company, or its successor or successors, as the
case may be, as an entirety, or substantially as an entirety, to any other
Person (whether or not an Affiliate of the Company, or its successor or
successors, as the case may be) authorized to acquire and operate the same;
provided, that (a) the Company is the surviving Person, or the Person formed by
or surviving any such consolidation or merger (if other than the Company) or to
which such sale, conveyance, transfer or lease of property is made is a Person
organized and existing under the laws of the United States or any State thereof
or the District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal or
Redemption Price of and interest on the Debentures according to their tenor and
the due and punctual performance and observance of all the covenants and
conditions of this Indenture to be kept or performed by the Company shall be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Trustee executed and delivered to the Trustee by the Person formed by
such consolidation, or into which the Company shall have been merged, or by the
Person which shall have acquired such property, as the case may be, and (c)
after giving effect to such consolidation, merger, sale, conveyance, transfer or
lease, no Default or Event of Default shall have occurred and be continuing.
10.2. Successor Corporation to be Substituted for Company
In case of any such consolidation, merger, conveyance or transfer and upon
the assumption by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the due
and punctual payment of the principal or Redemption Price of and interest on all
of the Debentures and the due and punctual performance and observance of all of
the covenants and conditions of this Indenture to be performed or observed by
the Company, such successor Person shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as the party of the
first part, and, in the event of a sale of all or substantially all of its
assets, the Company thereupon shall
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be relieved of any further liability or obligation hereunder or upon the
Debentures. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of MMI Companies, Inc., any or all
of the Debentures issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee or the Authenticating Agent;
and, upon the order of such successor Person instead of the Company and subject
to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee or the Authenticating Agent shall authenticate and deliver any
Debentures which previously shall have been signed and delivered by the officers
of the Company to the Trustee or the Authenticating Agent for authentication,
and any Debentures which such successor Person thereafter shall cause to be
signed and delivered to the Trustee or the Authenticating Agent for that
purpose. All the Debentures so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Debentures theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Indentures had been issued at the date of the execution hereof.
10.3. Opinion of Counsel to be Given Trustee
Prior to entering into any consolidation, merger, sale, conveyance,
transfer or lease, the Company shall deliver an Opinion of Counsel to the
Trustee as conclusive evidence that such consolidation, merger, sale,
conveyance, transfer or lease, and any assumption, permitted or required by the
terms of this Article X, complies with the provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
11.1. Discharge of Indenture
When (a) the Company shall deliver to the Trustee for cancellation all
Debentures theretofore authenticated (other than any Debentures which shall have
been destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.8) and not theretofore cancelled, or (b) all the
Debentures not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay on the Maturity Date all of the Debentures (other than any
Debentures which shall have been destroyed, lost or stolen and which shall have
been replaced as provided in Section 2.8) not theretofore cancelled or delivered
to the Trustee for cancellation, including principal or
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Redemption Price and interest due or to become due to the Maturity Date, but
excluding, however, the amount of any moneys for the payment of principal,
Redemption Price of or interest on the Debentures (1) theretofore repaid to the
Company in accordance with the provisions of Section 11.4, or (2) paid to any
State or to the District of Columbia pursuant to its unclaimed property or
similar laws, and if in either case the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company through the Maturity Date,
then this Indenture shall cease to be of further effect except for the
provisions of Sections 2.2, 2.7, 2.8, 3.1, 3.2, 3.4, 6.6, 6.10, 11.2, 11.3 and
11.4 hereof, which shall survive until such Debentures shall mature and be paid.
Thereafter, Sections 3.10(c), 6.6, 6.10 and 11.4 shall survive, and the Trustee,
on demand of the Company accompanied by any Officers' Certificate and an Opinion
of Counsel and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture, the
Company, however, hereby agreeing to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee in
connection with this Indenture or the Debentures.
11.2. Deposited Moneys and U.S. Government Obligations to be Held in Trust by
Trustee
Subject to the provisions of Section 11.4, all moneys and U.S. Government
Obligations deposited with the Trustee pursuant to Section 11.1 or Section 11.6
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Debentures for the payment of which
such moneys or U.S. Government Obligations have been deposited with the Trustee,
of all sums due and to become due thereon for principal or Redemption Price and
interest.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash and/or U.S. Government
Obligations deposited pursuant to Section 11.1 or Section 11.6 or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of outstanding Debentures.
11.3. Paying Agent to Repay Moneys Held
Upon the satisfaction and discharge of this Indenture all moneys then held
by any paying agent of the Debentures (other than the Trustee) shall, upon
written demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
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11.4. Return of Unclaimed Moneys
Any moneys deposited with or paid to the Trustee or any paying agent for
payment of the principal or Redemption Price of or interest on Debentures and
not applied but remaining unclaimed by the holders of Debentures for two years
after the date upon which the principal or Redemption Price of or interest on
such Debentures, as the case may be, shall have become due and payable, shall be
repaid to the Company by the Trustee or such paying agent on Company Request;
and the holder of any of the Debentures shall thereafter look only to the
Company for any payment which such holder may be entitled to collect and all
liability of the Trustee or such paying agent with respect to such moneys shall
thereupon cease; provided, however, that, prior to the return of unclaimed
moneys as described in this Section 11.4, the Company shall cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
11.5. Defeasance and Discharge.
In addition to discharge of this Indenture pursuant to Section 11.1, the
Company shall be deemed to have paid and discharged the entire indebtedness on
all Debentures on and after the date the conditions set forth in Section 11.6
are satisfied with respect to this Section (hereinafter called "Defeasance"),
and the provisions of this Indenture shall no longer be in effect except for (i)
the provisions contained in Sections 2.2, 2.7, 2.8, 3.1, 3.2, 3.4, 6.6, 6.10,
11.2, and 11.3, (ii) the rights of holders of Debentures to receive, from the
trust fund described in Section 11.6(a) hereof, payment of the principal or
Redemption Price of and interest on the Debentures when such payments are due
and (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, and the Trustee at the cost and expense of the Company, shall execute
proper instruments acknowledging the Defeasance and discharge.
11.6. Conditions to Defeasance.
The following shall be the conditions to application of Section 11.5 to the
outstanding Debentures:
(a) the Company has irrevocably deposited or caused to be irrevocably
deposited with the Trustee as funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the holders of Debentures (i) cash
in an amount, or (ii) U.S. Government Obligations, maturing as to principal
and/or interest, at such times and in such amounts as will insure
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the availability of cash, or (iii) a combination thereof, in each case
sufficient, without reinvestment, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge the principal or Redemption Price
of and interest on all Debentures on each date that such principal or Redemption
Price and interest is due and payable (such deposit, the "Defeasance Deposit");
(b) such Defeasance will not result in a breach or violation of, or
constitute a default under, this Indenture or any agreement or instrument to
which the Company is a party or by which it is bound;
(c) such Defeasance shall not cause the trust holding the Defeasance
Deposit to be required to qualify as a regulated investment company under the
Investment Company Act, unless it is qualified as such,
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision for Defeasance, as appropriate, have
been complied with;
(e) the Company has delivered to the Trustee an Opinion of Counsel based on
the fact that (x) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or (y), since the date hereof, there has
been a change in the applicable United States federal income tax law, in either
case to the effect that, and such opinion shall confirm that, the holders of the
Debentures will not recognize income, gain or loss for federal income tax
purposes as a result of the Defeasance and will be subject to federal income tax
on the same amount and in the same manner and at the same times, as would have
been the case if such Defeasance had not occurred;
(f) no Event of Default or event which with notice or lapse of time or both
would become an Event of Default shall have occurred and be continuing (A) on
the date of the Defeasance Deposit or (B) insofar as Sections 5.1(d) and (e) of
this Indenture are concerned, at any time during the period beginning on such
date and ending on the 91st day after the date of such deposit or, if longer,
ending on the date following the expiration of the longest preference period
applicable to the Company in respect of the Defeasance Deposit;
(g) if the Debentures are then listed on any national securities exchange,
the Company shall have delivered to the Trustee and the Defeasance Agent, if
any, an Opinion of Counsel to the effect that the exercise of the option under
Section 11.5 would not cause such Debentures to be delisted from such exchange.
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ARTICLE XII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
12.1. Indenture and Debentures Solely Corporate Obligations
No recourse for the payment of the principal or Redemption of or interest
on any Debenture, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture, or in any Debenture, or because of the creation
of any indebtedness represented thereby, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or of any successor Person to the Company, either directly or through
the Company or any successor Person to the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Debentures.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1. Successors
All the covenants, stipulations, promises and agreements in this Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
13.2. Official Acts by Successor Corporation
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
13.3. Surrender of Company Powers
The Company by instrument in writing executed by authority of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company, and thereupon such power so surrendered shall terminate both as
to the Company, as the case may be, and as to any successor Person.
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13.4. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Trustee or by the holders of
Debentures on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the purpose)
to the Company, 540 Lake Cook Road, Deerfield, Illinois 60015, Attention: Chief
Financial Officer, Treasurer or Secretary. Any notice, direction, request or
demand by any Debentureholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made in writing
at the office of the Trustee, 450 West 33rd Street, 15th Floor, New York, New
York 10001, Attention: Global Trust Services (unless another address is provided
by the Trustee to the Company for the purpose).
Any notice or communication to a Holder shall be mailed by first class mail
to his or her address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
13.5. Governing Law
This Indenture and each Debenture shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be governed
by and construed in accordance with the laws of said State, without regard to
conflicts of laws principles thereof.
13.6. Evidence of Compliance with Conditions Precedent
Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that in the opinion of the
signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture (except pursuant to Section 3.5) shall include (1) a statement
that the person making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to
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express an informed opinion as to whether or not such covenant or condition has
been complied with; and (4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.
13.7. Business Days
In any case where the date of payment of principal or Redemption Price of
or interest on the Debentures will not be a Business Day, the payment of such
principal or Redemption Price of or interest on the Debentures need not be made
on such date but may be made on the next succeeding Business Day, with the same
force and effect as if made on the date of payment and no interest shall accrue
for the period from and after such date.
13.8. Trust Indenture Act to Control
If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act of 1939, such imposed duties shall control.
13.9. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
13.10. Execution in Counterparts
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
13.11. Separability
In case any one or more of the provisions contained in this Indenture or in
the Debentures shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Debentures,
but this Indenture and the Debentures shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
13.12. Acknowledgment of Rights
The Company acknowledges that, with respect to any Debentures held by MMI
Trust or a trustee of such trust, if the
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Property Trustee of such Trust fails to enforce its rights under this Indenture
as the holder of the Debentures held as the assets of MMI Trust, any holder of
Capital Securities may institute legal proceedings directly against the Company
to enforce such Property Trustee's rights under this Indenture without first
instituting any legal proceedings against such Property Trustee or any other
person or entity. In connection with the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay principal or Redemption Price of or interest on the Debentures
when due, the Company acknowledges that a holder of Capital Securities may
directly institute a proceeding for enforcement of payment to such holder of the
principal or Redemption Price of or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date specified in the
Debentures.
ARTICLE XIV
REDEMPTION OF SECURITIES
14.1. Special Event Redemption
If an Investment Company Event or a Tax Event has occurred and is
continuing then the Company shall have the right at any time, upon (i) not less
than 45 days written notice to the Trustee, which notice shall be accompanied by
an Officers' Certificate certifying that an Investment Company Event or a Tax
Event entitling the Company to redeem the Debentures pursuant to this Section,
has occurred and (ii) written notice to the Debentureholders as provided in
Section 14.3 below, to redeem the Debentures in whole (but not in part), within
90 days following the occurrence of such Investment Company Event or Tax Event
at the Special Event Redemption Price. Following an Investment Company Event or
a Tax Event, the Company shall take such action as is necessary to promptly
determine the Special Event Redemption Price, including without limitation the
appointment by the Company of a Quotation Agent. The Special Event Redemption
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company determines, provided that the
Company shall have deposited with the Trustee an amount sufficient to pay the
Special Event Redemption Price by 10:00 a.m., New York time, on the date such
Special Event Redemption Price is to be paid. The Company shall provide the
Trustee with written notice of the Special Event Redemption Price promptly after
the calculation thereof, which notice shall include any calculation made by the
Quotation Agent in connection with the determination of the Special Event
Redemption Price.
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14.2. No Sinking Fund
The Debentures are not entitled to the benefit of any sinking fund.
14.3. Notice of Redemption; Selection of Debentures
In case the Company shall desire to exercise the right to redeem all of the
Debentures in accordance with their terms, it shall fix a date for redemption
and shall mail a notice of such redemption at least 30 and not more than 60 days
prior to the date fixed for redemption to the holders of Debentures (provided,
however, that if the Property Trustee then holds Debentures, the Debenture
Trustee shall give not less than 35 days written notice to the Property
Trustee), so to be redeemed as a whole at their last addresses as the same
appear on the Debenture Register. Such mailing shall be by first class mail. The
notice if mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
holder of any Debenture designated for redemption as a whole or in part shall
not affect the validity of the proceedings for the redemption of any other
Debenture.
Each such notice of redemption shall specify the CUSIP number of the
Debentures to be redeemed, the date fixed for redemption, the Redemption Price
at which the Debentures are to be redeemed (or the method by which such
Redemption Price is to be calculated), the place or places of payment, that
payment will be made upon presentation and surrender of the Debentures, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon will cease to
accrue.
By 10:00 a.m. New York time on the redemption date specified in the notice
of redemption given as provided in this Section, the Company will deposit with
the Trustee or with one or more paying agents an amount of money sufficient to
redeem on the redemption date all the Debentures so called for redemption at the
appropriate Redemption Price, together with accrued interest to the date fixed
for redemption.
14.4. Payment of Debentures on the Maturity Date
On the Maturity Date of the Debentures, and, in the case of a Special Event
Redemption, if notice of redemption has been given as provided in Section 14.3,
the Debentures shall become due and payable at the office of the Paying Agent
or, in the case of a Special Event Redemption, at the place or places and on the
date stated in such notice at the applicable Redemption Price, together with
interest accrued to the date fixed for redemption (subject to the rights of
holders of Debentures on the close of
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business on a regular record date in respect of an Interest Payment Date
occurring on or prior to the redemption date), and on and after said date
(unless the Company shall default in the payment of such Debentures at the
Redemption Price, together with interest accrued to said date) interest on the
Debentures shall cease to accrue. On presentation and surrender of such
Debentures at the office of the Paying Agent or at a place of payment specified
in said notice, the Debentures shall be paid and redeemed by the Company at the
applicable Redemption Price, together with interest accrued thereon to the date
fixed for redemption (subject to the rights of holders of Debentures on the
close of business on a regular record date in respect of an Interest Payment
Date occurring on or prior to the redemption date).
ARTICLE XV
SUBORDINATION OF SECURITIES
15.1. Agreement to Subordinate
The Company covenants and agrees, and each holder of Debentures issued
hereunder likewise covenants and agrees, that the Debentures shall be issued
subject to the provisions of this Article XV; and each holder of a Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment by the Company of the principal or Redemption Price of and
interest on all Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
all Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred.
No provision of this Article XV shall prevent the occurrence of any Default
or Event of Default hereunder.
15.2. Default on Senior Indebtedness
In the event and during the continuation of any default by the Company in
the payment of principal, premium, if any, interest or any other payment due on
any Senior Indebtedness, in the event that any applicable grace period with
respect to such default has ended and such default has not been cured or waived
or ceased to exist, or in the event that the maturity of any Senior Indebtedness
has been accelerated because of a default and such acceleration has not been
rescinded, then, in any of these cases, no payment shall be made by the Company
with respect to the principal or Redemption Price of or interest on the
Debentures.
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In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 15.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing, within 90 days of
such payment of the amounts then due and owing on such Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
15.3. Liquidation; Dissolution; Bankruptcy
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution, winding-up, liquidation, 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 Company, all Senior Indebtedness of the Company
must first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the Company on account
of the principal, Redemption Price or interest on the Debentures; and upon any
such dissolution or winding-up or liquidation or reorganization, any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Debentureholders or the
Trustee would be entitled to receive from the Company, except for the provisions
of this Article XV, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Debentureholders or by the Trustee under the Indenture
if received by them or it, directly to the holders of Senior Indebtedness of the
Company (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full, in money or money's
worth, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness, before any payment or distribution is
made to the Debentureholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or
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character, whether in cash, property or securities, prohibited by the foregoing,
shall be received by the Trustee before all Senior Indebtedness is paid in full,
or provision is made for such payment in money in accordance with its terms,
such payment or distribution shall be held in trust for the benefit of and shall
be paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness in full in
money in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the benefit of the holders of such Senior
Indebtedness.
For purposes of this Article XV, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article XV with respect to
the Debentures to the payment of Senior Indebtedness that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale,
conveyance, transfer or lease of its property as an entirety, or substantially
as an entirety, to another Person upon the terms and conditions provided for in
Article X of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 15.3 if such
other Person shall, as a part of such consolidation, merger, sale, conveyance,
transfer or lease, comply with the conditions stated in Article X of this
Indenture.
15.4. Subrogation
Subject to the payment in full of all Senior Indebtedness, the rights of
the Debentureholders shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company, as the case may be, applicable to such Senior
Indebtedness until the principal or Redemption Price of and interest on the
Debentures shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Debentureholders or the Trustee would
be
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entitled except for the provisions of this Article XV, and no payment over
pursuant to the provisions of this Article XV to or for the benefit of the
holders of such Senior Indebtedness by Debentureholders or the Trustee, shall,
as between the Company, its creditors other than holders of Senior Indebtedness
of the Company, and the holders of the Debentures, be deemed to be a payment by
the Company to or on account of such Senior Indebtedness. It is understood that
the provisions of this Article XV are and are intended solely for the purposes
of defining the relative rights of the holders of the Debentures, on the one
hand, and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this Indenture or in
the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal or
Redemption Price of and interest on the Debentures as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the holders of the Debentures and creditors
of the Company, as the case may be, other than the holders of Senior
Indebtedness of the Company, as the case may be, nor shall anything herein or
therein prevent the Trustee or the holder of any Debenture from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture,
subject to the rights, if any, under this Article XV of the holders of such
Senior Indebtedness in respect of cash, property or securities of the Company,
as the case may be, received upon the exercise of any such remedy.
15.5. Trustee to Effectuate Subordination
Each Debentureholder by such Debentureholder's acceptance thereof
authorizes and directs the Trustee on such Debentureholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XV and appoints the Trustee such Debentureholder's
attorney-in-fact for any and all such purposes.
15.6. Notice by the Company
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of moneys to or by the Trustee in respect of the Debentures pursuant
to the provisions of this Article XV. Notwithstanding the provisions of this
Article XV or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of moneys to or by the Trustee in respect of the
Debentures pursuant to the
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provisions of this Article XV, unless and until a Responsible Officer of the
Trustee assigned to its Principal Office shall have received written notice
thereof from the Company or a holder or holders of Senior Indebtedness or from
any trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 15.6 at least two Business Days prior to the date (i) upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal or Redemption Price of or interest on
any Debenture), or (ii) moneys and/or U.S. Government Obligations are deposited
in trust pursuant to Article XI, then anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and U.S. Government Obligations and to apply the same to the purposes for
which they were received, and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness of the
Company (or a trustee or representative on behalf of such holder), as the case
may be, to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XV, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Upon any payment or distribution of assets of the Company referred to in
this Article XV, the Trustee and the Debentureholders shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or to the
Debentureholders, for the purpose of ascertaining the persons
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entitled to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XV.
15.7. Rights of the Trustee; Holders of Senior Indebtedness
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XV in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article XV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Article VI of this Indenture, the Trustee shall not be liable to
any holder of Senior Indebtedness if it shall pay over or deliver to
Debentureholders, the Company or any other Person money or assets to which any
holder of Senior Indebtedness shall be entitled by virtue of this Article XV or
otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.6.
15.8. Subordination May Not Be Impaired
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Debentureholders, without
incurring responsibility to the Debentureholders and without impairing or
releasing the subordination provided in this Article XV or the obligations
hereunder of the holders of the Debentures to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or
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otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
16.1. Extension of Interest Payment Period
So 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
Debentures, to defer payments of interest by extending the interest payment
period of such Debentures for a period not exceeding 10 consecutive semi-annual
periods, including the first such semi-annual period during such extension
period (the "Extended Interest Payment Period"), during which Extended Interest
Payment Period no interest shall be due and payable; provided that no Extended
Interest Payment Period shall end on a date other than an Interest Payment Date
or extend beyond the Maturity Date. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to this Section 16.1, will bear interest
thereon at the annual rate of 7 5/8% plus the amount of any rate increase as
Liquidated Damages in conformity with the Registration Rights Agreement
compounded semi-annually for each semi-annual period of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Debentures, including any Additional Interest and Compounded Interest (together,
"Deferred Interest") that shall be payable to the holders of the Debentures in
whose names the Debentures are registered in the Debenture Register on the first
record date preceding the end of the Extended Interest Payment Period. Before
the termination of any Extended Interest Payment Period, the Company may further
defer payments of interest by further extending such period, provided that such
period, together with all such previous and further extensions within such
Extended Interest Payment Period, shall not exceed 10 consecutive semi-annual
periods, including the first such semi-annual period during such Extended
Interest Payment Period, or extend beyond the Maturity Date. Upon the
termination of any Extended Interest Payment Period and the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements.
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No interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
16.2. Notice of Extension
(a) If the Property Trustee is the only registered holder of the
Debentures at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Administrative Trustees, the
Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period five Business Days before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by MMI Trust are
payable, or (ii) the date MMI Trust is required to give notice of the record
date, or the date such Distributions are payable, to any national securities
exchange, to any automated quotation system or to holders of the Capital
Securities issued by MMI Trust, but in any event at least five Business Days
before such record date.
(b) If the Property Trustee is not the only holder of the Debentures at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the
date the Company is required to give notice of the record or payment date of
such interest payment to any national securities exchange or automated quotation
system.
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.2 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.1.
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The Chase Manhattan Bank, as Trustee, hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
MMI COMPANIES, INC.
/s/ Paul M. ORZECH
By_____________________________
Name: Paul M. Orzech
Title: Executive Vice President and
Chief Financial Officer
The Chase Manhattan Bank,
as Trustee
/s/ R. LORENZEN
By_____________________________
Name: Rich Lorenzen
Title: Senior Trust Officer
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
[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 A DEPOSITARY OR A NOMINEE OF A 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, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF THE NOMINEE OF THE
DEPOSITARY OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO THE NOMINEE OF THE DEPOSITARY
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED OWNER HEREOF,
THE NOMINEE OF THE DEPOSITARY, HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY "AFFILIATE" OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
A-1
<PAGE>
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY,
AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
No.___________ CUSIP No.____________
A-2
<PAGE>
MMI COMPANIES, INC.
7 5/8% SERIES A JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE DECEMBER 15, 2027
MMI Companies, Inc., 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 Chase Manhattan Bank, as Property
Trustee of MMI Capital Trust I, or registered assigns, the principal sum of
$128,866,000 on December 15, 2027 (the "Stated Maturity Date"), unless
previously redeemed, and to pay interest on the outstanding principal amount
hereof from December 23, 1997, 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 June 15 and December 15 of each year, commencing June 15, 1998 at the
rate of 7 5/8% per annum until the principal hereof shall have become due and
payable, and at the same rate per annum on any overdue principal or Redemption
Price 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 a full calendar
month, the number of days elapsed in such month. In the event that any date on
which the principal, Redemption Price of or interest on this Debenture is
payable is not a Business Day, then the 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) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, with the same force and effect as if made on such date.
Pursuant to the Registration Rights Agreement, in certain limited circumstances
the Company will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to this Debenture.
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 Debenture (or one or more Predecessor Debentures,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be the June 1 or
December 1 immediately 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
A-3
<PAGE>
paid to the Person in whose name this Debenture (or one or more Predecessor
Debentures) 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 Debentures 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 Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.
The principal or Redemption Price of and interest on this Debenture 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 Debenture 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 Debenture is the Property Trustee, the payment of the principal or
Redemption Price of and interest on this Debenture will be made at such place
and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her attorney-in-
fact for any and all such purposes. Each holder hereof, by his or her
acceptance hereof, hereby waives all 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 Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, or 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 Debenture 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.
A-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated:
MMI COMPANIES, INC.
By_________________________
Name:
Title:
By:_____________________________
Name:
Title:
A-5
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Series ___ Debentures referred to in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By: __________________________
A-6
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Debenture is one of the Debentures of the Company (herein sometimes
referred to as the "Debentures"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of December 23, 1997 (the
"Indenture"), duly executed and delivered between the Company and The Chase
Manhattan Bank, 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 Debentures.
Upon the occurrence and continuation of an Investment Company Event or a
Tax Event, the Company shall have the right at any time, within 90 days
following the occurrence of an Investment Company Event or a Tax Event to redeem
this Debenture in whole (but not in part) at the Special Event Redemption Price.
"Special Event Redemption Price" shall mean, with respect to any redemption of
the Debentures following an Investment Company Event or a Tax Event, an amount
in cash equal to the greater of (i) 100% of the principal amount to be redeemed
or (ii) the sum, as determined by a Quotation Agent, of the present values of
the remaining scheduled payments of principal and interest on the Debentures to
the Stated Maturity Date, discounted to the redemption 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, any accrued and unpaid interest
thereon, including Compounded Interest and Additional Interest, if any, to the
date of such redemption.
The Special Event Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption 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 Redemption Price by 10:00 a.m., New York City
time, on the date such Redemption Price is to be paid. Any redemption pursuant
to this paragraph will be made upon not less than 30 days nor more than 60 days
notice.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures 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 aggregate principal amount of
the Debentures 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
A-7
<PAGE>
holders of the Debentures, provided, however, that no such supplemental
indenture shall, without the consent of each holder of Debentures then
outstanding and affected thereby, (i) extend the Stated Maturity Date of any
Debentures, or reduce the principal amount thereof, or reduce any amount payable
on redemption 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 or Redemption Price of or interest on, the Debentures payable in any
coin or currency other than U.S. dollars, or impair or affect the right of any
holder of Debentures to institute suit for the payment thereof, or (ii) reduce
the aforesaid percentage of Debentures, 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 aggregate principal amount of
the Debentures at the time outstanding, on behalf of all of the holders of the
Debentures, 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 or Redemption
Price of or interest on any of the Debentures 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 Debentures then outstanding. Any such
consent or waiver by the holder of this Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Debenture and of any Debenture issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal or Redemption Price of and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
The Company shall have the right, at any time and from time to time during
the term of the Debentures so long as no Event of Default has occurred and then
is continuing, to defer payments of interest by extending the interest payment
period of such Debentures for a period not exceeding 10 consecutive semi-annual
periods, including the first such semi-annual period during such extension
period, and not extending beyond the Maturity Date of the Debentures (an
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified for the Debentures to the extent that payment of such
interest is enforceable under applicable law) to the holders of the Debentures.
Before the termination of any such Extended Interest Payment Period, the Company
may further defer payments of interest by further extending such Extended
Interest Payment
A-8
<PAGE>
Period, provided that such Extended Interest Payment Period, together with all
such previous and further extensions within such Extended Interest Payment
Period, shall not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extended Interest Payment Period and shall not
end on any date other than an Interest Payment Date, or extend beyond the
Maturity Date of the Debentures. Upon the termination of any such Extended
Interest Payment Period and the payment of all accrued and unpaid interest and
any additional amounts then due, the Company may commence a new Extended
Interest Payment Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) or (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Company that
rank pari passu with or junior in right of payment to the Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Company of any
securities or any Subsidiary of the Company (including any 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 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
shareholders' 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 required in order to avoid the issuance of fractional shares
of capital stock, following a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock; and (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) if at such time (i) an Event of Default shall have occurred and be
continuing, (ii) 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, (iii) the Company shall be in
default with respect to its payment obligations under the Capital Securities
Guarantee or (iv) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period, or any extension
thereof, pursuant to Section 16.1 of the Indenture and shall not have rescinded
such notice, and such exercise of its right to extend the interest payment
period, or any extension thereof, shall have commenced.
A-9
<PAGE>
The Debentures 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 Debenture is transferable
by the holder hereof on the Debenture Register of the Company, upon surrender of
this Debenture for registration of transfer at the office or agency of the
Company 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 Debenture
registrar duly executed by the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures 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 registration of 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 Debenture,
the Company, the Trustee, any authenticating agent, any paying agent, any
transfer agent and the registrar may deem and treat the holder hereof as the
absolute owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Debenture registrar) for the purpose of receiving payment of or on
account of the principal or Redemption Price hereof, and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal or Redemption
Price of or interest on this Debenture, 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 Debenture 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.
A-10
<PAGE>
EXHIBIT 4.2
NO SERIES B DEBENTURE MAY BE TRANSFERRED EXCEPT IN BLOCKS WITH A PRINCIPAL
AMOUNT OF $1,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
No. RA-2 CUSIP NO. 443087 AA5
<PAGE>
MMI COMPANIES, INC.
7 5/8% SERIES B JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE DECEMBER 15, 2027
MMI Companies, Inc., 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 Chase Manhattan Bank, as Property
Trustee of MMI Capital Trust I, or registered assigns, the principal sum of
$128,866,000 on December 15, 2027 (the "Stated Maturity Date") unless previously
redeemed, and to pay interest on the outstanding principal amount hereof from
December 23, 1997, 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 June 15 and December 15 of each year, commencing June 15, 1998 at the rate of
7 5/8% per annum until the principal hereof shall have become due and payable,
and at the same rate per annum on any overdue principal or Redemption Price 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 a full calendar month, the
number of days elapsed in such month. In the event that any date on which the
principal, Redemption Price of or interest on this Debenture is payable is not a
Business Day, then the 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) except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, 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 Debenture (or one or more Predecessor Debentures,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be the June 1 or
December 1 immediately 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 Debenture (or one or more Predecessor
Debentures) 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 Debentures 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 Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.
