As filed with the Securities and Exchange Commission on February 12, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1993
--------------------------------
MARKEL CORPORATION MARKEL CAPITAL TRUST I
(Exact name of Registrant as (Exact name of Registrant
specified in its charter) as specified in its trust agreement)
VIRGINIA DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
--------------------
6331 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
54-0292420
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
4551 COX ROAD 4551 COX ROAD
GLEN ALLEN, VIRGINIA 23060 GLEN ALLEN, VIRGINIA 23060
(804) 747-0136 (804) 747-0136
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
---------------------------
Gregory B. Nevers Gregory B. Nevers
Corporate Counsel Corporate Counsel
Markel Corporation Markel Corporation
4551 Cox Road 4551 Cox Road
Glen Allen, Virginia 23060 Glen Allen, Virginia 23060
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
---------------------------
COPIES TO:
Leslie A. Grandis Michael L. Fitzgerald
McGuire,Woods, Battle & Boothe, L.L.P. Brown & Wood, L.L.P.
One James Center One World Trade Center
Richmond, Virginia 23219 New York, New York 10048
---------------------------
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of to be Offering Price Aggregate Registration
to be Registered Registered Per Unit(1) Offering Price(1) Fee(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Series B Capital Securities of
Markel Capital Trust I . . . . . $150,000,000 100% $150,000,000 $45,454.55
- ---------------------------------------------------------------------------------------------------------------------
Series B Junior Subordinated
Deferrable Interest Debentures
of Markel Corporation(2) 100.00
- ---------------------------------------------------------------------------------------------------------------------
Markel Corporation Series B
Guarantee with respect to
Series B Capital Securities(3) 100.00
- ---------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . $150,000,000 100% $150,000,000 $45,654.55
=====================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the Series B Junior
Subordinated Deferrable Interest Debentures of Markel Corporation (the
"Junior Subordinated Debentures") distributed upon any liquidation of
Markel Capital Trust I.
(3) No separate consideration will be received for the Markel Corporation
Series B Guarantee.
(4) This Registration Statement is deemed to cover rights of holders of
Junior Subordinated Debentures under the Indenture, the rights of
holders of Series B Capital Securities of Markel Capital Trust I
under a Declaration of Trust, the rights of holders of such Capital
Securities under the Series B Guarantee and certain backup
undertakings as described herein.
(5) Such amount represents the liquidation amount of the Markel Capital
Trust I Series B Capital Securities to be exchanged hereunder and the
principal amount of Junior Subordinated Debentures that may be
distributed to holders of such Capital Securities upon any liquidation
of Markel Capital Trust I.
The Registrants hereby amend this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1997
MARKEL CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.71% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.71% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
MARKEL CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
--------------------
Markel Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $150,000,000 aggregate Liquidation Amount of its
8.71% Series B Capital Securities (the "New Capital Securities") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like Liquidation Amount of its outstanding
8.71% Series A Capital Securities (the "Old Capital Securities"), of which
$150,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, Markel Corporation, a Virginia corporation (the "Company"), is
also offering to exchange (i) its guarantee of payments of cash distributions
and payments on liquidation of the Trust or redemption of the Old Capital
Securities (the "Old Guarantee") for a like guarantee in respect of the New
Capital Securities (the "New Guarantee") and (ii) all of its 8.71% Series A
Junior Subordinated Deferrable Interest Debentures due January 1, 2046 (the "Old
Junior Subordinated Debentures") for a like aggregate principal amount of its
8.71% Series B Junior Subordinated Deferrable Interest Debentures due January 1,
2046 (the "New Junior Subordinated Debentures"), which New Guarantee and New
Junior Subordinated Debentures also have been registered under the Securities
Act. The Old Capital Securities, the Old Guarantee and the Old Junior
Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New Junior
Subordinated Debentures are collectively referred to herein as the "New
Securities."
The terms of the New Securities are identical in all material respects
to the respective terms of the Old Securities, except that the New Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Old Securities, the New
Capital Securities will not contain the $100,000 minimum Liquidation Amount
transfer restriction, the New Capital Securities will not provide for any
increase in the Distribution rate thereon, the New Junior Subordinated
Debentures will not contain the $100,000 minimum principal amount transfer
restriction and (e) the New Junior Subordinated Debentures will not provide for
any increase in the interest rate thereon. See "Description of New Securities"
and "Description of Old Securities." The New Capital Securities are being
offered for exchange in order to satisfy certain obligations of the Corporation
and the Trust under the Registration Rights Agreement dated as of January 13,
1997 (the "Registration Rights Agreement") among the Corporation, the Trust and
the Initial Purchasers (as defined herein). In the event that the Exchange Offer
is consummated, any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer and the New Capital Securities issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding Liquidation Amount
thereof have taken certain actions or exercised certain rights under the Trust
Agreement.
(CONTINUED ON THE FOLLOWING PAGE)
This Prospectus and the Letter of Transmittal are first being mailed to
all holders of Old Capital Securities on , 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE ___ FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________ __, 1997.
<PAGE>
The New Capital Securities and the Old Capital Securities
(collectively, the "Capital Securities") represent beneficial interests in the
assets of the Trust. The Corporation is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
The Chase Manhattan Bank is the Property Trustee of the Trust. The Trust was
formed for the sole purpose of issuing the Trust Securities and investing the
proceeds thereof in the Junior Subordinated Debentures (as defined herein). The
Junior Subordinated Debentures will mature on January 1, 2046 (the "Stated
Maturity Date"). The Capital Securities will have a preference over the Common
Securities under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise. See "Description of New
Securities--Subordination of Common Securities."
