<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _____________ to ____________.
Commission file number 0-14737
TRENWICK GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1152790
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Metro Center
One Station Place
Stamford, Connecticut 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 353-5500
None
__________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
____ ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock.
Class Outstanding at April 30, 1998
Common Stock, $.10 par value 12,056,699
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TRENWICK GROUP INC.
INDEX
Page
PART I. Financial Information Number
Consolidated Balance Sheet
March 31, 1998 and December 31, 1997 3
Consolidated Statement of Income
Three Months Ended March 31, 1998 and 1997 4
Consolidated Statement of Changes in Common Stockholders' Equity
Three Months Ended March 31, 1998 and 1997 5
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1998 and 1997 6
Consolidated Statement of Comprehensive Income
Three Months Ended March 31, 1998 and 1997 7
Notes to Consolidated Financial Statements 8-11
Management's Discussion and Analysis
of Financial Condition and Results of Operations 12-15
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE> 3
TRENWICK GROUP INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
(dollars in thousands)
<S> <C> <C>
Assets
Securities available for sale at fair value:
Debt securities (amortized cost: $842,280 and $788,727) $ 864,748 $ 812,314
Equity securities (cost: $40,845 and $31,603) 50,841 39,163
Cash and cash equivalents 108,178 12,847
----------- -----------
Total investments and cash 1,023,767 864,324
Accrued investment income 14,513 10,969
Receivables from ceding insurers 139,338 91,867
Reinsurance recoverable balances, net 108,901 66,361
Deferred policy acquisition costs 33,764 22,524
Net deferred income taxes 14,092 12,451
Other assets 36,454 19,427
----------- -----------
Total assets $ 1,370,829 $ 1,087,923
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Unpaid claims and claims expenses $ 652,437 $ 518,387
Unearned premium income 149,419 87,020
6.7% senior notes due 2003 75,000 --
Other liabilities 18,729 14,867
----------- -----------
Total liabilities 895,585 620,274
----------- -----------
Company-obligated mandatorily redeemable preferred
capital securities of subsidiary trust holding solely junior
subordinated debentures of Trenwick Group Inc. 110,000 110,000
----------- -----------
Common stockholders' equity:
Common stock, $.10 par value, 30,000,000 shares
authorized; 12,052,199 and 11,951,060 shares outstanding 1,205 1,195
Additional paid-in capital 157,041 153,714
Retained earnings 189,450 183,218
Accumulated other comprehensive income 21,102 20,245
Deferred compensation under stock award plan (3,554) (723)
----------- -----------
Total common stockholders' equity 365,244 357,649
----------- -----------
Total liabilities and stockholders' equity $ 1,370,829 $ 1,087,923
=========== ===========
</TABLE>
All share and per share information reflects a 3-for-2 stock split, paid on
April 15, 1997.
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1998 1997
------- -------
(in thousands except per share data)
<S> <C> <C>
Revenues:
Net premiums earned $45,824 $53,914
Net investment income 12,384 11,729
Net realized investment gains 720 1,915
Other income 12 --
------- -------
Total revenues 58,940 67,558
------- -------
Expenses:
Claims and claims expenses incurred 26,505 30,804
Policy acquisition costs 15,158 17,377
Underwriting expenses 4,280 3,989
Interest expense 58 890
Minority interest in subsidiary trust 2,426 1,617
------- -------
Total expenses 48,427 54,677
------- -------
Income before income taxes and extraordinary item 10,513 12,881
Income taxes 1,268 3,080
------- -------
Income before extraordinary item 9,245 9,801
Extraordinary loss on debt redemption,
net of $558 income tax benefit -- 1,037
------- -------
Net income $ 9,245 $ 8,764
======= =======
BASIC EARNINGS PER SHARE
Income before extraordinary item $ .78 $ .90
Extraordinary loss -- .09
------- -------
Net income $ .78 $ .81
======= =======
DILUTED EARNINGS PER SHARE
Income before extraordinary item $ .77 $ .81
======= =======
Net income $ .77 $ .81
======= =======
DIVIDENDS PER COMMON SHARE $ .25 $ .24
======= =======
</TABLE>
All share and per share information reflects a 3-for-2 stock split, paid on
April 15, 1997.
Prior period earnings per share amounts have been restated to comply with the
accounting standard, "Earnings Per Share".
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1998 1997
--------- ---------
(dollars in thousands)
<S> <C> <C>
Common stockholders' equity, beginning of year $ 357,649 $ 265,753
Common stock, $.10 par value, and additional paid-in capital:
Conversion of debentures (1,783,926) -- 57,780
Exercise of employer stock options
(22,500 and 60,000 shares) 328 756
Income tax benefits from additional
compensation deductions allowable
for income tax purposes 207 476
Restricted common stock awarded
(82,889 and 9,782 shares) 2,952 328
Common stock purchased and retired
(4,250 and 5,091 shares) (150) (171)
Retained earnings:
Net income 9,245 8,764
Cash dividends (3,013) (2,865)
Accumulated other comprehensive income:
Investment gains (losses), net of income taxes 1,325 (6,909)
Realized investment gains, net of income taxes, included
in net income (468) (1,245)
Deferred compensation under stock award plan:
Restricted common stock awarded (2,952) (328)
Compensation expense recognized 121 135
--------- ---------
Common stockholders' equity, end of period $ 365,244 $ 322,474
========= =========
</TABLE>
All share and per share information reflects a 3-for-2 stock split, paid on
April 15, 1997.
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1998 1997
--------- ---------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Premiums collected $ 50,480 $ 37,391
Ceded premiums paid (10,331) (464)
Claims and claims expenses paid (30,693) (31,581)
Claims and claims expenses recovered 521 700
Underwriting expenses paid (5,474) (5,141)
--------- ---------
Cash provided by underwriting activities 4,503 905
Net investment income received 13,023 11,863
Interest expense paid (4,851) (496)
Income taxes paid (1,044) (2,158)
Other income received 10 --
--------- ---------
Cash provided by operating activities 11,641 10,114
--------- ---------
Cash flows for investing activities:
Purchases of debt securities (26,064) (98,189)
Sales of debt securities 62,410 31,966
Maturities of debt securities 15,367 15,947
Purchases of equity securities (145) (8,351)
Sales of equity securities 102 4,621
Investment in subsidiary, net of cash acquired (39,536) --
Additions to premises and equipment (44) (51)
--------- ---------
Cash provided by (used for) investing activities 12,090 (54,057)
--------- ---------
Cash flows for financing activities:
Issuance of senior notes 75,000 --
Issuance of mandatorily redeemable preferred
capital securities -- 110,000
Redemption of convertible debentures -- (46,997)
Issuance costs of capital securities -- (1,280)
Issuance costs of senior notes (565) --
Issuance of common stock 328 756
Repurchase of common stock (150) --
Dividends paid (3,013) (2,865)
--------- ---------
Cash provided by financing activities 71,600 59,614
--------- ---------
Change in cash and cash equivalents 95,331 15,671
Cash and cash equivalents, beginning of period 12,847 14,253
--------- ---------
Cash and cash equivalents, end of period $ 108,178 $ 29,924
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1998 1997
------- -------
(in thousands)
<S> <C> <C>
Net income $ 9,245 $ 8,764
Other comprehensive income - net unrealized
investment gains (losses), net of income taxes 857 (8,154)
------- -------
Comprehensive income $10,102 $ 610
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
TRENWICK GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The interim consolidated financial statements included those of Trenwick
Group Inc. and its subsidiaries and have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent
with prior periods. Certain items in the financial statements have been
reclassified to conform with the 1998 presentation.
Management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The interim consolidated financial statements are unaudited; however, in
the opinion of management, the interim consolidated financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim periods.
These interim statements should be read in conjunction with the 1997
audited financial statements and related notes.
Earnings Per Share
Effective December 31, 1997, Trenwick adopted a new accounting standard,
"Earnings Per Share", which specifies the computation, presentation and
disclosure requirements of earnings per share and supersedes the previous
standard. It requires a dual presentation of basic and diluted earnings
per share. Basic earnings per share, which excludes the effect of common
stock equivalents, replaces primary earnings per share. Diluted earnings
per share, which utilizes the average market price per share when applying
the treasury stock method in determining common stock equivalents,
replaces fully-diluted earnings per share. Prior period per share amounts
have been restated to comply with this standard.
Debt issuance costs
Debt issuance costs associated with the issuance of the 6.7% senior notes
are being amortized over the term of the related debt using the interest
method.
8
<PAGE> 9
Comprehensive income
As of January 1, 1998, Trenwick adopted the new accounting standard,
"Reporting Comprehensive Income", which establishes standards for
reporting and presentation of comprehensive income and its components.
Comprehensive income comprises net income and other comprehensive income,
which for Trenwick currently consists of the change in the net unrealized
appreciation of investments, net of tax. Commencing in the quarter ending
June 30, 1998, other comprehensive income will also include foreign
currency translation adjustments since Trenwick will begin reflecting
Trenwick International's operating results in this quarter. Information
for periods prior to 1998 is presented on a basis consistent with the 1998
information.
2. REINSURANCE
Trenwick purchases reinsurance to reduce its exposure to catastrophe
losses and the frequency of large losses in all lines of business.
Trenwick, however, remains liable in the event that its retrocessionaires
do not meet their contractual obligations. The effects of reinsurance on
premiums written, premiums earned and claims and claims expenses incurred
is as follows (in thousands):
<TABLE>
<CAPTION>
Premiums Written Premiums Earned
Three Months Ended Three Months Ended
March 31, March 31,
----------------------- -----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Assumed $ 61,529 $ 72,737 $ 64,426 $ 64,225
Ceded (17,036) (13,179) (18,602) (10,311)
-------- -------- -------- --------
Net $ 44,493 $ 59,558 $ 45,824 $ 53,914
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Claims and Claims Expenses Incurred
Three Months Ended
March 31,
1998 1997
-------- --------
<S> <C> <C>
Assumed $ 46,711 $ 46,517
Ceded (20,206) (15,713)
-------- --------
Net $ 26,505 $ 30,804
======== ========
</TABLE>
9
<PAGE> 10
3. ACQUISITION OF TRENWICK INTERNATIONAL LIMITED
On February 27, 1998, Trenwick completed the acquisition of Trenwick
International Limited ("Trenwick International"), formerly Sorema (UK)
Limited, from Sorema S.A. for an aggregate purchase price of $62.9
million, including acquisition costs, which approximated book value.