2
<PAGE>
The principal or Redemption Price of and interest on this Debenture 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 Debenture 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 Debenture is the Property Trustee, the payment of the principal or
Redemption Price of and interest on this Debenture will be made at such place
and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her attorney-in-
fact for any and all such purposes. Each holder hereof, by his or her
acceptance hereof, hereby waives all 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 Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, or 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 Debenture 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.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated: ___________________
MMI COMPANIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Series B Debentures referred to in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:___________________________________
5
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Debenture is one of the Debentures of the Company (herein sometimes
referred to as the "Debentures"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of December 23, 1997 (the
"Indenture"), duly executed and delivered between the Company and The Chase
Manhattan Bank, 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 Debentures.
Upon the occurrence and continuation of an Investment Company Event or a
Tax Event, the Company shall have the right at any time, within 90 days
following the occurrence of an Investment Company Event or a Tax Event to redeem
this Debenture in whole (but not in part) at the Special Event Redemption Price.
"Special Event Redemption Price" shall mean, with respect to any redemption of
the Debentures following an Investment Company Event or a Tax Event, an amount
in cash equal to the greater of (i) 100% of the principal amount to be redeemed
or (ii) the sum, as determined by a Quotation Agent, of the present values of
the remaining scheduled payments of principal and interest on the Debentures to
the Stated Maturity Date, discounted to the redemption 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, any accrued and unpaid interest
thereon including Compounded Interest and Additional Interest, if any, to the
date of such redemption.
The Special Event Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption 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 Redemption Price by 10:00 a.m., New York City
time, on the date such Redemption Price is to be paid. Any redemption pursuant
to this paragraph will be made upon not less than 30 days nor more than 60 days
notice.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures 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 aggregate principal amount of
the Debentures 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 Debentures, provided,
however, that no such supplemental indenture shall, without the consent of each
holder of Debentures then outstanding and affected thereby, (i) extend the
Stated Maturity Date of any Debentures, or reduce the principal amount thereof,
or reduce any amount payable on redemption thereof, or reduce the rate or extend
the time of payment of
<PAGE>
interest thereon (subject to Article XVI of the Indenture), or make the
principal or Redemption Price of or interest on, the Debentures payable in any
coin or currency other than U.S. dollars, or impair or affect the right of any
holder of Debentures to institute suit for the payment thereof, or (ii) reduce
the aforesaid percentage of Debentures, 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 aggregate principal amount of
the Debentures at the time outstanding, on behalf of all of the holders of the
Debentures, 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 or Redemption
Price of or interest on any of the Debentures 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 Debentures then outstanding. Any such
consent or waiver by the holder of this Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Debenture and of any Debenture issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal or Redemption Price of and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
The Company shall have the right, at any time and from time to time during
the term of the Debentures so long as no Event of Default has occurred and then
is continuing, to defer payments of interest by extending the interest payment
period of such Debentures for a period not exceeding 10 consecutive semi-annual
periods, including the first such semi-annual period during such extension
period, and not extending beyond the Maturity Date of the Debentures (an
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified for the Debentures to the extent that payment of such
interest is enforceable under applicable law) to the holders of the Debentures.
Before the termination of any such Extended Interest Payment Period, the Company
may further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
together with all such previous and further extensions within such Extended
Interest Payment Period, shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extended Interest Payment
Period and shall not end on any date other than an Interest Payment Date, or
extend beyond the Maturity Date of the Debentures. Upon the termination of any
such Extended Interest Payment Period and the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) or (ii) make
2
<PAGE>
any payment of principal, interest or premium, if any, on or repay or repurchase
or redeem any debt securities of the Company that rank pari passu with or junior
in right of payment to the Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of any securities or any Subsidiary of
the Company (including any 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 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 shareholders' 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 required
in order to avoid the issuance of fractional shares of capital stock, following
a reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock; and (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)
if at such time (i) an Event of Default shall have occurred and be continuing,
(ii) 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, (iii) the Company shall be in
default with respect to its payment obligations under the Capital Securities
Guarantee or (iv) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period, or any extension
thereof, pursuant to Section 16.1 of the Indenture and shall not have rescinded
such notice, and such exercise of its right to extend the interest payment
period, or any extension thereof, shall have commenced.
The Debentures are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiples 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 Debenture is transferable
by the holder hereof on the Debenture Register of the Company, upon surrender of
this Debenture for registration of transfer at the office or agency of the
Company 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 Debenture
registrar duly executed by the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures 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 registration of 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 Debenture,
the Company, the Trustee, any authenticating agent, any paying agent, any
transfer agent and the registrar may deem and treat the holder hereof as the
absolute owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Debenture registrar) for the purpose of receiving payment of or on
account of the principal or Redemption Pride hereof, and (subject to the
Indenture) interest due hereon, and for all other purposes, and neither the
Company nor the Trustee nor any
3
<PAGE>
authenticating agent nor any paying agent or any transfer agent nor any
registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal or Redemption
Price of or interest on this Debenture, 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 Debenture 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.
4
<PAGE>
Exhibit 4.3
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF BUSINESS
TRUST REGISTRATION OF "MMI CAPITAL TRUST I", FILED IN THIS OFFICE ON THE
FIFTEENTH DAY OF DECEMBER, A.D. 1997, AT 9 O'CLOCK A.M.
[SEAL SECRETARY OF STATE] /s/ Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8812306
DATE: 12-15-97
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/15/1997
971429603 - 2833467
CERTIFICATE OF TRUST
OF
MMI CAPITAL TRUST I
This Certificate of Trust of MMI Capital Trust I (the "Trust"), dated as of
December 15, 1997, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. (S)3801, et seq.).
1. Name. The name of the business trust formed hereby is MMI Capital
Trust I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first-above written.
WAYNE A. SINCLAIR, not in his CHASE MANHATTAN BANK
individual capacity, but solely as DELAWARE, not in its individual capacity,
trustee of the Trust but solely as trustee of the Trust
/s/ Wayne A. Sinclair By: /s/ John J. Cashin
- ---------------------------------- ------------------------------
Name: John J. Cashin
Title: Vice President
JOSEPH R. HERMAN, not in his SCOTT T. VEECH, not in his individual
individual capacity, but solely as capacity, but solely as trustee of the
trustee of the Trust Trust
/s/ Joseph Herman /s/ Scott T. Veech
- ---------------------------------- ----------------------------------
<PAGE>
EXHIBIT 4.4
---------------------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
MMI CAPITAL TRUST I
Dated as of December 23, 1997
---------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S><C> <C> <C>
ARTICLE I - INTERPRETATION AND DEFINITIONS................................. 1
1.1 Definitions....................................................... 1
ARTICLE II - TRUST INDENTURE ACT........................................... 9
2.1 Trust Indenture Act; Application.................................. 9
2.2 Lists of Holders of Securities.................................... 9
2.3 Reports by the Property Trustee................................... 10
2.4 Periodic Reports to Property Trustee.............................. 10
2.5 Evidence of Compliance with Conditions Precedent.................. 10
2.6 Events of Default; Waiver......................................... 10
2.7 Event of Default; Notice.......................................... 12
ARTICLE III - ORGANIZATION................................................. 13
3.1 Name.............................................................. 13
3.2 Office............................................................ 13
3.3 Purpose........................................................... 13
3.4 Authority......................................................... 13
3.5 Title to Property of the Trust.................................... 14
3.6 Powers and Duties of the Administrative Trustees.................. 14
3.7 Prohibition of Actions by the Trust and the Trustees.............. 17
3.8 Powers and Duties of the Property Trustee......................... 18
3.9 Certain Duties and Responsibilities of the Property Trustee....... 20
3.10 Certain Rights of Property Trustee................................ 22
3.11 Delaware Trustee.................................................. 24
3.12 Execution of Documents............................................ 24
3.13 Not Responsible for Recitals or Issuance of Securities............ 24
3.14 Duration of Trust................................................. 24
3.15 Mergers........................................................... 24
ARTICLE IV - SPONSOR....................................................... 26
4.1 Sponsor's Purchase of Common Securities........................... 26
4.2 Responsibilities of the Sponsor................................... 26
4.3 Right to Proceed.................................................. 27
ARTICLE V - TRUSTEES....................................................... 27
5.1 Number of Trustees: Appointment of Co-Trustee.................... 27
5.2 Delaware Trustee.................................................. 28
5.3 Property Trustee; Eligibility..................................... 28
5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally................................................. 29
5.5 Administrative Trustees........................................... 29
</TABLE>
i
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<TABLE>
<S><C> <C> <C>
<CAPTION>
5.6 Delaware Trustee.................................................. 30
5.7 Appointment, Removal and Resignation of Trustees.................. 30
5.8 Vacancies among Trustees.......................................... 31
5.9 Effect of Vacancies............................................... 32
5.10 Meetings.......................................................... 32
5.11 Delegation of Power............................................... 32
5.12 Merger, Conversion, Consolidation or Succession to Business....... 33
ARTICLE VI - DISTRIBUTIONS................................................. 33
6.1 Distributions..................................................... 33
ARTICLE VII - ISSUANCE OF SECURITIES....................................... 34
7.1 General Provisions Regarding Securities........................... 34
7.2 Execution and Authentication...................................... 34
7.3 Form and Dating................................................... 35
7.4 Registrar, Paying Agent and Exchange Agent........................ 37
7.5 Paying Agent to Hold Money in Trust............................... 37
7.6 Replacement Securities............................................ 38
7.7 Outstanding Capital Securities.................................... 38
7.8 Capital Securities in Treasury.................................... 38
7.9 Temporary Securities and Exchange of Global Capital Securities.... 39
7.10 Cancellation...................................................... 39
7.11 CUSIP Numbers..................................................... 40
ARTICLE VIII - TERMINATION OF TRUST........................................ 40
8.1 Termination of Trust.............................................. 40
ARTICLE IX - TRANSFER OF INTERESTS......................................... 41
9.1 Transfer of Securities............................................ 41
9.2 Transfer Procedures and Restrictions.............................. 42
9.3 Deemed Security Holders........................................... 49
9.4 Book Entry Interests.............................................. 49
9.5 Notices to Clearing Agency........................................ 50
9.6 Appointment of Successor Clearing Agency.......................... 50
ARTICLE X - LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR
OTHERS................................................................ 50
10.1 Liability......................................................... 50
10.2 Exculpation....................................................... 51
10.3 Fiduciary Duty.................................................... 51
10.4 Indemnification................................................... 52
10.5 Outside Businesses................................................ 55
ARTICLE XI - ACCOUNTING.................................................... 55
11.1 Fiscal Year....................................................... 55
</TABLE>
ii
<PAGE>
<TABLE>
<S><C> <C> <C>
11.2 Certain Accounting Matters......................................... 55
11.3 Banking............................................................ 56
11.4 Withholding........................................................ 56
ARTICLE XII - AMENDMENTS AND MEETINGS...................................... 57
12.1 Amendments......................................................... 57
12.2 Meetings of the Holders; Action by Written Consent................. 59
ARTICLE XIII - REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE.... 60
13.1 Representations and Warranties of Property Trustee................. 60
13.2 Representations and Warranties of Delaware Trustee................. 61
ARTICLE XIV - REGISTRATION RIGHTS.......................................... 61
14.1 Representation Rights Agreement; Liquidated Damages................ 61
ARTICLE XV - MISCELLANEOUS................................................. 62
15.1 Notices............................................................ 62
15.2 Governing Law...................................................... 63
15.3 Intention of the Parties........................................... 63
15.4 Headings........................................................... 63
15.5 Successors and Assigns............................................. 63
15.6 Partial Enforceability............................................. 63
15.7 Counterparts....................................................... 64
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MMI CAPITAL TRUST I
December 23, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of December 23, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established MMI Capital Trust I (the
"Trust"), a trust formed under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of December 15, 1997 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on December 15, 1997, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer (each as hereinafter defined);
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
1.1 Definitions
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
<PAGE>
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes
and Exhibits are to Articles and Sections of and Annexes and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Additional Interest" has the meaning set forth in the Indenture.
"Administrative Trustee" has the meaning set forth in Section 5.1.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is authorized
to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate
registered in the name of a Clearing Agency or its nominee, ownership and
transfers of which shall be maintained and made through book entries by a
Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a day on
which banking institutions in The City of New York, New York or The City of
Chicago, Illinois are authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. (S) 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital Securities
and the Series B Capital Securities.
2
<PAGE>
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange Commission as
from time to time constituted, or if any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as of
December 23, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee; (b) any
Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Company Order" means a written request or order signed in the name of the
Sponsor by the Chairman, the Chief Executive Officer, the President, the Chief
Financial Officer, a Vice President, the Treasurer or an Assistant Treasurer,
the Controller or an Assistant Controller, the Secretary or an Assistant
Secretary of the Sponsor, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Property Trustee at which
the corporate trust business of the Property Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Agreement is located at 450 West 33rd Street, 15th Floor, New York, New York
10001-2697.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
3
<PAGE>
"Debenture Issuer" means MMI Companies, Inc., a Delaware corporation, or
any successor entity resulting from any consolidation, amalgamation, merger or
other business combination, in its capacity as issuer of the Debentures under
the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, a New York banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the Series B
Debentures.
"Default" means an event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in Section
7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.1(b).
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance with
Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of Default
(as defined in the Indenture) that has occurred and is continuing in respect of
the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Capital Securities" has the meaning set forth in Section 7.3(a).
"Global Capital Security" has the meaning set forth in Section 7.3(a).
4
<PAGE>
"Holder" means a Person in whose name a Security is registered, such Person
being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of December 23, 1997, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"interest" has the meaning set forth in the Indenture.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Like Amount" has the meaning set forth in Annex I.
"Liquidated Damages Agreement" means the Liquidated Damages Agreement dated
as of December 23, 1997, by and among the Trust, the Debenture Issuer and the
Initial Purchasers named therein, as amended from time to time.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Maturity Date" has the meaning set forth in the Indenture.
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by any two of the following officers of such Person: the Chairman, the
Chief Executive Officer, the President, a Vice President, the Controller or an
Assistant Controller, the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary. Any Officers' Certificate
5
<PAGE>
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be an
employee of the Sponsor.
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"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.
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Purchase Agreement" means the Purchase Agreement for the initial offering
and sale of Capital Securities.
"QIBs" shall mean qualified institutional buyers as defined in Rule 144A.
"Quorum" means a majority of the Administrative Trustees or, if there are
only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of December 23, 1997, by and among the Trust, the Debenture Issuer and
the Initial Purchasers named therein, as amended from time to time.
6
<PAGE>
"Registration Statement" has the meaning set forth in the Registration
Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, with direct
responsibility for the administration of this Declaration and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Restricted Capital Security" means a Capital Security required by Section
9.2 to contain a Restricted Securities Legend.
"Restricted Definitive Capital Securities" has the meaning set forth in
Section 7.3(c).
"Restricted Global Capital Security" has the meaning set forth in Section
7.3(a).
"Restricted Securities Legend" has the meaning set forth in Section 7.3(c).
"Rule 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Security" or "Securities" or "Trust Securities" means the Common
Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section 7.1(a).
"Series B Capital Securities" has the meaning specified in Section 7.1(a).
"Series A Capital Securities Guarantee" means the guarantee agreement dated
as of December 23, 1997, by the Sponsor in respect of the Series A Capital
Securities.
7
<PAGE>
"Series B Capital Securities Guarantee" means the guarantee agreement to be
entered in connection with the Exchange Offer by the Sponsor in respect of the
Series B Capital Securities.
"Series A Debentures" means the Series A 7 5/8% Junior Subordinated
Deferrable Interest Debentures due December 15, 2027 of the Debenture Issuer
issued pursuant to the Indenture
"Series B Debentures" means the Series B 7 5/8% Junior Subordinated
Deferrable Interest Debentures due December 15, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Sponsor" means MMI Companies, Inc., a Delaware corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Securities" has the meaning set forth in Section 3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust Securities,
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
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"Unrestricted Global Capital Security" has the meaning set forth in Section
9.2(b).
ARTICLE II
TRUST INDENTURE ACT
2.1 Trust Indenture Act; Application
(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee for
the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
2.2 Lists of Holders of Securities
(a) Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and the
Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request therefor, a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
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2.3 Reports by the Property Trustee
Within 60 days after May 31 of each year, commencing May 31, 1997, the
Property 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 Property Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
2.4 Periodic Reports to Property Trustee
Each of the Sponsor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
are 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(a)(4) of the Trust Indenture Act, such compliance
certificate to be delivered annually on or before 120 days after the end of each
fiscal year of the Sponsor.
2.5 Evidence of Compliance with Conditions Precedent
Each of the Sponsor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) of
the Trust Indenture Act may be given in the form of an Officers' Certificate.
2.6 Events of Default; Waiver
(a) The Holders of a Majority in liquidation amount of Capital Securities
may, by vote, on behalf of the Holders of all of the Capital Securities, waive
any past Event of Default in respect of the Capital Securities and its
consequences, provided that. if the underlying Event of Default under the
Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, the Event of Default under the Declaration may
only be waived by the vote of the Holders of at least the proportion in
aggregate liquidation amount of the Capital Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby
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expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Upon such waiver, any such default shall cease to exist,
and any Event of Default with respect to the Capital Securities arising
therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or an Event of Default with respect to the Capital Securities or impair any
right consequent thereon. Any waiver by the Holders of the Capital Securities of
an Event of Default with respect to the Capital Securities shall also be deemed
to constitute a waiver by the Holders of the Common Securities of any such Event
of Default with respect to the Common Securities for all purposes of this
Declaration without any further act, vote, or consent of the Holders of the
Common Securities.
The Holders of a Majority in liquidation amount of the Capital Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee, including
the right to direct the Property Trustee to exercise the remedies available to
it as holder of the Debentures; provided, however, that (subject to the
provisions of Section 3.9) the Property Trustee shall have the right to decline
to follow any such direction if the Property Trustee shall determine that the
action so directed would be unjustly prejudicial to the Holders not taking part
in such direction or if the Property Trustee, being advised by counsel,
determines that the action or proceeding so directed may not lawfully be taken
or if the Property Trustee, in good faith, by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
and/or Responsible Officers, shall determine that the action or proceedings so
directed would involve the Property Trustee in personal liability.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable, except where the Holders of the
Common Securities are deemed to have waived such Event of Default under the
Declaration as provided below in this Section 2.6(b); or
(ii) requires the consent or vote of a Super Majority to be waived,
the Event of Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in aggregate liquidation amount of the Common
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding, except where the Holders of the
Common Securities are deemed to have waived such Event of Default under the
Declaration as provided below in this Section 2.6(b);
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences if all Events of Default with respect to the
Capital Securities have been cured, waived
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or otherwise eliminated, and until such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee will be deemed to be acting
solely on behalf of the Holders of the Capital Securities and only the Holders
of the Capital Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.6(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of the Capital Securities, constitutes
a waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.6(c) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
2.7 Event of Default; Notice
(a) The Property Trustee shall, within five Business Days after the
occurrence of an Event of Default actually known to a Responsible Officer of the
Property Trustee, transmit by mail, first class postage prepaid, to the Holders,
the Administrative Trustees and the Sponsor notice of all such Events of
Default, unless such Events of Default have been cured before the giving of such
notice.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property Trustee charged
with the administration of the Declaration shall have actual knowledge.
(c) The Sponsor and the Administrative Trustees shall file annually within
30 days of each December 31 with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
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3.1 Name
The Trust is named "MMI Capital Trust I" as such name may be modified from
time to time by the Administrative Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Administrative Trustees.
3.2 Office
The address of the principal office of the Trust is c/o MMI Companies,
Inc., 540 Lake Cook Road, Deerfield, Illinois 60015, Attention: Mr. Wayne
Sinclair, Administrative Trustee. On ten Business Days written notice to the
Holders of Securities, the Property Trustee and the Delaware Trustee, the
Administrative Trustees may designate another principal office.
3.3 Purpose
The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities, (b) use the proceeds from the sale of the Securities to acquire the
Debentures, and (c) except as otherwise limited herein, to engage in only those
other activities necessary, advisable or incidental thereto. The Trust shall
not borrow money, issue debt or reinvest proceeds derived from investments,
mortgage or pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
3.4 Authority
Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Administrative Trustees shall have exclusive
and complete authority to carry out the purposes of the Trust. An action taken
by the Administrative Trustees in accordance with their powers shall constitute
the act of and serve to bind the Trust and an action taken by the Property
Trustee on behalf of the Trust in accordance with its powers shall constitute
the act of and serve to bind the Trust. In dealing with the Trustees acting on
behalf of the Trust, no person shall be required to inquire into the authority
of the Trustees to bind the Trust. Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.
3.5 Title to Property of the Trust
Except as provided in Section 3.8 with respect to the Debentures and the
Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
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3.6 Powers and Duties of the Administrative Trustees
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this Declaration;
provided, however, that except, in the case of (i) and (ii) as contemplated in
Section 7.l(a), (i) the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, (ii) there shall be
no interests in the Trust other than the Securities, and (iii) the issuance of
Securities shall be limited to a simultaneous issuance of both Capital
Securities and Common Securities at any Closing Time;
(b) in connection with the issue and sale of the Capital Securities and the
consummation of the Exchange Offer, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the Sponsor, in
relation to the offering and sale of Series A Capital Securities to qualified
institutional buyers in reliance on Rule 144A under the Securities Act and to
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act), and to execute and file with the
Commission, at such time as determined by the Sponsor, any Registration
Statement, including any amendments thereto, as contemplated by the Registration
Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order to qualify or
register all or part of the Capital Securities in any State in which the Sponsor
has determined to qualify or register such Capital Securities for sale;
(iii) at the direction of the Sponsor, execute and file an
application, prepared by the Sponsor, to the New York Stock Exchange or any
other national stock exchange or the Nasdaq Stock Market's National Market for
listing or quotation of the Capital Securities;
(iv) to execute and deliver letters, documents, or instruments with
DTC and other Clearing Agencies relating to the Capital Securities;
(v) if required, execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Capital Securities under Section
12(b) of the Exchange Act; and request from the Commission an exemption from the
periodic reporting requirements of Sections 13 and 15(d) of the Exchange Act;
and
(vi) execute and enter into the Purchase Agreement and the
Registration Rights Agreement and the Liquidated Damages Agreement providing for
the sale of the Capital Securities, a subscription agreement providing for the
sale of the Common Securities, a
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subscription agreement providing for the purchase of the Debentures and any
other agreements and other instruments that may be required to be delivered by
the Trust in connection with the issuance and sale of Securities;
(c) to acquire the Series A Debentures with the proceeds of the sale of the
Series A Capital Securities and the Common Securities and to exchange the Series
A Debentures for a like principal amount of Series B Debentures, pursuant to the
Exchange Offer; provided, however, that the Administrative Trustees shall cause
legal title to the Debentures to be held of record in the name of the Property
Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written notice of
the occurrence of a Tax Event or an Investment Company Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of the
Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of
the purposes of the Trust;
(1) to act as, or appoint another Person to act as, Registrar and Exchange
Agent for the Securities or to appoint a Paying Agent for the Securities as
provided in Section 7.4 except for such time as such power to appoint a Paying
Agent is vested in the Property Trustee;
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(m) to give prompt written notice to the Property Trustee and to Holders of
any notice received from the Debenture Issuer of its election to defer payments
of interest on the Debentures by extending the interest payment period under the
Indenture;
(n) to execute all documents or instruments, perform all duties and powers,
and do all things for and on behalf of the Trust in all matters necessary or
incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrative Trustees determine in their discretion
to be necessary or desirable in carrying out the activities of the Trust as set
out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for United
States federal income tax purposes.
(q) to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an effective
registration statement in accordance with the provisions of the Registration
Rights Agreement.
(r) to take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Administrative Trustees, on behalf of the
Trust.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
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Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
3.7 Prohibition of Actions by the Trust and the Trustees
(a) The Trust shall not, and the Trustees (including the Property Trustee)
shall not cause the Trust to, engage in any activity other than as required or
authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant to the
terms of this Declaration and of the Securities (except for amounts received by
the Trust as Additional Interest relating to taxes, fees or other charges
imposed on the Trust after the occurrence of a Tax Event or an Investment
Company Event, which amounts shall be disbursed by the Trust in payment of such
taxes, fees or other charges);
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided and as further limited in this
Declaration or Annex I, (A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture Trustee, or
exercising any trust or power conferred upon the Debenture Trustee with respect
to the Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture or the Debentures where
such consent shall be required unless the Trust shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
to the effect that such modification will not cause more than an insubstantial
risk that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
3.8 Powers and Duties of the Property Trustee
(a) The legal title to the Debentures shall be owned by and held of record
in the name of the Property Trustee in trust for the benefit of the Holders.
The right, title and
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interest of the Property Trustee to the Debentures shall vest automatically in
each Person who may hereafter be appointed as Property Trustee in accordance
with Section 5.7. Such vesting and cessation of title shall be effective whether
or not conveyancing documents with regard to the Debentures have been executed
and delivered.
(b) The Property Trustee shall not transfer its right, title and interest
in the Debentures to the Administrative Trustees or to the Delaware Trustee (if
the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders and, upon the receipt
of payments of funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and make payments
from the Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the Capital Securities
by a "nationally recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Administrative
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the occurrence of
certain events.
(d) The Property Trustee shall take all actions and perform such duties as
may be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any Legal
Action which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act, and if the Property Trustee shall have failed to take such Legal Action,
the Holders of the Capital Securities may take such Legal Action, to the same
extent as if such Holders of Capital Securities held an aggregate principal
amount of Debentures equal to the aggregate liquidation amount of such Capital
Securities, without first proceeding against the Property Trustee or the Trust;
provided however, that if an Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay the
principal of or premium, if any, or interest on the Debentures on
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the date such principal, premium, if any, or interest is otherwise payable (or
in the case of redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding against the Debenture Issuer for
enforcement of payment to such Holder of the principal of (or premium, if any),
or interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such Holder (a "Direct Action")
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of Capital Securities to the extent
of any payment made by the Debenture Issuer to such Holder of Capital Securities
in such Direct Action. Except as provided in the preceding sentences, the
Holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders pursuant to the terms of the Securities;
or
(ii) a successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.7 (a "Successor Property
Trustee").
(g) The Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Debentures under the Indenture and,
if an Event of Default actually known to a Responsible Officer of the Property
Trustee occurs and is continuing, the Property Trustee shall, for the benefit of
Holders, enforce its rights as holder of the Debentures subject to the rights of
the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any actions set
forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the Property
Trustee may authorize one or more Persons to act as additional Paying Agents and
to pay Distributions, redemption payments or liquidation payments on behalf of
the Trust with respect to all securities and any such Paying Agent shall comply
with Section 317(b) of the Trust Indenture Act. Any such additional Paying
Agent may be removed by the Property Trustee at any time the Property Trustee
remains as Paying Agent and a successor Paying Agent or additional Paying Agents
may be (but are not required to be) appointed at any time by the Property
Trustee while the Property Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none of
the duties, liabilities, powers or the authority of the Administrative Trustees
set forth in Section 3.6.
(k) So long as the Property Trustee is the Holder of Debentures, the
Property Trustee shall, within five Business Days of receipt thereof, transmit
to the Holders of Securities any notices received by the Property Trustee from
the Debenture Trustee, including, without limitation, notice of redemption or
prepayment of the Debentures, of a Default or
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Event of Default under the Indenture, of commencement of an Extension Period, of
the setting of a special record date for payment of Defaulted Interest (as such
term is defined in the Indenture), of the solicitation of consent of the holders
of Debentures to a supplemental indenture, an amendment to the Indenture or to a
waiver of provisions of the Indenture.
The Property Trustee must exercise the powers set forth in this Section 3.8
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Property Trustee shall not take, nor shall the
Sponsor or any Administrative Trustee direct the Property Trustee to take, any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
3.9 Certain Duties and Responsibilities of the Property Trustee
(a) The Property Trustee, before the occurrence of any Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and in the Securities and no implied covenants shall be read into
this Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and in the
Securities and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or obligations shall
be read into this Declaration or the Securities against the Property Trustee;
and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Property Trustee and conforming to the
requirements of this Declaration; provided, however, that in the case of any
such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Property Trustee, the Property Trustee shall be
under a duty to examine the same to determine whether or not they conform to the
requirements of this Declaration;
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(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody, safe
keeping and physical preservation of the Debentures and the Property Trustee
Account shall be to deal with such property in a similar manner as the Property
Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or with
respect to the value, genuineness, existence or sufficiency of the Debentures or
the payment of any taxes or assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee Account maintained
by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee be
liable for any default or misconduct of the Administrative Trustees or the
Sponsor.
3.10 Certain Rights of Property Trustee
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument,
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opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Property Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the Sponsor
or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts of
its selection and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of expertise
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
such advice or opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property Trustee shall
have the right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall have provided to the Property
Trustee security and indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including reasonable attorneys' fees and expenses
and the expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Property Trustee provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
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(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its compliance with any
of the terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders which instructions may
only be given by the Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property Trustee under the terms
of the Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence, and
reasonably believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
3.11 Delaware Trustee
Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Trustees described in this Declaration (except as required under the Business
Trust Act). Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
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Section 3807 of the Business Trust Act. In the event the Delaware Trustee shall
at any time be required to take any action or perform any duty hereunder with
respect to the Trust, the Delaware Trustee shall be entitled to the benefits of
Section 3.9(b) and Section 3.10.
3.12 Execution of Documents
Except as otherwise required by the Business Trust Act or applicable law,
each Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; provided that, the registration statement
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by a majority of the Administrative Trustees.
3.13 Not Responsible for Recitals or Issuance of Securities
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
3.14 Duration of Trust
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence up to December 23, 2028.
3.15 Mergers
(a) The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c) of this Declaration or as described in Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent of the
Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, 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 (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
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(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor Securities") so
long as the Successor Securities rank the same as the Securities rank with
respect to Distributions and payments upon liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor Entity
that possesses the same powers and duties as the Property Trustee possesses as
the Holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the Capital Securities are then
listed or quoted;
(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 nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the Holders (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders' interests in
the new entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Sponsor has received an opinion of an
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 (including any Successor Securities) in any
material respect (other than with respect to any dilution of the Holders'
interest in the new entity); and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the Successor
Entity will be required to register as an Investment Company; and
(viii) the Sponsor 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 Capital Securities Guarantee and the Common Securities
Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
amalgamate, merge with
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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.