As used herein, (i) "Indenture" means the Indenture, dated as of
January 13, 1997, as amended and supplemented from time to time, between the
Corporation and The Chase Manhattan Bank, as Debenture Trustee (the "Debenture
Trustee"), and (ii) "Declaration" means the Amended and Restated Declaration of
Trust relating to the Trust among the Corporation, as Sponsor, The Chase
Manhattan Bank as Property Trustee (the "Property Trustee"), Chase Manhattan
Bank Delaware, as Delaware Trustee, (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees"). In addition, as the context may
require, unless otherwise expressly stated, (i) the term "Capital Securities"
includes the Old Capital Securities and the New Capital Securities, (ii) the
term "Trust Securities" includes the Capital Securities and the Common
Securities, (iii) the term "Junior Subordinated Debentures" includes the Old
Junior Subordinated Debentures and the New Junior Subordinated Debentures and
(iv) the term "Guarantee" includes the Old Guarantee and the New Guarantee.
Holders of the New Capital Securities will be entitled to receive
cumulative cash distributions, accumulating from January 13, 1997 and payable
semi-annually in arrears on January 1 and July 1 of each year, commencing July
1, 1997, at the annual rate of 8.71% of the Liquidation Amount of $1,000 per New
Capital Security ("Distributions"). So long as no Debenture Event of Default (as
defined herein) has occurred and is continuing, the Company will have the right
to defer payments of interest on the Junior Subordinated Debentures at any time
and from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity Date.
Upon the termination of any such Extension Period and the payment of all amounts
then due, the Company may elect to begin a new Extension Period, subject to the
requirements set forth in the Indenture. If and for so long as interest payments
on the Junior Subordinated Debentures are so deferred, Distributions on the
Trust Securities will also be deferred and the Company will not be permitted,
subject to certain exceptions described herein, to declare or pay any cash
distributions with respect to the Company's capital stock (which includes common
and preferred stock) or to make any payment with respect to debt securities of
the Company that rank pari passu with or junior to the Junior Subordinated
Debentures. During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Trust Securities are entitled will continue to accumulate) at the
rate of 8.71% per annum, compounded semi-annually, and holders of Trust
Securities will be required to accrue interest income for United States federal
income tax purposes. See "Description of Junior Subordinated Debentures --
Option to Extend Interest Payment Date" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Company, through the Guarantee, the Common Guarantee, the
Declaration, the Junior Subordinated Debentures and the Indenture (each as
defined herein), taken together, has guaranteed, or will guarantee, as the case
may be, fully, irrevocably and unconditionally all of the Trust's obligations
under the Trust Securities. See "Relationship Among the New Capital Securities,
the New Junior Subordinated Debentures and the New Guarantee -- Full and
Unconditional Guarantee." The Old Guarantee and the Common Guarantee currently
guarantee, and the New Guarantee will guarantee, payments of Distributions and
payments on liquidation or redemption of the Trust Securities, but in each case
only to the extent that the Trust holds funds on hand legally available therefor
and has failed to make such payments, as described herein. See "Description of
the Guarantee." If the Company fails to make a required payment on the Junior
Subordinated Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the Trust Securities. The
Guarantee and the Common Guarantee will not cover any such payment when the
Trust does not have sufficient funds on hand legally available therefor. In such
event, a holder of Capital Securities may institute a legal proceeding directly
against the Company to enforce its rights in respect of such payment. See
"Description of New Junior Subordinated Debentures -- Enforcement of Certain
Rights by Holders of Capital Securities." The obligations of the Company under
the Guarantee and the Junior Subordinated Debentures will be unsecured and
subordinate and rank junior in right of payment to all Senior Indebtedness (as
defined in "Description of New Junior Subordinated Debentures --
Subordination"), which totaled approximately $120.3 million at December 31,
1996.
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated Debentures at a redemption price
equal to the principal amount of, plus accrued interest on, the Junior
Subordinated Debentures (the "Maturity Redemption Price"), (ii) in whole but not
in part, at any time, contemporaneously with the optional prepayment of the
Junior Subordinated Debentures upon the occurrence and continuation of a Special
Event (as defined herein), at a redemption price equal to the Special Event
Prepayment Price (as defined herein) (the "Special Event Redemption Price"), and
(iii) in whole or in part, on or after January 1, 2007, contemporaneously with
the optional prepayment by the Company of the Junior Subordinated Debentures, at
a redemption price equal to the Optional Prepayment Price (as defined herein)
(the "Optional Redemption Price"). Any of the Maturity Redemption Price, the
Special Event Redemption Price and the Optional Redemption Price may be referred
to herein as the "Redemption Price." See "Description of New Securities --
Redemption."
<PAGE>
The New Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity Date at the option of the Company (i) on or after January 1,
2007, in whole or in part, at a prepayment price (the "Optional Prepayment
Price") equal to 104.355% of the principal amount thereof on January 1, 2007,
declining ratably on each January 1 thereafter to 100% on or after January 1,
2017, plus accrued interest thereon to the date of prepayment, or (ii) prior to
January 1, 2007, in whole but not in part, upon the occurrence and continuation
of a Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (a) 100% of the principal amount thereof or (b) the sum,
as determined by a Quotation Agent (as defined herein), of the present values of
the principal amount and premium payable with respect to an optional redemption
of New Junior Subordinated Debentures on January 1, 2007, together with
scheduled payments of interest on the New Junior Subordinated Debentures from
the prepayment date to and including January 1, 2007, discounted to the
prepayment date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined herein) plus, in
either case, accrued interest thereon to the date of prepayment. Either of the
Optional Prepayment Price or the Special Event Prepayment Price may be referred
to herein as the "Prepayment Price." See "Description of New Junior Subordinated
Debentures -- Optional Prepayment" and " -- Conditional Right to Advance
Maturity and Special Event Prepayment."