Trenwick International is based in London and underwrites specialty
insurance and reinsurance treaty and facultative business on a worldwide
basis. The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based on the estimated fair
values at the date of acquisition. The excess of the purchase price over
the estimated fair value of the net assets of approximately $516,000, has
been recorded as goodwill, which is being amortized on a straight line
basis over 25 years. All assets and liabilities of Trenwick International
are consolidated in the balance sheet at March 31, 1998 and its operating
results will be reflected in Trenwick's results commencing with the
quarter ended June 30, 1998.
4. STOCKHOLDERS' EQUITY
Preferred Stock
Trenwick has 2,000,000 shares of $.10 par value preferred stock authorized
and none outstanding.
For the three months ended March 31, 1998, Trenwick awarded key employees
an aggregate of 82,889 shares of common stock under the terms of the 1989
and 1993 Stock Plans, valued at an average of $35.61 per share
(approximately $2,952,000). Trenwick is recognizing compensation expense
determined by the value of the shares, amortized over a five year vesting
period. During the period, 4,250 shares were repurchased at an average of
$35.29 per share (approximately $150,000) in connection with the
satisfaction of withholding taxes payable upon the vesting of shares
previously awarded under the plan.
Common Stock
On May 21, 1997, Trenwick's Board of Directors approved a stock repurchase
program covering up to one million shares of the Company's common stock;
no shares have been repurchased to date.
5. LONG TERM DEBT
On March 27, 1998 Trenwick completed a private offering of $75 million
aggregate principal amount of its 6.70% senior notes due April 1, 2003.
Interest is payable semi-annually on April 1 and October 1 of each year,
commencing on October 1, 1998. The notes are not subject to redemption
prior to maturity. They are unsecured obligations and will rank senior in
right of payment to all existing and future subordinated indebtedness of
Trenwick, including Trenwick's obligations with respect to its 8.82%
junior subordinated debentures held by Trenwick Capital Trust I in respect
of the $110 million 8.82% subordinated capital income securities issued by
the Trust. Under the terms of the notes, Trenwick is not restricted from
incurring indebtedness, but is subject to limits on its ability to incur
secured indebtedness for borrowed money.
A portion of the net proceeds of the offering were contributed to
Trenwick's wholly-owned subsidiary Trenwick International Limited, to
support its insurance and reinsurance operations, including increasing its
statutory capital to support its underwriting capacity. Remaining net
proceeds will be used for general corporate purposes, which may include
investments in and advances to subsidiaries, the financing of growth and
expansion, the financing of possible future acquisitions and other
corporate purposes.
10
<PAGE> 11
6. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
------- -------
<S> <C> <C>
INCOME AVAILABLE TO COMMON STOCKHOLDERS:
Income before extraordinary item (basic) $ 9,245 $ 9,801
Add interest on convertible debentures,
net of income taxes -- 578
------- -------
Income before extraordinary item (diluted) $ 9,245 $10,379
======= =======
Net income (basic) $ 9,245 $ 8,764
Add interest on convertible debentures and
loss on debt redemption, net of income taxes -- 1,615
------- -------
Net income (diluted) $ 9,245 $10,379
======= =======
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING:
Weighted average shares outstanding (basic) 11,933 11,855
Weighted average shares issuable on
conversion of debt -- 803
Weighted average shares issuable on exercise of
employee stock options, net of assumed repurchases 139 145
------- -------
Weighted average shares outstanding (diluted) 12,072 12,803
======= =======
PER SHARE AMOUNTS:
Basic
Income before extraordinary item $ .78 $ .90
======= =======
Net income $ .78 $ .81
======= =======
Diluted
Income before extraordinary item $ .77 $ .81
======= =======
Net income $ .77 $ .81
======= =======
</TABLE>
11
<PAGE> 12
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Trenwick ("Trenwick") is a holding company with two principal operating
subsidiaries, Trenwick America Reinsurance Corporation ("Trenwick America Re")
which reinsures property and casualty risks written by U.S. insurance companies,
and Trenwick International, which writes insurance and reinsurance property and
casualty risks outside of the U.S. Substantially all of Trenwick America Re's
business is produced by reinsurance brokers. Trenwick International obtains its
business from a variety of resources, including insurance and reinsurance
brokers. Trenwick America Re and Trenwick International underwrite both treaty
and facultative business.
OPERATING RESULTS
Trenwick Group Inc. reported consolidated net income of $9.2 million, or $.78
per share, for the first quarter of 1998 compared to $8.8 million, or $.81 per
share for the first quarter of 1997. Income before extraordinary item for the
first quarter of 1998 was $.78 per share, compared to $.90 per share for 1997.
Included in net income for the first quarter of 1997 was an extraordinary loss,
on debt redemption, net of tax, of approximately $1 million or $.09 per share.
Per share earnings on a diluted basis were $.77 for 1998 compared to $.81 for
1997.
Net income for the 1998 and 1997 first quarters include after-tax realized
investment gains of $468,000 or $.04 per share and $1.2 million or $.10 per
share, respectively.
PREMIUMS
Trenwick's gross premium writings, consisting entirely of the business of the
Company's U.S. subsidiary, Trenwick America Re, declined 15% in the quarter.
Casualty business, which represents 93% of the Company's business declined 10%.
Property business declined 52%.
Trenwick's net premiums written in the U.S. declined 25% in the quarter compared
to last year. Casualty premiums declined 20%, while net property writings
declined 55%.
Trenwick America Re's net casualty premium writings declined as a result of
three principal causes. Competition among primary companies caused cedants to
reduce their own premium writings or restructure their reinsurance programs,
reducing the amount of reinsurance they purchase. As a result of consolidation
within the industry, many ceding companies are now larger and financially
stronger, enabling them to retain more risk. In addition, increasingly intense
competition in the reinsurance markets has driven reinsurance prices on a number
of accounts below pricing levels which the Company will accept. Trenwick America
Re's property business continued to decline primarily as a result of PXRE Re's
(the Company's strategic partner in the writing of catastrophe reinsurance)
conservative response to continued erosion in pricing in that segment of the
reinsurance business.
12
<PAGE> 13
Trenwick America Re's new casualty business increased 23% in the quarter over
the same period in 1997 and represented approximately 43% of total premium
writings during the period. Continuing casualty business decreased 27% in the
quarter over the same period in 1997. Continuing casualty business represented
50% of the total premium writings during the period. The Company's property
business represented approximately 7% of total premium writings for the quarter
ended March 31, 1998.
Gross premiums written by Trenwick International in the first quarter of 1998
were approximately $31 million. Net written premiums amounted to approximately
$26 million. If the Company had acquired Trenwick International effective
January 1, 1998, Trenwick's consolidated gross premiums written would have been
approximately $93 million, an increase of 27% relative to the first quarter of
1997. Similarly, consolidated net premiums written would have been approximately
$70 million, a 17% increase over the first quarter last year. While the Company
anticipates that its premium writings in 1998 will increase as a result of the
addition of Trenwick International, the pro forma data is informational only and
may not necessarily reflect the level of writings for the balance of the year.
UNDERWRITING EXPERIENCE
The combined ratio is one means of measuring the profitability of a property and
casualty company. The combined ratio reflects underwriting experience, but does
not reflect income from investments or provisions for income taxes. A combined
ratio below 100% indicates profitable underwriting and a combined ratio
exceeding 100% indicates unprofitable underwriting. Although a reinsurer may
have unprofitable underwriting results, the reinsurer may still be profitable
because of investment income earned on the accumulated invested assets.
13
<PAGE> 14
The following table sets forth Trenwick's combined ratios and the components
thereof calculated on a GAAP basis for the period indicated, together with
Trenwick America Re's combined ratio calculated on a statutory basis:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1997
----- -----
<S> <C> <C>
Claims and claims expense ratio 57.9% 57.1%
----- -----
Expense ratio:
Policy acquisition expense ratio 33.1 32.2
Underwriting expense ratio 9.3 7.4
----- -----
Total expense ratio 42.4 39.6%
----- -----
Combined ratio (GAAP basis) 100.3% 96.7%
===== =====
Trenwick America Re
statutory combined ratio 99.9% 95.9%
===== =====
</TABLE>
As indicated, Trenwick's claims and claims expense ratio slightly deteriorated
in the first quarter of 1998 compared to the same period in 1997. The claims and
claims expense ratio in the first quarter of 1998 includes favorable development
of $1.4 million compared to approximately $2 million in the first quarter of
1997. Additionally, the policy acquisition expense ratio increased due to the
continued shift in the mix of business from excess to quota share. The
underwriting expense ratio increased 1.9 percentage points primarily as a result
of the decrease in premium writings.
INVESTMENT INCOME
Net investment income of $12.4 million in the first quarter of 1998 increased 6%
compared to $11.7 million for the same period in 1997. Pre-tax yields on
invested assets, excluding equity securities, averaged 6.1% in 1998 and 6.3% in
1997. The increase in investment income is due to the continued growth in
Trenwick's invested asset base.
After-tax net investment income in the first quarter of 1998 was $9.5 million
compared to $9.1 million for the comparative period in 1997. The effective tax
rate on net investment income for the three months ended was approximately 23.4%
in 1998, versus 22.5% in 1997.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, Trenwick's consolidated investments and cash totaled $1.0
billion, as compared to $864.3 million at December 31, 1997. Included in cash
and cash equivalents as of March 31, 1998 are the proceeds from the issuance of
the 6.7% senior notes. The fair value of the Company's debt securities portfolio
exceeded amortized cost of $842.3 million and $788.7 million by $22.5 million
and $23.6 million at March 31, 1998 and December 31, 1997, respectively. At
March 31, 1998 and at December 31, 1997, the fair value of the Company's equity
securities exceeded cost of $40.8 million and $31.6 million by $10.0 million and
$7.6 million, respectively.