ARTICLE IV
SPONSOR
4.1 Sponsor's Purchase of Common Securities'
At the Closing Time, the Sponsor will purchase all of the Common Securities
then issued by the Trust, in an amount at least equal to 3% of the capital of
the Trust, at the same time as the Series A Capital Securities are issued and
sold.
4.2 Responsibilities of the Sponsor
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by the
Trust with the Commission any Registration Statement, including any amendments
thereto as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Capital Securities and to do any and all
such acts, other than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for filing
by the Trust an application to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing or quotation of the
Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration
statement on Form 8-A relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement and the Registration
Rights Agreement providing for the sale of the Capital Securities.
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4.3 Right to Proceed
The Sponsor acknowledges the rights of the Holders of Capital Securities,
in the event that a failure of the Trust to pay Distributions on the Capital
Securities is attributable to the failure of the Sponsor to pay interest or
principal on the Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
5.1 Number of Trustees: Appointment of Co-Trustee
The number of Trustees initially shall be five (5) and:
(a) at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities; provided, however, that, the number of Trustees shall in
no event be less than two (2); provided further that (1) one Trustee, in the
case of a natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its principal
place of business in the State of Delaware (the "Delaware Trustee"); (2) there
shall be at least one Trustee who is an employee or officer of, or is affiliated
with the Sponsor (an "Administrative Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to qualify as an
indenture under the Trust Indenture Act, and such Trustee may also serve as
Delaware Trustee if it meets the applicable requirements. Notwithstanding the
above, unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust's property
may at the time be located, the Holders of a Majority in liquidation amount of
the Common Securities acting as a class at a meeting of the Holders of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of the Trust's property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
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5.2 Delaware Trustee
If required by the Business Trust Act, the Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
5.3 Property Trustee; Eligibility
(a) There shall at all times be one Trustee (the "Property Trustee") which
shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Property Trustee shall cease to be eligible to so
act under Section 5.3(a), the Property Trustee shall immediately resign in the
manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Property
Trustee and the Holder of the Common Securities (as if it were the obligor
referred to in Section 310(b) of the Trust Indenture Act) shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
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(e) The initial Property Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Global Trust Services
5.4 Certain Qualifications of Administrative Trustees and Delaware Trustee
Generally
Each Administrative Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
5.5 Administrative Trustees
The initial Administrative Trustees shall be:
Wayne A. Sinclair
Joseph R. Herman
Scott T. Veech
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) Except as otherwise required by the Business Trust Act or applicable
law, any Administrative Trustee is authorized to execute on behalf of the Trust
any documents which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by a majority of the Administrative
Trustees; and
(c) An Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
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5.6 Delaware Trustee
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
5.7 Appointment, Removal and Resignation of Trustees
(a) Subject to Section 5.7(b) of this Declaration and to Section 6(b) of
Annex I hereto, Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be continuing
after the issuance of any Securities, by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee or
the Delaware Trustee, by vote of Holders of a Majority in liquidation amount of
the Capital Securities voting as a class at a meeting of Holders of the Capital
Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.7(a) until a Successor Property Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Administrative Trustees and
the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with this Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
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(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and the resigning Property
Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been appointed
and has accepted such appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
(d) The Sponsor shall use its best efforts to promptly appoint a Successor
Delaware Trustee or Successor Property Trustee, as the case may be, if the
Property Trustee or the Delaware Trustee delivers an instrument of resignation
in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 5.7
within 60 days after delivery of an instrument of resignation or removal, the
Property Trustee or Delaware Trustee resigning or being removed, as applicable,
may petition any court of competent jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and prescribe, appoint a
Successor Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the acts or
omissions to act of any Successor Property Trustee or successor Delaware
Trustee, as the case may be.
5.8 Vacancies among Trustees
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
5.9 Effect of Vacancies
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in
the number of Administrative Trustees shall occur, until such vacancy is filled
by the appointment of an Administrative Trustee in accordance with Section 5.7,
the Administrative Trustees in office, regardless of their number,
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shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this
Declaration.
5.10 Meetings
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice
of any telephonic meetings of the Administrative Trustees or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
5.11 Delegation of Power
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
5.12 Merger, Conversion, Consolidation or Succession to Business
Any corporation into which the Property Trustee or the Delaware Trustee or
any Administrative Trustee that is not a natural person, as the case may be, may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger,
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conversion or consolidation to which the Property Trustee, the Delaware Trustee
or the Administrative Trustee, as the case may be, shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Property Trustee or the Delaware Trustee, as the case may be, shall be
the successor of the Property Trustee or the Delaware Trustee, as the case may
be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
6.1 Distributions
Holders shall receive Distributions in accordance with the applicable terms
of the relevant Holder's Securities. If and to the extent that the Debenture
Issuer makes a payment of interest (including Compounded Interest (as defined in
the Indenture), premium, if any, and/or principal on the Debentures held by the
Property Trustee or Liquidated Damages (as defined in the Registration Rights
Agreement) or any other payments pursuant to the Registration Rights Agreement
with respect to the Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount (subject to adjustment as
provided in the following sentence) to Holders. All amounts received by the
Trust as Additional Interest paid on the Debentures as the result of a Tax Event
or an Investment Company Event and that relate to taxes, fees or other charges
payable by the Trust shall be set aside by the Trust and used to pay the tax or
taxes giving rise to the Tax Event or Investment Company Event. All other
amounts received by the Trust as Additional Interest shall be paid as
Distributions on the Securities.
ARTICLE VII
ISSUANCE OF SECURITIES
7.1 General Provisions Regarding Securities
(a) The Administrative Trustees shall on behalf of the Trust issue one
class of capital securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the "Series A
Capital Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Common Securities shall be
issued in a liquidation amount not less than 3% of the total capital of the
trust. The Administrative Trustees shall on behalf of the Trust issue one class
of capital securities representing undivided beneficial interests in the Trust
having such terms as set forth in
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Annex I (the "Series B Capital Securities") in exchange for Series A Capital
Securities accepted for exchange in the Exchange Offer, which Series B Capital
Securities shall not bear the legends required by Section 9.2(i) unless the
Holder of such Series A Capital Securities is either (A) a broker-dealer who
purchased such Series A Capital Securities directly from the Trust for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(B) a Person participating in the distribution of the Series B Capital
Securities, or (C) a Person who is an affiliate (as defined in Rule 144A) of the
Trust. The Trust shall issue no securities or other interests in the assets of
the Trust other than the Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and non-
assessable undivided beneficial interests in the assets of the Trust.
(d) Every Person, by virtue of having become a Holder or a Capital Security
Beneficial Owner in accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms of, and shall be bound
by, this Declaration.
7.2 Execution and Authentication
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such Administrative
Trustee before the Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the person who signed such
Securities had not ceased to be such Administrative Trustee; and any Securities
may be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Administrative Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for the
Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
(c) A Capital Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Property Trustee. The signature shall
be conclusive evidence that the Capital Security has been authenticated under
this Declaration.
(d) Upon a written order of the Trust signed by one Administrative Trustee,
the Property Trustee shall authenticate the Capital Securities for original
issue. The aggregate number of Capital Securities outstanding at any time shall
not exceed the number set forth in the Terms in Annex I hereto except as
provided in Section 7.6.
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(e) The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Sponsor or an Affiliate.
7.3 Form and Dating
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Capital Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Annex I and the forms of Securities
set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and
to the extent applicable, the Property Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs shall be
issued in the form of one or more permanent global Securities in definitive,
fully registered form without distribution coupons, with the global legend (a
"Global Capital Security") and, if sold in reliance on Rule 144A, as provided in
the Purchase Agreement, the Restricted Securities Legend set forth in Exhibit A-
1 hereto (a "Restricted Global Capital Security"), and shall be deposited on
behalf of the purchasers of the Capital Securities represented thereby with such
Clearing Agency or pursuant to such Clearing Agency's written instructions or
with the Property Trustee, at its New York office, as custodian for the Clearing
Agency, and registered in the name of the Clearing Agency or a nominee of the
Clearing Agency, duly executed by the Trust and authenticated by the Property
Trustee as hereinafter provided. The number of Capital Securities represented by
the Global Capital Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the Clearing Agency
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to the
Global Capital Security and such other Capital Securities in global form as may
be authorized by the Trust to be deposited with or on behalf of the Clearing
Agency.
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The Trust shall execute and the Property Trustee shall, in accordance with
this Section 7.3, authenticate and make available for delivery initially one or
more Global Capital Securities that (i) shall be registered in the name of Cede
& Co. or other nominee designated by such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to such Clearing
Agency's written instructions or held by the Property Trustee as custodian for
the Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants") shall
have no rights under this Declaration with respect to any Global Capital
Security held on their behalf by the Clearing Agency or by the Property Trustee
as the custodian of the Clearing Agency or under such Global Capital Security,
and the Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner of such
Global Capital Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in Section 7.9,
owners of beneficial interests in a Global Capital Security will not be entitled
to receive physical delivery of certificated Capital Securities ("Definitive
Capital Securities"). Purchasers of Securities who are "accredited investors"
(as defined in Rule 50l(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) will receive Capital Securities in the form of individual
certificates in definitive, fully registered form without distribution coupons
and with the Restricted Securities Legend set forth in Exhibit A-1 hereto
("Restricted Definitive Capital Securities"); provided, however, that upon
transfer of such Restricted Definitive Capital Securities to a QIB, such
Restricted Definitive Capital Securities will, unless the Global Capital
Security has previously been exchanged, be exchanged for an interest in a Global
Capital Security pursuant to the provisions of Section 9.2. Restricted
Definitive Capital Securities will bear the Restricted Securities Legend set
forth on Exhibit A-1 unless removed in accordance with this Section 7.3 or
Section 9.2.
(d) Authorized Denominations. The Series A Capital Securities are
issuable only in denominations of $100,000 and any integral multiple of $1,000
in excess thereof. The Series B Capital Securities shall be issuable only in
denominations of $1,000 and any integral multiple of $1,000 in excess thereof.
7.4 Registrar, Paying Agent and Exchange Agent
The Trust shall maintain in the Borough of Manhattan, The City of New York,
(i) an office or agency where Capital Securities may be presented for
registration of transfer ("Registrar"), (ii) an office or agency where Capital
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for exchange ("Exchange Agent"). The
Registrar shall keep a register of the Capital Securities and of their
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transfer. The Trust may appoint the Registrar, the Paying Agent and the Exchange
Agent and may appoint one or more co-registrars, one or more additional paying
agents and one or more additional exchange agents in such other locations as it
shall determine. The term "Registrar" includes any additional registrar, "Paying
Agent" includes any additional paying agent and the term "Exchange Agent"
includes any additional exchange agent. The Trust may change any Paying Agent,
Registrar, co-registrar or Exchange Agent without prior notice to any Holder.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees. The Trust shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Exchange Agent. The Trust shall act as Paying Agent, Registrar, co-registrar,
and Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent and Exchange Agent for the Capital Securities.
7.5 Paying Agent to Hold Money in Trust
The Trust shall require each Paying Agent other than the Property Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Property Trustee all money held by the Paying Agent for the
payment of liquidation amounts or Distributions on the Securities, and will
notify the Property Trustee if there are insufficient funds for such purpose.
While any such insufficiency continues, the Property Trustee may require a
Paying Agent to pay all money held by it to the Property Trustee. The Trust at
any time may require a Paying Agent to pay all money held by it to the Property
Trustee and to account for any money disbursed by it. Upon payment over to the
Property Trustee, the Paying Agent (if other than the Trust or an Affiliate of
the Trust) shall have no further liability for the money. If the Trust or the
Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent.
7.6 Replacement Securities
If a Holder claims that a Security owned by it has been lost, destroyed or
wrongfully taken or if such Security is mutilated and is surrendered to the
Trust or in the case of the Capital Securities to the Property Trustee, the
Trust shall issue and the Property Trustee shall authenticate a replacement
Security if the Property Trustee's and the Trust's requirements, as the case may
be, are met. An indemnity bond must be provided by the Holder which, in the
judgment of the Property Trustee, is sufficient to protect the Trustees, the
Sponsor, the Sponsor as Guarantor under the Series A or Series B Capital
Securities Guarantee or any authenticating agent from any loss which any of them
may suffer if a Security is replaced. The Trust may charge such Holder for its
expenses in replacing a Security.
Every replacement Security is an additional beneficial interest in the
Trust.
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7.7 Outstanding Capital Securities
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to Section
7.6 hereof, it ceases to be outstanding unless the Property Trustee receives
proof satisfactory to it that the replaced, paid or purchased Capital Security
is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms of
this Declaration, they cease to be outstanding and Distributions on them shall
cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
7.8 Capital Securities in Treasury
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Capital Securities owned by
the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall
be disregarded and deemed not to be outstanding, except that for the purposes of
determining whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which the Property
Trustee actually knows are so owned shall be so disregarded.
7.9 Temporary Securities and Exchange of Global Capital Securities
(a) Until Definitive Securities are ready for delivery, the Trust may
prepare and, in the case of the Capital Securities, the Property Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Trust
considers appropriate for temporary Securities. Without unreasonable delay, the
Trust shall prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate Definitive Securities in exchange for temporary
Securities.
(b) A Global Capital Security deposited with the Clearing Agency or with
the Property Trustee as custodian for the Clearing Agency pursuant to Section
7.3 shall be transferred to the beneficial owners thereof in the form of
certificated Capital Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Sponsor that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice, (ii) a Default or an Event of Default has occurred and is
continuing or (iii) the Trust at its sole discretion elects to cause the
issuance of certificated Capital Securities.
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(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of certificated Capital Securities pursuant to this
Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee,
to be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall authenticate and make available for delivery, upon
such transfer of each portion of such Global Capital Security, an equal
aggregate liquidation amount of Securities of authorized denominations in the
form of certificated Capital Securities. Any portion of a Global Capital
Security transferred pursuant to this Section shall be registered in such names
as the Clearing Agency shall direct. Any Capital Security in the form of
certificated Capital Securities delivered in exchange for an interest in the
Restricted Global Capital Security shall, except as otherwise provided by
Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth in Exhibit
A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a Global
Capital Security may grant proxies and otherwise authorize any Person, including
Participants and Persons that may hold interests through Participants, to take
any action which such Holder is entitled to take under this Declaration or the
Securities.
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
7.10 Cancellation
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of canceled Capital Securities in accordance with its normal procedures
unless the Trust otherwise directs. The Trust may not issue new Capital
Securities to replace Capital Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any holder has
exchanged.
7.11 CUSIP Numbers
The Trust in issuing the Capital Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
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ARTICLE VIII
TERMINATION OF TRUST
8.1 Termination of Trust
(a) The Trust shall automatically dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or liquidation
or its equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the Debentures
to the Holders, provided that, the Property Trustee has received written notice
from the Sponsor directing the Property Trustee to dissolve the Trust (which
direction is optional, and except as otherwise expressly provided below, within
the discretion of the Sponsor) and provided, further, that such direction and
such distribution are conditioned upon (i) the receipt by the Sponsor or the
Trust, as the case requires, of any required regulatory approval, (ii) the
Administrative Trustees' receipt of an opinion of counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
rulings of the Internal Revenue Service, 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 the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of the Trust
by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the Holders in accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at such time as no
Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 8.1(a), after completion of the winding up of the affairs of the
Trust, the Administrative Trustees shall file a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
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ARTICLE IX
TRANSFER OF INTERESTS
9.1 Transfer of Securities
(a) Securities may be transferred, in whole or in part, only in accordance
with the terms and conditions set forth in this Declaration and in the terms of
the Securities. Any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may be transferred, in
whole or in part, only in accordance with the terms and conditions set forth in
this Declaration. Any transfer or purported transfer of any security not made in
accordance with this Declaration shall be null and void.
(c) The Common Securities may not be transferred except to the Sponsor or
an Affiliate of the Sponsor except as otherwise permitted under this
Declaration.
(d) The Registrar shall provide for the registration of Capital Securities
and of the registration of transfer of Securities, which will be effected
without charge but only upon payment (with such indemnity as the Registrar may
require) in respect of any tax or other governmental charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any Capital
Securities, the Administrative Trustees shall cause one or more new Securities
to be issued in the name of the designated transferee or transferees. Every
Capital Security surrendered for registration of transfer shall be accompanied
by a written instrument of transfer in form satisfactory to the Administrative
Trustees and the Registrar duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Capital Security surrendered for registration
of transfer shall be canceled by the Property Trustee. A transferee of a Capital
Security shall be entitled to the rights and subject to the obligations of a
Holder hereunder upon the receipt by such transferee of a Capital Security. By
acceptance of a Security, each transferee shall be deemed to have agreed to be
bound by this Declaration.
9.2 Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section 9.2(b), if Capital
Securities are issued upon the registration of transfer, exchange or replacement
of Capital Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted Securities
Legend on Capital Securities, the Capital Securities so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust and the
Property Trustee such satisfactory evidence, which shall include an Opinion of
Counsel experienced in such matters, as may be reasonably required by the
Sponsor and the Property Trustee, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers
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thereof are made pursuant to an exception from the registration requirements of
the Securities Act or, with respect to Restricted Capital Securities, that such
Securities are not "restricted" within the meaning of Rule 144. Upon provision
of such satisfactory evidence, the Property Trustee, at the written direction
of the Trust, shall authenticate and deliver Capital Securities that do not bear
the legend.
(b) Transfers After Effectiveness of a Registration Statement. After the
effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply, and beneficial interests in such a Capital Security in
global form without legends will be available (i) to transferees of such Capital
Securities upon exchange of the transferring holder's Restricted Definitive
Capital Security, or (ii) upon directions to transfer a Holder's beneficial
interest in the Global Capital Security. No transfer or exchange of a Restricted
Definitive Series A Capital Security or of an interest in the Global Capital
Security shall be effective unless the transferor delivers to the Trust a
certificate in a form substantially similar to that attached hereto as the "Form
of Assignment" in Exhibit A-1. Except as otherwise provided in Section 9.2(m),
after the effectiveness of a Registration Statement, the Trust shall issue and
the Property Trustee, upon a written order of the Trust signed by one
Administrative Trustee, shall authenticate a Capital Security in global form
without the Restricted Securities Legend (the "Unrestricted Global Capital
Security") to deposit with the Clearing Agency to evidence transfers of
beneficial interests from the (i) Global Capital Security and (ii) Restricted
Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
Definitive Capital Securities are presented to the Registrar
(x) to register the transfer of such Definitive Capital Securities; or
(y) to exchange such Definitive Capital Securities for an equal number of
Definitive Capital Securities, the Registrar or co-registrar shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Definitive Capital
Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Trust and the Registrar or
co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being delivered
to the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
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(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1, and
(ii) if the Trust or Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in the Restricted
Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for a
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
may not be exchanged for a beneficial interest in a Global Capital Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Registrar of a Definitive Capital Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Registrar and
the Administrative Trustees, together with:
(i) if such Definitive Capital Security is a Restricted Capital
Security, certification (in a form substantially similar to that attached hereto
as the "Form of Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a Restricted
Capital Security, written instructions directing the Registrar to make, or to
direct the Clearing Agency to make, an adjustment on its books and records with
respect to the appropriate Global Capital Security to reflect an increase in the
number of the Capital Securities represented by such Global Capital Security,
then the Registrar shall cancel such Definitive Capital Security and cause, or
direct the Clearing Agency to cause, the aggregate number of Capital Securities
represented by the appropriate Global Capital Security to be increased
accordingly and to instruct its Participant or indirect participant to reflect
such beneficial interest so transferred on its records. If no Global Capital
Securities are then outstanding, the Trust shall issue and the Property Trustee
shall authenticate, upon written order of any Administrative Trustee, an
appropriate number of Global Capital Securities.
(e) Transfer and Exchange of Global Capital Securities. Subject to
Section 9.2(f), the transfer and exchange of Global Capital Securities or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Restricted Global Capital
Security for a Definitive Restricted Capital Security.
(i) Any Person having a beneficial interest in a Restricted Global
Capital Security may, upon transfer of such beneficial interest to a Person who
is an "accredited investor" (as defined in Rule 501(a)(1)(2)(3) or (7) under
Regulation D under the Securities Act), exchange such beneficial interest for a
Restricted Definitive Capital Security representing the same number of Capital
Securities. Upon receipt by the Registrar from the Clearing
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Agency or its nominee on behalf of any Person having a beneficial interest in a
Restricted Global Capital Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person designated by
the Clearing Agency as having such a beneficial interest in a Restricted Capital
Security and a certification from the transferor (in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1),
which may be submitted by facsimile, the Registrar will cause the aggregate
number of Capital Securities represented by Restricted Global Capital Securities
to be reduced on its books and records and, following such reduction, the Trust
will execute and the Property Trustee will authenticate and make available for
delivery to the transferee a Restricted Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Restricted Global Capital Security pursuant to this
Section 9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Participants or indirect participants or otherwise, shall instruct the Property
Trustee in writing. The Property Trustee shall deliver such Capital Securities
to the Persons in whose names such Capital Securities are so registered in
accordance with such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital Securities.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in subsection (h) of this Section 9.2), a Global Capital
Security may not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or another nominee of the Clearing Agency or by
the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at any time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Administrative Trustees, in their sole discretion, notify
the Property Trustee in writing that they elect to cause the issuance of
Definitive Capital Securities under this Declaration,
then the Administrative Trustees will execute, and the Property Trustee, upon
receipt of a written order of the Trust signed by one Administrative Trustee
requesting the authentication and delivery of Definitive Capital Securities to
the Persons designated by the Clearing Agency, will authenticate and make
available for delivery Definitive Capital Securities, representing in the
aggregate the number of Capital Securities represented by the Global Capital
Securities, in exchange for such Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii), each
Capital Security certificate evidencing the Restricted Capital Securities (and
all Capital Securities
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issued in exchange therefor or substitution thereof) prior to consummation of
the Exchange Offer shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF 1N THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE CORPORATION OR ANY
"AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 OF REGULATION D
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE CORPORATION PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT
THE TRANSFEROR DELIVER TO THE TRUST A LETTER FROM THE TRANSFEREE SUBSTANTIALLY
IN THE FORM OF ANNEX A TO THE OFFERING MEMORANDUM DATED DECEMBER 18, 1997. SUCH
HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
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CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global Capital
Security) pursuant to an effective registration statement under the Securities
Act or pursuant to Rule 144 under the Securities Act after such registration
statement ceases to be effective:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder thereof to
exchange such Restricted Capital Security for a Definitive Capital Security that
does not bear the Restricted Securities Legend and rescind any restriction on
the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Capital Security, the Registrar shall permit the Holder
of such Global Capital Security to exchange such Global Capital Security for
another Global Capital Security that does not bear the Restricted Securities
Legend.
(j) Cancellation or Adjustment of Global Capital Security. At such time
as all beneficial interests in a Global Capital Security have either been
exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be returned to the Property
Trustee for cancellation or retained and canceled by the Property Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Property Trustee (if it
is then the custodian for such Global Capital Security) with respect to such
Global Capital Security, by the Property Trustee or the Securities Custodian, to
reflect such reduction.
(k) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the Trust
shall execute and the Property Trustee shall authenticate Definitive Capital
Securities and Global Capital Securities at the Registrar's or co-Registrar's
request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust or the
Sponsor may require) in respect of any tax or other governmental charge that may
be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) Capital Securities during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Capital Securities for redemption and
ending at the close of business on the day of such mailing; or
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(b) any Capital Security so selected for redemption in whole or in part, except
the unredeemed portion of any Capital Security being redeemed in part.
(iv) Prior to the due presentation for registrations of transfer of
any Capital Security, the Trust, the Property Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name a
Capital Security is registered as the absolute owner of such Capital Security
for the purpose of receiving Distributions on such Capital Security and for all
other purposes whatsoever, and none of the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same security and
shall be entitled to the same benefits under this Declaration as the Capital
Securities surrendered upon such transfer or exchange.
(1) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or obligation
to any beneficial owner of a Global Capital Security, a Participant in the
Clearing Agency or other Person with respect to the accuracy of the records of
the Clearing Agency or its nominee or of any Participant thereof, with respect
to any ownership interest in the Capital Securities or with respect to the
delivery to any Participant, beneficial owner or other Person (other than the
Clearing Agency) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Capital Securities. All
notices and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made only to or
upon the order of the registered Holders (which shall be the Clearing Agency or
its nominee in the case of a Global Capital Security). The rights of beneficial
owners in any Global Capital Security shall be exercised only through the
Clearing Agency subject to the applicable rules and procedures of the Clearing
Agency. The Property Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Clearing Agency or any agent
thereof with respect to its Participants and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation or
duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Declaration or under applicable law with respect to
any transfer of any interest in any Capital Security (including any transfers
between or among Clearing Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
(m) Exchange of Series A Capital Securities for Series B Capital
Securities. The Series A Capital Securities may be exchanged for Series B
Securities pursuant to the terms of the Exchange Offer. The Property Trustee
shall make the exchange as follows:
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The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the
transactions contemplated by the Exchange Offer have been consummated; and
(B) the number of Series A Capital Securities properly
tendered in the Exchange Offer that are represented by a Global Capital Security
and the number of Series A Capital Securities properly tendered in the Exchange
Offer that are represented by Definitive Capital Securities, the name of each
Holder of such Definitive Capital Securities, the liquidation amount of Capital
Securities properly tendered in the Exchange Offer by each such Holder and the
name and address to which Definitive Capital Securities for Series B Capital
Securities shall be registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certificate, (ii)
an Opinion of Counsel (x) to the effect that the Series B Capital Securities
have been registered under Section 5 of the Securities Act and the Indenture has
been qualified under the Trust Indenture Act and (y) with respect to the matters
set forth in Section 3(p) of the Registration Rights Agreement and (iii) a
Company Order, shall authenticate (A) a Global Capital Security for Series B
Capital Securities in aggregate liquidation amount equal to the aggregate
liquidation amount of Series A Capital Securities represented by a Global
Capital Security indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Capital Securities representing Series B Capital
Securities registered in the names of, and in the liquidation amounts indicated
in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the outstanding
Series A Capital Securities shall have been properly tendered and not withdrawn,
the Property Trustee shall make an endorsement on the Global Capital Security
for Series A Capital Securities indicating the reduction in the number and
aggregate liquidation amount represented thereby as a result of the Exchange
Offer.
The Trust shall deliver such Definitive Capital Securities for Series B
Capital Securities to the Holders thereof as indicated in such Officers'
Certificate.
(n) Minimum Transfers. Series A Capital Securities may only be
transferred in minimum blocks of $100,000 aggregate liquidation amount until
such Series A Capital Securities have been exchanged for Series B Capital
Securities registered pursuant to an effective registration statement filed
under the Securities Act.
9.3 Deemed Security Holders
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to
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recognize any equitable or other claim to or interest in such Security on the
part of any Person, whether or not the Trust shall have actual or other notice
thereof.
9.4 Book Entry Interests
Global Capital Securities shall initially be registered on the books and
records of the Trust in the name of Cede & Co., the nominee of the Clearing
Agency, and no Capital Security Beneficial Owner will receive a Definitive
Capital Security certificate representing such Capital Security Beneficial
Owner's interests in such Global Capital Securities, except as provided in
Section 9.2 and Section 7.9. Unless and until definitive, fully registered
Capital Securities certificates have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 or Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing
Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Capital Securities and receiving approvals, votes or
consents hereunder) as the Holder of the Global Capital Securities and shall
have no obligation to the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this Section 9.4
shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants pursuant
to the agreements between such Capital Security Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants, unless and until
Definitive Capital Securities are issued pursuant to this Declaration, the
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and will receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make book
entry transfers among the Clearing Agency Participants; provided, that solely
for the purposes of determining whether the Holders of the requisite amount of
Capital Securities have voted on any matter provided for in this Declaration, so
long as Definitive Capital Securities have not been issued, the Trustees may
conclusively rely on, and shall be fully protected in relying on, any written
instrument (including a proxy) delivered to the Trustees by the Clearing Agency
setting forth the Capital Security Beneficial Owners' votes or assigning the
right to vote on any matter to any other Persons either in whole or in part.
9.5 Notices to Clearing Agency
Whenever a notice or other communication to the Capital Security Holders is
required under this Declaration, the Trustees shall give all such notices and
communications specified
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herein to be given to the Holders of Global Capital Securities to the Clearing
Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.
9.6 Appointment of Successor Clearing Agency
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Capital Securities, the Administrative Trustees
may, in their sole discretion, appoint a successor Clearing Agency with respect
to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
10.1 Liability
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the debts and
obligations of the Trust (other than with respect to the payment of principal,
interest and premium, if any, on the Securities) to the extent not satisfied out
of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
10.2 Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred
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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 Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
10.3 Fiduciary Duty
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Person and any Indemnified Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner that
is, or provides terms that are, fair and reasonable to the Trust or any Holder
of Securities, the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own
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interests, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or by
applicable law.
10.4 Indemnification
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees and expenses) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Administrative
Trustees
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by a majority vote of a quorum consisting of such Administrative Trustees who
were not parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a quorum of disinterested Administrative
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Administrative Trustees so directs, by independent legal
counsel in a written opinion or (iii) the Common Security Holder of the Trust,
that, based upon the facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Administrative Trustees,
independent legal counsel or Common Security Holder reasonably determine that
such person deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(v) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Capital
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section 10.4(a) is in
effect. Any repeal or modification of this Section 10.4(a) shall not affect any
rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(vii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any
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constituent of a constituent) absorbed in a consolidation or merger, so that any
person who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such constituent
entity as a director, trustee, officer, employee or agent of another entity,
shall stand in the same position under the provisions of this Section 10.4(a)
with respect to the resulting or surviving entity as he would have with respect
to such constituent entity if its separate existence had continued.
(viii) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or willful
misconduct 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 provisions of this
Section 10.4(b) shall survive the satisfaction and discharge of this Declaration
or the resignation or removal of the Property Trustee or the Delaware Trustee,
as the case may be.
10.5 Outside Businesses
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may, subject to Section 5.3(c), engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
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ARTICLE XI
ACCOUNTING
11.1 Fiscal Year
The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or
such other year as is required by the Code.
11.2 Certain Accounting Matters
(a) At all times during the existence of the Trust, the Administrative
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Administrative Trustees shall endeavor to
deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Administrative Trustees on behalf of the Trust with any state or local
taxing authority.
11.3 Banking
The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Administrative Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.