The Company will have the right at any time to terminate the Trust and
cause a Like Amount of the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust, subject to the
Company having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of the Capital Securities.
Unless the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities, in the event of a liquidation of the Trust under certain
circumstances described herein, after satisfaction of liabilities to creditors
of the Trust as required by applicable law, the holders of the Capital
Securities generally will be entitled to receive a Liquidation Amount of $1,000
per Capital Security plus accumulated and unpaid Distributions thereon to the
date of payment. See "Description of New Securities -- Liquidation of the Trust
and Distribution of Junior Subordinated Debentures" and "Certain Federal Income
Tax Consequences -- Receipt of Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Company nor the Trust has sought its own interpretive
letter and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the two immediately
following sentences, the Company and the Trust believe that New Capital
Securities issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an "affiliate" of the Company or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing New Capital Securities, or
any broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Company or the
Trust, (ii) any New Capital Securities to be received by it are being acquired
in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such New Capital Securities. In addition, the Company and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to the Company and the Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
on behalf of whom such holder holds the Capital Securities to be exchanged in
the Exchange Offer. Each broker-dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it acquired
the Old Capital Securities for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Capital Securities. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Company and the Trust believe that broker-dealers who acquired Old Capital
Securities for their own accounts, as a result of market-making activities or
other trading activities ("Participating Broker-Dealers"), may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Company
and the Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker- Dealer in
<PAGE>
connection with resales of such New Capital Securities for a period ending 90
days after the Expiration Date (as defined herein) (subject to extension under
certain limited circumstances described below) or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer.
See "Plan of Distribution." However, a Participating Broker-Dealer who intends
to use this Prospectus in connection with the resale of New Capital Securities
received in exchange for Old Capital Securities pursuant to the Exchange Offer
must notify the Company or the Trust, or cause the Company or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer--Exchange Agent." Any
Participating Broker-Dealer who is an "affiliate" of the Company or the Trust
may not rely on such interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction. See "The Exchange Offer--Resales of New Capital
Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If the Company or the Trust
gives such notice to suspend the sale of the New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable), it shall
extend the 90- day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection with the resale
of New Capital Securities by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the New Capital
Securities or to and including the date on which the Company or the Trust has
given notice that the sale of New Capital Securities (or the New Guarantee or
the New Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. Although the Initial Purchasers have informed the Company and the Trust
that they each currently intend to make a market in the New Capital Securities,
they are not obligated to do so, and any such market making may be discontinued
at any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. The
Company and the Trust currently do not intend to apply for listing of the New
Capital Securities on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Old Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Company nor the Trust will
have any further obligation to such holders (other than under certain limited
circumstances) to provide for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 1997 (such time on such date being hereinafter
called the "Expiration Date"), unless the Exchange Offer is extended by the
Company or the Trust (in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended). Tenders of Old
Capital Securities may be withdrawn at any time on or prior to the Expiration
Date. The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered for exchange. However, the Exchange
Offer is subject to certain events and conditions which may be waived by the
Company or the Trust and to the terms and provisions of the Registration Rights
Agreement. Old Capital Securities may be tendered in whole or in part having an
aggregate Liquidation Amount of not less than $100,000 (100 Capital Securities)
or any integral multiple of $1,000 Liquidation Amount (one Capital Security) in
excess thereof. The Company has agreed to pay all expenses of the Exchange
Offer. See "The Exchange Offer--Fees and Expenses." Holders of the Old Capital
Securities whose Old Capital Securities are accepted for exchange will not
receive Distributions on such Old Capital Securities and will be deemed to
have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after January 13, 1997. See "The Exchange
Offer--Distributions on New Capital Securities."
Neither the Company nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
---------------
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE TRUST. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
Page
Available Information.....................................................
Incorporation of Certain Documents by Reference...........................
Summary...................................................................
Risk Factors..............................................................
Markel Corporation .......................................................
Use of Proceeds ..........................................................
Ratios of Earnings to Fixed Charges.......................................
Capitalization............................................................
Summary Financial Data ...................................................
Markel Capital Trust I ...................................................
The Exchange Offer........................................................
Description of New Securities ............................................
Description of New Junior Subordinated Debentures ........................
Description of The Guarantee .............................................
Description of Old Securities.............................................
Relationship Among the New Capital Securities, the
New Junior Subordinated Debentures and the New Guarantee................
Certain Federal Income Tax Consequences ..................................
ERISA Considerations......................................................
Plan of Distribution......................................................
Notice to Investors ......................................................
Certain Legal Matters.....................................................
Experts...................................................................
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information concerning the Trust can be inspected and copied at
prescribed rates at the Commission's Public Reference Room, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following Regional
Offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York
10048; and, Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may be obtained by mail from the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. If available, such reports and other information may
also be accessed through the Commission's electronic data gathering, analysis
and retrieval system ("EDGAR") via electronic means, including the Commission's
web site on the Internet (http://www.sec.gov).