As of March 31, 1998, Trenwick's consolidated common stockholders' equity
totaled $365.2 million or $30.31 per share, as compared to $357.6 million or
$29.93 per share at December 31, 1997. Since December 31, 1997, the unrealized
appreciation of debt and equity investments increased $857,000, net of tax, or
$.07 per share.
Statutory surplus of Trenwick America Re was $334.4 million as of March 31,
1998, compared to $322.9 million as of December 31, 1997.
Cash flow from operations of $11.6 million in the first quarter of 1998
increased approximately 15% compared to cash flow from operations of $10.1
million in the first quarter of 1997.
Cash provided by financing activities in the first quarter of 1998 increased to
$71.6 million compared to cash provided by financing activities of $59.6 million
in the first quarter of 1997 primarily due to the proceeds from the issuance of
$75 million principal amount of 6.7% senior notes by Trenwick Group Inc.
Trenwick declared a first quarter dividend of $.25 per share in 1998, a 4%
increase compared to $.24 in the first quarter of 1997.
15
<PAGE> 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
4.2 Indenture dated as of March 27, 1998, between Trenwick and The
First National Bank of Chicago, as Trustee, with respect to
Trenwick's $75 million principal amount of 6.7% Senior Notes due
April 1, 2003.
27.0 Financial Data Schedule
b) Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter ended
March 31, 1998:
Date of Report Item Reported
-------------- -------------
February 27, 1998 Press Release announcing
acquisition of Sorema (UK)
Limited.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRENWICK GROUP INC.
-----------------------------
(Registrant)
Date: May 15, 1998 JAMES F. BILLETT, JR.
------------- -----------------------------
James F. Billett, Jr.
Chairman, President and
Chief Executive Officer
Date: May 15, 1998 ALAN L. HUNTE
------------- -----------------------------
Alan L. Hunte
Vice President, Chief Financial Officer
and Treasurer
17
<PAGE> 1
INDENTURE
Dated as of March 27, 1998
between
TRENWICK GROUP INC.
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
$75,000,000
6.70% SENIOR NOTES due April 1, 2003
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01. Definitions........................................................................... 1
ARTICLE II
NOTES
SECTION 2.01. Forms Generally....................................................................... 7
SECTION 2.02. Execution and Authentication.......................................................... 7
SECTION 2.03. Form and Payment...................................................................... 7
SECTION 2.04. Legends............................................................................... 8
SECTION 2.05. Global Note........................................................................... 8
SECTION 2.06. Interest.............................................................................. 9
SECTION 2.07. Transfer and Exchange.................................................................10
SECTION 2.08. Replacement Notes.....................................................................11
SECTION 2.09. Treasury Notes........................................................................12
SECTION 2.10. Temporary Notes.......................................................................12
SECTION 2.11. Cancellation..........................................................................12
SECTION 2.12. Defaulted Interest....................................................................13
SECTION 2.13. CUSIP Numbers.........................................................................13
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, and Interest and Additional Interest............................14
SECTION 3.02. Offices for Notices and Payments, etc.................................................14
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office....................................15
SECTION 3.04. Provision as to Paying Agent..........................................................15
SECTION 3.05. Certificate to Trustee................................................................16
SECTION 3.06. Compliance with Consolidation Provisions..............................................16
SECTION 3.07. Corporate Existence...................................................................16
SECTION 3.08. Limitation on Liens...................................................................16
SECTION 3.09. Limitation on Disposition of Stock of Subsidiaries....................................17
SECTION 3.10. Payment Upon Resignation or Removal...................................................18
SECTION 3.11. Taxes and Other Claims................................................................18
ARTICLE IV
NOTEHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
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SECTION 4.01. Noteholders' Lists....................................................................18
SECTION 4.02. Preservation and Disclosure of Lists..................................................19
SECTION 4.03. Reports of the Company................................................................20
SECTION 4.04. Reports by the Trustee................................................................21
ARTICLE V
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.....................................................................21
SECTION 5.02. Payment of Notes on Default; Suit Therefor............................................23
SECTION 5.03. Limitation on Suits...................................................................24
SECTION 5.04. Application of Moneys Collected by Trustee............................................25
SECTION 5.05. Proceedings by Noteholders............................................................25
SECTION 5.06. Proceedings by Trustee................................................................26
SECTION 5.07. Remedies Cumulative and Continuing....................................................26
SECTION 5.08. Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders...........................................................................27
SECTION 5.09. Notice of Defaults....................................................................27
SECTION 5.10. Undertaking to Pay Costs..............................................................28
SECTION 5.11. Waiver of Stay or Extension Laws......................................................28
SECTION 5.12. Delay or Omission Not Waiver..........................................................28
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee................................................29
SECTION 6.02. Reliance on Documents, Opinions, etc..................................................30
SECTION 6.03. No Responsibility for Recitals, etc...................................................31
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Notes.....................................................31
SECTION 6.05. Moneys to be Held in Trust............................................................32
SECTION 6.06. Compensation and Expenses of Trustee..................................................32
SECTION 6.07. Officers' Certificate as Evidence.....................................................33
SECTION 6.08. Conflicting Interest of Trustee.......................................................33
SECTION 6.09. Eligibility of Trustee................................................................33
SECTION 6.10. Resignation or Removal of Trustee.....................................................34
SECTION 6.11. Acceptance by Successor Trustee.......................................................35
SECTION 6.12. Succession by Merger, etc.............................................................35
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SECTION 6.13. Limitation on Rights of Trustee as a Creditor.........................................36
SECTION 6.14. Authenticating Agents.................................................................36
ARTICLE VII
CONCERNING THE NOTEHOLDERS
SECTION 7.01. Action by Noteholders.................................................................37
SECTION 7.02. Proof of Execution by Noteholders.....................................................38
SECTION 7.03. Who Are Deemed Absolute Owners........................................................38
SECTION 7.04. Notes Owned by Company Deemed Not Outstanding.........................................38
SECTION 7.05. Revocation of Consents; Future Holders Bound..........................................39
ARTICLE VIII
NOTEHOLDERS' MEETINGS
SECTION 8.01. Purpose of Meetings...................................................................39
SECTION 8.02. Call of Meetings by Trustee...........................................................40
SECTION 8.03. Call of Meetings by Company or Noteholders............................................40
SECTION 8.04. Qualifications for Voting.............................................................40
SECTION 8.05. Regulations...........................................................................40
SECTION 8.06. Voting................................................................................42
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Noteholders........................................................42
SECTION 9.02. With Consent of Noteholders...........................................................43
SECTION 9.03. Compliance with Trust Indenture Act of 1939;
Effect of Supplemental Indentures.....................................................44
SECTION 9.04. Notation on Notes.....................................................................45
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished to Trustee..................................................................45
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.......................................45
SECTION 10.02. Successor Corporation to be Substituted for Company...................................46
SECTION 10.03. Opinion of Counsel to be Given Trustee................................................46
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ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
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SECTION 11.01. Discharge of Indenture.......................................................46
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be Held in
Trust by Trustee.............................................................47
SECTION 11.03. Paying Agent to Repay Moneys Held............................................48
SECTION 11.04. Return of Unclaimed Moneys...................................................48
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations..................................................48
SECTION 11.06. Reinstatement................................................................49
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Notes Solely Corporate Obligations.............................50
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors...................................................................50
SECTION 13.02. Official Acts by Successor Corporation.......................................50
SECTION 13.03. Surrender of Company Powers..................................................50
SECTION 13.04. Address for Notices, etc.....................................................51
SECTION 13.05. Governing Law................................................................51
SECTION 13.06. Evidence of Compliance with Conditions Precedent.............................51
SECTION 13.07. Business Days................................................................51
SECTION 13.08. Trust Indenture Act of 1939 to Control.......................................52
SECTION 13.09. Table of Contents, Headings, etc.............................................52
SECTION 13.10. Execution in Counterparts....................................................52
SECTION 13.11. Separability.................................................................52
SECTION 13.12. Assignment...................................................................52
SECTION 13.13. No Sinking Fund..............................................................52
EXHIBIT A..............................................................................................A-1
EXHIBIT B..............................................................................................B-1
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THIS INDENTURE, dated as of March 27, 1998, between Trenwick
Group Inc., a corporation existing under the laws of the State of Delaware
(hereinafter sometimes called the "Company"), and The First National Bank of
Chicago, a rational banking association, 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
Notes (as defined herein) 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 Notes, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (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 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939 (as defined below) or which are by reference therein
defined in the Securities Act (as defined below), shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in the Trust Indenture Act of 1939 and in the
Securities Act as in force at the date of this Indenture as originally executed.
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 the
Registration Rights Agreement. Any reference herein or in the Notes to
"interest" shall also refer to Additional Interest, to the extent such
Additional Interest is payable pursuant to the Registration Rights Agreement.
"Affiliate" shall have the same meaning as given to that term
in Rule 405 under the Securities Act or any successor rule thereunder.
"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.
<PAGE> 7
"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 the Board of Directors.
"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.
"Business Day" shall mean, with respect to any series of
Notes, any day other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York, New York are authorized or required by law
or executive order to close.
"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.
"Capital Stock" shall mean any and all shares, interests,
participations or equivalents (however designated) of corporate stock or any and
all equivalent ownership interests in a Person other than a corporation)..