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11.4 Withholding
The Trust and the Administrative Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Administrative Trustees shall file required forms
with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect to
the Holder to applicable jurisdictions. To the extent that the Trust is
required to withhold and pay over any amounts to any authority with respect to
Distributions or allocations to any Holder, the amount withheld shall be deemed
to be a Distribution in the amount of the withholding to the Holder. In the
event of any claimed over withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
12.1 Amendments
(a) Except as otherwise provided in this Declaration or by any applicable
terms of the Securities, this Declaration may only be amended by a written
instrument approved and executed by the Administrative Trustees (or if there are
more than two Administrative Trustees a majority of the Administrative Trustees)
and
(i) if the amendment affects the rights, powers, duties, obligations
or immunities of the Property Trustee, also by the Property Trustee; and
(ii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Delaware Trustee, also by the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment shall be
void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
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(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee, the
Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities),
provided, however, that the Property Trustee shall not be required to sign any
such amendment, and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities.
(d) Section 9.1(c), this Section 12.1 and Annex I shall not be amended
without the consent of all of the Holders of the Securities.
(e) Article Four shall not be amended without the consent of the Holders of
a Majority in liquidation amount of the Common Securities.
(f) The rights of the holders of the Common Securities under Article Five
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities;
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
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(i) cure any ambiguity, correct or supplement any provision in this
Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or questions
arising under this Declaration which shall not be inconsistent with the other
provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of this Declaration
to such extent as shall be necessary to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust at all times
that any Securities are outstanding or to ensure that the Trust will not be
required to register as an Investment Company under the Investment Company Act;
provided, however, such action shall not adversely affect in any material
respect the interests of the Holders, and any amendments of this Declaration
shall become effective when notice thereof is given to the Holders.
12.2 Meetings of the Holders; Action by Written Consent
(a) Meetings of the Holders of any class of Securities may be called at any
time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notices in a writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders calling a meeting shall specify in writing
the Security Certificates held by the Holders exercising the right to call a
meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities,
the following provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least seven days and not more than
60 days before the date of such meeting. Whenever a vote, consent or approval
of the Holders is permitted or required under this Declaration or the rules of
any stock exchange on which the Capital Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of the
Holders. Any action that may be taken at a meeting of the Holders of Securities
may be taken without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the minimum
amount of Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders having a right to vote
thereon were present and voting. Prompt notice of the taking of action without
a meeting shall be given to the Holders entitled to vote who have not consented
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in writing. The Administrative Trustees may specify that any written ballot
submitted to a Security Holder for the purpose of taking any action without a
meeting shall be returned to the Trust within a reasonable time specified by the
Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which a Holder is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall
be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of Securities executing it. Except as other vise provided herein,
all matters relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative Trustees
may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any stock exchange
on which the Capital Securities are then listed or trading, otherwise provides,
the Administrative Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any Holders
of Securities, waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
13.1 Representations and Warranties of Property Trustee
The Trustee that acts as initial Property Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Property Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a state or federally chartered bank or banking
corporation with trust powers and authority to execute and deliver, and to carry
out and perform its obligations under the terms of this Declaration and is
qualified to serve as a trustee under the Trust Indenture Act;
(b) The execution, delivery and performance by the Property Trustee of the
Declaration has been duly authorized by all necessary corporate action on the
part of the
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Property Trustee. The Declaration has been duly executed and delivered by the
Property Trustee and constitutes a legal, valid and binding obligation of the
Property Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or
notice to, any State or federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration.
13.2 Representations and Warranties of Delaware Trustee
The Trustee that acts as initial Delaware Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee, if an entity, is duly organized, validly existing
and in good standing under the laws of the State of Delaware, with corporate
power and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration and is qualified to serve as a
trustee under the Trust Indenture Act;
(b) The execution, delivery and performance by the Delaware Trustee of this
Declaration has been duly authorized by all necessary corporate action on the
part of the Delaware Trustee. This Declaration has been duly executed and
delivered by the Delaware Trustee and constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its principal place
of business in the State of Delaware.
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ARTICLE XIV
REGISTRATION RIGHTS
14.1 Registration Rights Agreement; Liquidated Damages
The Holders of the Capital Securities, the Debentures and the Capital
Securities Guarantee are entitled to the benefits of the Registration Rights
Agreement and, in the case of the Initial Purchasers, the Liquidated Damages
Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 Notices
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders, the Property Trustee and the Delaware Trustee):
MMI Capital Trust I
c/o MMI Companies, Inc.
540 Lake Cook Road
Deerfield, IL 60015
Attention: Mr. Wayne Sinclair, Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders, the Administrative Trustees and the Property Trustee):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the Property Trustee's mailing
address set forth below (or such other address as the Property Trustee may give
notice of to the Holders):
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The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Global Trust Services
(d) if given to the Sponsor or the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below or such other address as the
Sponsor or Holder of the Common Securities, as the case may be, may give notice
to the Trust, the Property Trustee and the Delaware Trustee:
MMI Companies, Inc.
540 Lake Cook Road
Deerfield, IL 60015
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set forth on the books and
records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
15.2 Governing Law
This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
15.3 Intention of the Parties
It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
15.4 Headings
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and
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agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether so
expressed.
15.6 Partial Enforceability
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
15.7 Counterparts
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ WAYNE A. SINCLAIR
--------------------------------------------
Wayne A. Sinclair, As Administrative Trustee
--------------------------------------------
Joseph R. Herman, As Administrative Trustee
--------------------------------------------
Scott T. Veech, As Administrative Trustee
Chase Manhattan Bank Delaware
As Delaware Trustee
By:
----------------------------------------
Name:
Title:
The Chase Manhattan Bank
As Property Trustee
By:
----------------------------------------
Name:
Title:
MMI COMPANIES, INC.
As Sponsor and as Debenture Issuer
By: /s/ PAUL M. ORZECH
----------------------------------------
Name: Paul Orzech
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
--------------------------------------------
Wayne A. Sinclair, As Administrative Trustee
/s/ JOSEPH R. HERMAN
--------------------------------------------
Joseph R. Herman, As Administrative Trustee
/s/ SCOTT T. VEECH
--------------------------------------------
Scott T. Veech, As Administrative Trustee
Chase Manhattan Bank Delaware
As Delaware Trustee
By:
----------------------------------------
Name:
Title:
The Chase Manhattan Bank
As Property Trustee
By:
----------------------------------------
Name:
Title:
MMI COMPANIES, INC.
As Sponsor and as Debenture Issuer
By:
----------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
--------------------------------------------
Wayne A. Sinclair, As Administrative Trustee
--------------------------------------------
Joseph R. Herman, As Administrative Trustee
--------------------------------------------
Scott T. Veech, As Administrative Trustee
Chase Manhattan Bank Delaware
As Delaware Trustee
By: /s/ DENIS KELLY
----------------------------------------
Name: Denis Kelly
Title: Trust Officer
The Chase Manhattan Bank
As Property Trustee
By:
----------------------------------------
Name:
Title:
MMI COMPANIES, INC.
As Sponsor and as Debenture Issuer
By:
----------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
--------------------------------------------
Wayne A. Sinclair, As Administrative Trustee
--------------------------------------------
Joseph R. Herman, As Administrative Trustee
--------------------------------------------
Scott T. Veech, As Administrative Trustee
Chase Manhattan Bank Delaware
As Delaware Trustee
By:
----------------------------------------
Name:
Title:
The Chase Manhattan Bank
As Property Trustee
By: /s/ R. LORENZEN
----------------------------------------
Name: R. Lorenzen
Title: Senior Trust Officer
MMI COMPANIES, INC.
As Sponsor and as Debenture Issuer
By:
----------------------------------------
Name:
Title:
<PAGE>
Annex I
<PAGE>
ANNEX I
TERMS OF
7 5/8% SERIES A/SERIES B CAPITAL SECURITIES
7 5/8% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of December 23, 1997 (as amended from time to time, the "Declaration"),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Securities are set out below (each capitalized term used
but not defined herein has the meaning set forth in the Declaration or, if not
defined in such Declaration, as defined in the Offering Memorandum referred to
below in Section 2(c) of this Annex I):
1. Designation and Number
(a) Capital Securities. 125,000 Series A Capital Securities of the Trust
and 125,000 Series B Capital Securities of the Trust, each series with a maximum
aggregate liquidation amount with respect to the assets of the Trust of One
Hundred Twenty-five Million Dollars ($125,000,000), and each with a liquidation
amount with respect to the assets of the Trust of $1,000 per security, are
hereby designated for the purposes of identification only as "7 5/8% Series A
Capital Securities" and "7 5/8% Series B Capital Securities", respectively
(collectively, the "Capital Securities"). The certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange on which the Capital Securities are listed.
(b) Common Securities. 3,866 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Three
Million, Eight Hundred Sixty-six Thousand Dollars ($3,866,000) and a liquidation
amount with respect to the assets of the Trust of $1,000 per security, are
hereby designated for the purposes of identification only as "7 5/8% Common
Securities" (the "Common Securities"). The certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions
(a) Distributions payable on each Security will be fixed at a rate per
annum of 7 5/8% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period will bear additional distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Debentures. The term
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"Distributions," as used herein, includes distributions of any such Liquidated
Damages payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds on hand legally
available therefor.
(b) Distributions on the 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 December 23, 1997, and will be payable semi-
annually in arrears on June 15 and December 15 of each year, commencing on June
15, 1998 (each, a "Distribution Date"), except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and for any period less than a full calendar month on the
basis of the actual number of days elapsed in such month. As long as no Event
of Default has occurred and is continuing under the Indenture, the Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period at any time and from time to time on the
Debentures for a period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such period (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall end on a day
other than an Interest Payment Date for the Debentures or shall extend beyond
the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with additional Distributions thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semi-annually during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending 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, including the first semi-annual
period during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, subject to the foregoing limitations, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the fifteenth day of the
month immediately preceding the month in which the relevant Distribution Date
occurs, which Distribution Dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment in respect of the Capital Securities will
be made as described under the heading "Description of the Capital Securities --
Form, Denomination, Book-Entry Procedures and Transfer" in the Offering
Memorandum dated December 18, 1997, of the Debenture Issuer and the Trust
relating to the Securities and the Debentures. Payments in respect of Capital
Securities held in certificated form will be made by check mailed to the Holder
entitled thereto. The relevant record dates for the Common Securities shall be
the same as the record dates for the Capital Securities. Distributions payable
on any Securities that are not punctually paid on any Distribution Date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Holder on the relevant record date,
and such defaulted Distribution
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will instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined in
accordance with the Indenture. If any date on which Distributions are payable on
the Securities is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a Business Day
(except that if such next succeeding day which is a Business Day falls in a
subsequent calendar year, such payment shall be payable on the Business Day next
preceding such date) (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.
(d) In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution
If a dissolution occurs as described in Sections 8.1(a)(i), (ii), (iii),
(iv) and (vii) of the Declaration, the Trust shall be liquidated by the Trustees
as expeditiously as the 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 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 as specified in Section 8 of this Annex I.
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Debentures upon the liquidation of the Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Securities of the
Holder to whom such Debentures are distributed.
4. Redemption and Distribution
(a) Upon the repayment of the Debentures in whole, at maturity or upon
early redemption pursuant to an Investment Company Event or a Tax Event, as
described below, the proceeds from such repayment shall be simultaneously
applied by the Property Trustee (subject to the Property Trustee having received
notice no later than 45 days prior to such repayment) to redeem a Like Amount of
the Securities at a redemption price equal to (i) in the case of the repayment
of the Debentures at maturity, the Maturity Redemption Price (as defined below),
and (ii) in the case of the optional prepayment of the Debentures upon the
occurrence of a Tax
I-3
<PAGE>
Event, the Special Event Redemption Price (as defined below). The Maturity
Redemption Price and the Special Event Redemption Price are referred to
collectively as the "Redemption Price." Holders will be given not less than 30
nor more than 60 days notice of such redemption by mail at the address recorded
in the registry maintained by the Trust.
(b) The "Maturity Redemption Price", with respect to a redemption of
Securities, shall mean an amount equal to the principal of and accrued and
unpaid interest on the Debentures as of the maturity date thereof.
(c) If an Investment Company Event or a Tax Event shall occur and be
continuing, the Debenture Issuer may at its option prepay the Debentures in
whole (but not in part) within the 90 days of the occurrence of such Investment
Company Event or Tax Event (the "90 Day Period") at the Special Event Prepayment
Price (as defined in the Indenture), and, simultaneously with such prepayment,
cause a Like Amount of the Securities to be redeemed by the Trust at the Special
Event Redemption Price on a Pro Rata basis.
"Investment Company Event" means the receipt by the Company and the Trust
of an Opinion of 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 written change,
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" or a company "controlled" by an "investment company" that is required
to be registered under the Investment Company Act, which change becomes
effective on or after the date of the issuance of the Capital Securities.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of an
Opinion of Counsel (a "Tax Event Opinion") experienced in such matters to the
effect that, as a result of (a) 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 (b) any amendment to or change in an interpretation or application
of such laws or regulations by any legislative body, court, governmental agency
or regulatory agency, there is more than an insubstantial risk that (i) the
Trust would be subject to United States federal income tax with respect to
income received or accrued on the Debentures, (ii) interest payable by the
Debenture Issuer on the Debentures would not be deductible by the Debenture
Issuer for United States federal income tax purposes or (iii) the Trust will be
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Special Event Redemption Price" shall mean, with respect to a redemption
of Securities, a price equal to the greater of (i) 100% of the principal amount
of a Like Amount of Debentures to be prepaid or (ii) the sum, as determined by a
Quotation Agent (as defined in the Indenture), of the present values of the
remaining scheduled payments of principal and interest on the Debentures to the
maturity date thereof, discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
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<PAGE>
Adjusted Treasury Rate (as defined in the Indenture), plus, in each case,
accrued Distributions thereon, to the date of redemption.
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Capital Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all Securities
for all semi-annual Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions of Securities or
distributions of Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder to be redeemed or exchanged
not fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this
Section 4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid, to
Holders. Each Redemption/Distribution Notice shall be addressed to the Holders
of Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any other Holder.
(ii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then (A)
with respect. to Capital Securities issued in book-entry form, by 12:00 noon,
New York City time, on the redemption date, provided that the Debenture Issuer
has paid the Property Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures by 10:00 a.m., New York City
time, on the maturity date or the date of redemption, as the case requires, the
Property Trustee will deposit irrevocably with the Clearing Agency or its
nominee (or successor Clearing Agency or its nominee) funds sufficient to pay
the applicable Redemption Price with respect to such Capital Securities and will
give the Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the relevant Clearing Agency Participants, and (B) with
respect to Capital Securities issued in certificated form and
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<PAGE>
Common Securities, provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the redemption date.
If a Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, Distributions
will cease to accumulate on the Securities so called for redemption and all
rights of Holders so called for redemption will cease, except the right of the
Holders of such Securities to receive the Redemption Price, but without interest
on such Redemption Price, and such Securities shall cease to be outstanding.
(iii) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of Holders of
Securities on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Securities for redemption or (ii) any
Securities selected for redemption except the unredeemed portion of any Security
being redeemed. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (except that if such next
succeeding day which is a Business Day falls in a subsequent calendar year, such
payment shall be payable on the Business Day next preceding such date) (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 fixed for redemption. If payment
of the Redemption Price in respect of any Securities is improperly withheld or
refused and not paid either by the Property Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accumulate from the original redemption date to the
actual date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital Securities, the
Clearing Agency or its nominee (or any successor Clearing Agency or its nominee)
if the Global Certificates have been issued or, if Definitive Capital Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws), provided
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
I-6
<PAGE>
5. Voting Rights - Capital Securities
(a) Except as provided under Sections 5.7(a)(iii), 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
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 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 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 Debentures. In addition to obtaining the foregoing
approvals of such Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an opinion of counsel experienced
in such matters to the effect that the Trust will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
(c) If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of, or premium if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
(d) Any approval or direction of Holders of Capital Securities may be given
at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Property Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken,
I-7
<PAGE>
to be mailed to each Holder of record of Capital Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
(e) No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of 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 Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities
(a) Except as provided under Sections 5.7(a)(ii), 6(b), 6(c), and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred and be
continuing, any 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 Sponsor as the holder of the Common
Securities. No resignation or removal of a 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 Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
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 Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common
I-8
<PAGE>
Securities except by subsequent vote of such Holders. The Property Trustee shall
notify each Holder of Common Securities of any notice of default with respect to
the Debentures. In addition to obtaining the foregoing approvals of such Holders
of the Common Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an Opinion of Counsel experienced in such matters to the
effect that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
(d) If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with Direct Action, the rights of the Common Securities Holder
will be subordinated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Common
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.
(e) Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
(f) No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
(g) The provisions of Section 6(a) through 6(f) of this Annex I
notwithstanding, the Holders of Common Securities shall be deemed to have waived
an Event of Default under the Declaration in accordance with the provisions of
Section 2.6(a) and 2.6(b) of the Declaration.
7. Amendments to Declaration
In addition to the requirements set out in Section 12.1 of the Declaration,
the Declaration may be amended from time to time by the Sponsor, the Property
Trustee and the Administrative Trustees, without the consent of the Holders of
the Securities (i) to cure any ambiguity, correct or supplement any provisions
in the Declaration that may be inconsistent
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<PAGE>
with any other provisions, or to make any other provisions with respect to
matters or questions arising under the Declaration which shall not be
inconsistent with the other provisions of the Declaration, or (ii) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Securities are
outstanding or to ensure that the Trust will not be required to register as an
"Investment Company" under the Investment Company Act; provided, however, such
action shall not adversely affect in any material respect the interests of any
Holder of Securities, and any amendments of the Declaration shall become
effective when notice thereof is given to the Holders of the Securities. The
Declaration may be amended by the Trustees and the Sponsor with (i) the consent
of Holders representing a majority in liquidation amount of all outstanding
Securities, and (ii) receipt by the Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the 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
Declaration may not be amended to (i) change the amount or timing of any
Distribution on or redemption of 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) restrict the right of a Holder
of Trust Securities to institute suit for the enforcement of any such payment on
or after such date.
8. Pro Rata
A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder according to
the aggregate liquidation amount of the Securities held by the relevant Holder
in relation to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default under the Declaration has
occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Capital Securities pro rata
according to the aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Capital
Securities outstanding, and only after satisfaction of all amounts owed to the
Holders of the Capital Securities, to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
9. Ranking
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
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<PAGE>
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture
Each Holder of Capital Securities and Common Securities, by the acceptance
thereof, agrees to the provisions of the Capital Securities Guarantee and the
Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture and the Registration
Rights Agreement.
11. No Preemptive Rights
The Holders of the Securities shall have no preemptive rights to subscribe
for any additional securities.
12. Miscellaneous
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital Securities
Guarantee or the Common Securities Guarantee (as may be appropriate), the
Indenture (including any supplemental indenture) to a Holder without charge on
written request to the Sponsor at its principal place of business.
I-11
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL 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 CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 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 INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[IF THIS SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT: THE CAPITAL
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY,
A1-1
<PAGE>
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
THE COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 OF REGULATION D
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS CAPITAL
SECURITY MAY BE TRANSFERRED ONLY IN BLOCKS WITH A LIQUIDATION AMOUNT OF $100,000
AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
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Certificate Number Number of Capital Securities
[If Global, CUSIP No. 553086AA7]
[If Restricted Capital Security
CUSIP No. 553086AB5]
Certificate Evidencing Capital Securities
of
MMI Capital Trust I
_________% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security)
MMI Capital Trust I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that _______________
(the "Holder") is the registered owner of [$__________ in aggregate liquidation
amount of Capital Securities of the Trust] [the aggregate liquidation amount of
Capital Securities of the Trust specified in Schedule A hereto.] representing
undivided beneficial interests in the assets of the Trust designated the
_________% Series __ Capital Securities (liquidation amount $1,000 per 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 and in proper form
for transfer. The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of December 23, 1997, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Capital Securities as set forth in Annex I to
the Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Capital
Securities Guarantee to the extent provided therein and agrees to the provisions
regarding Holders of Capital Securities specified in the Registration Rights
Agreement.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
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<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day
of __________.
MMI CAPITAL TRUST I
By:
------------------------
Name:
---------------
Administrative Trustee
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<PAGE>
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
Dated: __________
The Chase Manhattan Bank,
As Property Trustee
By:
------------------------
Authorized Officer
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<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of _________% (the "Coupon Rate") of the liquidation amount of $1,000
per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions 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).
Pursuant to the Registration Rights Agreement, in certain limited circumstances
the Debenture Issuer will be required to pay Liquidated Damages (as defined in
the Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the 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 December __, 1997 and will be payable semi-
annually in arrears, on __________________ and __________________ of each year,
commencing on __________________, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that (i) no Extension Period may extend beyond the
Stated Maturity Date, (ii) any Extension Period will terminate as to all Junior
Subordinated Debentures upon an acceleration thereof (subject to reinstatement,
upon cure or waiver as provided in the Indenture), and (iii) any Extension
Period will terminate as to any Junior Subordinated Debenture to be redeemed
pursuant to the occurrence and continuation of an Investment Company Event or a
Tax Event. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, semiannual Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending 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, including the first semi-annual period during such Extension
Period, or extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
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<PAGE>
Subject to the prior obtaining of any regulatory approval then required and
to certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time dissolve the
Trust and, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, cause the Debentures to be distributed to the
Holders of the Securities in liquidation of the Trust or, simultaneous with any
redemption of the 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.
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<PAGE>
______________________
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)
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 that
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.
A1-8
<PAGE>
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without transfer; or
(2) [ ] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with Regulation S under
the Securities Act of 1933.
(4) [ ] transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of
Regulation D under the Securities Act of 1933 that is acquiring
the Capital Securities for its own account, or for the account of
such an institutional "accredited investor," for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in viol ation of the Securities
Act of 1933; or
(5) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if box (3),
(4) or (5) is checked, the Registrar may require, prior to registering any such
transfer of the Capital Securities such legal opinions, certifications and other
information as the Trust has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act; provided, further, that (i) if
box 2 is checked, the transferee must also certify that it is a qualified
institutional buyer as defined in Rule 144A or (ii) if box (4) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust
dated July 10, 1997; provided, further, that after the date that a Registration
Statement has become effective and so long as such Registration Statement
continues to be effective, the Registrar may only permit transfers for which box
(6) has been checked.
Signature
------------------------------------
Signature
A1-9
<PAGE>
SCHEDULE A(1)
The initial aggregate liquidation amount of Capital Securities evidenced by
the Certificate to which this Schedule is attached is $__________ (equivalent to
__________ Capital Securities). The notations on the following table evidence
decreases and increases in the number of Capital Securities evidenced by such
Certificate.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Liquidation Amount of
Decrease in Increase in Capital Securities
Liquidation Amount Liquidation Amount of Remaining After Such Notation by
of Capital Securities Capital Securities Decrease or Increase Registration
- ---------------------- --------------------- --------------------- ------------
</TABLE>
- -----------------------------
(1) Append to Global Securities only.
A1-10
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 OF REGULATION D UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A2-1
<PAGE>
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
MMI Capital Trust I
_________% Common Securities
(liquidation amount $1,000 per Common Security)
MMI Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that MMI Companies, Inc.
(the "Holder") is the registered owner of _________ common securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated the _________% Common Securities (liquidation amount $1,000 per
Common Security) (the "Common Securities"). Subject to the terms of the
Declaration (as defined below), the Common Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of December 23, 1997, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Common Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Common
Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day
of __________________, 1997.
MMI CAPITAL TRUST I
By:
---------------------------------
Name: Joseph R. Herman
Administrative Trustee
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per
annum of _________% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions 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). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will accrue from
the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from December 23, 1997 and will be payable semi-
annually in arrears, on __________________ and __________________ of each year,
commencing on __________________, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with interest thereon (to the extent permitted by
applicable law) at the Coupon Rate compounded semi-annually during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
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, including the first semi-annual
period during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to the Sponsor obtaining any regulatory prior approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause the Debentures to be distributed
to the holders to the Securities in liquidation of the Trust or, simultaneous
with any
A2-3
<PAGE>
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the Declaration.
A2-4
<PAGE>
--------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________ agent to transfer this
Common 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 Common Security
Certificate)
Signature Guarantee/2/:
- ----------------
/2/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.
A2-5
<PAGE>
[Include the following if the Common Security bears a Restricted Common
Securities Legend]
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without transfer; or
(2) [ ] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with Regulation S under
the Securities Act of 1933.
(4) [ ] to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D
under the Securities Act that is acquiring the Preferred Security
for its own account, or for the account of such an institutional
"accredited investor," for investment purposes and not with a
view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act; or
(5) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Common Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Preferred Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption provided by Rule 144 under such Act; provided,
further. that (i) if box 2 is checked, the transferee must also certify that it
is a qualified institutional buyer as defined in Rule 144A or (ii) if box 4 is
checked, the transferee must also provide a Transferee Representation Letter in
the form attached to the Offering Memorandum of the Trust, dated
________________, 1997, after the date that a Registration Statement has become
effective and so long as such Registration Statement continues to be effective,
the Exchange Agent may only permit transfers for which box (6) has been checked.
_______________________________
Signature
A2-6
<PAGE>
EXHIBIT 4.5
THIS CAPITAL SECURITY IS A GLOBAL 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 "DTC") 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 CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 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 INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CAPITAL SECURITY MAY BE TRANSFERRED ONLY IN BLOCKS WITH A LIQUIDATION
AMOUNT OF $1,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
B1-1
<PAGE>
Certificate Number B1 Number of Capital Securities
125,000
CUSIP No. 553086AC3
Certificate Evidencing Capital Securities
of
MMI Capital Trust I
7 5/8% Series B Capital Securities
(liquidation amount $1,000 per Capital Security)
MMI Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of $125,000,000 in aggregate liquidation
amount of Capital Securities of the Trust, representing undivided beneficial
interests in the assets of the Trust, designated the 7 5/8% Series B Capital
Securities (liquidation amount $1,000 per 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 and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of December 23, 1997, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the Capital
Securities as set forth in Annex I to the Declaration. Capitalized terms used
but not defined herein shall have the meaning given them in the Declaration. The
Sponsor will provide a copy of the Declaration, the Capital Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Trust
at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Capital
Securities Guarantee to the extent provided therein and agrees to the provisions
regarding Holders of Capital Securities specified in the Registration Rights
Agreement.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Capital Securities as
evidence of indirect beneficial ownership in the Debentures.
B1-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate as of this
____ day of January, 1998.
MMI CAPITAL TRUST I
By:
--------------------------------
Name: Joseph R. Herman
Administrative Trustee
B1-3
<PAGE>
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series B Capital Securities referred to in the within-
mentioned Declaration.
Dated:
------------------
The Chase Manhattan Bank,
As Property Trustee
By:
-----------------------------
Senior Trust Officer
B1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 7 5/8% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions 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 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 the date of original issuance and will
be payable semi-annually in arrears, on June 15 and December 15 of each year,
commencing on June 15, 1998, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year consisting of twelve 30-day
months and, for any period less than a full calendar month, the number of days
elapsed in such month. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
at any time and from time to time on the Debentures for a period not exceeding
10 consecutive calendar semi-annual periods, including the first such semi-
annual period during such extension period (each an "Extension Period"),
provided that (i) no Extension Period may extend beyond the Stated Maturity
Date, (ii) any Extension Period will terminate as to all Junior Subordinated
Debentures upon an acceleration thereof (subject to reinstatement, upon cure or
waiver as provided in the Indenture), and (iii) any Extension Period will
terminate as to any Junior Subordinated Debenture to be redeemed pursuant to the
occurrence and continuation of an Investment Company Event or a Tax Event. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, semi-annual Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending 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,
including the first semi-annual period during such Extension Period, or extend
beyond the Stated Maturity Date. Payments of accumulated Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date after the end of the Extension Period. Upon the termination
of any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
B1-5
<PAGE>
Subject to the prior obtaining of any regulatory approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause the Debentures to be distributed
to the Holders of the Capital Securities in liquidation of the Trust or,
simultaneous with any redemption of the Debentures, cause a Like Amount of the
Capital Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the Declaration.
B1-6
<PAGE>
______________________
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)
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 that
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.
B1-7
<PAGE>
SCHEDULE A/1/
The initial aggregate liquidation amount of Capital Securities evidenced by
the Certificate to which this Schedule is attached is $125,000,000 (equivalent
to 125,000 Capital Securities). The notations on the following table evidence
decreases and increases in the number of Capital Securities evidenced by such
Certificate.
<TABLE>
<CAPTION>
Liquidation Amount of
Decrease in Increase in Capital Securities
Liquidation Amount Liquidation Amount of Remaining After Such Notation by
of Capital Securities Capital Securities Decrease or Increase Registration
- --------------------- --------------------- --------------------- ------------
<S> <C> <C> <C>
</TABLE>
- ------------
/1/ Append to Global Securities only.
B1-8
<PAGE>
EXHIBIT 4.6
================================================================================
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
MMI COMPANIES, INC.