No separate financial statements of the Trust have been included herein. The
Company does not consider that such financial statements would be material to
holders of the Capital Securities because (i) all of the voting securities of
the Trust are owned, directly or indirectly, by the Company, a reporting company
under the Exchange Act, (ii) the Trust has no independent operations and exists
for the sole purpose of issuing securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
Junior Subordinated Debentures issued by the Company, and (iii) the Company's
obligations described herein to provide certain indemnities in respect of, and
be responsible for, certain costs, expenses, debts and liabilities of the Trust
under the Indenture and any supplemental indenture thereto and pursuant to the
Declaration of the Trust, the guarantee issued with respect to Capital
Securities issued by the Trust, the Junior Subordinated Debentures purchased by
Markel Capital Trust I and the related Indenture, taken together, constitute a
full and unconditional guarantee of payments due on the Capital Securities. See
"Description of New Junior Subordinated Debentures" and "Description of the
Guarantee."
The Trust is not currently subject to the information reporting requirements of
the Exchange Act. The Trust will become subject to such requirements upon the
effectiveness of the Registration Statement, although it intends to seek and
expects to receive exemptions therefrom.
This Prospectus constitutes a part of a registration statement on Form S-4 (the
"Registration Statement") filed by the Company and the Trust with the Commission
under the Securities Act. This Prospectus does not contain all the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and reference is
hereby made to the Registration Statement and to the exhibits relating thereto
for further information with respect to the Company, the Trust and the New
Securities. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company pursuant to
Section 13 of the Exchange Act are incorporated by reference in this Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31, 1995,
as amended by Amendment No. 1 filed April 9, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996;
(c) Current Report on Form 8-K filed on November 13, 1996;
(d) Current Report on Form 8-K filed on January 10, 1997; and
(e) Current Report on Form 8-K filed on February 6, 1997.
Such incorporation by reference shall not be deemed to specifically incorporate
by reference the information referred to in Item 402(a)(8) of Regulation S-K.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the New Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus or any supplement thereto to the extent that a statement
contained herein or therein (or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein or therein) modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all
of the provisions of such contract or other document. The Company will
provide without charge to each person to whom a copy of this Prospectus has
been delivered, upon the written or oral request of such person, a copy of any
or all of the documents referred to above which have been or may be
incorporated by reference herein (other than exhibits to such documents
unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to Markel Corporation,
Investor Relations Department, 4551 Cox Road, Glen Allen, Virginia 23060,
telephone (800) 446-6671.
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in or incorporated by reference into this
Prospectus.
Markel Capital Trust I
The Trust is a statutory business trust created under Delaware law by the filing
of a certificate of trust with the Delaware Secretary of State on December 30,
1996. The Trust is governed by an Amended and Restated Declaration of Trust (the
"Declaration") executed by the Company, as Sponsor, The Chase Manhattan Bank, as
Property Trustee, and The Chase Manhattan Bank Delaware, as Delaware Trustee and
the three individual Administrative Trustees named therein. The Trust's business
and affairs are conducted by the Issuer Trustees: the Property Trustee, the
Delaware Trustee, and the three individual Administrative Trustees who are
employees or officers of or affiliated with the Company. The Trust exists for
the exclusive purposes of (i) issuing and selling the Trust Securities, (ii)
using the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures issued by the Company and (iii) engaging in only those
other activities necessary, advisable or incidental thereto (such as registering
the transfer of the Trust Securities). Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Trust, and payments under the Junior
Subordinated Debentures will be the sole revenue of the Trust. All of the Common
Securities are owned by the Company.
Markel Corporation
Markel Corporation is an insurance holding company which, through its
subsidiaries, markets and underwrites specialty insurance products and programs
to a variety of niche markets. The Company believes that its specialty product
focus and niche market strategy enable it to develop particular expertise and
specialized knowledge of its markets. Such specialization allows the Company to
provide added value to its customers and to compete on a basis other than price.
The year ended December 31, 1995 marked the Company's fourth consecutive year of
underwriting profitability and the ninth year of underwriting profitability in
the last ten years. The Company emphasizes quality service in all phases of its
operations and believes that this approach fosters strong relationships with its
producers and greater customer loyalty.
The Company's primary businesses are professional and products liability, excess
and surplus lines, specialty programs, specialty personal and commercial lines
and brokered excess and surplus lines. The Company's distribution channels
include retail and wholesale brokers, general agents, direct marketing,
including telemarketing and direct mail, and affinity groups. The Company offers
products and coverages designed to meet the needs of insureds in niche or
emerging markets or insureds with specialized exposures or risks that are not
adequately served by the standard markets. Significant products include
professional liability coverages for doctors, lawyers, architects, engineers and
other professionals, comprehensive programs for summer camps and other youth
recreation organizations, conference centers, child care centers, private
schools, martial arts schools, gymnastics schools, dance studios and horse
farms, and property and liability coverages for restaurants and bars, vacant
properties and hard-to- place property risks, yachts, jet skis and other
watercraft, mobile homes and other non-standard dwellings, taxi fleets and other
commercial vehicles. Each risk is generally considered on an individual basis,
and coverages typically include limit restrictions, deductibles, exclusions,
surcharges and other features which respond to distinctive risk characteristics.
The Company had earned premiums of $285.1 million and $225.1 million for the
year ended December 31, 1995 and for the nine months ended September 30, 1996,
respectively. As of September 30, 1996, the Company had total assets of
approximately $1.4 billion and shareholders' equity of $247.8 million.
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer................... Up to $150,000,000 aggregate Liquidation
Amount of New Capital Securities are
being offered in exchange for a like
aggregate Liquidation Amount of Old
Capital Securities. Old Capital
Securities may be tendered for exchange
in whole or in part in a Liquidation
Amount of $100,000 (100 Capital
Securities) or any integral multiple of
$1,000 (one Capital Security) in excess
thereof. The Company and the Trust are
making the Exchange Offer in order to
satisfy their obligations under the
Registration Rights Agreement relating
to the Old Capital Securities. For a
description of the procedures for
tendering Old Capital Securities, see
"The Exchange Offer--Procedures for
Tendering Old Capital Securities."