"Company" shall mean Trenwick Group 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 the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, a Vice President (however
designated), the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Consolidated Tangible Net Worth" means, at any date, the
total assets appearing on the most recently prepared consolidated balance sheet
of the Company and its Subsidiaries as at the end of a fiscal quarter of the
Company, prepared in accordance with generally accepted accounting principles
consistently applied, less (a) the total liabilities appearing on such balance
sheet and (b) intangible assets. "Intangible assets" means the value (net of any
applicable reserves), as shown on or reflected in such balance sheet, of: (i)
all trade names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organizational and development costs; and (iii) unamortized debt discount and
expense, less unamortized premium. "Intangible assets" excludes deferred policy
acquisition costs and deferred income tax assets.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
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<PAGE> 8
"Default" shall mean any event, act or condition that with
notice or lapse of time, or both, would constitute an Event of Default.
"Definitive Notes" shall mean those Notes issued in fully
registered certificated form but not Notes issued in global form.
"Depositary" shall mean, with respect to Notes of any series,
for which the Company shall determine that such Notes will be issued as a Global
Note, 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 2.05(d).
"Event of Default" shall mean any event specified in Section
5.01, 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 Notes" shall mean the Company's 6.70% Senior Notes
due April 1, 2003, issued pursuant to an Exchange Offer (including any Private
Exchange (as defined in the Registration Rights Agreement)), as authenticated
and issued under this Indenture.
"Exchange Offer" shall mean the offer that may be made
pursuant to the Registration Rights Agreement by the Company to exchange
Exchange Notes for Initial Notes.
"Global Notes" shall mean those Notes issued in global form,
and "Global Note" shall mean the Note executed by the Company and delivered by
the Trustee to the Depositary or pursuant to the Depositary's instruction, all
in accordance with the Indenture, which shall be 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.
"Indenture" shall mean this instrument as originally executed
or as it may from time to time be modified, amended or supplemented by one or
more indentures supplemental hereto entered into pursuant to the applicable
provision hereof including, for all purposes of this instrument and any
supplemental indenture, the provisions of the Trust Indenture Act of 1939 that
are deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively.
"Initial Notes" shall mean the Company's 6.70% Senior Notes
due April 1, 2003, as initially authenticated and issued under this Indenture.
3
<PAGE> 9
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06.
"Non Book-Entry Notes" shall have the meaning set forth in
Section 2.05.
"Notes" shall mean, collectively, the Initial Notes and the
Exchange Notes.
"Noteholder", "holder of Notes", or other similar terms, shall
mean any Person in whose name at the time a particular Note is registered on the
register kept by the Company or the Trustee for that purpose in accordance with
the terms hereof.
"Officers" shall mean any of the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, a Vice President (however
designated), the Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by (i)
the Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, the President, the Chief Executive Officer or a Vice President, and
(ii) the Chief Financial Officer, the Chief Accounting Officer, the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary, and delivered
to the Trustee, which certificate shall comply with the provisions of Section
13.06.
"Opinion of Counsel" shall mean a written opinion of legal
counsel who is reasonably acceptable to the Trustee, which opinion shall comply
with the provisions of Section 13.06.
"Other Notes" shall mean only those senior notes issued by the
Company from time to time.
The term "outstanding" when used with reference to Notes,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except
(a) Notes theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment or prepayment
of which 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); and
(c) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.08 unless proof satisfactory
4
<PAGE> 10
to the Company and the Trustee is presented that any such Notes 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 Note" of any particular Note shall mean every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.08 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note.
The term "principal office of the Trustee", or other similar
term, shall mean the principal office of the Trustee, at which at any particular
time its corporate trust business shall be administered and which office is, at
the time of execution of this Indenture, located at One First National Plaza,
Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust Services
Division, except for purposes of Sections 3.02 and 13.04 such term shall mean
the office or agency of the Trustee in the Borough of Manhattan, the City of New
York, which office at the date hereof is located at First Chicago Trust Company
of New York, 14 Wall Street, Eighth Floor, New York, New York 10005.
"Purchase Agreement" shall mean the Purchase Agreement dated
March 24, 1998 among the Company and the Initial Purchaser as defined therein.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of March 27, 1998, by and among the Company and the
Initial Purchaser, as such agreement may be amended, modified or supplemented
from time to time.
"Regular Record Date" with respect to the payment of interest
installments on the Notes, shall mean the fifteenth day preceding the relevant
Interest Payment Date. If a Regular Record Date is not a Business Day, such
Regular Record Date shall be deemed to be the next preceding Business Day.
"Responsible Officer," when used with respect to the Trustee,
shall mean any officer or assistant officer of the Trustee assigned by the
Trustee to administer this Indenture.
"Restricted Note" shall mean Notes that bear or are required
to bear the legends set forth in Exhibit A hereto.
"Rule 144A" shall mean 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.
5
<PAGE> 11
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Security Register" shall mean the list of holders kept by a
Notes registrar or provided to the Trustee pursuant to Section 4.01.
"Stated Maturity" shall mean April 1, 2003.
"Significant Subsidiary" means any Subsidiary of the Company
which at the time of determination has, (A) assets which constituted at least
10% of the Company's total assets on a consolidated basis as of such date, or
(B) revenue which constituted at least 10% of the Company's total revenues on a
consolidated basis for such period or (C) net earnings which constituted at
least 10% of the Company's total net earnings on a consolidated basis for such
period, all as determined as of the date of the Company's most recently prepared
quarterly financial statements or the 12-month period then ended.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which 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.
"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 Notes 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 9.03; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act of 1939"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.
"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 timely 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)
6
<PAGE> 12
are not callable or prepayable 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
NOTES
SECTION 2.01. Forms Generally.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form set forth in Exhibit A hereto, the terms of
which are incorporated in and made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Note shall be dated
the date of its authentication. The Notes shall be issued in denominations of
$1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
At least one Officer shall sign the Notes for the Company by
manual or facsimile signature. If an Officer whose signature is on a Note no
longer holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Notes shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall, upon receipt of a Company Order and such
other documents as may be required by Section 13.06, authenticate for original
issue up to, and the aggregate principal amount of Notes outstanding at any time
may not exceed, seventy-five million U.S. dollars ($75,000,000) aggregate
principal amount of the Notes; except as provided in Sections 2.07, 2.08 and
2.10 hereof. The Company Order shall specify the amount of Notes to be
authenticated and the date on which such Notes are to be authenticated. The
series of Notes to be initially issued hereunder shall be the Initial Notes.
SECTION 2.03. Form and Payment.
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<PAGE> 13
Except as provided in Section 2.05, the Notes shall be issued
in fully registered certificated form without interest coupons. Principal of,
and interest on the Notes issued in certificated form will be payable, the
transfer of such Notes will be registrable and such Notes will be exchangeable
for Notes bearing identical terms and provisions at the office or agency of the
Company maintained for such purpose under Section 3.02; provided, however, that
payment of interest with respect to Notes represented by the Global Note
(including principal, interest and Additional Interest, if any) be made by wire
transfer of immediately available funds to the Depositary, which shall credit
the relevant accounts at the Depositary. With respect to Definitive Notes, the
Company will make all payments of principal, interest and Additional Interest,
if any, by wire transfer of immediately available funds to the accounts
specified by the Noteholders thereof, or, if no such account is specified, by
mailing a check to each such Noteholder's registered address.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04
or as otherwise determined by the Company in accordance with applicable law,
each Note 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, upon receipt of a Company
Order, the Trustee shall authenticate Exchange Notes in exchange for Initial
Notes accepted for exchange in the Exchange Offer, which Exchange Notes shall
not bear the legends required by subsection (a) above, in each case unless the
Trustee is notified in writing that the holder of such Initial Notes is either
(A) a broker-dealer who purchased such Initial Notes directly from the Company
for resale pursuant to Rule 144A or any other available exemption under the
Securities Act, (B) a Person participating in the distribution of the Initial
Notes or (C) a Person who is an affiliate (as defined in Rule 144 under the
Securities Act) of the Company or unless the Registration Rights Agreement shall
require otherwise.
SECTION 2.05. Global Note.
(a) The Global Notes shall represent the aggregate amount of
outstanding Notes from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and prepayments.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the amount of outstanding Notes represented thereby shall be made by
the Trustee, in accordance with applicable procedures established by the
Depositary.
(b) The Global Notes may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.
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<PAGE> 14
(c) 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 Definitive Notes, in
authorized denominations and in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for such Global Note. If there
is an Event of Default, the Depositary shall have the right to exchange the
Global Notes for Definitive Notes. In addition, the Company may at any time
determine that the Notes shall no longer be represented by a Global Note. In the
event of such an Event of Default or such a determination, the Company shall
execute, and subject to Section 2.07, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate and
make available for delivery Definitive Notes, in authorized denominations and in
an aggregate principal amount equal to the principal amount of the Global Note
in exchange for such Global Note. Upon the exchange of the Global Note for such
Definitive Notes, in authorized denominations, the Global Note shall be
cancelled by the Trustee. Such Definitive Notes issued in exchange for the
Global Note 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 Notes to the Depositary for delivery to the
Persons in whose names such Definitive Notes are so registered.
SECTION 2.06. Interest.
(a) Each Note will bear interest at the rate of 6.70% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance, until the
principal thereof becomes due and payable, and on any overdue principal and, and
(to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the Coupon Rate, compounded
semi-annually, payable semi-annually in arrears on April 1 and October 1 of each
year (each, an "Interest Payment Date") commencing on October 1, 1998, to the
Person in whose name such Note or any predecessor Note is registered on the
books of the Company, at the close of business on the Regular Record Date for
such interest installment.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30- day months and, for any period less than six months,
the actual months elapsed and the actual days elapsed in a partial month in such
period. 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), with the same force and effect as if made
on such date.
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SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. The Initial Notes, and those
Exchange Notes with respect to which any Person described in Section 2.04(b)(A),
(B) or (C) is the beneficial owner, may not be transferred except in compliance
with any legend contained in Exhibit A unless otherwise determined by the
Company in accordance with applicable law. Attached as Exhibit B is the form of
the transferee letter to be provided to the Trustee prior to a transfer by a
Holder of such Notes who offers, sells or otherwise transfers the Notes within
two years after the original issuance of the Notes inside the United States to
an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act), which letter contains certain
representations and agreements relating to restrictions in transfer of the Notes
and that such transferee will purchase not less than $100,000 total principal
amount of Notes. Such form of transferee letter will not be required to be
provided following registration of the Notes under the Securities Act pursuant
to the Registration Rights Agreement.