Dated as of _______________, 1998
================================================================================
<PAGE>
CONTENTS
ARTICLE I - DEFINITIONS AND INTERPRETATION.................................. 2
1.1 Definitions and Interpretation.................................... 2
ARTICLE II - TRUST INDENTURE ACT............................................ 5
2.1 Trust Indenture Act; Application.................................. 5
2.2 Lists of Holders of Securities.................................... 5
2.3 Reports by the Capital Securities Guarantee Trustee............... 6
2.4 Periodic Reports to Capital Securities Guarantee Trustee.......... 6
2.5 Evidence of Compliance with Conditions Precedent.................. 6
2.6 Events of Default; Waiver......................................... 6
2.7 Event of Default; Notice.......................................... 7
2.8 Conflicting Interests............................................. 7
ARTICLE III - POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES
GUARANTEE TRUSTEE...................................................... 7
3.1 Powers and Duties of the Capital Securities Guarantee Trustee..... 7
3.2 Certain Rights of Capital Securities Guarantee Trustee............ 9
3.3 Not Responsible for Recitals or Issuance of Series B Capital
Securities Guarantee.............................................. 11
ARTICLE IV - CAPITAL SECURITIES GUARANTEE TRUSTEE........................... 11
4.1 Capital Securities Guarantee Trustee; Eligibility................. 11
4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee................................................. 12
ARTICLE V - GUARANTEE....................................................... 13
5.l Guarantee......................................................... 13
5.2 Waiver of Notice and Demand....................................... 13
5.3 Obligations Not Affected.......................................... 13
5.4 Rights of Holders................................................. 14
5.5 Guarantee of Payment.............................................. 15
5.6 Subrogation....................................................... 15
5.7 Independent Obligations........................................... 15
ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION...................... 15
6.1 Limitation of Transactions........................................ 15
i
<PAGE>
6.2 Ranking........................................................... 16
ARTICLE VII - TERMINATION................................................... 16
7. l Termination....................................................... 16
ARTICLE VIII - COMPENSATION AND EXPENSES OF CAPITAL SECURITIES
GUARANTEE TRUSTEE...................................................... 17
ARTICLE IX - INDEMNIFICATION................................................ 17
9.l Exculpation....................................................... 17
9.2 Indemnification................................................... 18
ARTICLE X- MISCELLANEOUS.................................................... 18
10.1 Successors and Assigns............................................ 18
10.2 Amendments........................................................ 18
10.3 Notices........................................................... 19
10.4 Benefit........................................................... 20
10.5 Governing Law..................................................... 20
ii
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT (this "Series B
Capital Securities Guarantee"), dated as of ____________, 1998, is executed and
delivered by MMI Companies, Inc., a Delaware corporation (the "Guarantor"), and
The Chase Manhattan Bank, 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 Series A Capital Securities (as defined
herein) of MMI Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of December 23, 1997, among the trustees of the Issuer,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer issued on December
23, 1997 125,000 capital securities, having an aggregate liquidation amount of
$125,000,000, such capital securities being designated the 7 5/8% Series A
Capital Securities (collectively the "Series A Capital Securities"), executed
and delivered a guarantee agreement dated as of December 23, 1997 (the "Series B
Capital Securities Guarantee") and, in connection with an Exchange Offer (as
defined in the Declaration) is issuing on the date hereof the Series B Capital
Securities Guarantee (as defined in the Declaration) for the benefit of holders
of the Series B Capital Securities (as defined in the Declaration).
WHEREAS, as incentive for the holders of the Series A Capital Securities to
exchange such securities for the Series B Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Series B Capital Securities Guarantee, to pay to the Holders (as defined
below) the Guarantee Payments (as defined below). The Guarantor agrees to make
certain other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor has executed and delivered a guarantee agreement
(the "Common Securities Guarantee"), with substantially identical terms to this
Series B 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 subordinated, to the extent and in the manner set forth
in the Common Securities Guarantee, to the rights of holders of Series A Capital
Securities and the Series B Capital Securities to receive Guarantee Payments
under the Series A Capital Securities Guarantee and this Series B Capital
Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the exchange by each Holder of Series A
Capital Securities for Series B Capital Securities, which exchange the Guarantor
hereby acknowledges shall benefit the Guarantor, the Guarantor executes and
delivers this Series B Capital Securities Guarantee for the benefit of the
Holders.
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ARTICLE I - DEFINITIONS AND INTERPRETATION
1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Series B 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
Series B Capital Securities Guarantee have the same meaning when used in this
Series B Capital Securities Guarantee unless otherwise defined in this Series B
Capital Securities Guarantee;
(c) a term defined anywhere in this Series B Capital Securities Guarantee
has the same meaning throughout;
(d) all references to "the Series B Capital Securities Guarantee" or "this
Series B Capital Securities Guarantee" are to this Series B Capital Securities
Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Series B Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Series B Capital
Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Series B Capital Securities Guarantee, unless otherwise defined in
this Series B Capital Securities Guarantee or unless the context otherwise
requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act of 1933, as amended, or any successor rule thereunder.
"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.
"Capital Securities Guarantee Trustee" means The Chase Manhattan Bank, 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 Series B Capital Securities Guarantee 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.
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"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 450 West 33rd Street, 15th Floor, New York, New York 10001-2697.
"Covered Person" means any Holder or beneficial owner of Series B Capital
Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the 7 5/8% Series B Junior Subordinated Deferrable Interest
Debentures due December 15, 2027 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 payment
or other obligations under this Series B Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Series B 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 Series B
Capital Securities to the extent the Issuer has funds on hand legally available
therefor at such time, (ii) the applicable 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 Series B Capital Securities called for redemption
by the Issuer, and (iii) upon a voluntary or involuntary termination and
liquidation of the Issuer (other than in connection with the distribution of
Debentures to the Holders in exchange for Series B 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 Series B 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 has occurred and is continuing, no Guarantee Payments under the
Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they are
entitled under this Series B Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Series B Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Series B Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Person known to the Capital Securities
Guarantee Trustee to be an 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.
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"Indenture" means the Indenture dated as of December 23, 1997, among the
Guarantor (the "Debenture Issuer") and The Chase Manhattan Bank, as trustee (the
"Debenture Trustee"), pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in Section 5.1
of the Indenture.
"Majority in liquidation amount of the Series B Capital Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) 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 Series B Capital Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by any two of the following officers of such Person: the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, a Vice President, the
Chief Financial Officer, the Controller or an Assistant Controller, the
Secretary or an Assistant Secretary, the Treasurer or an Assistant Treasurer.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Series B Capital Securities Guarantee (other
than pursuant to Section 314(d)(4) of the Trust Indenture Act) 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 statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(c) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as "Other
Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by the
Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor with
respect to capital securities (if any) similar to the Series B Capital
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust,
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unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of December 23, 1997, by and among the Guarantor, the Issuer and the
Initial Purchasers named therein as such agreement may be amended, modified or
supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Securities Guarantee Trustee with direct responsibility for the administration
of this Series B Capital Guarantee and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Senior Indebtedness" means Senior Indebtedness as defined in the
Indenture.
"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.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Securities" means the Common Securities and the Series A Capital
Securities and Series B Capital Securities, collectively.
ARTICLE II - TRUST INDENTURE ACT
2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Series B Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Series B 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.
2.2 Lists 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 addresses of the
Holders ("List of Holders") as of a date, (i) within 14 days after each record
date for payment of Distributions, and (ii) at any other time within 30 days of
receipt by the 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;
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provided, that the Guarantor shall not be obligated to provide such List of
Holders at any time 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.
2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after May 31 of each year, commencing May 31, 1998, the
Capital Securities Guarantee Trustee shall provide to the Holders such reports
as are required by Section 313(a) 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 other
requirements of Section 313(d) of the Trust Indenture Act.
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 of the Trust
Indenture Act (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(a)(4) of the Trust Indenture Act provided that such compliance
certificate shall be delivered on or before 120 days after the end of each
fiscal year of the Guarantor. 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).
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 Series B 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.
2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series B Capital
Securities may, by vote, on behalf of all the Holders, 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 Series B
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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.
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
actually known to a Responsible Officer of the Capital Securities Guarantee
Trustee, mail by first class postage prepaid, to all Holders, notices of all
such defaults, 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
Series A 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 from the Guarantor or a Holder, 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.
2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this Series
B Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III - POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B 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 Series B Capital
Securities Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(b) below or to a Successor Capital Securities Guarantee
Trustee on 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
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
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(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 Series B 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 Series B Capital Securities Guarantee, and no implied covenants
shall be read into this Series B 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 above) 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 Series B 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.
(d) No provision of this Series B 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 Series B
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 Series B Capital Securities Guarantee, and no
implied covenants or obligations shall be read into this Series B 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 Series B
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 Series A 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;
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(iii) the Capital Securities Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in liquidation amount
of the Series B 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 Series B Capital Securities Guarantee;
and
(iv) no provision of this Series B 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 Series B Capital Securities Guarantee or indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
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 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
Series B Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Series B 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 on its part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The 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 the Capital Securities
Guarantee Trustee 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
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right at any time to seek instructions concerning the administration of this
Series B 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 Series B
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 Series B Capital Securities Guarantee.
(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, 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 to so
act or as to its compliance with any of the terms and provisions of this Series
B 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 Series B 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 Series B 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.
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(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, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Series B Capital
Securities Guarantee.
(b) No provision of this Series B Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act 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.
3.3 Not Responsible for Recitals or Issuance of Series B Capital Securities
Guarantee
The recitals contained in this Series B 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 Series B Capital Securities Guarantee.
ARTICLE IV - CAPITAL SECURITIES GUARANTEE TRUSTEE
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 $50,000,000, and subject to supervision
or examination by Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Securities Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Capital Securities Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
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(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, subject to the penultimate paragraph thereof.
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 Securities 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 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.
(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 Series B 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.
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ARTICLE V - GUARANTEE
5.l 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 other than the defense of
payment. 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.
5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series B 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 Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under
this Series B 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:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series B Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Series B Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series B 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);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization,
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arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series B Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) 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 with respect to the
Guarantee Payments shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Series B
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 Series A Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee; provided, however,
that, subject to the duties and responsibilities of the Trustee pursuant to the
Indenture, the Capital Securities Guarantee Trustee shall have the right to
decline to follow any such direction if the Capital Securities Guarantee Trustee
shall determine that the action so directed would be unjustly prejudicial to the
Holders not taking part in such direction or if the Capital Securities Guarantee
Trustee being advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if the Capital Securities Guarantee
Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Capital Securities Guarantee Trustee in personal liability.
(b) If the Capital Securities Guarantee Trustee fails to enforce such
Series B Capital Securities Guarantee, any Holder may institute a legal
proceeding directly against the Guarantor to enforce the Capital Securities
Guarantee Trustee's rights under this Series B 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.
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5.5 Guarantee of Payment
This Series B Capital Securities Guarantee creates a guarantee of payment
and not of collection.
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 Series B 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 indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series B Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series B 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.
5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Series B 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 Series B
Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION
6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the Guarantor shall
not (i) 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) or (ii) make any
payment of principal of or premium, if any, or interest on or repay, repurchase
or redeem any debt securities of the Guarantor (including Other Debentures) that
rank pari passu with or junior in right of payment to the Debentures or (iii)
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 with 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 shareholders' 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 Series A Capital Securities Guarantee
or this Series B Capital Securities Guarantee,
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(d) the purchase of fractional shares resulting from a reclassification of the
Guarantor's capital stock, (e) 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, and (f) 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)
if at such time (l) there shall have occurred and be continuing an event of
default under the Declaration, (2) there shall have occurred and be continuing
an Event of Default under the Indenture, (3) there shall have occurred and be
continuing a payment default under the Declaration or the Indenture, (4) if the
Debentures are held by the Issuer, the Guarantor shall be in default with
respect to its payment of any obligations under this Agreement, or (5) the
Guarantor 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.
6.2 Ranking
This Series B Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all Senior Indebtedness, to the same extent and in the same manner
that the Debentures are subordinated to Senior Indebtedness pursuant to the
Indenture, it being understood that the terms of Article XV of the Indenture
shall apply to the obligations of the Guarantor under this Series A Capital
Securities Guarantee as if (x) such Article XV were set forth herein in full and
(y) such obligations were substituted for the term "Securities" appearing in
such Article XV, (ii) pari passu with the Debentures, the Other Debentures and
with the most senior preferred or preference stock hereafter issued by the
Guarantor and with any Other Guarantee (as defined herein) and any Other Common
Securities Guarantee and any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII - TERMINATION
7.1 Termination
This Series B Capital Securities Guarantee shall terminate (i) upon full
payment of the applicable Redemption Price (as defined in the Declaration) of
all Series B 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 Series B Capital
Securities. Notwithstanding the foregoing, this Series B Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid under the
Series B Capital Securities or under this Series B Capital Securities Guarantee.
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ARTICLE VIII - COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
The Guarantor covenants and agrees to pay to the Capital Securities
Guarantee Trustee from time to time, and the Capital Securities Guarantee
Trustee shall be entitled to, such compensation as shall be agreed to in writing
between the Guarantor and the Capital Securities Guarantee Trustee (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Guarantor will pay or reimburse the
Capital Securities Guarantee Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Capital Securities
Guarantee Trustee in accordance with any of the provisions of this Capital
Securities Guarantee (including the reasonable compensation and the expenses and
disbursements of its counsel and of all Persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Guarantor also covenants to indemnify the Capital
Securities Guarantee Trustee (and its officers, agents, directors and employees)
for, and to hold it harmless against, any and all loss, damage, claim, liability
or expense including taxes (other than taxes based on the income of the Capital
Securities Guarantee Trustee) incurred without negligence or bad faith on the
part of the Capital Securities Guarantee Trustee and arising out of or in
connection with the acceptance or administration of this guarantee, including
the costs and expenses of defending itself against any claim of liability in the
premises. The obligations of the Guarantor under this Article VIII to compensate
and indemnify the Capital Securities Guarantee Trustee and to pay or reimburse
the Capital Securities Guarantee Trustee for expenses, disbursements and
advances shall be secured by a lien prior to that of the Series A Capital
Securities upon all property and funds held or collected by the Capital
Securities Guarantee Trustee as such, except funds held in trust for the benefit
of the holders of particular Series B Capital Securities.
The provisions of this Article shall survive the termination of this
Capital Securities Guarantee or the resignation or removal of the Capital
Securities Guarantee Trustee.
ARTICLE IX - INDEMNIFICATION
9.1 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 Series B 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 Series B 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.
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
9.2 Indemnification
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 9.2
shall survive the termination of this Series B Capital Securities Guarantee or
the resignation or removal of the Capital Securities Guarantee Trustee.
ARTICLE X - MISCELLANEOUS
10.1 Successors and Assigns
All guarantees and agreements contained in this Series B Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
10.2 Amendments
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Series B Capital Securities Guarantee may only be amended with the prior
approval of the Holders of a Majority in liquidation amount of the Securities
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined). The provisions of the Declaration with
respect to consents to amendments thereof (whether at a meeting or otherwise)
shall apply to the giving of such approval.
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10.3 Notices
All notices provided for in this Series B 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 Trustee at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice of to the Holders and the Capital Securities Guarantee Trustee):
MMI Capital Trust I
c/o MMI Companies, Inc.
540 Lake Cook Road
Deerfield, IL 60015
Attention: Mr. Wayne Sinclair, Administrative Trustee
Telecopy: (847) 374-1330
(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 the Capital Securities Guarantee Trustee may give notice of to the
Holders and the Issuer):
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Global Trust Services
Telecopy: (212) 946-3041
(c) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Series B Capital Securities and the Capital Securities Guarantee
Trustee):
MMI Companies, Inc.
540 Lake Cook Road
Deerfield, IL 60015
Attention: Chief Financial Officer
Telecopy: (847) 374-1330
(d) If given to any Holder of Series B Capital Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
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10.4 Benefit
This Series B Capital Securities Guarantee is solely for the benefit of the
Holders and, subject to Section 3.1(a), is not separately transferable from the
Series B Capital Securities.
10.5 Governing Law
THIS SERIES B 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.
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THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of the day and
year first above written.
MMI COMPANIES, INC.
As Guarantor
By:
---------------------------------
Name: Paul M. Orzech
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK
As Capital Securities Guarantee Trustee
By:
---------------------------------
Name: Richard Lorenzen
Title:
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EXHIBIT 4.7
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated December 23, 1997
among
MMI COMPANIES, INC.
MMI CAPITAL TRUST I
and
SALOMON BROTHERS INC
ABN AMRO CHICAGO CORPORATION
BANCAMERICA ROBERTSON STEPHENS
--------------
as Initial Purchasers
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of December 23, 1997, among MMI Companies, Inc., a Delaware
corporation (the "Company"), MMI CAPITAL TRUST I, a business trust formed under
the laws of the state of Delaware (the "Trust"), and SALOMON BROTHERS INC
("Salomon"), ABN AMRO CHICAGO CORPORATION, BANCAMERICA ROBERTSON STEPHENS (each
an "Initial Purchaser" and, collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
December 18, 1997 (the "Purchase Agreement"), among the Company, as issuer of
the Series A 7 5/8% Junior Subordinated Deferrable Interest Debentures due
December 15, 2027 (the "Subordinated Debentures"), the Trust and the Initial
Purchasers, which provides for, among other things, the sale by the Trust to the
Initial Purchasers of $125,000,000 of the Trust's Series A 7 5/8% Capital
Securities, liquidation amount $1,000 per Capital Security (the "Capital
Securities"), the proceeds of which will be used by the Trust to purchase the
Subordinated Debentures. The Capital Securities, together with the Subordinated
Debentures and the Company's guarantee of the Capital Securities (the "Capital
Securities Guarantee"), are collectively referred to as the "Securities". In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company and the Trust have agreed to provide to the Initial Purchasers and their
direct and indirect transferees the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Additional Distributions" shall have the meaning set forth in Section
2(e) hereof.
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Affiliate" shall have the meaning given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Applicable Period" shall have the meaning set forth in Section 3(t)
hereof.
<PAGE>
"Business Day" means any day other than a Saturday, 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.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and
Restated Declaration of Trust of MMI Capital Trust 1, dated as of December 23,
1997, by the trustees named therein and the Company as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section
2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Offer" shall mean the offer by the Company and the Trust to
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities pursuant
to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
Debentures, the Series B 7 5/8% Junior Subordinated Deferrable Interest
Debentures due December 15, 2027 (the "Exchange Debentures") containing terms
substantially identical to the Subordinated Debentures (except that they will
not contain terms with respect to the transfer restrictions under the Securities
Act, will not require transfers thereof to be in
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<PAGE>
minimum blocks of $100,000 aggregate principal amount and will not provide for
any Liquidated Damages thereon), (ii) with respect to the Capital Securities,
the Trust's Series B 7 5/8% Capital Securities, liquidation amount $1,000 per
Capital Security (the "Exchange Capital Securities") which will have terms
substantially identical to the Capital Securities (except they will not contain
terms with respect to transfer restrictions under the Securities Act, will not
require transfers thereof to be in minimum blocks of $100,000 aggregate
liquidation amount and will not provide for any increase in Additional
Distributions thereon) and (iii) with respect to the Capital Securities
Guarantee, the Company's guarantee (the "Exchange Guarantee") of the Exchange
Capital Securities which will have terms substantially identical to the Capital
Securities Guarantee.
"Holder" shall mean each Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures dated as of December 23, 1997, between
the Company, as issuer, and The Chase Manhattan Bank, as trustee, as the same
may be amended from time to time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble
to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
"Issue Date" shall mean the date of original issuance of the
Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
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<PAGE>
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including posteffective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities: provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities or
Private Exchange Securities for the exchange or resale thereof, as the case may
be, shall have been declared effective under the Securities Act and such
Securities or Private Exchange Securities, as the case may be, shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities or
Private Exchange Securities, as the case may be, shall have been sold or are
eligible to be sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act, (iii) such
Securities or Private Exchange Securities, as the case may be, shall have ceased
to be outstanding or (iv) with respect to the Securities, such Securities shall
have been exchanged for Exchange Securities upon consummation of the Exchange
Offer and are thereafter freely tradeable by the holder thereof (other than an
Affiliate of the Company).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities) and compliance with the rules of
the NASD, (iii) all expenses of any Persons in preparing
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<PAGE>
or assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and distributing
any underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the Company
and of the independent certified public accountants of the Company, including
the expenses of any "cold comfort" letters required by or incident to such
performance and compliance, (vi) the fees and expenses of the Trustee and its
counsel, and any exchange agent or custodian, (vii) all fees and expenses
incurred in connection with the listing, if any, of any of the Exchange
Securities or the Registrable Securities on any securities exchange or
exchanges, and (viii) the reasonable fees and expenses of any special experts
retained by the Company in connection with any Registration Statement.
"Registration Statement" shall mean any registration statement of the
Company and the Trust which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Rule 144(k) Period" shall mean the period of two years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the Private
Exchange Securities, as the case may be, on an appropriate form under Rule 415
under
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<PAGE>
the Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustees" shall mean any and all trustees with respect to (i) the
Capital Securities under the Declaration, (ii) the Subordinated Debentures under
the Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. To the extent not prohibited by any applicable
law or applicable interpretation of the staff of the SEC, the Company and the
Trust shall, for the benefit of the Holders, at the Company's cost, use their
best efforts to (i) cause to be filed with the SEC within 150 days after the
Issue Date an Exchange Offer Registration Statement on an appropriate form under
the Securities Act covering the Exchange Offer, (ii) cause such Exchange Offer
Registration Statement to be declared effective under the Securities Act within
180 days after the Issue Date, and (iii) keep such Exchange Offer Registration
Statement effective for not less than 30 calendar days (or longer if required by
applicable law) after the date notice of the Exchange Offer has been mailed to
the Holders. Upon the effectiveness of the Exchange Offer Registration
Statement, the Company and the Trust shall promptly commence the Exchange Offer,
it being the objective of such Exchange Offer to enable each Holder eligible and
electing to exchange Registrable Securities for a like principal amount of
Exchange Debentures or a like liquidation amount of Exchange Capital Securities,
together with the Exchange Guarantee, as applicable (assuming that such Holder
(i) is not an Affiliate of the Company, (ii) is not a broker-dealer tendering
Registrable Securities acquired directly from the Company or the Trust for its
own account, (iii) acquires the Exchange Securities in the ordinary course of
such Holder's business and (iv) has no arrangements or understandings with any
Person to participate in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
under state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the Trust
shall:
(i) mail or cause to be mailed to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
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<PAGE>
(ii) keep the Exchange Offer open for acceptance for a period of not less
than 30 days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law) (such period referred to herein as the "Exchange
Period");
(iii) utilize the services of the Depositary for the Exchange Offer; (iv)
permit Holders to withdraw tendered Securities at any time prior to the close of
business, New York time, on the last Business Day of the Exchange Period, by
sending to the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Securities delivered for exchange, and a statement that such Holder is
withdrawing its election to have such Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws relating to
the Exchange Offer.
If an Initial Purchaser determines upon advice of its counsel that it
is not eligible to participate in the Exchange Offer with respect to the
exchange of Securities constituting any portion of an unsold allotment in the
initial distribution, as soon as practicable upon receipt by the Company and the
Trust of a written request from such Initial Purchaser, the Company and the
Trust, as applicable, shall offer to exchange with such Initial Purchaser (the
"Private Exchange") for the Securities held by such Initial Purchaser, a like
liquidation amount of Capital Securities of the Trust or, in the event the Trust
is liquidated and Subordinated Debentures are distributed, a like principal
amount of the Subordinated Debentures of the Company, together with the Exchange
Guarantee, in each case that are identical (except that such securities may bear
a customary legend with respect to restrictions on transfer pursuant to the
Securities Act) to the Exchange Securities (the "Private Exchange Securities")
notwithstanding that they are issued pursuant to the Indenture, the Declaration
or the Guarantee (which provide that the Exchange Securities will not be subject
to the transfer restrictions set forth in the Indenture or the Declaration, as
applicable, and that the Exchange Securities, the Private Exchange Securities
and the Securities will vote and consent together on all matters as one class
and that neither the Exchange Securities, the Private Exchange Securities nor
the Securities will have the right to vote or consent as a separate class on any
matter). The Private Exchange Securities shall be of the same series as the
Exchange Securities and the Company and the Trust will seek to cause the
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CUSIP Service Bureau to issue the same CUSIP Numbers for the Private Exchange
Securities as for the Exchange Securities issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer and, if
applicable, the Private Exchange, the Company and the Trust, as the case
requires, shall:
(i) accept for exchange all Securities or portions thereof tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by the
Company; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securities,
as applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation amount
of the Capital Securities (together with the guarantee thereof) as are
surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on each
Exchange Debenture and Private Exchange Security issued pursuant to the
Exchange Offer and in the Private Exchange will accrue from the last date on
which a Distribution or interest was paid on the Capital Security or the
Subordinated Debenture surrendered in exchange therefor or, if no Distribution
or interest has been paid on such Capital Security or Subordinated Debenture,
from the Issue Date. To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company and the Trust shall use
their best efforts to complete the Exchange Offer as provided above, and shall
comply with the applicable requirements of the Securities Act, the Exchange Act
and other applicable laws in connection with the Exchange Offer. Except as
provided herein, the Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the staff of the SEC. Each Holder of Registrable
Securities who wishes to exchange such Registrable Securities for Exchange
Securities in the Exchange Offer will be required to make certain customary
representations in connection therewith, including, in the case of any Holder
of Capital Securities, representations that (i) it is not an Affiliate of the
Trust or the Company, (ii) the Exchange Securities to be received by it were
acquired in the ordinary course of its business and (iii) at the time of the
Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Capital
Securities. The Company and the Trust shall inform the Initial Purchasers,
after consultation with the applicable
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Trustees, of the names and addresses of the Holders to whom the Exchange Offer
is made, and each Initial Purchaser shall have the right to contact such Holders
and otherwise facilitate the tender of Registrable Securities in the Exchange
Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating Broker-
Dealers, and the Company and the Trust shall have no further obligation to
register the Registrable Securities (other than Private Exchange Securities)
pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. If prior to the expiration of the Exchange
Offer: (i) the Company, the Trust or the Majority Holders reasonably determine,
after conferring with counsel (which may be in-house counsel), that the Exchange
Offer Registration provided in Section 2(a) above is not available under
applicable law and regulations and currently prevailing interpretations of the
staff of the SEC, (ii) the Company shall determine in good faith that there is a
reasonable likelihood that, or a material uncertainty exists as to whether,
consummation of the Exchange Offer would result in interest payable by the
Company on the Subordinated Debentures not being deductible by the Company for
United States federal income tax purposes, (iii) the Exchange Offer Registration
Statement is not declared effective within 180 days after the Issue Date or (iv)
upon the request of any Initial Purchaser with respect to any Registrable
Securities held by it, if, in the reasonable opinion of Willkie Farr & Gallagher
or other counsel experienced in such matters, such Initial Purchaser is not
permitted pursuant to applicable law or applicable interpretations of the staff
of the SEC, to participate in the Exchange Offer and thereby receive securities
that are freely tradeable without restriction under the Securities Act and
applicable blue sky or state securities laws (any of the events specified in
(i)-(iv) being a "Shelf Registration Event" and the date of occurrence thereof,
the "Shelf Registration Event Date"), then in addition to or in lieu of
effecting the registration of the Exchange Securities pursuant to the Exchange
Offer Registration Statement, the Administrative Trustees (as defined in the
Declaration) on behalf of the Trust will (x) promptly deliver to the Holders and
the Delaware Trustee (as defined in the Declaration) written notice thereof and
(y) at the Company's sole expense: (a) as soon as practicable after such Shelf
Registration Event Date, and, in any event, within 30 days after such Shelf
Registration Event Date (but shall not be required to do so earlier than 75 days
after the Closing Time), file a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Securities, and (b) shall use
their best efforts to have such Shelf Registration Statement declared effective
by the SEC as soon as practicable. No Holder of Registrable Securities shall be
entitled to include any of its Registrable Securities in any Shelf Registration
pursuant to this Agreement unless and until such Holder agrees in
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writing to be bound by all of the provisions of this Agreement applicable to
such Holder and furnishes to the Company and the Trust in writing, within 15
days after receipt of a request therefor, such information as the Company and
the Trust may, after conferring with counsel with regard to information relating
to Holders that would be required by the SEC to be included in such Shelf
Registration Statement or Prospectus included therein, reasonably request for
inclusion in any Shelf Registration Statement or Prospectus included therein.
Each Holder as to which any Shelf Registration is being effected agrees to
furnish to the Company and the Trust all information with respect to such Holder
necessary to make the information previously furnished to the Company by such
Holder not materially misleading.
The Company and the Trust agree to use their best efforts to keep the
Shelf Registration Statement continuously effective and usable for resales for
(a) the Rule 144(k) Period in the case of a Shelf Registration Statement filed
pursuant to Section 2(b)(i), (ii) or (iii) or (b) 180 days in the case of a
Shelf Registration Statement filed pursuant to Section 2(b)(iv) (subject in each
case to extension pursuant to the last paragraph of Section 3 hereof), or for
such shorter period which will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding (the "Effectiveness Period").