Expiration Date...................... 5:00 p.m., New York City time, on , 1997,
unless the Exchange Offer is extended by
the Company or the Trust (in which case
the Expiration Date will be the latest
date and time to which the Exchange Offer
is extended). See "The Exchange
Offer--Terms of the Exchange Offer."
Conditions to the Exchange Offer..... The Exchange Offer is subject to certain
conditions, which may be waived by the
Company and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum Liquidation
Amount of Old Capital Securities being
tendered. See "The Exchange
Offer--Conditions to the Exchange Offer."
Offer................................ The Company and the Trust reserve the
right in their sole and absolute
discretion, subject to applicable law,
at any time and from time to time, (i)
to delay the acceptance of the Old
Capital Securities for exchange, (ii)
to terminate the Exchange Offer if
certain specified conditions have not
been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer
and retain all Old Capital Securities
tendered pursuant to the Exchange Offer,
subject, however, to the right of
holders of Old Capital Securities to
withdraw their tendered Old Capital
Securities, or (iv) to waive any
condition or otherwise amend the terms
of the Exchange Offer in any respect.
See "The Exchange Offer--Terms of the
Exchange Offer."
Withdrawal Rights.................... Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written
notice of such withdrawal to the Exchange
Agent in conformity with certain
procedures set forth below under "The
Exchange Offer--Withdrawal Rights."
<PAGE>
Procedures for Tendering
Old Capital Securities............... Tendering holders of Old Capital
Securities must complete and sign a
Letter of Transmittal in accordance
with the instructions contained therein
and forward the same by mail, facsimile
or hand delivery, together with any
other required documents, to the
Exchange Agent, either with the Old
Capital Securities to be tendered or in
compliance with the specified procedures
for guaranteed delivery of Old Capital
Securities. Certain brokers, dealers,
commercial banks, trust companies and
other nominees may also effect tenders by
book-entry transfer. Holders of Old
Capital Securities registered in the name
of a broker, dealer, commercial bank,
trust company or other nominee are urged
to contact such person promptly if
they wish to tender Old Capital
Securities pursuant to the Exchange
Offer. See "The Exchange
Offer--Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities
should not be sent to the Company or the
Trust. Such documents should only be
sent to the Exchange Agent.
<PAGE>
Resales of New Capital Securities.... The Company and the Trust are making
the Exchange Offer in reliance on the
position of the staff of the Division of
Corporation Finance of the Commission as
set forth in certain interpretive letters
addressed to third parties in other
transactions. However, neither the
Company nor the Trust has sought its own
interpretive letter and there can be no
assurance that the staff of the Division
of Corporation Finance of the Commission
would make a similar determination with
respect to the Exchange Offer as it has
in such interpretive letters to third
parties. Based on these
interpretations by the staff of the
Division of Corporation Finance of the
Commission, and subject to the two
immediately following sentences, the
Company and the Trust believe that
New Capital Securities issued pursuant
to this Exchange Offer in exchange for
Old Capital Securities may be offered
for resale, resold and otherwise
transferred by a holder thereof (other
than a holder who is a broker-dealer)
without further compliance with the
registration and prospectus delivery
requirements of the Securities Act,
provided that such New Capital
Securities are acquired in the ordinary
course of such holder's business and
that such holder is not
participating, and has no arrangement
or understanding with any person to
participate, in a distribution (within
the meaning of the Securities Act) of
such New Capital Securities. However,
any holder of Old Capital Securities who
is an "affiliate" of the Company or the
Trust or who intends to participate in
the Exchange Offer for the purpose of
distributing the New Capital
Securities, or any broker-dealer who
purchased the Old Capital Securities
from the Trust to resell pursuant to
Rule 144A or any other available
exemption under the Securities Act, (a)
will not be able to rely on the
interpretations of the staff of the
Division of Corporation Finance of
the Commission set forth in the
above-mentioned interpretive letters,
(b) will not be permitted or entitled to
tender such Old Capital Securities in
the Exchange Offer and (c) must comply
with the registration and prospectus
delivery requirements of the Securities
Act in connection with any sale or
other transfer of such Old Capital
Securities unless such sale is made
pursuant to an exemption from such
requirements. In addition, as described
below, if any broker-dealer holds Old
Capital Securities acquired for its own
account as a result of market-making
or other trading activities and
exchanges such Old Capital Securities for
New Capital Securities, then such
broker-dealer must deliver a prospectus
meeting the requirements of the
Securities Act in connection with
any resales of such New Capital
Securities.
Each holder of Old Capital Securities
who wishes to exchange Old Capital
Securities for New Capital Securities in
the Exchange Offer will be required to
represent that (i) it is not an
"affiliate" of the Company or the Trust,
(ii) any New Capital Securities to be
received by it are being acquired in
the ordinary course of its business,
(iii) it has no arrangement or
understanding with any person to
participate in a distribution (within
the meaning of the Securities Act) of
such New Capital Securities,
<PAGE>
and (iv) if such holder is not a
broker-dealer, such holder is not
engaged in, and does not intend to
engage in, a distribution (within the
meaning of the Securities Act) of such
New Capital Securities. Each
broker-dealer that receives New Capital
Securities for its own account pursuant
to the Exchange Offer must acknowledge
that it acquired the Old Capital
Securities for its own account as the
result of market-making activities or
other trading activities and must agree
that it will deliver a prospectus
meeting the requirements of the
Securities Act in connection with any
resale of such New Capital Securities.