(b) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute
Definitive Notes and Global Notes at the Trustee's request. All Definitive Notes
and Global Notes issued upon any registration of transfer or exchange of
Definitive Notes or Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Definitive Notes or Global Notes 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.
Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and, and interest on such Notes,
and neither the Trustee, any agent nor the Company shall be affected by notice
to the contrary.
(c) Exchange of Initial Notes for Exchange Notes. The Initial
Notes may be exchanged for Exchange Notes 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:
(i) upon issuance of the Exchange Notes, the transactions
contemplated by the Exchange Offer have been consummated; and
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(ii) the principal amount of Initial Notes properly tendered
in the Exchange Offer that are represented by a Global Note and the
principal amount of Initial Notes properly tendered in the Exchange
Offer that are represented by Definitive Notes, the name of each holder
of such Definitive Notes, the principal amount at maturity properly
tendered in the Exchange Offer by each such holder and the name and
address to which Definitive Notes for Exchange Notes 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 Exchange Notes have been
registered under Section 5 of the Securities Act and the Indenture, 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 Note for
Exchange Notes in aggregate principal amount equal to the aggregate principal
amount of Initial Notes represented by a Global Note indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive Notes
representing Exchange Notes registered in the names of, and in the principal
amounts indicated in, such Officers' Certificate.
If the principal amount at Stated Maturity of the Global Note
for the Exchange Notes is less than the principal amount at Stated Maturity of
the Global Note for the Initial Notes, the Trustee shall make an endorsement on
such Global Note for the Initial Notes indicating a reduction in the principal
amount at maturity represented thereby.
The Trustee shall deliver such Definitive Notes for Exchange
Notes to the holders thereof as indicated in such Officers' Certificate.
SECTION 2.08. Replacement Notes.
(a) If any mutilated Note is surrendered to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee
shall authenticate a replacement Note if the Trustee's requirements for
replacements of Notes are met. An indemnity bond must be supplied by the
Noteholder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee or any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company or the Trustee may
charge for its expenses in replacing a Note.
(b) Every replacement Note is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
(c) The provisions of this Section 2.08 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement of mutilated, destroyed, lost or stolen Notes.
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SECTION 2.09. Treasury Notes.
In determining whether the holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
that the Trustee actually knows to be so owned shall be so considered.
SECTION 2.10. Temporary Notes.
Pending the preparation of Definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company shall cause
Definitive Notes to be prepared without unreasonable delay. The Definitive Notes
shall be printed, typewritten, 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, all as determined by the
Officers executing such Definitive Notes. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency maintained by the
Company for such purpose pursuant to Section 3.02, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, in exchange therefor the same aggregate principal amount of Definitive
Notes of authorized denominations. Until so exchanged, the temporary Notes shall
in all respects be entitled to the same benefits under this Indenture as
Definitive Notes.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy the cancelled Notes in accordance with its normal practices
(subject to the record retention requirement of the Exchange Act) unless the
Company directs that such cancelled Notes be returned to it. The Company may not
issue new Notes to replace Notes that have been prepaid or paid or that have
been delivered to the Trustee for cancellation.
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SECTION 2.12. Defaulted Interest.
Any interest on any Note 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
Notes to the Persons in whose names such Notes (or their respective
Predecessor Notes) 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 Note 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 30 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 Noteholder at his or her address as it appears in the Security
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
Notes (or their respective Predecessor Notes) 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 Notes in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Notes 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.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices as a convenience to Noteholders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice and that reliance
may be placed
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only on the other identification numbers printed on the Notes, and any such
prepayment 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.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, and Interest and Additional Interest.
The Company covenants and agrees for the benefit of the
Noteholders that it will duly and punctually pay or cause to be paid the
principal of, and interest and Additional Interest, if any, on the Notes at the
place, at the respective times and in the manner provided herein. Except as
provided in Section 2.03, each installment of interest on the Notes may be paid
by mailing checks for such interest payable to the order of the Noteholder
entitled thereto, as it may appear in the Notes register. The Company further
covenants to pay any and all amounts including, without limitation, Additional
Interest, if any, on the dates and in the manner required under the Registration
Rights Agreement.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Notes remains outstanding, the Company
will maintain in The City of New York, New York, an office or agency where the
Notes may be presented for payment, an office or agency where the Notes 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 Notes 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 office or agency of The First
National Bank of Chicago in the Borough of Manhattan, the City of New York,
which office at the date hereof is located at First Chicago Trust Company of New
York, 14 Wall Street, Eighth Floor, New York, New York 10005. In case the
Company shall fail to maintain any such office or agency in The City of New
York, 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 corporate trust 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 City of New
York, New York where the Notes may be presented for 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 City of
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New York, New York, for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof.
SECTION 3.03. 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.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Notes, 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 3.04,
(i) that it will hold all sums held by it as such agent for
the payment of the principal of, or interest on the Notes (whether such
sums have been paid to it by the Company or by any other obligor on the
Notes) in trust for the benefit of the holders of the Notes;
(ii) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the Notes) to make any payment
of the principal of or interest on the Notes when the same shall be due
and payable; and
(iii) that it will at any time during the continuance of any
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by it as such paying
agent.
(b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of, or interest on the Notes, set
aside, segregate and hold in trust for the benefit of the holders of the Notes a
sum sufficient to pay such principal, or 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 Notes) to make any payment of the
principal of, or interest on the Notes when the same shall become due and
payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Notes hereunder, or for any other
reason, pay or cause to be paid to the Trustee all sums held in trust for any
such Notes by the Trustee or any paying agent hereunder, as required by this
Section 3.04, such sums to be held by the Trustee upon the trusts herein
contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 11.03 and 11.04.
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SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first fiscal
year ending after the date hereof, so long as Notes 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.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Notes remains
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.
SECTION 3.07. Corporate Existence.
Subject to Article X, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of its Significant Subsidiaries
in accordance with the respective organizational documents of each such
Subsidiary and the rights (charter and statutory) and corporate franchises of
the Company and each such Subsidiary; provided, however, that the Company shall
not be required to preserve, with respect to itself, any right or corporate
franchise, and with respect to such Significant Subsidiaries any such existence,
right or corporate franchise, if the Board of Directors, or the board of
directors of the Significant Subsidiary concerned, shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or any such Subsidiary and that the loss thereof is not
disadvantageous in any material respect to the Holders.
SECTION 3.08. Limitation on Liens.
Except as set forth below, neither the Company nor any
Significant Subsidiary will incur, issue, assume or guarantee any indebtedness
for borrowed money (all such indebtedness for borrowed money incurred, issued,
permitted to exist, assumed or guaranteed being hereinafter in this Section
called "Indebtedness") secured by a lien, mortgage, pledge, security interest,
charge or encumbrance of any kind ("Lien") on any property or assets of the
Company or any Significant Subsidiary, or any shares of Capital Stock of any
Significant Subsidiary, without effectively providing that the Notes (together
with, if the Company shall so determine, any other Indebtedness which is not
subordinated to the Notes) shall be secured equally and ratably with (or prior
to) such Indebtedness, so long as such Indebtedness shall be so secured, unless
after giving effect thereto, the aggregate amount of all such secured
Indebtedness of the Company and its Subsidiaries would not exceed 10% of
Consolidated Tangible Net Worth of the Company and its Subsidiaries as reflected
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on the Company's most recently prepared quarterly balance sheet; provided,
however, that this covenant shall not apply to, and there shall be excluded from
secured Indebtedness in any computation under this covenant, Indebtedness
secured by:
(a) Liens existing on the date hereof;
(b) Liens on property of, or on any shares of Capital Stock
of, any Person existing at the time such Person becomes a Significant Subsidiary
or merges into or consolidates with the Company or a Significant Subsidiary;
(c) Liens on property of, or on any shares of Capital Stock
of, any Person existing at the time of acquisition thereof by the Company or any
Significant Subsidiary;
(d) Liens to secure the financing of the acquisition,
construction or improvement of property, or the acquisition of shares of stock,
hereafter acquired, constructed or improved by the Company or any Subsidiary,
provided that such Liens are created prior to, at the time of or within one year
after such acquisition or, in the case of property, completion of construction
or commencement of commercial operation, whichever is later;
(e) Liens in favor of the Company or any Subsidiary;
(f) Liens required by or in favor of domestic governments or
agencies thereof including those to secure progress, advance or other payments
pursuant to any contract or provisions of any statute; and
(g) any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in part, of any Lien
referred to in the foregoing clauses (a) to (f), inclusive, provided, however,
that (i) such extension, renewal or replacement Lien shall be limited to all or
a part of the same property or shares of stock that secured the Lien extended,
renewed or replaced (plus improvements, including additions to improvements, on
such property) and (ii) the Indebtedness secured by such Lien at such time is
not increased (except, with respect to a Lien on property, to the extent that
additional Indebtedness was incurred to provide for the payment of all or any
part of the construction price of improvements or additions to improvements on
such property).
SECTION 3.09. Limitation on Disposition of Stock of Subsidiaries.
Except as provided in Section 3.08, the Company will not, and
will not permit any Subsidiary to, sell, transfer or otherwise dispose of any
shares of Capital Stock of any Significant Subsidiary (or of any Subsidiary
having direct or indirect control of any Significant Subsidiary) except for,
subject to Article X, (i) a sale, transfer or other disposition of any Capital
Stock of any Significant Subsidiary (or of any Subsidiary having direct or
indirect control of any Significant Subsidiary) to the Company or a wholly owned
Subsidiary of the Company or (ii) a sale, transfer
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or other disposition of all or any part of the Capital Stock of any Significant
Subsidiary (or of any Subsidiary having direct or indirect control of any
Significant Subsidiary) held by the Company and/or its Subsidiaries for at least
fair value (as determined by the Board of Directors of the Company acting in
good faith).