The Company and the Trust shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration. The Company and the Trust
will, in the event a Shelf Registration Statement is declared effective, provide
to each Holder a reasonable number of copies of the Prospectus which is a part
of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration has become effective and take certain other actions as are required
to permit certain unrestricted resales of the Registrable Securities. The
Company and the Trust further agree, if necessary, to supplement or amend the
Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company and the Trust
agree to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company, as issuer of the Subordinated Debentures,
shall pay all Registration Expenses in connection with the registration pursuant
to Section 2(a) and/or 2(b) hereof and will reimburse the Initial Purchasers for
the reasonable fees and disbursements of Willkie Farr & Gallagher, counsel for
the Initial Purchasers, incurred in connection with the Exchange Offer and, if
applicable, the Private Exchange, and either Willkie Farr & Gallagher or any one
other counsel designated in writing by the Majority Holders to act as counsel
for the Holders of the Registrable Securities in connection with a
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Shelf Registration Statement, which other counsel shall be reasonably
satisfactory to the Company. Except as provided herein, each Holder shall pay
all expenses of its counsel, underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to such Exchange Offer Registration Statement or Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. The Company and the
Trust will be deemed not to have used their best efforts to cause the Exchange
Offer Registration Statement or the Shelf Registration Statement, as the case
may be, to become, or to remain, effective during the requisite period if either
of them voluntarily take any action that would result in any such Registration
Statement not being declared effective or that would result in the Holders of
Registrable Securities covered thereby not being able to exchange or offer and
sell such Registrable Securities during that period unless such action is
required by applicable law interpretations of the SEC staff
(e) Liquidated Damages. If:
(i) neither the Exchange Offer Registration Statement is filed with the
SEC on or prior to the 150th day after the Issue Date nor a Shelf Registration
Statement is filed with the SEC on or prior to the 45th day after the Shelf
Registration Event Date in respect of a Shelf Registration Event attributable to
any of the events set forth in Sections 2(b)(i), (ii) and (iii) then commencing
on the day after the applicable required filing date, liquidated damages
("Liquidated Damages") shall accrue on the principal amount of the Subordinated
Debentures, and additional distributions ("Additional Distributions") shall
accumulate on the liquidation amount of the Trust Securities (as such term is
defined in the Declaration), each at a rate of 0.25% per annum; or
(ii) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the SEC on or prior to the 180th
day after the Issue Date (in the case of an Exchange Offer Registration
Statement) or on or prior to the later of (A) the 45th day after the date such
Shelf Registration Statement was required to be filed and (B) the 180th day
after the Issue Date (in the case of a Shelf Registration Statement, in respect
of a Shelf Registration Event attributable to any of the
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events set forth in Sections 2(b)(i), (ii) and (iii)), then, commencing on the
181st day after the Issue Date (in the case of an Exchange Offer Registration
Statement) or the later of (A) the 46th day after the day such Shelf
Registration Statement was required to be filed and (B) the 181st day after the
Issue Date (in the case of a Shelf Registration Statement in respect of a Shelf
Registration Event attributable to any of the events set forth in Sections
2(b)(i), (ii) and (iii)), Liquidated Damages shall accrue on the principal
amount of the Subordinated Debentures, and Additional Distributions shall
accumulate on the liquidation amount of the Trust Securities, each at a rate of
0.25% per annum; or
(iii) (A) the Trust has not exchanged Exchange Capital Securities for all
Capital Securities validly tendered or the Company has not exchanged Exchange
Guarantees or Exchange Subordinated Debentures for all Capital Securities
Guarantees or Subordinated Debentures, as the case may be, validly tendered, in
accordance with the terms of the Exchange Offer on or prior to the 45th day
after the date on which the Exchange Offer Registration Statement was declared
effective or (B) if applicable, the Shelf Registration Statement in respect of a
Shelf Registration Event attributable to any of the events set forth in Sections
2(b)(i), (ii) and (iii) has been declared effective and such Shelf Registration
Statement ceases to be effective or available to a Holder of Registrable
Securities for use in connection with the sale of such Registrable Securities
(whether as a result of an event contemplated by Section 3(e) or otherwise) at
any time prior to the expiration of the Rule 144(k) Period (other than after
such time as all Securities have been disposed of thereunder or otherwise cease
to be Registrable Securities) and continues to be so unavailable for a period
exceeding 30 consecutive days or an aggregate of 90 days (whether or not
consecutive) in any 360 day period, then Liquidated Damages shall accrue on the
principal amount of Subordinated Debentures, and Additional Distributions shall
accumulate on the liquidation amount of the Trust Securities, each at a rate of
0.25% per annum commencing on (x) the 46th day after such effective date, in the
case of (A) above, or (y) the 31st consecutive day or the 91st day in any 360
day period after the day such Shelf Registration Statement ceases to be
effective or available in the case of (B) above;
provided, however, that neither the Liquidated Damages rate on the Subordinated
Debentures, nor the Additional Distribution rate on the liquidation amount of
the Trust Securities, may exceed in the aggregate 0.25% per annum; provided,
further, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Exchange Offer Registration Statement or a
Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Capital Securities, Exchange Guarantees and Exchange
Debentures for all Capital Securities, Guarantees and Subordinated Debentures
tendered (in the case of clause (iii)(A) above), or at such time
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as the Shelf Registration Statement which had ceased to remain effective or
available for use again becomes effective and available for use (in the case of
clause (iii)(B) above), Liquidated Damages on the principal amount of the
Subordinated Debentures and Additional Distributions on the liquidation amount
of the Trust Securities as a result of such clause (or the relevant subclause
thereof) shall cease to accrue and accumulate.
Any amounts of Liquidated Damages and Additional Distributions due pursuant
to Section 2(e)(i), (ii) or (iii) above will be payable in cash on the next
succeeding June 15 and December 15, as the case may be, to Holders on the
relevant record dates for the payment of interest and distributions pursuant to
the Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies available to the
Holders, the Company and the Trust acknowledge that any failure by the Company
or the Trust to comply with its obligations under Section 2(a) and Section 2(b)
hereof may result in material irreparable injury to the Holders for which there
is no adequate remedy at law, that it would not be possible to measure damages
for such injuries precisely and that, in the event of any such failure, any
Holder may obtain such relief as may be required to specifically enforce the
Company's and the Trust's obligations under Section 2(a) and Section 2(b)
hereof.
3. Registration Procedures. In connection with the obligations of the
Company and the Trust with respect to the Registration Statements pursuant to
Sections 2(a) and 2(b) hereof, the Company and the Trust shall use their best
efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be selected
by the Company and the Trust, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by
the selling Holders thereof and, in the case of an Exchange Offer, be
available for the exchange of Registrable Securities, and (iii) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to
be filed therewith or incorporated therein by reference, if applicable; and
use its best efforts to cause such Registration Statement to become
effective and remain effective (and, in the case of a Shelf Registration
Statement, available for use) in accordance with Section 2 hereof;
provided, however, that if (1) such filing is pursuant to Section 2(b), or
(2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities, before filing any Registration Statement
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<PAGE>
or Prospectus or any amendments or supplements thereto, the Company and the
Trust shall furnish to and afford the Holders of the Registrable Securities
and each such Participating Broker-Dealer, as the case may be, covered by
such Registration Statement, their counsel and the managing underwriters,
if any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed. The Company and the Trust
shall not file any Registration Statement or Prospectus or any amendments
or supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document if the Majority
Holders or such Participating Broker-Dealer, as the case may be, their
counsel or the managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period or the
Applicable Period, as the case may be; and cause each Prospectus to be
supplemented, if so determined by the Company or the Trust or requested by
the SEC, by any required prospectus supplement and as so supplemented to be
filed pursuant to Rule 424 (or any similar provision then in force) under
the Securities Act, and comply with the provisions of the Securities Act,
the Exchange Act and the rules and regulations promulgated thereunder
applicable to it with respect to the disposition of all securities covered
by each Registration Statement during the Effectiveness Period or the
Applicable Period, as the case may be, in accordance with the intended
method or methods of distribution by the selling Holders thereof described
in this Agreement (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities included in the Shelf Registration Statement, at
least three Business Days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Securities included in the Shelf
Registration Statement and to each underwriter of an underwritten offering
of Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the use of
the Prospectus or any amendment or supplement
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<PAGE>
thereto by each of the selling Holders of Registrable Securities included
in the Shelf Registration Statement in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(d) in the case of a Shelf Registration, register or qualify where
required the Registrable Securities under all applicable state securities
or "blue sky" laws of such jurisdictions by the time the applicable
Registration Statement is declared effective by the SEC as any Holder of
Registrable Securities covered by a Registration Statement and each
underwriter of an underwritten offering of Registrable Securities shall
reasonably request in writing in advance of such date of effectiveness, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder and underwriter to consummate the
disposition in each such jurisdiction of such Registrable Securities owned
by such Holder; provided, however, that the Company and the Trust shall not
be required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general consent to service
of process in any jurisdiction where it would not otherwise be subject to
such service of process or (iii) subject itself to taxation in any such
jurisdiction if it is not then so subject;
(e) (1) in the case of a Shelf Registration or (2) if Participating
Broker-Dealers from whom the Company or the Trust has received prior
written notice that they will be utilizing the Prospectus contained in the
Exchange Offer Registration Statement as provided in Section 3(t) hereof,
are seeking to sell Exchange Securities and are required to deliver
Prospectuses, promptly notify each Holder of Registrable Securities, or
such Participating Broker-Dealers, as the case may be, their counsel and
the managing underwriters, if any, and promptly confirm such notice in
writing (i) when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective, (iii) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the
qualification of the Registrable Securities or the Exchange Securities to
be offered or sold by any Participating Broker-Dealer in any jurisdiction
described in paragraph 3(d) hereof or the initiation of any proceedings for
that purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the
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representations and warranties of the Company and the Trust contained in
any purchase agreement, securities sales agreement or other similar
agreement, cease to be true and correct in all material respects, (v) of
the happening of any event or the failure of any event to occur or the
discovery of any facts or otherwise, during the Effectiveness Period which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which causes such Registration
Statement or Prospectus to omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) of the Company and the Trust's
reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, at least one conformed copy of each
Registration Statement relating to such Shelf Registration and any post-
effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends and in such denominations (consistent
with the provisions of the Indenture and the Declaration) and registered in
such names as the selling Holders or the underwriters may reasonably
request at least two Business Days prior to the closing of any sale of
Registrable Securities pursuant to such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its best
efforts to prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and to notify each Holder to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an
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event, and each Holder hereby agrees to suspend the sale of Securities
pursuant to such Prospectus until the Company has amended or supplemented
such Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented prospectus to such holder (or
Participating Broker-Dealer, as the case may be) or the Company has given
notice that the sale of the Securities may be resumed, as the case may be;
(j) in the case of a Shelf Registration, a reasonable time prior to
the filing of any document which is to be incorporated by reference into a
Registration Statement or a Prospectus after the initial filing of a
Registration Statement. provide a reasonable number of copies of such
document to the Holders; and make such of the representatives of the
Company and the Trust as shall be reasonably requested by the Holders of
Registrable Securities or an Initial Purchaser on behalf of such Holders
available for discussion of such document;
(k) obtain a CUSIP number for all Exchange Capital Securities and the
Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures or the Exchange Debentures) as the case may be, not
later than the effective date of a Registration Statement, and provide the
Trustee with printed certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible for deposit
with the Depositary;
(l) cause the Indenture, the Declaration, and the Exchange Guarantee
to be qualified under the Trust Indenture Act of 1939 (the "TIA") in
connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be, and effect such changes to such documents
as may be required for them to be so qualified in accordance with the terms
of the TIA and execute, and use its best efforts to cause the relevant
trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
SEC to enable such documents to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings and take all such other appropriate actions as are reasonably
requested in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by (x) an
Initial Purchaser, in the case where such Initial Purchaser holds
Securities acquired by it as part of its initial allotment and (y) other
Holders of the
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Registrable Securities covered thereby: (i) make such representations and
warranties to Holders of such Registrable Securities and the underwriters
(if any), with respect to the business of the Trust, the Company and its
subsidiaries as then conducted and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and the Trust and
updates thereof (which may be in the form of a reliance letter) in form and
substance reasonably satisfactory to the managing underwriters (if any) and
the Holders of a majority in principal amount of the Registrable Securities
being sold, addressed to each selling Holder and the underwriters (if any)
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such underwriters (it being agreed that the matters to be
covered by such opinion may be subject to customary qualifications and
exceptions); (iii) obtain "cold comfort" letters and updates thereof in
form and substance reasonably satisfactory to the managing underwriters
from the independent certified public accountants of the Company and the
Trust (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company and the Trust or of any
business acquired by the Company and the Trust for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by
such underwriters in accordance with Statement on Auditing Standards No.
72; and (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to the
underwriters and the Holders of Registrable Securities than those set forth
in Section 4 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount or liquidation amount,
as the case may be, of Registrable Securities covered by such Registration
Statement and the managing underwriters and agents) customary for such
agreements with respect to all parties to be indemnified pursuant to said
Section (including, without limitation, such underwriters and selling
Holders). The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b) or
(2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any
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Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, make reasonably available for inspection by any
selling Holder of such Registrable Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Securities, if any,
and any attorney, accountant or other agent retained by any such selling
Holder or each such Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the offices where normally
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Trust, the Company and
its subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the
Trust, the Company and its subsidiaries to make available all relevant
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement; provided, however, that the
foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers or any Participating Broker-Dealer by
Salomon and on behalf of the other parties by one counsel designated by the
Majority Holders on behalf of such other parties as described in Section
2(c) hereof. Records which the Company and the Trust determine, in good
faith, to be confidential and any records which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or is necessary in connection with any
action, suit or proceeding or (iii) the information in such Records has
been made generally available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to agree in writing that information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it
as the basis for any market transactions in the securities of the Trust or
the Company unless and until such is made generally available to the
public. Each selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to further agree in writing
that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company at its expense to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its
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securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end
of any 12-month period (or 90 days after the end of any 12-month period if
such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange, if
requested by a Trustee, obtain an opinion of counsel to the Company
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange, as
the case may be, substantially to the effect that (i) each of the Company
and the Trust, as the case requires, has duly authorized, executed and
delivered the Exchange Securities and Private Exchange Securities, and (ii)
each of the Exchange Securities or the Private Exchange Securities, as the
case may be, constitutes a legal, valid and binding obligation of the
Company or the Trust, as the case requires, enforceable against the Company
or the Trust, as the case requires, in accordance with its respective terms
(in each case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company or
the Trust, as applicable (or to such other Person as directed by the
Company or the Trust, respectively), in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the
Company or the Trust, as applicable, shall mark, or cause to be marked, on
such Registrable Securities delivered by such Holders that such Registrable
Securities are being cancelled in exchange for the Exchange Securities or
the Private Exchange Securities, as the case may be; in no event shall such
Registrable Securities be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD;
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable
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Securities covered by a Registration Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to the
Initial Purchasers or another representative of the Participating Broker-
Dealers, and which shall contain a summary statement of the positions taken
or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer (a "Participating Broker-Dealer")
that holds Registrable Securities acquired for its own account as a result
of market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Securities to be received by such broker-dealer in the Exchange
Offer, whether such positions or policies have been publicly disseminated
by the staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchasers or such other representative, represent
the prevailing views of the staff of the SEC, including a statement that
any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities,
(ii) furnish to each Participating Broker-Dealer who has delivered to the
Company the notice referred to in Section 3(e), without charge, as many
copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or
supplement thereto, as such Participating Broker-Dealer may reasonably
request (each of the Company and the Trust hereby consents to the use of
the Prospectus forming part of the Exchange Offer Registration Statement or
any amendment or supplement thereto by any Person subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement
thereto), (iii) use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of
the Securities Act for such period of time as such Persons must comply with
such requirements under the Securities Act and applicable rules and
regulations in order to resell the Exchange Securities, provided, however,
that such period shall not be required to exceed 180 days (or such longer
period if extended pursuant to the last sentence of Section 3 hereof) (the
"Applicable Period"), and (iv) include in the transmittal letter or similar
documentation to be executed by an exchange offeree
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in order to participate in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-
making activities or other trading activities, it will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of Exchange Securities received in
respect of such Registrable Securities pursuant to the Exchange
Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of
the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company and the Trust agree to deliver to the Initial Purchasers or to
another representative of the Participating Broker-Dealers, if
requested by an Initial Purchaser or such other representative of the
Participating Broker-Dealers, on behalf of the Participating Broker-
Dealers upon consummation of the Exchange Offer (i) an opinion of
counsel in form and substance reasonably satisfactory to the Initial
Purchasers or such other representative of the Participating Broker-
Dealers, covering the matters customarily covered in opinions
requested in connection with Exchange Offer Registration Statements
and such other matters as may be reasonably requested (it being agreed
that the matters to be covered by such opinion may be subject to
customary qualifications and exceptions), (ii) an officers'
certificate containing certifications substantially similar to those
set forth in Section 5(f) of the Purchase Agreement and such
additional certifications as are customarily delivered in a public
offering of debt securities and (iii) as well as upon the
effectiveness of the Exchange Offer Registration Statement, a comfort
letter, in each case, in customary form if permitted by Statement on
Auditing Standards No. 72.
The Company or the Trust may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company or the Trust, as applicable, such information regarding such seller as
may be required by the staff of the SEC to be included in a Registration
Statement. The Company or the Trust may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to
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furnish such information within a reasonable time after receiving such request.
The Company shall have no obligation to register under the Securities Act the
Registrable Securities of a seller who so fails to furnish such information.
In the case of a Shelf Registration Statement, or if Participating
Broker-Dealers who have notified the Company and the Trust that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof are seeking to sell Exchange Securities and
are required to deliver Prospectuses, each Holder agrees that, upon receipt of
any notice from the Company or the Trust of the happening of any event of the
kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof or until
it is advised in writing (the "Advice") by the Company and the Trust that the
use of the applicable Prospectus may be resumed, and, if so directed by the
Company and the Trust, such Holder will deliver to the Company or the Trust (at
the Company's or the Trust's expense, as the case requires) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or Exchange
Securities, as the case may be, current at the time of receipt of such notice.
If the Company or the Trust shall give any such notice to suspend the
disposition of Registrable Securities or Exchange Securities, as the case may
be, pursuant to a Registration Statement, the Company and the Trust shall use
their best efforts to file and have declared effective (if an amendment) as soon
as practicable an amendment or supplement to the Registration Statement and
shall extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days in the
period from and including the date of the giving of such notice to and including
the date when the Company and the Trust shall have made available to the Holders
(x) copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company and the Trust agree, jointly and severally,
to indemnify and hold harmless each Initial Purchaser, each Holder, each
underwriter who participates in an offering of the Registrable Securities, each
Participating Broker-Dealer, each agent, employee, officer and director of any
of the foregoing parties and each person that controls each of the foregoing
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and agents, employees, officers and directors of any such
controlling person (each, a "Section 4(a) Indemnified Party") from and against
any and all losses, claims, damages, judgments, liabilities and expenses
(including the reasonable fees and expenses of counsel and other expenses in
connection with investigating, defending or
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settling any such action or claim) as they are incurred which arise out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement covering Registrable Securities or
Exchange Securities or any amendment or supplement thereto or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except (i) the Company and the Trust shall not be liable to any
Section 4(a) Indemnified Party in any such case insofar as such losses, claims,
damages, judgments, liabilities or expenses arise out of, or are based upon, any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing by such Holder, Initial Purchaser,
Participating Broker-Dealer or any underwriter to the Company or the Trust
expressly for use therein and (ii) the Company and the Trust shall not be liable
to any Section 4(a) Indemnified Party under the indemnity agreement in this
Section 4(a) with respect to any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary Prospectus to the extent that
any such loss, claim, damage, judgment, liability or expense of any Holder,
Initial Purchaser, Participating Broker-Dealer, any underwriter or controlling
person results from the fact that such Holder, Initial Purchaser, any
underwriter or Participating Broker-Dealer sold Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final Prospectus as then amended or supplemented if the
Company had previously furnished copies thereof to such Holder, Initial
Purchaser, underwriter or Participating Broker-Dealer and the loss, claim,
damage, judgment, liability or expense of such Holder, Initial Purchaser,
underwriter, Participating Broker-Dealer or controlling person results from an
untrue statement or omission of a material fact contained in the preliminary
Prospectus, which was corrected in the final Prospectus.
(b) If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
Section 4(a) Indemnified Party with respect to which indemnity may be sought
against the Company and the Trust pursuant to this Section 4, such Section 4(a)
Indemnified Party shall promptly notify the Company and the Trust in writing,
and the Company and the Trust shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Section 4(a) Indemnified Party and payment of all fees and expenses; provided,
however, that the omission so to notify the Company and the Trust shall not
relieve the Company or the Trust from any liability that they may have to any
Section 4(a) Indemnified Party (except to the extent that the Company and the
Trust are materially prejudiced or otherwise forfeit substantive rights or
defenses by reason of such failure). A Section 4(a) Indemnified Party shall have
the right to employ separate counsel in any such action or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Section 4(a)
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Indemnified Party unless (i) the Company and the Trust agree in writing to pay
such fees and expenses, (ii) the Company and the Trust have failed promptly to
assume the defense and employ counsel satisfactory to the Section 4(a)
Indemnified Party or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include the Section 4(a) Indemnified Party and
the Company and/or the Trust and such Section 4(a) Indemnified Party shall have
been advised in writing by its counsel that representation of them and the
Company and/or the Trust by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
has been proposed) due to actual or potential differing interests between them
(in which case the Company and/or the Trust shall not have the right to assume
the defense of such action on behalf of such Section 4(a) Indemnified Party). It
is understood that the Company and the Trust shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) at any time for such Section 4(a) Indemnified
Party, and that all such fees and expenses shall be reimbursed as they are
incurred. The Company and the Trust shall not be liable for any settlement of
any such action effected without the written consent of the Company and the
Trust, but if settled with the written consent of the Company and the Trust, or
if there is a final judgment with respect thereto, the Company and the Trust
agree to indemnify and hold harmless each Section 4(a) Indemnified Party from
and against any loss or liability by reason of such settlement or judgment. The
Company and the Trust shall not, without the prior written consent of each
Section 4(a) Indemnified Party affected thereby, effect any settlement of any
pending or threatened proceeding in which such Section 4(a) Indemnified Party
has sought indemnity hereunder, unless such settlement includes an unconditional
release of such Section 4(a) Indemnified Party from all liability arising out of
such action, claim, litigation or proceeding.
(c) Each Holder agrees to indemnify and hold harmless the Company, the
Trust, any underwriter and the other selling Holders and each of their
respective directors, officers (including each officer of the Company and the
Trust who signed the Registration Statement) and any person controlling the
Company, the Trust, any underwriter or any other selling Holder within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act (each such
party, a "Section 4(c) Indemnified Party") to the same extent as the foregoing
indemnity from the Company and the Trust to any Section 4(a) Indemnified Party,
but only with respect to information furnished to the Company or the Trust in
writing by such Holder, expressly for use in the Registration Statement,
Prospectus (or any amendment or supplement thereto), or any preliminary
Prospectus, provided, however, that, in the case of a Shelf Registration
Statement, no such Holder shall be liable for any amount hereunder in excess of
the amount by which the net
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proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Shelf Registration Statement exceeds the amount of any damages
which such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. In case any action
shall be brought against any Section 4(c) Indemnified Party based on the
Registration Statement, Prospectus (or any amendment or supplement thereto), or
any preliminary Prospectus and in respect of which indemnification may be sought
against each Holder pursuant to this Section 4(c), each Holder shall have the
rights and duties given to the Company and the Trust by Section 4(a) (except
that if the Company and the Trust shall have assumed the defense thereof, each
Holder may, but shall not be required to, employ separate counsel therein and
participate in the defense thereof and the fees and expenses of such counsel
shall be at the expense of the Holder) and the Section 4(c) Indemnified Parties
shall have the rights and duties given to the Section 4(a) Indemnified Parties
by Section 4(b).
(d) If the indemnification provided for in this Section 4 is
unavailable to any party entitled to indemnification pursuant to Section 4(a) or
4(c), then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, judgments, liabilities and expenses
in such proportion as is appropriate to reflect the relative fault of the
Company and the Trust, on the one hand, and each Holder, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, judgments, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Trust, on the one hand, and each Holder, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Trust, on the one hand, or
by each Holder, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company, the Trust and each Holder agree that it would not be
just and equitable if contribution pursuant to Section 4(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 4(d). No person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 4 are in addition to any liability that any indemnifying party may
otherwise have to any indemnified party.
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5. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company or the Trust is
subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any Registrable Securities remain outstanding, each of the Company and the
Trust, as the case may be, will use its best efforts to file the reports
required to be filed by it under the Securities Act and Section 13(a) or 15(d)
of the Exchange Act and the rules and regulations adopted by the SEC thereunder,
or, if it ceases to be so required to file such reports, it will, upon the
request of any Holder of Registrable Securities (a) make publicly available such
information as is necessary to permit sales of its securities pursuant to Rule
144 under the Securities Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales of its securities pursuant to Rule
144A under the Securities Act and it will take such further action as any Holder
of Registrable Securities may reasonably request, and (c) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time, (ii) Rule 144A under the Securities Act,
as such rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, each of the Company and the Trust will deliver to such
Holder a written statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust has not
entered into, nor will the Company or the Trust on or after the date of this
Agreement enter into, any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's or the Trust's other issued and
outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Trust has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this
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Agreement may be amended, without the consent of any Holder of Registrable
Securities, by written agreement signed by the Company, the Trust and Salomon,
to cure any ambiguity, correct or supplement any provision of this Agreement
that may be inconsistent with any other provision of this Agreement or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with other provisions of this
Agreement, (ii) this Agreement may be amended, modified or supplemented, and
waivers and consents to departures from the provisions hereof may be given by
written agreement signed by the Company, the Trust and Salomon to the extent
that any such amendment, modification, supplement, waiver or consent is, in
their reasonable judgment, necessary or appropriate to comply with applicable
law (including any interpretation of the Staff of the SEC) or any change therein
and (iii) to the extent any provision of this Agreement relates to an Initial
Purchaser, such provision may be amended, modified or supplemented, and waivers
or consents to departures from such provisions may be given, by written
agreement signed by Salomon, the Company and the Trust.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if
to the Company or the Trust, initially at the Company's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the respective successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the
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Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities, such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such Person shall be
entitled to receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers shall be a
third party beneficiary of the agreements made hereunder between the Company and
the Trust, on the one hand, and the Holders, on the other hand, and shall have
the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN
THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND
THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company, the Trust or its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company, the Trust or its Affiliates shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MMI COMPANIES, INC.
By: /s/ Paul M. Orzech
-------------------------------------
Name: Paul M. Orzech
Title: Executive Vice President
and Chief Financial Officer
MMI CAPITAL TRUST I
By: /s/ Joseph Herman
-------------------------------------
Name: Joseph Herman
Title: Senior Vice President
and Controller
Confirmed and accepted as of
the date first above
written:
SALOMON BROTHERS INC
ABN AMRO CHICAGO CORPORATION
BANCAMERICA ROBERTSON STEPHENS
By: SALOMON BROTHERS INC
By: /s/ Maura D. Bailey
--------------------------
Name:
Title:
<PAGE>
EXHIBIT 5.1
[Letterhead of Richards, Layton & Finger]
January 20, 1998
MMI Capital Trust I
c/o MMI Companies, Inc.
540 Lake Cook Road
Deerfield, Illinois 60015
Re: MMI Capital Trust I
-------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for MMI Companies, Inc., a
Delaware corporation (the "Company"), and MMI Capital Trust I, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated as of December 15, 1997
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on December 15, 1997;
(b) The Declaration of Trust of the Trust, dated as of December 15, 1997,
by and among the Company and the trustees of the Trust named therein;
<PAGE>
MMI Capital Trust I
January 20, 1998
Page 2
(c) The Amended and Restated Declaration of Trust of the Trust, dated as
of December 23, 1997 (including Annex I and Exhibits A-1 and A-2 thereto) (the
"Declaration"), among the Company, the trustees of the Trust named therein, and
the holders, from time to time, of undivided beneficial interests in the assets
of the Trust;
(d) The Registration Statement on Form S-4 (the "Registration Statement"),
including a preliminary prospectus (the "Prospectus"), relating to the 7 5/8%
Series B Capital Securities of the Trust, representing undivided beneficial
interests in the assets of the Trust (each, a "Series B Capital Security" and
collectively, the "Series B Capital Securities"), as proposed to be filed by the
Company and the Trust with the Securities and Exchange Commission on or about
January 20, 1998; and
(e) A Certificate of Good Standing for the Trust, dated January 20, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed in paragraphs (a) through (e) above. In particular, we have
not reviewed any document (other than the documents listed in paragraphs (a)
through (e) above) that is referred to in or incorporated by reference into the
documents reviewed by us. We have assumed that there exists no provision in any
document that we have not reviewed that is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation of our own but
rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation or due organization or due
formation, as the case may be, and valid existence
<PAGE>
MMI Capital Trust I
January 20, 1998
Page 3
in good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation, (iii) the
legal capacity of natural persons who are parties to the documents examined by
us, (iv) that each of the parties to the documents examined by us has the power
and authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Series B Capital Security is to be issued by the Trust (collectively, the
"Series B Capital Security Holders") of a certificate (substantially in the form
of Exhibit A-1 to the Declaration) in accordance with the Declaration and the
Registration Statement, and (vii) that the Series B Capital Securities are
issued to the Series B Capital Security Holders in accordance with the
Declaration and the Registration Statement. We have not participated in the
preparation of the Registration Statement and assume no responsibility for its
contents.
This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Series B Capital Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and will be entitled
to the benefits of the Declaration.
3. The Series B Capital Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Series B Capital
Security Holders may be obligated to make payments as set forth in the
Declaration.
The opinion expressed in paragraph 2 above is subject to the effect upon
the Declaration of (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance or transfer and other similar
laws relating to or affecting the rights and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. In addition, we hereby
<PAGE>
MMI Capital Trust I
January 20, 1998
Page 4
consent to the use of our name under the heading "Validity of Exchange
Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
BJK/bjr
<PAGE>
[Letterhead of Wildman, Harrold, Allen & Dixon]
Exhibit 5.2
January 20, 1998
MMI Companies, Inc.
540 Lake Cook Road
Deerfield, Illinois 60015
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We are representing MMI Companies, Inc. (the "Company") and MMI Capital
Trust I in connection with the proposed exchange of (i) $125,000,000 aggregate
Liquidation Amount Series B 7 5/8% Capital Securities by the Trust for a like
amount of its Series A 7 5/8% Capital Securities, (ii) $128,866,000 principal
amount of the Company's 7 5/8% Series B Junior Subordinated Deferrable Interest
Debentures due December 15, 2027 (the "Debentures") by the Company for a like
principal amount of its 7 5/8% Series A Junior Subordinated Deferrable Interest
Debentures due December 15, 2027, and (iii) the Company's guarantee of payments
of distributions and redemptions on the $125,000,000 aggregate Liquidation
Amount Series B 7 5/8% Capital Securities of MMI Capital Trust I (the
"Guarantee") by the Company for a like guarantee with respect to the
$125,000,000 aggregate Liquidation Amount Series A 7 5/8% Capital Securities of
MMI Capital Trust I. The Debentures and the Guarantee are to be issued under
the Company's Indentures (the "Indentures") to The Chase Manhattan Bank, as
Trustee (the "Trustee") dated as of December 23, 1997. We have examined or are
otherwise familiar with the Articles of Incorporation of the Company, as
amended, the By-Laws of the Company, as amended, the Company's Registration
Statement pursuant to which the Debentures and the
<PAGE>
MMI Companies, Inc.
January 20, 1998
Page 2
Guarantee are to be registered under the Securities Act of 1933, the corporate
proceedings regarding their authorization and such other documents, records, and
instruments as we have deemed necessary for the purposes of this opinion.
Based upon the foregoing, we are of the opinion that, upon the execution,
authentication and delivery of the Debentures and the Guarantee against receipt
of the respective securities to be exchanged therefor as described above, the
Debentures and the Guarantee will be legal, valid and binding obligations of the
Company, entitled to the benefits of the respective Indentures in accordance
with the respective terms thereof, except as enforcement of provisions of the
Indentures may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting the enforcement of
creditors' rights and by general equity principles.