The Letter of Transmittal states that,
by so acknowledging and by delivering
a prospectus, a broker-dealer will not
be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Based on the position
taken by the staff of the Division of
Corporation Finance of the Commission in
the interpretive letters referred to
above, the Company and the Trust believe
that Participating Broker-Dealers who
acquired Old Capital Securities for their
own accounts as a result of market-making
activities or other trading activities
may fulfill their prospectus delivery
requirements with respect to the New
Capital Securities received upon
exchange of such Old Capital Securities
(other than Old Capital Securities
which represent an unsold allotment
from the original sale of the Old
Capital Securities) with a prospectus
meeting the requirements of the
Securities Act, which may be the
prospectus prepared for an exchange
offer so long as it contains a
description of the plan of distribution
with respect to the resale of such New
Capital Securities. Accordingly, this
Prospectus, as it may be amended or
supplemented from time to time, may be
used by a Participating Broker-Dealer
in connection with resales of New
Capital Securities received in exchange
for Old Capital Securities where such
Old Capital Securities were acquired by
such Participating Broker- Dealer for
its own account as a result of
market-making or other trading
activities. Subject to certain provisions
set forth in the Registration Rights
Agreement and to the limitations
described below under "The Exchange
Offer--Resales of New Capital
Securities," the Company and the Trust
have agreed that this Prospectus, as it
may be amended or supplemented from time
to time, may be used by a Participating
Broker-Dealer in connection with resales
of such New Capital Securities for a
period ending 90-days after the
Expiration Date (subject to extension
under certain limited circumstances) or,
if earlier, when all such New Capital
Securities have been disposed of by
such Participating Broker-Dealer. See
"Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of
the Company or the Trust may not rely on
such interpretive letters and must
comply with the registration and
prospectus delivery requirements of
the Securities Act in connection with
any resale transaction. See "The
Exchange Offer--Resales of New Capital
Securities."
Exchange Agent....................... The exchange agent with respect to the
Exchange Offer is The Chase Manhattan
Bank (the "Exchange Agent"). The
addresses, and telephone and facsimile
numbers, of the Exchange Agent are set
forth in "The Exchange Offer--Exchange
Agent" and in the Letter of Transmittal.
<PAGE>
Use of Proceeds...................... Neither the Company nor the Trust will
receive any cash proceeds from the
issuance of the New Capital Securities
offered hereby. See "Use of Proceeds."
Certain United States Federal
Income Tax Considerations; ERISA
Considerations....................... Holders of Old Capital Securities should
review the information set forth under
"Certain Federal Income Tax
Consequences" and "ERISA Considerations"
prior to tendering Old Capital Securities
in the Exchange Offer.
THE NEW CAPITAL SECURITIES
Securities Offered................... Up to $150,000,000 aggregate Liquidation
Amount of the Trust's New Capital
Securities which have been registered
under the Securities Act (Liquidation
Amount $1,000 per New Capital Security).
The New Capital Securities will be
issued, and the Old Capital Securities
were issued, under the Declaration. The
New Capital Securities and any Old
Capital Securities which remain
outstanding after consummation of the
Exchange Offer will vote together as a
single class for purposes of determining
whether holders of the requisite
percentage in outstanding Liquidation
Amount thereof have taken certain
actions or exercised certain rights
under the Trust Declaration. See
"Description of New Securities--Voting
Rights; Amendment of the Declaration."
The terms of the New Capital Securities
are identical in all material respects
to the terms of the Old Capital
Securities, except that the New
Capital Securities have been registered
under the Securities Act and will not be
subject to the $100,000 minimum
Liquidation Amount transfer
restriction and certain other
restrictions on transfer applicable to
the Old Capital Securities and will not
provide for any increase in the
Distribution rate thereon. See "The
Exchange Offer--Purpose of the Exchange
Offer," "Description of New
Securities" and "Description of Old
Securities."
Distribution Dates................... January 1 and July 1 of each year
commencing July 1, 1997.
Extension Periods.................... Distributions on Capital Securities
will be deferred for the duration of any
Extension Period elected by the Company
with respect to the payment of interest
on the New Junior Subordinated
Debentures. No Extension Period will
exceed 10 consecutive semi-annual
periods or extend beyond the Stated
Maturity Date. See "Description of New
Junior Subordinated Debentures -- Option
to Extend Interest Payment Date" and
"Certain Federal Income Tax
Consequences -- Interest Income and
Original Issue Discount."
<PAGE>
Ranking.............................. The New Capital Securities will rank
pari passu, and payments thereon will
be made pro rata, with the Old Capital
Securities and the Common Securities
except as described under "Description
of New Securities -- Subordination of
Common Securities." The New Junior
Subordinated Debentures will rank pari
passu with the Old Junior Subordinated
Debentures and all other junior
subordinated debentures to be issued by
the Company ("Other Debentures"),
which will be issued and sold (if at
all) to other trusts to be established by
the Company (if any), in each case
similar to the Trust ("Other Trusts"),
and will be unsecured and subordinate and
junior in right of payment to all Senior
Indebtedness to the extent and in the
manner set forth in the Indenture. See
"Description of New Junior Subordinated
Debentures." The New Guarantee will rank
pari passu with the Old Guarantee and all
other guarantees (if any) to be issued by
the Company with respect to capital
securities (if any) issued by Other
Trusts ("Other Guarantees") and will
constitute an unsecured obligation of the
Company and will rank subordinate and
junior in right of payment to all Senior
Indebtedness to the extent and in the
manner set forth in the Guarantee
Agreement and, in the event of
bankruptcy or insolvency proceedings
involving the Company, will rank
subordinate and junior in right of
payment to all liabilities (other than
Other Guarantees) of the Company, but
senior to any obligations in respect of
any class of capital stock of the
Company. See "Description of the
Guarantee."