SECTION 3.10. 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 the date of such termination,
removal or resignation.
SECTION 3.11. Taxes and Other Claims.
The Company and each Significant Subsidiary shall file all
federal, state and local tax returns required to be filed by it and shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges which are
material to the Company and its Subsidiaries, on a consolidated basis (including
withholding taxes and any penalties, interest and additions to taxes) levied or
imposed upon the Company or its Subsidiaries or upon the income, profits or
property of the Company or any such Significant Subsidiary, and (ii) all lawful
claims of materialmen, mechanics, carriers, warehousemen, landlords and other
like persons which are material to the Company and its Subsidiaries, on a
consolidated basis and, if unpaid, might by law become a lien upon the property
of the Company or any such Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment or governmental change or claim whose amount, applicability or
validity is being contested in good faith and for which disputed amounts
adequate reserves have been made in the opinion of the Company's management or
as required by generally accepted accounting principles.
ARTICLE IV
NOTEHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Noteholders' 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
Notes, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Noteholders as of such record date;
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(b) at such other times as the Trustee may request in writing,
within 30 Business Days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 Business Days prior to the time such list is furnished, except that
no such list need be furnished so long as the Trustee is in possession
thereof by reason of its acting as Note registrar. The Company hereby
appoints the Trustee as Notes registrar.
SECTION 4.02. 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 Notes (1) contained in the most recent list furnished to it as
provided in Section 4.01 or (2) received by it in the capacity of Notes
registrar (if so acting) hereunder. The Trustee may destroy any list furnished
to it as provided in Section 4.01 upon receipt of a new list so furnished.
(b) In case three or more holders of Notes (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 Note 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 Notes or with holders of all Notes 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:
(i) 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 4.02; or
(ii) inform such applicants as to the approximate number of
holders of all Notes 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 4.02, and as to the
approximate cost of mailing to such Noteholders 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 Noteholder 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 4.02 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 5 Business Days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
all Notes 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
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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
Noteholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every holder of Notes, 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 Notes in accordance with the provisions of subsection (b) of this Section
4.02, 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).
SECTION 4.03. Reports of the Company.
(a) The Company covenants and agrees to file with the Trustee,
within 15 Business Days after the date on which the Company files the same with
the Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
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 Note 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 rules and regulations prescribed from
time to time by the 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 Notes, as the names and addresses of such holders appear upon the
Security 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 4.03 as may be
required by rules and regulations prescribed from time to time by the
Commission.
(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
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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 Notes
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 Notes identified by any holder of Restricted Notes, unless such information
is furnished to the Commission pursuant to Section 13 or 15(d) of the Exchange
Act.
SECTION 4.04. Reports by the Trustee.
Within 60 days after May 15 of each year, commencing May 15,
1999, the Trustee shall provide to the holders of the Notes such reports as are
required by Section 313 of the Trust Indenture Act of 1939, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act of 1939.
The Trustee shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act of 1939.
ARTICLE V
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. 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 involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest or Additional
Interest upon any Note or any Other Notes when it becomes due and
payable, and continuance of such default for a period of 30 days; or
(b) default in the payment of all or any part of the principal
of any Note or any Other Notes as and when the same shall become due
and payable either at maturity, upon prepayment, by declaration of
acceleration of maturity or otherwise; or
(c) the Company fails to comply with any of its other
agreements in the Notes or this Indenture and the default continues for
60 days after notice to the Company by the Trustee as specified below;
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(d) there shall be a default under any evidence or
Indebtedness of the Company or any Subsidiary, whether any such
Indebtedness now exists or shall hereafter be created, if (A) either
(i) such default results from the failure to pay any such Indebtedness
at maturity or (ii) as a result of such default the maturity of such
Indebtedness has been accelerated prior to its expressed maturity and
(B) the aggregate principal amount of such Indebtedness equals
$10,000,000 or more or, together with the principal amount of any other
Indebtedness of the Company or any Subsidiary in default for failure to
pay principal at maturity or the maturity of which has been accelerated
aggregates $10,000,000 or more and (C) without such Indebtedness having
been discharged or such acceleration having been rescinded or annulled
within a period of 30 days after notice to the Company by the Trustee
as specified below; provided, however, that if the Company shall have
commenced and shall pursue the contest of the validity of such
acceleration in good faith by appropriate legal proceedings, then, from
the date of such commencement to the conclusion of such proceedings,
the Event of Default hereunder by reason thereof shall be deemed
likewise to have been thereupon remedied, cured or waived without
further action upon the part of either the Trustee or any of the
Holders of the Notes; provided, further, however, that if such
acceleration shall subsequently be rescinded or annulled any
acceleration of the Notes consequent solely on such other acceleration
shall likewise be deemed rescinded or annulled without further action
on the part of the Trustee or the Holders of the Notes;
(e) the Company or any Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law (A) becomes insolvent, (B)
fails generally to pay its debts as they become due, (C) admits in
writing its inability to pay its debts generally as they become due,
(D) commences a voluntary case or proceeding, (E) consents to, or
acquiesces in, the institution of a bankruptcy or an insolvency
proceeding against it or the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding, (F) applies
for, consents to or acquiesces in the appointment of or taking
possession by a Custodian of the Company or any Significant Subsidiary
or of all or substantially all of its property or (G) makes a general
assignment for the benefit of its creditors; or
(f) a court of competent jurisdiction enters a judgment,
decree or order under any Bankruptcy Law which (A) is for relief
against the Company or any Significant Subsidiary in an involuntary
case, (B) appoints a Custodian of the Company or any Significant
Subsidiary or a Custodian for all or substantially all of its property
or (C) orders the winding-up or liquidation of the Company or any
Significant Subsidiary; and such judgment, decree or order shall remain
unstayed and in effect for a period of 60 consecutive days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or State law for the relief, supervision, conservation,
reorganization or liquidation of debtors or for the benefit of
creditors. The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
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A Default under clause (c) or (d) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Notes notify the Company of the Default and the Company does not cure the
Default within the period specified in the applicable clause after receipt of
the notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default." Such notice shall be given by
the Trustee if requested by the Holders of at least 25% in principal amount of
the Notes then outstanding.
SECTION 5.02. Payment of Notes on Default; Suit Therefor.
If an Event of Default (other than an Event of Default
specified in Section 5.01(e) or (f)) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
Notes by notice to the Company and the Trustee, may declare the unpaid principal
of and accrued interest on all the Notes to be due and payable. Upon such
declaration the principal and accrued interest of such Notes shall be due and
payable immediately. If an Event of Default specified in Section 5.01(e) or (f)
occurs, all unpaid principal of and accrued interest on the Notes then
outstanding shall automatically become due and payable without any declaration
or other act on the part of the Trustee or any Noteholder. Upon payment of such
principal amount and interest all of the Company's obligations under the Notes
and this Indenture, other than obligations under Section 6.06, shall terminate.
The Holders of a majority in principal amount of the Notes by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except non-payment of principal or interest that has
become due solely because of the acceleration.
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 Notes and collect in the manner provided by law out of the
property of the Company or any other obligor on the Notes 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 Notes 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 Notes, or to the creditors or property
of the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand pursuant to the provisions of this Section 5.02, 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 principal and interest owing and
unpaid in respect of the Notes 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
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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 of the Noteholders
allowed in such judicial proceedings relative to the Company or any other
obligor on the Notes, 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 Notes 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 Noteholders 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 Noteholders, 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.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes, or the production thereof in 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 trust, and any
recovery of judgment shall be for the ratable benefit of the holders of the
Notes.
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 Notes, and it shall not be necessary to make any holders of
the Notes parties to any such proceedings.
SECTION 5.03. Limitation on Suits.
A Noteholder may pursue a remedy with respect to this
Indenture or the Notes only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the
Notes make a request to the Trustee to pursue the remedy;
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(3) such Holder or Holders offers to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the Notes do not give the Trustee a direction inconsistent
with the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
SECTION 5.04. 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 Notes 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 all amounts due to the Trustee under
Section 6.06, including the costs and expenses of collection applicable to the
Notes 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;
Second: To Noteholders for amounts due and unpaid on the Notes
for principal and interest, ratably without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal, interest
and Additional Interest, if any, respectively; and
Third: To the Company.
SECTION 5.05. Proceedings by Noteholders.
No holder of any Note 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
Notes specifying such Event of Default, as hereinbefore provided, and unless
also the holders of not less than 25% in principal amount of the Notes at the
time outstanding shall have made written request upon the Trustee to 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,
and during
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such 60 days the holders of a majority in principal amount of the Notes at the
time outstanding do not give a direction to the Trustee inconsistent with the
request, it being understood and intended, and being expressly covenanted by the
taker and holder of every Note with every other taker and holder and the
Trustee, that no one or more holders of Notes 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 Notes, 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 Notes.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Note to receive payment of the principal
of interest, and Additional Interest on such Note, 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 Note hereunder it is expressly understood, intended
and covenanted by the taker and holder of every Note with every other such taker
and holder and the Trustee, that no one or more holders of Notes 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
Notes, 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
Notes. For the protection and enforcement of the provisions of this Section,
each and every Noteholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
SECTION 5.06. Proceedings by Trustee.
In case an Event of Default occurs with respect to Notes 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.
SECTION 5.07. Remedies Cumulative and Continuing.
Except as provided in the last paragraph of Section 2.08, all
powers and remedies given by this Article V to the Trustee or to the Noteholders
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
Notes, 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 Notes, and no delay or omission of the
Trustee or of any holder of any of the Notes 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
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default or an acquiescence therein; and, subject to the provisions of Section
5.04, every power and remedy given by this Article V or by law to the Trustee or
to the Noteholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Noteholders.
SECTION 5.08. Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders.