We hereby consent to the filing of this opinion as Exhibit 5.2 to the
Company's registration statement and to being named in the prospectus under the
caption "Validity of Exchange Securities" with respect to the matters stated
therein. In giving such counsel, we do not thereby admit that we are in the
category of persons whose consent is required under the Securities Act of 1933
or the Securities Exchange Act of 1934 or the rules and regulations promulgated
thereunder.
Very truly yours,
/s/ Wildman, Harrold, Allen & Dixon
-----------------------------------
Wildman, Harrold, Allen & Dixon
<PAGE>
EXHIBIT 8
[Letterhead of Wildman, Harrold, Allen & Dixon]
January 20, 1998
MMI Companies, Inc.
MMI Capital Trust I
540 Lake Cook Road
Deerfield, IL 60015-5290
Re: MMI Companies, Inc. and MMI Capital Trust I
Registration Statement on Form S-4
-------------------------------------------
Dear Ladies and Gentlemen:
We have acted as special United States tax counsel to MMI Companies,
Inc. (the "Company") and to MMI Capital Trust I (the "Trust") in connection with
the Registration Statement on Form S-4 (the "Registration Statement") of the
Company and the Trust filed by them with the Securities and Exchange Commission
on January 20, 1998. Capitalized terms used but not defined herein have the
meanings specified in the Registration Statement.
Subject to the assumptions and limitations set forth therein and in this
letter, we hereby confirm to you our opinion as set forth in the Registration
Statement in the discussion under the heading "Certain Federal Income Tax
Consequences."
In connection with this opinion we have assumed the following:
(1) The Exchange Offer will be effected in accordance with the
Registration Rights Agreement and the Indenture.
(2) The Company intends to, and by acceptance of a Capital Security,
each holder covenants to, treat the Junior Subordinated Debentures as debt for
U.S. federal income tax purposes.
(3) The facts, representations and covenants contained in a letter to
our firm from the Company dated December 23, 1997, were true and correct when
made and will remain true and correct through the consummation of the Exchange.
<PAGE>
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and the
references to us under the headings "Certain Federal Income Tax Consequences"
and "Validity of Exchange Securities." In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under the
Securities Act of 1933 or the Securities Exchange Act of 1934 or the rules and
regulations promulgated thereunder.
Very truly yours,
/s/ WILDMAN, HARROLD, ALLEN & DIXON
----------------------------------------
Wildman, Harrold, Allen & Dixon
<PAGE>
EXHIBIT 12.1
MMI Companies, Inc. and Subsidiaries
Ratio of earnings to fixed charges
(in thousands except ratios)
<TABLE>
<CAPTION>
Nine months
Year ended December 31, ended
--------------------------------------------------- September 30,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations before income taxes $ 6,675 $ 15,205 $ 15,589 $ 24,834 $ 26,969 $ 23,024
Add fixed charges:
Interest expense 2,152 1,489 1,619 2,767 3,397 2,682
Preferred dividends (before income taxes) 142
Amortization of issuance costs 36 38 123 41 70 50
Portion of rents representative of interest factor 761 666 935 996 972 829
------- -------- -------- -------- -------- -------------
2,949 2,193 2,677 3,946 4,439 3,561
------- -------- -------- -------- -------- -------------
Income as adjusted $ 9,624 $ 17,398 $ 18,266 $ 28,780 $ 31,408 $ 26,585
======= ======== ======== ======== ======== =============
Fixed charges $ 2,949 $ 2,193 $ 2,677 $ 3,946 $ 4,439 $ 3,561
======= ======== ======== ======== ======== =============
Ratio of earnings to fixed charges 3.3 7.9 6.8 7.3 7.1 7.5
</TABLE>
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
in the Registration Statement filed on January 20, 1998 on Form S-4 and related
Prospectus of MMI Companies, Inc. and MMI Capital Trust I for the registration
of $125,000,000 of 7 5/8% Capital Securities of MMI Capital Trust I and to the
incorporation by reference therein of our reports dated February 27, 1997, with
respect to the consolidated financial statements and schedules of MMI Companies,
Inc. included in its Annual Report (Form 10-K) for the year ended December 31,
1996, as amended by Form 10-K/A No. 1, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Chicago, Illinois
January 20, 1998
<PAGE>
Exhibit 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to incorporation by reference in the Registration Statement on Form
S-4 filed January 20, 1998, by MMI Companies, Inc. and MMI Capital Trust Inc. of
our report dated March 18, 1996, relating to the balance sheet of Unionamerica
Holdings plc and subsidiaries as of December 31, 1995, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the two-year period ended December 31, 1995, and all
related schedules, which report appears in the December 31, 1996, annual
report on Form 10-K of Unionamerica Holdings plc, and to the reference to our
firm under the heading "Independent Auditors" in the Prospectus.
We consent to incorporation by reference in the Registration Statement on Form
S-4 filed January 20, 1998, by MMI Companies, Inc. and MMI Capital Trust Inc. of
our report dated March 11, 1997, relating to the balance sheet of Unionamerica
Holdings plc and subsidiaries as of December 31, 1996, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year ended December 31, 1996, and all related schedules, which report
appears in the December 31, 1996, annual report on Form 10-K of Unionamerica
Holdings plc, and to the reference to our firm under the heading "Independent
Auditors" in the Prospectus.
/s/ KPMG
---------------
KPMG
London, England
January 20, 1998
<PAGE>
Exhibit 24
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ George B. Caldwell
---------------------------------
George B. Caldwell
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ K. James Ehlen
---------------------------------
K. James Ehlen, MD
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ F. Laird Facey
---------------------------------
F. Laird Facey, MD
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Alan C. Guy
---------------------------------
Alan C. Guy
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ William M. Kelley
---------------------------------
William M. Kelley
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Andrew D. Kennedy
---------------------------------
Andrew D. Kennedy
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Timothy R. Mc Cormick
---------------------------------
Timothy R. Mc Cormick
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Gerald L. McManis
---------------------------------
Gerald L. McManis
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Scott S. Parker
---------------------------------
Scott S. Parker
<PAGE>
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Edward C. Peddie
---------------------------------
Edward C. Peddie
<PAGE>
Exhibit 24
POWER OF ATTORNEY
The undersigned Director and/or Officer of MMI Companies, Inc., a Delaware
corporation (the "Corporation"), hereby appoints B. Frederick Becker, Wayne A.
Sinclair, Paul M. Orzech and George S. Rosic and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the others) and with full power of substitution, to sign on his
behalf and in his name as such Director and/or Officer, a Registration Statement
(and such amendment or amendments thereto as may be necessary) of the
Corporation under the Securities Act of 1933, as amended (the "Act"), together
with all exhibits thereto and other documents in connection therewith, for
filing with the United States Securities and Exchange Commission under the Act
with respect to offers to exchange for a like amount of unregistered securities
(i) $125,000,000 aggregate Liquidation Amount of 7 5/8% Capital Securities of
MMI Capital Trust I, (ii) $128,866,000 principal amount of the Corporation's
7 5/8% Junior Subordinated Deferrable Interest Debentures due December 15, 2027,
and (iii) the Corporation's Guarantee of certain payments on the 7 5/8% Capital
Securities, and to do or cause to be done such other acts and to execute such
other documents which said attorneys and agents may deem necessary or advisable
to enable the Corporation to comply with the Act and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
hereby ratifying and confirming all that such attorneys and agents, or any of
them, may do or cause to be done by virtue of these presents.
Dated January 15, 1998
/s/ Joseph D. Sargent
---------------------------------
Joseph D. Sargent
<PAGE>
EXHIBIT 25.1
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
____________________________________________
MMI Companies, Inc.
(Exact name of obligor as specified in its charter)
Delaware 36-3263253
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
540 Lake Cook Road
Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
____________________________________________
7-5/8% Series B Junior Subordinated Deferrable
Interest Debentures due December 15, 2027
(Title of the indenture securities)
____________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 16th day of January, 1998.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
-------------------------------
/s/ R. Lorenzen
Senior Trust Officer
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin................................ $ 11,760
Interest-bearing balances........................ 4,343
Securities:........................................
Held to maturity securities........................ 2,704
Available for sale securities...................... 37,885
Federal funds sold and securities purchased under
agreements to resell............................. 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,370
Less: Allowance for loan and lease losses 2,760
Less: Allocated transfer risk reserve.... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve........................... 124,597
Trading Assets..................................... 64,630
Premises and fixed assets (including capitalized
leases).......................................... 2,925
Other real estate owned............................ 286
Investments in unconsolidated subsidiaries and
associated companies............................. 232
Customers' liability to this bank on acceptances
outstanding...................................... 2,212
Intangible assets.................................. 1,480
Other assets....................................... 11,117
--------
TOTAL ASSETS....................................... $291,529
========
</TABLE>
-4-
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C>
In domestic offices................................................ $ 86,574
Noninterest-bearing.........................................$31,818
Interest-bearing............................................ 54,756
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's.......................................................... 69,887
Noninterest-bearing ........................................$ 3,777
Interest-bearing............................................ 66,110
Federal funds purchased and securities sold under
agreements to repurchase............................................. 45,307
Demand notes issued to the U.S. Treasury............................. 161
Trading liabilities.................................................. 47,406
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less...................... 4,578
With a remaining maturity of more than one year
through three years................................................ 261
With a remaining maturity of more than three years................. 131
Bank's liability on acceptances executed and
outstanding.......................................................... 2,212
Subordinated notes and debentures.................................... 5,715
Other liabilities.................................................... 12,355
TOTAL LIABILITIES.................................................... 274,587
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock......................................................... 1,211
Surplus (exclude all surplus related to preferred stock)............ 10,294
Undivided profits and capital reserves............................... 5,414
Net unrealized holding gains (losses) on available-for-sale
securities........................................................... 7
Cumulative foreign currency translation adjustments.................. 16
TOTAL EQUITY CAPITAL................................................. 16,942
------
TOTAL LIABILITIES AND EQUITY CAPITAL................................. $291,529
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
EXHIBIT 25.2
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
____________________________________________
MMI Capital Trust I
(Exact name of obligor as specified in its charter)
Delaware 52-2073764
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
540 Lake Cook Road
Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
_______________________________________________
7-5/8% Series B Capital Securities
(Title of the indenture securities)
____________________________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 16th day of January, 1998.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
---------------------------
/s/ R. Lorenzen
Senior Trust Officer
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin.......................................... $ 11,760
Interest-bearing balances.................................. 4,343
Securities:........................................
Held to maturity securities................................... 2,704
Available for sale securities................................. 37,885
Federal funds sold and securities purchased under
agreements to resell....................................... 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,370
Less: Allowance for loan and lease losses 2,760
Less: Allocated transfer risk reserve 13
--------
Loans and leases, net of unearned income,
allowance, and reserve..................................... 124,597
Trading Assets................................................ 64,630
Premises and fixed assets (including capitalized
leases).................................................... 2,925
Other real estate owned....................................... 286
Investments in unconsolidated subsidiaries and
associated companies....................................... 232
Customers' liability to this bank on acceptances
outstanding................................................ 2,212
Intangible assets............................................. 1,480
Other assets.................................................. 11,117
--------
TOTAL ASSETS.................................................. $291,529
========
</TABLE>
-4-
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C> <C>
In domestic offices.................................. $ 86,574
Noninterest-bearing ........................ $31,818
Interest-bearing..............................54,756
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's............................................ 69,887
Noninterest-bearing.............................$ 3,777
Interest-bearing..............................66,110
Federal funds purchased and securities sold under
agreements to repurchase................................ 45,307
Demand notes issued to the U.S. Treasury................ 161
Trading liabilities..................................... 47,406
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less........ 4,578
With a remaining maturity of more than one year
through three years............................... 261
With a remaining maturity of more than three years... 131
Bank's liability on acceptances executed and outstanding 2,212
Subordinated notes and debentures....................... 5,715
Other liabilities....................................... 12,355
TOTAL LIABILITIES....................................... 274,587
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus........... 0
Common stock............................................ 1,211
Surplus (exclude all surplus related to preferred stock) 10,294
Undivided profits and capital reserves.................. 5,414
Net unrealized holding gains (losses)
on available-for-sale securities........................ 7
Cumulative foreign currency translation adjustments..... 16
TOTAL EQUITY CAPITAL.................................... 16,942
--------
TOTAL LIABILITIES AND EQUITY CAPITAL.................... $291,529
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
EXHIBIT 25.3
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
---------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
----------------------------------------------
MMI Companies, Inc.
(Exact name of obligor as specified in its charter)
Delaware 36-3263253
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
540 Lake Cook Road
Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
----------------------------------------------
Exchange Capital Securities Guarantee
MMI Capital Trust I
(Title of the indenture securities)
----------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 16th day of January, 1998.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
-------------------------------
/s/ R. Lorenzen
Senior Trust Officer
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin............................................. $ 11,760
Interest-bearing balances..................................... 4,343
Securities:......................................................
Held to maturity securities...................................... 2,704
Available for sale securities.................................... 37,885
Federal funds sold and securities purchased under
agreements to resell.......................................... 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,370
Less: Allowance for loan and lease losses 2,760
Less: Allocated transfer risk reserve 13
--------
Loans and leases, net of unearned income,
allowance, and reserve........................................ 124,597
Trading Assets................................................... 64,630
Premises and fixed assets (including capitalized
leases)....................................................... 2,925
Other real estate owned.......................................... 286
Investments in unconsolidated subsidiaries and
associated companies.......................................... 232
Customers' liability to this bank on acceptances
outstanding................................................... 2,212
Intangible assets................................................ 1,480
Other assets..................................................... 11,117
--------
TOTAL ASSETS..................................................... $291,529
========
</TABLE>
-4-
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C> <C>
In domestic offices............................................. $ 86,574
Noninterest-bearing .....................................$31,818
Interest-bearing..........................................54,756
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's....................................................... 69,887
Noninterest-bearing .....................................$ 3,777
Interest-bearing..........................................66,110
Federal funds purchased and securities sold under
agreements to repurchase........................................... 45,307
Demand notes issued to the U.S. Treasury........................... 161
Trading liabilities................................................ 47,406
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less................... 4,578
With a remaining maturity of more than one year
through three years......................................... 261
With a remaining maturity of more than three years.............. 131
Bank's liability on acceptances executed and outstanding........... 2,212
Subordinated notes and debentures.................................. 5,715
Other liabilities.................................................. 12,355
TOTAL LIABILITIES.................................................. 274,587
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus...................... 0
Common stock....................................................... 1,211
Surplus (exclude all surplus related to preferred stock).......... 10,294
Undivided profits and capital reserves............................. 5,414
Net unrealized holding gains (losses)
on available-for-sale securities................................... 7
Cumulative foreign currency translation adjustments................ 16
TOTAL EQUITY CAPITAL............................................... 16,942
--------
TOTAL LIABILITIES AND EQUITY CAPITAL............................... $291,529
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
MMI CAPITAL TRUST I
OFFER TO EXCHANGE ITS
7 5/8% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES B CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
7 5/8% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES A CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
TO THE EXTENT DESCRIBED IN THE PROSPECTUS, BY
MMI COMPANIES, INC.
PURSUANT TO THE PROSPECTUS DATED JANUARY , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998 UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer Is:
THE CHASE MANHATTAN BANK
By Mail, Hand or Overnight Delivery:
The Chase Manhattan Bank
55 Water Street
Room 234, North Building
New York, NY 10041
Attn: Carlos Esteves
By Facsimile Transmission:
(For Eligible Institutions Only):
(212) 638-7375 or
(212) 344-9367
CONFIRM BY TELEPHONE:
(212) 638-0828
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE NUMBER
OTHER THAN THE ONES LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meanings
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders (which term, for
purposes of this document, shall include any participant in the Depository
Trust Company ("DTC")) either if (a) certificates are to be forwarded herewith
or (b) tenders are to be made pursuant to the procedures for tender by book-
entry transfer set forth
<PAGE>
under "The Exchange Offer--Procedures for Tendering Original Capital
Securities" in the Prospectus and an Agent's Message (as defined below) is not
delivered. Certificates, or book-entry confirmation of a book-entry transfer
of such Series A Capital Securities (the "Original Capital Securities") into
the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or
facsimile thereof or delivery of an Agent's Message in lieu thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at its address set forth herein on or prior to the
Expiration Date. Tenders by book-entry transfer may also be made by delivering
an Agent's Message in lieu of this Letter of Transmittal. The term "book-entry
confirmation" means a timely confirmation of a book-entry transfer of Original
Capital Securities into the Exchange Agent's account at DTC. The term "Agent's
Message" means a message, transmitted by DTC to and received by the Exchange
Agent and forming part of a book-entry confirmation, which states that DTC has
received an express acknowledgment from the tendering participant, which
acknowledgment states that such participant has received and agrees to be
bound by this Letter of Transmittal and that the Trust and MMI Companies, Inc.
(the "Company") may enforce this Letter of Transmittal against such
participant.
Holders of Original Capital Securities whose certificates (the
"Certificates") for such Original Capital Securities are not immediately
available or who cannot deliver their Certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date or who
cannot complete the procedures for book-entry transfer on or prior to the
Expiration Date, must tender their Original Capital Securities according to
the guaranteed delivery procedures set forth in "The Exchange Offer--
Procedures for Tendering Original Capital Securities" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
DESCRIPTION OF ORIGINAL CAPITAL SECURITIES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATE
LIQUIDATION
AMOUNT OF LIQUIDATION
ORIGINAL AMOUNT OF
CERTIFICATE CAPITAL ORIGINAL
NUMBER(S)* SECURITIES CAPITAL
(ATTACH (ATTACH SECURITIES
NAME(S) AND ADDRESS(ES) ADDITIONAL ADDITIONAL TENDERED
REGISTERED HOLDER LIST IF LIST IF (IF LESS THAN
PLEASE FILL IN, IF BLANK NECESSARY) NECESSARY) ALL)**
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Total Amount
Tendered: $ $
============== ==============
- ---------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all Original Capital
Securities held. Original Capital Securities may be tendered in whole or
in part in denominations of $100,000 and integral multiples of $1,000 in
excess thereof, provided that if any Original Capital Securities are
tendered for exchange in part, the untendered Liquidation Amount thereof
must be $100,000 or any integral multiple of $1,000 in excess thereof.
All Original Capital Securities held shall be deemed tendered unless a
lesser number is specified in this column.
2
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS (DEFINED IN INSTRUCTION 1)
ONLY)
[_] CHECK HERE IF TENDERED ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH
DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _________________________________________________
DTC Account Number ____________________________________________________________
Transaction Code Number _______________________________________________________
By crediting the Original Capital Securities to the Exchange Agent's account
at DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with respect to the Exchange Offer,
including transmitting an Agent's Message to the Exchange Agent in which the
holder of the Original Capital Securities acknowledges and agrees to be bound
by the terms of this Letter of Transmittal, the participant in ATOP confirms
on behalf of itself and the beneficial owners of such Original Capital
Securities all provisions of this Letter of Transmittal applicable to it and
such beneficial owners as fully as if it had completed the information
required herein and executed and transmitted this Letter of Transmittal to the
Exchange Agent.
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder _____________________________________________________
Window Ticket Number (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution which Guaranteed Delivery _________________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution _________________________________________________
DTC Account Number ____________________________________________________________
Transaction Code Number _______________________________________________________
[_] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED ORIGINAL
CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET
FORTH ABOVE.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________________________________
Address: ______________________________________________________________________
Area Code and Telephone Number: _______________________________________________
Contact Person: _______________________________________________________________
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to MMI Capital Trust I, a Delaware statutory
business trust (the "Trust"), and MMI Companies, Inc., a Delaware corporation,
as Sponsor (the "Company"), the above-described aggregate Liquidation Amount
of the Trust's 7 5/8% Series A Capital Securities (the "Original Capital
Securities") in exchange for a like aggregate Liquidation Amount of the
Trust's 7 5/8% Series B Capital Securities (the "Exchange Capital Securities")
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), upon the terms and subject to the conditions set forth in
the Prospectus dated January , 1998 (as the same may be amended or
supplemented from time to time, the "Prospectus"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, together with the
Prospectus, constitutes the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Original Capital Securities tendered herewith in accordance
with the terms and conditions of the Exchange Offer (including, if the
Exchange Offer is extended or amended, the terms and conditions of any such
extension or amendment), the undersigned hereby sells, assigns and transfers
to or upon the order of the Trust all right, title and interest in and to such
Original Capital Securities as are being tendered herewith. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent as its agent
and attorney-in-fact (with full knowledge that the Exchange Agent is also
acting as agent of the Company and the Trust in connection with the Exchange
Offer) with respect to the tendered Original Capital Securities, with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), subject only to the right of
withdrawal described in the Prospectus to (i) deliver Certificates for
Original Capital Securities to the Trust together with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Trust,
upon receipt by the Exchange Agent, as the undersigned's agent, of the
Exchange Capital Securities to be issued in exchange for such Original Capital
Securities, (ii) present Certificates for such Original Capital Securities for
registration of transfer, and to transfer the Original Capital Securities on
the books of the Trust, and (iii) receive for the account of the Trust all
benefits and otherwise exercise all rights of beneficial ownership of such
Original Capital Securities, all in accordance with the terms and conditions
of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
ORIGINAL CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE
ACCEPTED FOR EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND
UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES
AND ENCUMBRANCES, AND THAT THE ORIGINAL CAPITAL SECURITIES TENDERED HEREBY ARE
NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON
REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY,
THE TRUST OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE
EXCHANGE, ASSIGNMENT AND TRANSFER OF THE ORIGINAL CAPITAL SECURITIES TENDERED
HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE
REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF
THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) (which term, for the
purposes of this Letter of Transmittal, shall include any participant in DTC)
of the Original Capital Securities tendered hereby should be printed above, if
they are not already set forth above, as they appear on the Certificates
representing such Original Capital Securities. The Certificate number(s) and
the Original Capital Securities that the undersigned wishes to tender should
be indicated in the appropriate boxes above.
If any tendered Original Capital Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more
Original Capital Securities than are tendered or accepted for exchange,
Certificates for such nonexchanged or nontendered Original Capital Securities
will be returned (or, in the case of Original Capital Securities tendered by
book-entry transfer, such Original Capital Securities will be credited to any
account maintained at DTC), without expense to the tendering holder, promptly
following the expiration or termination of the Exchange Offer.
4
<PAGE>
The undersigned understands that tenders of Original Capital Securities
pursuant to any one of the procedures described under "The Exchange Offer--
Procedures for Tendering Original Capital Securities" in the Prospectus and in
the instructions herein will, upon the Company's and the Trust's acceptance
for exchange of such tendered Original Capital Securities, constitute a
binding agreement between the undersigned, the Company and the Trust upon the
terms and subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the Prospectus, the
Company and the Trust may not be required to accept for exchange any of the
Original Capital Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Capital
Securities be issued in the name of the undersigned or, in the case of a book-
entry transfer of Original Capital Securities, that such Exchange Capital
Securities be credited to the account indicated above maintained at DTC. If
applicable, substitute Certificates representing Original Capital Securities
not exchanged or not accepted for exchange will be issued to the undersigned
or, in the case of a book-entry transfer of Original Capital Securities, will
be credited to the account indicated above maintained at DTC. Similarly,
unless otherwise indicated under "Special Delivery Instructions" below, please
deliver Exchange Capital Securities to the undersigned at the address shown
below the undersigned's signature.
BY TENDERING ORIGINAL CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT ANY
"AFFILIATE" OF THE COMPANY OR THE TRUST WITHIN THE MEANING OF RULE 405 UNDER
THE SECURITIES ACT, (II) ANY EXCHANGE CAPITAL SECURITIES TO BE RECEIVED BY THE
UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III)
THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO
PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF
EXCHANGE CAPITAL SECURITIES TO BE RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF
THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED 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. BY TENDERING ORIGINAL
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, A
HOLDER OF ORIGINAL CAPITAL SECURITIES WHICH IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF
THE DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION
TO THIRD PARTIES, THAT (A) SUCH ORIGINAL CAPITAL SECURITIES HELD BY THE
BROKER-DEALER ARE HELD ONLY AS A NOMINEE OR (B) SUCH ORIGINAL CAPITAL
SECURITIES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT
OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER
THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH
EXCHANGE CAPITAL SECURITIES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY
DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT
IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER
(AS DEFINED BELOW) IN CONNECTION WITH RESALES OF EXCHANGE CAPITAL SECURITIES
RECEIVED IN EXCHANGE FOR ORIGINAL CAPITAL SECURITIES, WHERE SUCH ORIGINAL
CAPITAL SECURITIES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
5
<PAGE>
OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER THE EXPIRATION
DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN
THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH EXCHANGE CAPITAL SECURITIES HAVE
BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH
BROKER-DEALER WHO ACQUIRED ORIGINAL CAPITAL SECURITIES FOR ITS OWN ACCOUNT AS
A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING
BROKER-DEALER"), BY TENDERING SUCH ORIGINAL CAPITAL SECURITIES AND EXECUTING
THIS LETTER OF TRANSMITTAL, OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN
LIEU THEREOF, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY 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 THE PROSPECTUS UNTRUE
IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR
INCORPORATED BY REFERENCE THEREIN, 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 PURSUANT TO THE
PROSPECTUS UNTIL THE COMPANY OR THE TRUST HAS AMENDED OR SUPPLEMENTED THE
PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES
OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER,
OR THE COMPANY OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE
CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE. IF THE COMPANY OR THE
TRUST GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE EXCHANGE CAPITAL
SECURITIES, IT SHALL EXTEND THE 180-DAY PERIOD REFERRED TO ABOVE DURING WHICH
PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE 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 SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES
OF THE EXCHANGE CAPITAL SECURITIES OR TO AND INCLUDING THE DATE ON WHICH THE
COMPANY OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF EXCHANGE CAPITAL
SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
AS A RESULT, A PARTICIPATING BROKER-DEALER WHO INTENDS TO USE THE PROSPECTUS
IN CONNECTION WITH RESALES OF EXCHANGE CAPITAL SECURITIES RECEIVED IN EXCHANGE
FOR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER MUST NOTIFY THE
COMPANY AND THE TRUST, OR CAUSE THE COMPANY AND 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 ABOVE OR MAY BE DELIVERED TO
THE EXCHANGE AGENT AT THE ADDRESS SET FORTH IN THE PROSPECTUS UNDER "THE
EXCHANGE OFFER--EXCHANGE AGENT."
Holders of Original Capital Securities whose Original Capital Securities are
accepted for exchange will not receive Distributions on such Original Capital
Securities, and the undersigned waives the right to receive any Distributions
on such Original Capital Securities accumulated from and after December 23,
1997. Accordingly, a holder of Exchange Capital Securities as of the record
date for the payment of Distributions on June 15, 1998 will be entitled to
Distributions accumulated from and after December 23, 1997.
6
<PAGE>
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company or the Trust to be necessary or desirable to
complete the sale, assignment and transfer of the Original Capital Securities
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees
in bankruptcy, legal representatives, successors and assigns of the
undersigned. Except as stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL
CAPITAL SECURITIES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE
TENDERED THE ORIGINAL CAPITAL SECURITIES AS SET FORTH IN SUCH BOX.
7
<PAGE>
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEAS COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY
INSTRUCTION 2)
Must be signed by registered holder(s) (which term, for purposes of this
document, shall include any participant in DTC) exactly as name(s) appear(s)
on Certificate(s) for the Original Capital Securities hereby tendered or on
the register of holders maintained by the Trust, or by any person authorized
to become the registered holder by endorsements and documents transmitted
herewith (including such opinions of counsel, certifications and other
information as may be required by the Trust or the Property Trustee for the
Original Capital Securities to comply with the restrictions on transfer
applicable to the Original Capital Securities). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
------------------------------------
------------------------------------
(Signature of Holder(s) or
Authorized Signatory)
Date: _________________________, 1998
Name(s) _____________________________________________________________________
(Please Print)
Capacity (full title) _______________________________________________________
Address _____________________________________________________________________
------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number ______________________________________________
Tax Identification or Social Security Number(s) _____________________________
SIGNATURE(S) GUARANTEE
(IF REQUIRED--SEE INSTRUCTIONS 2 AND 5)
------------------------------------
(Authorized Signature)
Date: _________________________, 1998
Name of Eligible Institution Guaranteeing Signatures ________________________
Capacity (full title) _______________________________________________________
(Please Print)
Address _____________________________________________________________________
------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number ______________________________________________
8
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the
Exchange Capital Securities or any
Original Capital Securities that
are not tendered are to be issued
in the name of someone other than
the registered holder of the
Original Capital Securities whose
name appears above.
Issue
[_] Exchange Capital Securities
and/or
[_] Original Capital Securities
not tendered to:
Name ______________________________
Address ___________________________
-----------------------------
(Include Zip Code)
Area Code and
Telephone Number __________________
Tax Identification or
Social Security Number ____________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the
Exchange Capital Securities or any
Original Capital Securities that
are not tendered are to be sent to
someone other than the registered
holder of the Original Capital
Securities whose name appears
above, or to such registered
holder at an address other than
that shown above.
Mail
[_] Exchange Capital Securities
and/or
[_] Original Capital Securities
not tendered to:
Name ______________________________
Address ___________________________
-----------------------------
(Include Zip Code)
Area Code and
Telephone Number __________________
Tax Identification or
Social Security Number ____________
9
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES.
This Letter of Transmittal is to be completed either if (a) Certificates are
to be forwarded herewith or (b) tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth under "The Exchange
Offer--Procedures for Tendering Original Capital Securities" in the Prospectus
and an Agent's Message is not delivered. Certificates, or book-entry
confirmation of a book-entry transfer of such Original Capital Securities into
the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in lieu thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date. Original Capital Securities may be tendered in whole or in part in the
liquidation amount of $100,000 (100 Capital Securities) and integral multiples
of $1,000 in excess thereof, provided that, if any Original Capital Securities
are tendered for exchange in part, the untendered liquidation amount thereof
must be $100,000 (100 Capital Securities) or any integral multiple of $1,000
in excess thereof.