Redemption........................... The Trust Securities are subject to
mandatory redemption in a Like Amount,
(i) in whole but not in part, on the
Stated Maturity Date upon repayment of
the Junior Subordinated Debentures, (ii)
in whole but not in part, at any time
contemporaneously with the optional
prepayment of the Junior Subordinated
Debentures by the Company upon the
occurrence and continuation of a Special
Event and (iii) in whole or in part, on
or after January 1, 2007
contemporaneously with the optional
prepayment by the Company of the Junior
Subordinated Debentures, in each case at
the applicable Redemption Price. See
"Description of New Securities --
Redemption."
Ratings.............................. The New Capital Securities are expected
to be rated "BBB-" by Standard & Poor's
Ratings Service and by Duff & Phelps
Credit Rating Co., and "baa3" by Moody's
Investors Service, Inc.
<PAGE>
Absence of Market for the Capital
Securities........................... The New Capital Securities will be a
new issue of securities for which there
currently is no market. Although
Donaldson, Lufkin & Jenrette
Securities Corporation and Smith Barney,
Inc. the initial purchasers of the Old
Capital Securities (the "Initial
Purchasers") have informed the Trust and
the Company that they each currently
intend to make a market in the Capital
Securities, the Initial Purchasers are
not obligated to do so, and any such
market making may be discontinued at any
time without notice. Accordingly, there
can be no assurance as to the development
or liquidity of any market for the New
Capital Securities. The Trust and the
Company do not intend to apply for
listing of the New Capital Securities on
any securities exchange or for quotation
through The Nasdaq Stock Market. See
"Plan of Distribution."
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS IN CONNECTION
WITH THE EXCHANGE OFFER AND THE NEW CAPITAL SECURITIES OFFERED HEREBY.
Holding Company Structure; Restrictions on Dividends
As a holding company, the Company's ability to meet debt service obligations and
pay operating expenses depends on receipt of sufficient funds from its direct
and indirect subsidiaries. The inability of the Company's direct and indirect
subsidiaries to pay dividends to the Company in an amount sufficient to meet
debt service obligations and pay operating expenses would have a material
adverse effect on the Company. The payment of dividends by the Company's
subsidiaries without prior regulatory approval is subject to restrictions set
forth in the insurance laws and regulations of Virginia, Illinois, Delaware, New
Jersey, California and Arizona, the states of domicile of the Company's
insurance subsidiaries. The Company currently does not expect such regulatory
requirements to impair its ability to meet interest payment obligations and to
pay operating expenses in the future. However, the Company can give no assurance
that dividends will be declared or paid by its subsidiaries. As of December 31,
1995, the Company's direct and indirect insurance subsidiaries had sufficient
capital and earnings to pay up to $36.2 million of dividends to the Company
during 1996 without prior regulatory approval.
Ranking of Subordinate Obligations Under the Guarantee and Junior Subordinated
Debentures
The obligations of the Company under the Guarantee issued by it for the benefit
of the holders of Capital Securities and the Junior Subordinated Debentures are
unsecured and subordinate and rank junior in right of payment to all present and
future Senior Indebtedness of the Company and rank pari passu with obligations
to or rights of the Company's other general unsecured creditors. In addition, in
the case of a bankruptcy or insolvency proceeding involving the Company, the
Company's obligations under the Guarantee will rank subordinate and junior in
right of payment to all liabilities (other than Other Guarantees) of the
Company, but senior to any obligation in respect of any class of capital stock
of the Company. No payment may be made of the principal of, or premium, if any,
or interest on the Junior Subordinated Debentures, or in respect of any
redemption, retirement, purchase or other acquisition of any of the Junior
Subordinated Debentures, at any time when (i) there is a default in the payment
of the principal of, or premium, if any, or interest on or otherwise in respect
of any Senior Indebtedness, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise, or (ii) any event of default with
respect to any Senior Indebtedness has occurred and is continuing, or would
occur as a result of such payment on the Junior Subordinated Debentures or any
redemption, retirement, purchase or other acquisition of any of the Junior
Subordinated Debentures, permitting the holders of such Senior Indebtedness (or
a trustee on behalf of the holders thereof) to accelerate the maturity thereof.
At December 31, 1996, the aggregate principal amount of outstanding Senior
Indebtedness of the Company was approximately $120.3 million. Because the
Company is a holding company, the right of the Company to participate in any
distribution of assets of any direct or indirect subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution)
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Company may itself be recognized as a creditor of that
subsidiary. At September 30, 1996, the direct and indirect subsidiaries of the
Company had total liabilities (excluding liabilities owed to the Company) of
approximately $1.0 billion. In addition, because many of the Company's
subsidiaries are insurance companies subject to regulatory control by various
state insurance departments, the ability of such subsidiaries to pay dividends
to the Company without prior regulatory approval is limited by applicable laws
and regulations. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Junior Subordinated Debentures should look only to
the assets of the Company for payments on the Junior Subordinated Debentures.