The holders of a majority in principal amount of the Notes 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 6.01) 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 Stated Maturity
of the Notes, the holders of a majority in principal amount of the Notes at the
time outstanding may on behalf of the holders of all of the Notes waive any past
Default or Event of Default and its consequences except a Default (a) in the
payment of principal of or interest on any of the Notes or (b) in respect of
covenants or provisions hereof which cannot be modified or amended without the
consent of the holder of each Note 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 Notes 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 5.07, said Default or Event of Default shall
for all purposes of the Notes and this Indenture be deemed to have been cured
and to be not continuing.
SECTION 5.09. Notice of Defaults.
The Trustee shall, within 60 days after the occurrence of a
Default with respect to the Notes mail to all Noteholders, as the names and
addresses of such holders appear upon the Note 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 5.08
being hereby defined to be the events specified in clauses (a), (b), (c), (d),
(e) and (f) of Section 5.01, not including periods of grace, if any, provided
for therein, and irrespective of the giving of written notice specified in
Section 5.03); and provided, that, except in the case of Default in the payment
of the principal of or interest on any of the Notes, the Trustee shall be
protected in withholding such notice if and so long as the board of directors of
the Trustee, the executive committee thereof, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Noteholders.
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SECTION 5.10. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Note 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 5.10 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Noteholder or group of Noteholders
holding in the aggregate more than 10% in principal amount of the Notes
outstanding at the time outstanding, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
against the Company on or after the same shall have become due and payable.
SECTION 5.11. Waiver of Stay or Extension Laws.
The Company (to the extent it may lawfully do so) shall not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and shall not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.12. Delay or Omission Not Waiver.
No delay or omission of the Trustee or any Noteholder to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
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ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Notes 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:
(i) 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
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
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 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 Noteholders pursuant to Section 5.07, 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.
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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.
Every portion of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article VI and to the provisions of the Trust
Indenture Act of 1939.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(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,
and the Trustee need not investigate any fact or matter stated in such
document;
(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 the Trustee shall not be liable for any
action taken or suffered or omitted by it hereunder in good faith in
reliance on such Officers' Certificate; 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
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 Noteholders, pursuant to the
provisions of this Indenture, unless such Noteholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion 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
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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;
(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
principal amount of the Notes at the time outstanding; 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 Note 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 except (i) a Default under Sections 5.01(a)
and 5.01(b) of this Indenture (other than with respect to the payment
of Additional Interest) or (ii) any Default or Event of Default of
which a Responsible Officer shall have actual knowledge thereof or the
Trustee shall have received notice thereof in accordance with Section
13.03 from the Company or any Noteholder.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Notes (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 Notes. The Trustee and the
Authenticating Agent shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee or the Authenticating Agent in conformity with the provisions of
this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents
or Registrar May Own Notes.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Note registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes with the same rights it would
have if it were not Trustee, Authenticating Agent, paying agent, transfer agent
or Note registrar.
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SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, 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 the Chairman of the Board
of Directors, the President or a Vice President or the Treasurer or an Assistant
Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company 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
Trustee's compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust. 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 reasonable attorney's
fees and 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 6.06 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
Notes upon all property and funds held or collected by the Trustee in its
capacity as such, except funds held in trust for the benefit of the holders of
particular Notes.
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 5.01(e) or Section
5.01(f), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services of the Trustee as provided for
herein are intended to constitute expenses of administration under any
applicable federal or state bankruptcy, insolvency or other similar law.
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The provisions of this Section shall survive resignation or
removal of the Trustee and the termination of this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
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.
SECTION 6.08. 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 of 1939, the
Trustee and the Company shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act of 1939.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times 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 other Person permitted to act as trustee by the Commission 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 aforesaid supervising or
examining authority, then for the purposes of this Section 6.09 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.
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 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
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SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Company and by mailing notice thereof to the holders of the Notes at
their addresses as they shall appear on the Note 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 affected
Noteholders, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Noteholder who
has been a bona fide holder of a Note for at least six months may, subject to
the provisions of Section 5.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at
least six months, or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign after written
request therefor by the Company or by any such Noteholder, or
(iii) 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 5.09, any Noteholder
who has been a bona fide holder of a Note 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 principal amount of the Notes
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
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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 Noteholder, 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.
SECTION 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 6.06, 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 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 6.06.
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 6.08 and eligible under the
provisions of Section 6.09.
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 Notes at their addresses as they
shall appear on the Note register. If the Company fails to mail such notice
within 10 Business 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.
SECTION 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
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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 Notes 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 Notes
so authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes 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 es 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 Notes in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act of 1939, excluding any creditor relationship described in Section
311(b) of the Trust Indenture Act of 1939. A Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act of 1939 to
the extent included therein.
SECTION 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 Notes issued upon
exchange or registration of transfer thereof as fully to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Notes; 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 Notes. 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
$50,000,000 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
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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 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 Noteholders as the names and addresses of such
holders appear on the Security 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.
ARTICLE VII
CONCERNING THE NOTEHOLDERS
SECTION 7.01. Action by Noteholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in principal amount of the Notes at the time outstanding
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 have joined therein may be evidenced (a) by any instrument or any
number of instruments of similar tenor executed by such Noteholders in person or
by agent or proxy appointed in writing, or (b) by the record of such holders of
Notes voting in favor thereof at any meeting of such Noteholders duly called and
held in accordance with the provisions of Article VIII, or (c) by a combination
of such instrument or instruments and any such record of such a meeting of such
Noteholders.
If the Company shall solicit from the Noteholders 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 Noteholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action, but
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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 may be given before or after the record date, but only the Noteholders of
record at the close of business on the record date shall be deemed to be
Noteholders for the purposes of determining whether Noteholders of the requisite
proportion of outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Notes shall be computed as of the
record date; provided, however, that no such authorization, agreement or consent
by such Noteholders 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.
SECTION 7.02. Proof of Execution by Noteholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Noteholder 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 Notes shall be proved by the
Security Register or by a certificate of the Note 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 Noteholders' meeting shall be proved in the
manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Note, the Company, the Trustee, any Authenticating Agent, any paying agent, any
transfer agent and any Note registrar may deem the Person in whose name such
Note shall be registered upon the Security Register to be, and may treat him as,
the absolute owner of such Note (whether or not such Note shall be overdue) for
the purpose of receiving payment of or on account of the principal of and
premium, if any, and, subject to Section 2.06, interest on such Note 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 Note 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
of the sum or sums so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Note.
SECTION 7.04. Notes Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite principal
amount of Notes at the time outstanding have concurred in any direction, consent
or waiver under this Indenture, Notes which are owned by the Company or any
other obligor on the Notes or by any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company or
any other obligor on the Notes shall be disregarded and deemed not to be
outstanding for the
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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 Notes which the Trustee actually knows are so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith may be regarded as outstanding for the purposes of this Section 7.04 if
the pledgee shall establish to the satisfaction of the Trustee the pledgee's
right to vote such Notes and that the pledgee is not the Company or any such
other obligor or person directly or indirectly controlling or controlled by or
under direct or indirect common control with the 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.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in principal amount of the Notes at the time outstanding
specified in this Indenture in connection with such action, any holder of a Note
(or any Note issued in whole or in part in exchange or substitution therefor)
the serial number of which is shown by the evidence to be included in the Notes
the holders of which have consented to such action may, by filing written notice
with the Trustee at the principal office of the Trustee and upon proof of
holding as provided in Section 7.02, revoke such action so far as concerns such
Note (or so far as concerns the principal amount represented by any exchanged or
substituted Note). Except as aforesaid any such action taken by the holder of
any Note shall be conclusive and binding upon such holder and upon all future
holders and owners of such Note, and of any Note issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Note or any Note issued in exchange or substitution
therefor.
ARTICLE VIII
NOTEHOLDERS' MEETINGS
SECTION 8.01. Purpose of Meetings.
A meeting of Noteholders 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 Noteholders 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;
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(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified principal amount of such Notes
at the time outstanding under any other provision of this Indenture or
under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Noteholders to
take any action specified in Section 8.01, 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 Noteholders, 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 Notes at their addresses as
they shall appear on the Securities Register. Such notice shall be mailed not
less than 20 nor more than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Noteholders.
In case at any time the Company pursuant to a Board
Resolution, or the holders of at least 10% in principal amount of the Notes at
the time outstanding, shall have requested the Trustee to call a meeting of
Noteholders, 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 Noteholders may determine the time and the place in the Borough
of Manhattan, The City of New York for such meeting and may call such meeting to
take any action authorized in Section 8.01, by mailing notice thereof as
provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Noteholders a Person
shall (a) be a holder of one or more Notes or (b) a Person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
Persons who shall be entitled to be present or to speak at any meeting of
Noteholders 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.
SECTION 8.05. Regulations.
(a) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Noteholders, in regard to proof of the holding of Notes 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
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evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall think fit.
(b) 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 Noteholders as provided in Section 8.03, in which case the
Company or the Noteholders 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.
(c) Subject to the provisions of Section 8.04, at any meeting
each holder of Notes or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Notes held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Note
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the Person to vote on behalf of other Noteholders. Any
meeting of Noteholders duly called pursuant to the provisions of Section 8.02 or
8.03 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.
(d) The Persons entitled to vote a majority in principal
amount of the outstanding Notes shall constitute a quorum for a meeting of
holders of Notes; provided, however, that if any action is to be taken at such
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
Notes, the Persons holding or representing such specified percentage in
principal amount of the outstanding Notes will constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of holders of Notes, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 8.02, except that such
notice need be given only once not less than five days prior the date on which
the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the outstanding Notes which shall constitute a quorum.
(e) Any resolution passed or decision taken at any meeting of
holders of Notes duly held in accordance with this Section shall be binding on
all the holders of Notes whether or not present or represented at the meeting.
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SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Notes 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 Notes 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 Noteholders 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 8.02. The record shall show the serial numbers of the Notes 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 Initial Notes and the Exchange Notes
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
SECTION 9.01. Without Consent of Noteholders.