Holders who wish to tender their Original Capital Securities and (i) whose
Original Capital Securities are not immediately available or (ii) who cannot
deliver their Original Capital Securities, this Letter of Transmittal and all
other required documents to the Exchange Agent on or prior to the Expiration
Date or (iii) who cannot complete the procedures for delivery by book-entry
transfer on or prior to the Expiration Date, may tender their Original Capital
Securities by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth under "The
Exchange Offer--Procedures for Tendering Original Capital Securities" in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution (as defined below); (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
made available by the Company and the Trust, must be received by the Exchange
Agent on or prior to the Expiration Date; and (iii) the Certificates (or a
book-entry confirmation (as defined in the Prospectus)) representing all
tendered Original Capital Securities, in proper form for transfer, together
with a Letter of Transmittal (or facsimile thereof or Agent's Message in lieu
thereof), properly completed and duly executed, with any required signature
guarantees and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Exchange Offer--Procedures for Tendering
Original Capital Securities" in the Prospectus.
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. For Original
Capital Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on
or prior to the Expiration Date. As used herein and in the Prospectus,
"Eligible Institution" means 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 recognized program.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND THE 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
10
<PAGE>
SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY ON OR PRIOR TO THE EXPIRATION DATE. NO DOCUMENTS SHOULD
BE SENT TO THE COMPANY OR THE TRUST. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Neither the Company nor the Trust will accept any alternative, conditional
or contingent tenders. Each tendering holder, by execution of a Letter of
Transmittal (or facsimile thereof or Agent's message in lieu thereof), waives
any right to receive any notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES.
No signature guarantee on this Letter of Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder (which
term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the owner of the
Original Capital Securities) of Original Capital Securities tendered
herewith, unless such holder has completed either the box entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions"
above, or
(ii) such Original Capital Securities are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature on
this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE.
If the space provided in the box captioned "Description of Original Capital
Securities" is inadequate, the Certificate numbers and/or the liquidation
amount of Original Capital Securities and any other required information
should be listed on a separate signed schedule which is attached to this
Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS.
Tenders of Original Capital Securities will be accepted only in the
liquidation amount of $100,000 (100 Capital Securities) and integral multiples
of $1,000 in excess thereof, provided that if any Original Capital Securities
are tendered for exchange in part, the untendered liquidation amount thereof
must be $100,000 (100 Capital Securities) or any integral multiple of $1,000
in excess thereof. If less than all of the Original Capital Securities
evidenced by any Certificate submitted are to be tendered, fill in the
liquidation amount of Original Capital Securities which are to be tendered in
the box entitled "Liquidation Amount of Original Capital Securities Tendered
(If Less than All)." In such case, a new Certificate for the remainder of the
Original Capital Securities that were evidenced by your Old Certificate will
be sent to the holder of the Original Capital Securities, promptly after the
Expiration Date unless the appropriate boxes on this Letter of Transmittal are
completed. All Original Capital Securities represented by Certificates
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
Except as otherwise provided herein, tenders of Original Capital Securities
may be withdrawn at any time on or prior to the Expiration Date. In order for
a withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth above or in the Prospectus on or prior
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Original Capital Securities to be withdrawn, the
aggregate liquidation amount of Original Capital Securities to be withdrawn,
and (if Certificates for Original Capital Securities have been tendered) the
name of the registered holder of the Original Capital Securities as set forth
on the Certificate for the Original Capital Securities, if different from that
of the person who tendered such Original Capital Securities. If Certificates
for the Original Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
Certificates for the Original Capital Securities, the tendering holder must
submit the serial numbers shown on the particular Certificates for the
Original Capital Securities to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible
11
<PAGE>
Institution, except in the case of Original Capital Securities tendered for
the account of an Eligible Institution. If Original Capital Securities have
been tendered pursuant to the procedures for book-entry transfer set forth
under "The Exchange Offer--Procedures for Tendering Original Capital
Securities," the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Original Capital
Securities, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written or facsimile transmission on or
prior to the Expiration Date. Withdrawals of tenders of Original Capital
Securities may not be rescinded. Original Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering Original Capital
Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Company, the Trust, any affiliates or
assigns of the Company 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 Original Capital Securities which have been tendered but
which are withdrawn on or prior to the Expiration Date will be returned to the
holder thereof without cost to such holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the
Original Capital Securities tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) or on a
security position listing without alteration, enlargement or any change
whatsoever.
If any of the Original Capital Securities tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any tendered Original Capital Securities are registered in different
names on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal (or facsimiles thereof or
Agent's Messages in lieu thereof) as there are different registrations of
Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and must submit proper evidence
satisfactory to the Company and the Trust, in their sole discretion, of such
persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner of the
Original Capital Securities listed and transmitted hereby, no endorsement of
Certificates or separate bond powers are required unless Exchange Capital
Securities are to be issued in the name of a person other than the registered
holder. Signatures on such Certificates or bond powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the Original Capital Securities listed, the Certificates
must be endorsed or accompanied by appropriate bond powers, signed exactly as
the name of the registered owner appears on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information
as the Company, the Trust or the Exchange Agent may require in accordance with
the restrictions on transfer applicable to the Original Capital Securities.
Signatures on such Certificates or bond powers must be guaranteed by an
Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
If Exchange Capital Securities are to be issued in the name of a person
other than the signer of this Letter of Transmittal, or if Exchange Capital
Securities are to be sent to someone other than the signer of this Letter of
Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal
12
<PAGE>
should be completed. Certificates for Original Capital Securities not
exchanged will be returned by mail or, if tendered by book-entry transfer, by
crediting the account indicated above maintained at DTC unless the appropriate
boxes on this Letter of Transmittal are completed. See Instruction 4.
7. IRREGULARITIES.
The Company and the Trust will determine, in their sole discretion, all
questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Original Capital
Securities, which determination shall be final and binding on all parties. The
Company and the Trust reserve the absolute right to reject any and all tenders
determined by either of them not to be in proper form or the acceptance of
which, or exchange for, may, in the view of counsel to the Company or the
Trust, be unlawful. The Company and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer--Conditions to
Exchange Offer," or any conditions or irregularities in any tender of Original
Capital Securities of any particular holder whether or not similar conditions
or irregularities are waived in the case of other holders. The Company and the
Trust's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Original Capital Securities will be deemed to
have been validly made until all irregularities with respect to such tender
have been cured or waived. The Company, the Trust, any affiliates or assigns
of the Company, the Trust, the Exchange Agent, or any other person shall not
be under a duty to give notification of any irregularities in tenders or incur
any liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Exchange Agent
at its address and telephone number set forth on the front of this Letter of
Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed
Delivery and the Letter of Transmittal may be obtained from the Exchange Agent
or from your broker, dealer, commercial bank, trust company or other nominee.
9. LOST, DESTROYED OR STOLEN CERTIFICATES.
If any Certificates representing Original Capital Securities have been lost,
destroyed or stolen, the holder should promptly notify the Exchange Agent. The
holder will then be instructed as to the steps that must be taken in order to
replace the Certificates. This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost, destroyed or
stolen Certificates have been followed.
10. SECURITY TRANSFER TAXES.
Holders who tender their Original 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 Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer tax (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 exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
11. INCORPORATION OF LETTER OF TRANSMITTAL.
This Letter of Transmittal shall be deemed to be incorporated in and
acknowledged and accepted by any tender through the DTC's ATOP procedures by
any participant in DTC on behalf of itself and the beneficial owners of any
Original Capital Securities so tendered.
13
<PAGE>
12. WAVIER OF CONDITIONS.
The Company and the Trust reserve the absolute right to waive satisfaction
of any or all conditions enumerated in the Prospectus.
13. NO CONDITIONAL TENDERS.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Original Capital Securities, by execution of this Letter
of Transmittal, shall waive any right to receive notice of the acceptance of
Original Capital Securities for exchange.
Neither the Company, the Trust, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Original Capital Securities nor shall any of them incur any
liability for failure to give any such notice.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF OR AN AGENT'S
MESSAGE IN LIEU HEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE EXCHANGE AGENT AT OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Original Capital
Securities are accepted for exchange is required by law to provide the
Exchange Agent with such holder's correct taxpayer identification number
("TIN") on Substitute Form W-9 included herein or otherwise establish a basis
for exemption from backup withholding. If such holder is an individual, the
TIN is his social security number. If the Exchange Agent is not provided with
the correct TIN, the Internal Revenue Service may subject the holder or
transferee to a $50 penalty. In addition, delivery of such holder's Exchange
Capital Securities may be subject to backup withholding. Failure to comply
truthfully with the backup withholding requirements also may result in the
imposition of severe criminal and/or civil fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may quality
as an exempt recipient by submitting to the Exchange Agent a properly
completed Internal Revenue Service Form W-8, signed under penalties of
perjury, attesting to that holder's foreign status. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the holder or other transferee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Original
Capital Securities exchanged in the Exchange Offer, the holder is required to
provide the Exchange Agent with either: (i) the holder's correct TIN by
completing the form included herein, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and
that (A) the holder has not been notified by the Internal Revenue Service that
the holder is subject to backup withholding as a result of failure to report
all interest or dividends or (B) the Internal Revenue Service has notified the
holder that the holder is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
14
<PAGE>
The box in Part 2 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 2 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN
is provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-
9. If the holder furnishes the Exchange Agent with its TIN within 60 days
after the date of the Substitute Form W-9, the amounts retained during the 60-
day period will be remitted to the holder and no further amounts shall be
retained or withheld from payments made to the holder thereafter. If, however,
the holder has not provided the Exchange Agent with its TIN within such 60-day
period, amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
NUMBER TO GIVE THE DEPOSITARY
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Original Capital Securities or of the last transferee appearing on the
transfers attached to, or endorsed on, the Original Capital Securities. If the
Original Capital Securities are held in more than one name or are held not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
15
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
PAYOR'S NAME: THE CHASE MANHATTAN BANK
Social Security Number or
Part 1 -- PLEASE Employer
PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
SUBSTITUTE Identification Number
FORM W-9 TIN: ____________________
---------------------------------------------------------
DEPARTMENT OF THE (2) I am not subject to backup withholding either
TREASURY because (i) I am exempt from backup withholding,
(ii) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interests or dividends, or (iii) the
IRS has notified me that I am no longer subject
to backup withholding.
Part 2 -- Awaiting TIN / /
CERTIFICATION -- UNDER PENALTIES OF PERJURY, I
CERTIFY THAT:
INTERNAL REVENUE (1) The number shown on this form is my correct
SERVICE Taxpayer Identification Number (or am waiting
for a number to be issued to me) and
(3) Any other information provided in this form is
PAYER'S REQUEST true and correct.
FOR CERTIFICATION INSTRUCTIONS -- You must cross out
item (2) above if you have been notified by the IRS
TAXPAYER that you are currently subject to backup withholding
IDENTIFICATION because of underreporting interest or dividends on
NUMBER ("TIN") your tax return. However, if after being notified by
the IRS that you were subject to backup withholding
you received another notification from the IRS that
you are no longer subject to backup withholding, do
not cross out such item (2).
---------------------------------------------------------
SIGNATURE ____________________________ DATE _________
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
GUIDELINES FOR CERTIFICAITON OF TAXPAYER IDENTIFICAITON NUMBER ON FORM W-
9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of all reportable
payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within 60
days.
-------------------------------------- ,
Signature 1998
Date
16
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY FOR TENDER
OF 7-5/8% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES A CAPITAL SECURITY)
OF MMI CAPITAL TRUST I
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Trust's (as defined below) 7-5/8% Series A Capital
Securities (the "Original Capital Securities") are not immediately available,
(ii) Original Capital Securities, the Letter of Transmittal and all other
required documents cannot be delivered to The Chase Manhattan Bank (the
"Exchange Agent") on or prior to the Expiration Date (as defined in the
Prospectus referred to below) or (iii) the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand, overnight courier or mail, or transmitted by
facsimile transmission, to the Exchange Agent. See "The Exchange Offer--
Procedures for Tendering Original Capital Securities" in the Prospectus. In
addition, in order to utilize the guaranteed delivery procedure to tender
Original Capital Securities pursuant to the Exchange Offer, a completed, signed
and dated Letter of Transmittal relating to the Original Capital Securities (or
facsimile thereof) must also be received by the Exchange Agent on or prior to
the Expiration Date. Capitalized terms not defined herein have the meanings
assigned to them in the Prospectus.
The Exchange Agent For The Exchange Offer Is:
THE CHASE MANHATTAN BANK
By Mail: Facsimile Transmissions: By Hand or Overnight
(Registered or Certified (Eligible Institutions Only) Delivery:
Mail recommended) (212) 638-7375 or
The Chase Manhattan Bank (212) 344-9367 The Chase Manhattan Bank
55 Water Street, Room 234 To Confirm by Telephone 55 Water Street, Room 234
North Building or for Information Call: North Building
New York, NY 10041 (212) 638-0828 New York, NY 10041
Attn: Carlos Esteves Attn: Carlos Esteves
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to MMI Capital Trust I, a Delaware business
trust (the "Trust") and to MMI Companies, Inc., a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated January __, 1998 (as the same may be amended or supplemented
from time to time, the "Prospectus"), and the related Letter of Transmittal
(which together constitute the "Exchange Offer"), receipt of which is hereby
acknowledged, the aggregate liquidation amount of 7-5/8% Series A Capital
Securities set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer--Procedures for
Tendering Original Capital Securities."
Aggregate Liquidation Amount*
--------------------------------------------------
Name(s) of Registered Holder(s):
-----------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Amount Tendered: $
--------------------------------------------------------------
Certificate No.(s) (if available):
---------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Total Liquidation Amount Represented by 7-5/8% Series A Capital Securities
Certificate(s))
$
------------------------------------------------------------------------------
If 7-5/8% Series A Capital Securities will be tendered by book-entry transfer,
provide the following information:
DTC Account Number:
------------------------------------------------------------
Date:
--------------------------------------------------------------------------
*Must be in denominations of a Liquidation Amount of $1,000 and any integral
multiple thereof, and not less than $100,000 aggregate Liquidation Amount.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
X
------------------------------------------------------------------------------
X
------------------------------------------------------------------------------
<PAGE>
SIGNATURE(S) OF OWNER(S) OR DATE AUTHORIZED SIGNATORY
- -------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER:
Must be signed by the holder(s) of the 7-5/8 Series A Capital Securities as
their name(s) appear(s) on certificates for 7-5/8 Series A Capital Securities or
on a security position listing, or by person(s) authorized to become registered
holder(s) by endorsement and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
Please print name(s) and address(es)
Name(s):
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Capacity:
----------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
-2-
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker or government securities 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 recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the 7 5/8%
Series A Capital Securities tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such 7 5/8% Series A Capital
Securities to the Exchange Agent's account at The Depository Trust Company
("DTC"), pursuant to the procedures for book-entry transfer set forth in the
Prospectus, in either case together with one or more properly completed and duly
executed Letter(s) of Transmittal (or facsimile thereof) and any other required
documents within three business days after the date of execution of this Notice
of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the 7 5/8% Series A Capital Securities tendered hereby to the
Exchange Agent within the time period set forth above and that failure to do so
could result in a financial loss to the undersigned.
(PLEASE TYPE OR PRINT)
Name of Firm:
----------------------------------- -----------------------------
Authorized Signature
Address: Title:
---------------------------------------- ----------------------
Dated:
- ------------------------------------------------- ----------------------
Zip Code
- -------------------------------------------------
AREA CODE AND TELEPHONE NO.
NOTE: DO NOT SEND CERTIFICATES FOR 7 5/8% SERIES A CAPITAL SECURITIES WITH THIS
FORM. CERTIFICATES FOR 7 5/8% SERIES A CAPITAL SECURITIES SHOULD BE SENT
ONLY WITH YOUR LETTER OF TRANSMITTAL.
-3-
<PAGE>
EXHIBIT 99.3
January ___, 1998
EXCHANGE AGENT AGREEMENT
------------------------
The Chase Manhattan Bank
450 West 33rd Street
15th floor
New York, New York 10001
Ladies and Gentlemen:
MMI Capital Trust I (the "Trust") and MMI Companies, Inc. (the
"Corporation") propose to make an offer (the "Exchange Offer") to exchange the
Trust's outstanding 7 5/8% Series A Capital Securities (the "Original Capital
Securities") for the Trust's registered 7 5/8% Series B Capital Securities (the
"Exchange Capital Securities"). The terms and conditions of the Exchange Offer
as currently contemplated are set forth in a prospectus, dated January ___, 1998
(the "Prospectus"), proposed to be distributed to all record holders of the
Original Capital Securities. The Original Capital Securities and the Exchange
Capital Securities are collectively referred to herein as the "Capital
Securities" or the "Securities".
The Trust hereby appoints The Chase Manhattan Bank to act as exchange
agent (the "Exchange Agent") in connection with the Exchange Offer. Reference
hereinafter to "you" shall refer to The Chase Manhattan Bank.
The Exchange Offer is expected to be commenced by the Trust on or about
January ___, 1998. The Letter of Transmittal accompanying the Prospectus is to
be used by the holders of the Original Capital Securities to accept the Exchange
Offer, and contains instructions with respect to the delivery of certificates
for Original Capital Securities tendered.
The Exchange Offer shall expire at 5:00 p.m., New York City time, on
___________, 1998 or on such later date or time to which the Trust may extend
the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions
set forth in the Prospectus, the Trust and the Corporation expressly reserve the
right to extend the Exchange Offer from time to time and may extend the
Exchange Offer by giving oral (confirmed in writing) or
<PAGE>
written notice to you before 9:00 a.m., New York City time, on the business
day following the previously scheduled Expiration Date.
The Trust and the Corporation expressly reserve the right to delay, amend
or terminate the Exchange Offer, and not to accept for exchange any Original
Capital Securities not theretofore accepted for exchange, upon the occurrence of
any of the conditions of the Exchange Offer specified in the Prospectus under
the caption "The Exchange Offer." The Trust or the Corporation will give to you
as promptly as practicable oral (confirmed in writing) or written notice of any
delay, amendment, termination or nonacceptance.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1. You will perform such duties and only such duties as are specifically
set forth herein and such duties which are necessarily incidental thereto.
2. You will establish an account with respect to the Original Capital
Securities at The Depository Trust Company (the "Book-Entry Transfer Facility")
for purposes of the Exchange Offer within two business days after the date of
the Prospectus, and any financial institution that is a participant in the Book-
Entry Transfer Facility's systems may make book-entry delivery of the Original
Capital Securities by causing the Book-Entry Transfer Facility to transfer such
Original Capital Securities into your account in accordance with the Book-Entry
Transfer Facility's procedure for such transfer.
3. You are to examine each of the Letters of Transmittal and certificates
for Original Capital Securities (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility) and any other documents
delivered or mailed to you by or for holders of the Original Capital Securities
to ascertain whether: (i) the Letters of Transmittal and any such other
documents are duly executed and properly completed in accordance with
instructions set forth therein and (ii) the Original Capital Securities have
otherwise been properly tendered. In each case where the Letter of Transmittal
or any other document has been improperly completed or executed or any of the
certificates for Original Capital Securities are not in proper form for transfer
or some other irregularity in connection with the acceptance of the Exchange
Offer exists you will endeavor to inform the presenters of the need for
fulfillment of all requirements and to take any other action as may be necessary
or advisable to cause such irregularity to be corrected.
4. With the approval of the Chairman of the Board, the Executive Vice
President or any Vice President of the Corporation (such approval, if given
orally, promptly to be confirmed in writing) or any other party designed by such
officer in writing, you are authorized to waive any irregularities in connection
with any tender of Original Capital Securities pursuant to the Exchange Offer.
5. Tenders of Original Capital Securities may be made only as set forth in
the Letter of Transmittal and Original Capital Securities shall be considered
properly tendered to you only when tendered in accordance with the procedures
set forth therein.
2
<PAGE>
Notwithstanding the provisions of this paragraph 5, Original Capital
Securities which the Chairman of the Board, the Executive Vice President or any
Vice President of the Corporation or any other party designated by any such
officer in writing shall approve as having been properly tendered shall be
considered to be properly tendered (such approval, if given orally, promptly
shall be confirmed in writing).
6. You shall advise the Corporation with respect to any Original Capital
Securities delivered subsequent to the Expiration Date and accept its
instructions with respect to disposition of such Original Capital Securities.
7. You shall accept tenders:
(a) in cases where the Original Capital Securities are registered in
two or more names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only when
proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Original Capital
Securities provided that customary transfer requirements, including any
applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Original Capital Securities where
so indicated and as permitted in the Letter of Transmittal and deliver
certificates for Original Capital Securities to the transfer agent for split-up
and return any untendered Original Capital Securities to the holder (or such
other person as may be designated in the Letter of Transmittal) as promptly as
practicable after expiration or termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Trust will notify you (such notice if given orally, promptly to be
confirmed in writing) of its acceptance, promptly after the Expiration Date, of
all Original Capital Securities for Exchange Capital Securities and cause such
Original Capital Securities to be canceled. Delivery of Exchange Capital
Securities will be made on behalf of the Trust by you at the rate of $1,000
liquidation amount of Exchange Capital Securities for each $1,000 liquidation
amount of the Original Capital Securities tendered promptly after notice (such
notice if given orally, promptly to be confirmed in writing) of acceptance of
said Original Capital Securities by the Trust; provided, however, that in all
cases, Original Capital Securities tendered pursuant to the Exchange Offer will
be exchanged only after timely receipt by you of certificates for such Original
Capital Securities (or confirmation of book-entry transfer into your account at
the Book-Entry Transfer Facility), a properly completed and duly executed Letter
of Transmittal (or facsimile thereof) with any required signature guarantees, or
an Agent's Message (as defined in the Prospectus) in lieu of the Letter of
Transmittal, and any other required document. You shall issue Exchange Capital
Securities only in aggregate liquidation amounts of $1,000 or any integral
multiple thereof.
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9. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the Prospectus and the
Letter of Transmittal, Original Capital Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date.
10. The Trust shall not be required to exchange any Original Capital
Securities tendered if any of the conditions set forth in the Exchange Offer are
not met. Notice of any decision by the Trust not to exchange any Original
Capital Securities tendered shall be given (such notices if given orally,
promptly shall be confirmed in writing) by the Trust or the Corporation to you.
11. If, pursuant to the Exchange Offer, the Trust does not accept for
exchange all or part of the Original Capital Securities tendered because of an
invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer" or otherwise, you shall as
soon as practicable after the expiration or termination of the Exchange Offer
return those certificates for unaccepted Original Capital Securities (or effect
appropriate book-entry transfer), together with any related required documents
and the Letters of Transmittal relating thereto that are in your possession, to
the persons who deposited them.
12. All certificates for reissued Original Capital Securities, unaccepted
Original Capital Securities or for Exchange Capital Securities shall be
forwarded by (a) first-class mail, postage pre-paid under a blanket surety bond
protecting you and the Trust from loss or liability arising out of the non-
receipt or non-delivery of such certificates or (b) by registered mail insured
separately for the replacement value of each of such certificates.
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any persons to solicit tenders.
14. As Exchange Agent hereunder you:
(a) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of any of
the certificates or the Original Capital Securities represented thereby
deposited with you pursuant to the Exchange Offer, and will not be required to
and will make no representation as to the validity, value or genuineness of the
Exchange Offer;
(b) shall not be obligated to take any legal action hereunder which
might in your reasonable judgment involve any expense or liability, unless you
shall have been furnished with reasonable indemnity;
(c) shall not be liable to the Trust or the Corporation for any
action taken or omitted by you, or any action suffered by you to be taken or
omitted, without negligence, misconduct or bad faith on your part, by reason of
or as a result of the administration of your duties hereunder in accordance
with the terms and conditions of this Agreement or by reason of your compliance
with the instructions set forth herein or with any written or oral
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instructions delivered to you pursuant hereto, and may reasonably rely on and
shall be protected in acting in good faith in reliance upon any certificate,
instrument, opinion, notice, letter, facsimile or other document or security
delivered to you and reasonably believed by you to be genuine and to have been
signed by the proper party or parties;
(d) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution and
validity and effectiveness of its provisions, but also as to the truth and
accuracy of any information contained therein, which you shall in good faith
reasonably believe to be genuine or to have been signed or represented by a
proper person or persons;
(e) may rely on and shall be protected in acting upon written notice or
oral instructions from any officer of the Corporation or any trustee of the
Trust with respect to the Exchange Offer;
(f) shall not advise any person tendering Original Capital Securities
pursuant to the Exchange Offer as to the wisdom of making such tender or as to
the market value or decline or appreciation in market value of any Original
Capital Securities;
(g) may consult with counsel and the written advice or opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by you hereunder in good faith and in
reliance thereon.
15. You shall send to all holders of Original Capital Securities a copy of
the Prospectus, the Letter of Transmittal, the Notice of Guaranteed Delivery, as
defined in the Prospectus, and such other documents (collectively, the "Exchange
Offer Documents") as may be furnished by the Trust or the Corporation to
commence the Exchange Offer and take such other action as may from time to time
be requested by the Trust or the Corporation or its counsel (and such other
action as you may reasonably deem appropriate) to furnish copies of the Exchange
Offer Documents or such other forms as may be approved from time to time by the
Trust or the Corporation, to all holders of Original Capital Securities and to
all persons requesting such documents and to accept and comply with telephone
requests for information relating to the Exchange Offer. The Corporation will
furnish you with copies of such documents at your request. All other requests
for information relating to the Exchange Offer shall be directed to the
Corporation, Attention: Paul M. Orzech, Executive Vice President and Chief
Financial Officer, at the Corporation's offices at 540 Lake Cook Road,
Deerfield, IL 60015, telephone (847) 940-7550.
16. You shall advise by facsimile transmission or telephone, and promptly
thereafter confirm in writing to Paul M. Orzech of the Corporation, and such
other person or persons as the Trust may request in writing, not later than 7:00
p.m., New York City time, each business day, and more frequently if reasonably
requested, up to and including the Expiration Date, as to the number of Original
Capital Securities which have been tendered pursuant to the Exchange Offer and
the items received by you pursuant to this Agreement, separately reporting and
giving cumulative totals as to items properly received and items improperly
received. In addition, you will also inform, and cooperate in making available
to, the Trust
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or any such other person or persons as the Corporation requests in writing from
time to time prior to the Expiration Date, of such other information as it
reasonably requests. Such cooperation shall include, without limitation, the
granting by you to the Corporation and such person as the Corporation may
request of access to those persons on your staff who are responsible for
receiving tenders, in order to ensure that immediately prior to the Expiration
Date the Corporation shall have received information in sufficient detail to
enable it to decide whether to extend the Exchange Offer. You shall prepare a
final list of all persons whose tenders were accepted, the aggregate principal
amount of Original Capital Securities tendered and the aggregate principal
amount of Original Capital Securities accepted and deliver said list to the
Corporation.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall be
stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
customarily preserve other records pertaining to the transfer of securities.
You shall dispose of unused Letters of Transmittal and other surplus materials
in accordance with your customary procedures.
18. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you for the
payment of transfer taxes by reasons of amounts, if any, borrowed by the
Corporation, or any of its subsidiaries or affiliates pursuant to any loan or
credit agreement with you or for compensation owned to you hereunder.
19. For services rendered as Exchange Agent hereunder you shall be
entitled to such compensation and reimbursement of out-of-pocket expenses as is
set forth on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus, the Letter of
Transmittal and the other documents associated with the Exchange Offer attached
hereto and further acknowledge that you have examined each of them. Any
inconsistency between this Agreement, on the one hand, and the Prospectus, the
Letter of Transmittal and such other forms (as they may be amended from time to
time), on the other hand, shall be resolved in favor of the latter two
documents, except with respect to the duties, liabilities and indemnification of
you as Exchange Agent which shall be controlled by this Agreement.
21. The Corporation, on behalf of itself and the Trust, agrees to
indemnify and hold you harmless in your capacity as Exchange Agent hereunder
against any liability, cost or expense, including reasonable attorneys' fees and
expenses, arising out of or in connection with your appointment as Exchange
Agent and the performance of your duties hereunder, including, without
limitation, any act, omission, delay or refusal made by you in reasonable
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Original Capital Securities reasonably believed by you
in good faith to be authorized, and in delaying or refusing in good faith to
accept any tenders or effect any transfer of Original Capital
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Securities; provided, however, that neither the Trust nor the Corporation shall
be liable for indemnification or otherwise for any loss, liability, cost or
expense to the extent arising out of your negligence, willful misconduct or bad
faith.
22. You shall deliver or cause to be delivered, in a timely manner, to
each governmental authority to which any transfer taxes are payable in respect
of the exchange of Original Capital Securities your check in the amount of all
transfer taxes so payable, and the Corporation shall reimburse you for the
amount of any and all transfer taxes payable in respect of the exchange of
Original Capital Securities; provided, however, that you shall reimburse the
Corporation for amounts refunded to you in respect of your payment of any such
transfer taxes, at such time as such refund is received by you.
23. This Agreement and your appointment as Exchange Agent hereunder shall
be construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state,
and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
24. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
25. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
26. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
27. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to the Trust or the Corporation:
MMI Companies, Inc.
540 Lake Cook Road
Deerfield, IL 60015
Facsimile: (847) 374-1330
Attention: Paul M. Orzech, Executive Vice President and
Chief Financial Officer
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If to the Exchange Agent:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Facsimile: (212) 946-8160
Attention: Global Trust Services.
28. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 18, 19 and 21 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver
to the Corporation any certificates for Original Capital Securities, funds or
property (including, without limitation, Letters of Transmittal and any other
documents relating to the Exchange Offer) then held by you as Exchange Agent
under this Agreement.
29. This Agreement shall be binding and effective as of the date hereof.
Please acknowledge receipt of this Agreement and confirm the arrangements
herein provided by signing and returning the enclosed copy.
MMI CAPITAL TRUST I
By:
-------------------------------------
Name:
Title: Administrative Trustee
MMI COMPANIES, INC.
By:
--------------------------------------
Name:
Title:
Accepted as the date
first above written:
THE CHASE MANHATTAN BANK
By:
------------------------------
Name:
Title:
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MMI CAPITAL TRUST I
Exchange Agency
Fee Schedule
Flat Fee............................................. $_________
Out-Of-Pocket Expenses
Fees quoted do not include out-of-pocket expenses including, but not
limited to, reasonable legal fees and expenses, facsimile, stationary, postage,
telephone, overnight courier and messenger costs, all of which shall be paid by
the Corporation.