The Company and the Trustee may from time to time and at any
time amend this Indenture, without the consent of the Noteholders, for one or
more of the following purposes:
(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 hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the
Noteholders as the Board of Directors and the Trustee shall consider to
be for the protection of the Noteholders, 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
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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 provide for the issuance under this Indenture of Notes
in coupon form if allowed by law (including Notes registrable as to
principal only) and to provide for exchangeability of such Notes with
the Notes issued hereunder in fully registered form and to make all
appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture; provided,
that any such action shall not materially adversely affect the
interests of the holders of the Notes;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Notes;
(f) to qualify or maintain qualification of this Indenture
under the Trust Indenture Act of 1939; or
(g) to make any change that does not adversely affect the
rights of any Noteholder 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 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 this Indenture authorized by the provisions
of this Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Notes at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Noteholders.
(a) With the consent (evidenced as provided in Section 7.01)
of the holders of a majority in principal amount of the Notes 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 this 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 Notes; provided, however, that no such amendment shall without
the consent of the holders of each Note
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then outstanding and affected hereby (i) extend the Stated Maturity of any Note,
or reduce the rate, or reduce the principal amount thereof, or make the
principal thereof or any interest or Additional Interest thereon payable in any
coin or currency other than that provided in the Notes, or impair or affect the
right of any Noteholder to institute suit for payment thereof, or (ii) reduce
the aforesaid percentage of Notes the holders of which are required to consent
to any such amendment to this Indenture.
(b) Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any supplemental indenture affecting
such amendment, and upon the filing with the Trustee of evidence of the consent
of Noteholders 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.
(c) 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 Noteholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
(d) It shall not be necessary for the consent of the
Noteholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act of 1939; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article IX shall comply with the Trust Indenture Act of 1939. 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 Notes 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.
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SECTION 9.04. Notation on Notes.
Notes 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 Notes 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 Notes then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished to Trustee.
(a) The Trustee, subject to the provisions of Sections 6.01
and 6.02, 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.
(b) 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.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of the Company with or into any other
Person (whether or not affiliated with the Company, as the case may be), or
successive consolidations or mergers in which the Company or its successor or
successors 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 an entirety, or substantially as an entirety, to any other Person (whether or
not affiliated with the Company or its successor or successors) 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 the Person 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 of (and premium, if any) and interest
on the Notes 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
45
<PAGE> 51
Indenture Act of 1939, 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, and (c) immediately after giving
effect to such consolidation, merger, sale, conveyance, transfer or lease, no
Default or Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default shall have occurred and be continuing.
SECTION 10.02. 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 of (and premium, if
any) and interest on all of the Notes 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 the Company thereupon shall be
relieved of any further liability or obligation hereunder or upon the Notes.
Such successor Person thereupon may cause to be signed, and may issue either in
its own name or in the name of Trenwick Group Inc., any or all of the Notes
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 Notes 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 Notes which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Notes so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Notes theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Notes had been issued at the date of the
execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Opinion of Counsel as conclusive evidence that any
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
SECTION 11.01. Discharge of Indenture.
46
<PAGE> 52
When (a) the Company shall deliver to the Trustee for
cancellation all Notes theretofore authenticated (other than any Notes which
shall have been destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.08) and not theretofore cancelled, or (b) all the
Notes 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, and the Company shall deposit or cause to be deposited
with the Trustee, in trust, funds sufficient to pay on the Stated Maturity all
of the Notes (other than any Notes which shall have been destroyed, lost or
stolen and which shall have been replaced or paid as provided in Section 2.08)
not theretofore cancelled or delivered to the Trustee for cancellation,
including principal and interest and any Additional Interest due or to become
due to the Stated Maturity or prepayment date, as the case may be, but
excluding, however, the amount of any moneys for the payment of principal or
interest and any Additional Interest on the Notes (1) theretofore repaid to the
Company in accordance with the provisions of Section 11.04, 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, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.02, 2.07,
2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04, which shall survive until such
Notes shall mature and be paid. Thereafter, Sections 6.06, 6.10 and 11.04 shall
survive, and the Trustee, on demand of the Company accompanied by any Officers'
Certificate and an Opinion of Counsel, to the effect that all conditions to the
satisfaction and discharge of this Indenture have been satisfied, 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 Notes.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and
U.S. Government Obligations deposited with the Trustee pursuant to Sections
11.01 or 11.05 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 Notes 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 and interest.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 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 Notes.
47
<PAGE> 53
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all
moneys then held by any paying agent of the Notes (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.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of or interest on such Notes, 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 written demand; and the holder of any of the Notes 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.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Company shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the Notes on the 91st day
after the applicable conditions set forth below have been satisfied with respect
to the Notes:
(a) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined below)
as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the Notes (i) money
in an amount, or (ii) U.S. Government Obligations which through the
payment of interest and principal in respect thereof in accordance with
their terms will provide, not later than one Business Day before the
due date of any payment, money in an amount, or (iii) a combination of
(i) and (ii), sufficient, in the opinion (with respect to (ii) and
(iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee and the Defeasance Agent, if any, to pay and discharge each
installment of principal of and interest on the outstanding Notes on
the dates such installments of principal or interest are due;
(b) if the Notes 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 this Section 11.05 would not cause such
Notes to be delisted from such exchange;
(c) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit; and
48
<PAGE> 54
(d) the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that
holders of the Notes will not recognize income, gain or loss for United
States federal income tax purposes as a result of the exercise of the
option under this Section 11.05 and will be subject to United States
federal income tax in the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised, and such opinion shall be accompanied by a private letter
ruling to that effect received from the United States Internal Revenue
Service or a revenue ruling pertaining to a comparable form of
transaction to that effect published by the United States Internal
Revenue Service.
"Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Notes and to have
satisfied all the obligations under this Indenture relating to the Notes (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except (A) the rights of holders of Notes to receive,
from the trust fund described in clause (1) above, payment of the principal of
and the interest on the Notes when such payments are due; (B) the Company's
obligations with respect to the Notes under Sections 2.07, 2.08, 5.02 and 11.04;
and (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder.
"Defeasance Agent" means another financial institution which
is eligible to act as Trustee hereunder and which assumes all of the obligations
of the Trustee necessary to enable the Trustee to act hereunder. In the event
such a Defeasance Agent is appointed pursuant to this Section, the following
conditions shall apply:
(a) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth such
Defeasance Agent's rights and responsibilities; and
(b) The Defeasance Agent shall provide verification to the
Trustee acknowledging receipt of sufficient money and/or U.S.
Government Obligations to meet the applicable conditions set forth in
this Section 11.05.
SECTION 11.06. Reinstatement.
If the Trustee or any Defeasance Agent is unable to apply any
money in accordance with Section 11.05 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 11.05 until such time as
the Trustee or any Defeasance Agent is permitted to apply all such money in
accordance with Section 11.05.
49
<PAGE> 55
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Notes Solely Corporate Obligations.
No recourse for the payment of the principal of or interest or
Additional Interest on any Note, 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 Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer, employee 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, 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 Notes.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. 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.
SECTION 13.02. 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.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of
two-thirds (2/3) 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 and as to any successor
Person.
50
<PAGE> 56
SECTION 13.04. Address 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 Notes 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, Metro Center, One Station Place, Stamford, CT 06902, Attention:
Jane T. Wiznitzer, Vice President-Legal Affairs and Secretary. Any notice,
direction, request or demand by any Noteholder 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, The First National Bank of Chicago
located at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126,
Attention: Corporate Trust Services Division or its agent in the Borough of
Manhattan, located at First Chicago Trust Company of New York, 14 Wall Street,
Eighth Floor, New York, New York 10005.
SECTION 13.05. Governing Law.
This Indenture and each Note 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.
SECTION 13.06. 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 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 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.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or
interest or Additional Interest on the Notes will not be a Business Day, the
payment of such principal of or interest or Additional Interest on the Notes
need not be made on such date but may be made on the next succeeding
51
<PAGE> 57
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.
SECTION 13.08. Trust Indenture Act of 1939 to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
which is required to be included in this Indenture by any of Sections 310 to
317, inclusive, of the Trust Indenture Act of 1939, such required provision
shall control.
SECTION 13.09. 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.
SECTION 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.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Notes 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 provision of this Indenture or of the Notes, but this
Indenture and the Notes shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of
its rights or obligations under this Indenture to a direct or indirect wholly
owned Subsidiary of the Company, provided, that, in the event of any such
assignment, the Company will remain liable for all such obligations. Subject to
the foregoing, the Indenture is binding upon and inures to the benefit of the
parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties hereto.
SECTION 13.13. No Sinking Fund.
The Notes are not entitled to the benefit of any sinking fund.
52
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31,
1998 FOR TRENWICK GROUP INC.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 864,748
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 50,841
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 915,589
<CASH> 108,178
<RECOVER-REINSURE> 139,338<F1>
<DEFERRED-ACQUISITION> 33,764
<TOTAL-ASSETS> 1,370,829
<POLICY-LOSSES> 652,437
<UNEARNED-PREMIUMS> 149,419
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 75,000
110,000
0
<COMMON> 1,205
<OTHER-SE> 364,039
<TOTAL-LIABILITY-AND-EQUITY> 1,370,829
45,824
<INVESTMENT-INCOME> 12,384
<INVESTMENT-GAINS> 720
<OTHER-INCOME> 12
<BENEFITS> 26,505
<UNDERWRITING-AMORTIZATION> 15,158
<UNDERWRITING-OTHER> 6,764
<INCOME-PRETAX> 10,513
<INCOME-TAX> 1,268
<INCOME-CONTINUING> 9,245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,245
<EPS-PRIMARY> .78<F2>
<EPS-DILUTED> .77
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>REPRESENTS NET REINSURANCE RECOVERABLE BALANCES AFTER OFFSET OF FUNDS HELD AND
REINSURANCE BALANCES PAYABLE.
<F2> REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