None of the Indenture, the Guarantee, the Common Guarantee or the Declaration
places any limitation on the amount of secured or unsecured debt, including
Senior Indebtedness, or other obligations, that may be incurred by the Company
or any of its subsidiaries, either in the event of a highly leveraged
transaction or otherwise. See "Description of the Guarantee -- Status" and
"Description of the New Junior Subordinated Debentures -- Subordination."
<PAGE>
The ability of the Trust to pay amounts due on the Capital Securities is solely
dependent upon the Company's making payments on the Junior Subordinated
Debentures as and when required.
Option to Extend Interest Payment Period; Tax Considerations
So long as no Debenture Event of Default (as defined herein) shall have occurred
and be continuing, the Company will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity Date. Upon any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at the rate of 8.71% per annum,
compounded semi-annually, but not exceeding the interest rate then accruing on
the Junior Subordinated Debentures) from the relevant payment date for such
Distributions during any such Extension Period.
The Company may extend any existing Extension Period, provided that such
extension does not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity Date. Upon the
termination of any Extension Period and the payment of all interest then accrued
and unpaid on the Junior Subordinated Debentures (together with interest thereon
at the annual rate of 8.71%, compounded semi-annually, to the extent permitted
by applicable law), the Company may elect to begin a new Extension Period,
subject to the above requirements. There is no limitation on the number of times
that the Company may elect to begin an Extension Period. See "Description of New
Securities -- Distributions" and "Description of New Junior Subordinated
Debentures -- Option to Extend Interest Payment Date."
Should the Company exercise its right to defer payments of interest on the
Junior Subordinated Debentures, each holder of Capital Securities will be
required to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed to
holders of Capital Securities. As a result, during an Extension Period, each
holder of Capital Securities will recognize income for United States federal
income tax purposes in advance of the receipt of cash and will not receive the
cash related to such income from the Trust if the holder disposes of the Capital
Securities prior to the record date for the payment of Distributions thereafter.
See "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount" and " -- Sales of Capital Securities."
Should the Company elect to exercise its right to defer payments of interest on
the Junior Subordinated Debentures, the then current market price of the Capital
Securities is likely to be affected adversely. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities. In addition, the mere existence of the Company's right to defer
payments of interest on the Junior Subordinated Debentures may cause the market
price of the Capital Securities to be more volatile than the market prices of
other securities on which OID accrues that are not subject to such deferral
rights.
Conditional Right to Advance Maturity and Special Event Redemption
If a Tax Event (as defined herein) occurs, then the Company will have the right
(i) prior to the termination of the Trust, to advance the Stated Maturity Date
of the Junior Subordinated Debentures to the minimum extent required in order to
allow for the payments of interest in respect of the Junior Subordinated
Debentures to continue to be tax deductible, but in no event shall the resulting
maturity of the Junior Subordinated Debentures be less than 20 years from
January 13, 1997, or (ii) to terminate the Trust (if not previously terminated)
and advance the Stated Maturity Date of the Junior Subordinated Debentures to
the minimum extent required in order to allow for the payments of interest in
respect of the Junior Subordinated Debentures to continue to be tax deductible
for United States federal income tax purposes, but in no event shall the
resulting maturity of the Junior Subordinated Debentures be less than 40 years
from January 13, 1997. In either case, such maturity date shall be advanced only
if, in the opinion of counsel to the Company experienced in such matters, after
advancing the maturity date, interest paid on the Junior Subordinated Debentures
will be deductible for United States federal income tax purposes (the action
referred to in either clause (i) or (ii) above being referred to herein as a
"Tax Event Maturity Advancement").
If a Tax Event occurs and in the opinion of counsel to the Company experienced
in such matters, there would in all cases, after effecting a Tax Event Maturity
Advancement, be more than an insubstantial risk that an Adverse Tax Consequence
(as defined herein) would continue to exist, or, if an Investment Company Event
(as defined herein) occurs, then the Company will have the right, within 90 days
following the occurrence of such Tax Event or Investment Company Event, as the
case may be, to redeem the Junior Subordinated Debentures in whole (but not in
part) in the manner set forth under "Description of New Junior Subordinated
Debentures -- Conditional Right to Advance Maturity and Special Event
Prepayment," and therefore to cause a mandatory redemption of the Capital
Securities prior to the Stated Maturity Date (the circumstances under which the
Company has the right to so redeem the Junior Subordinated Debentures in
connection with a Tax Event being referred to herein as a "Conditional Tax
Redemption Event"). Each of a Conditional Tax Redemption Event or an Investment
Company Event are sometimes referred to herein as a "Special Event".
<PAGE>
Possible Distribution of Junior Subordinated Debentures
The Company will have the right at any time to dissolve the Trust and, after
satisfaction of claims of creditors of the Trust as provided by applicable law,
to cause the Junior Subordinated Debentures to be distributed to the holders of
the Trust Securities. Under current United States federal income tax law, a
distribution of Junior Subordinated Debentures upon the dissolution of the Trust
would not be a taxable event to holders of the Capital Securities. If, however,
the Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of dissolution of the Trust,
the distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities. Moreover, upon the occurrence of a
Special Event, a dissolution of the Trust in which holders of the Capital
Securities receive cash would be a taxable event to such holders. See "Certain
Federal Income Tax Consequences -- Receipt of Junior Subordinated Debentures or
Cash Upon Liquidation of the Trust."
Possible Tax Law Changes Affecting the Capital Securities
On February 6, 1997, as part of the Clinton Administration's Fiscal 1998 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which would, among other things, generally deny corporate issuers
a deduction for interest in respect of certain debt obligations, such as the New
Junior Subordinated Debentures, issued on or after the date "of first committee
action," if such debt obligations had a maximum term in excess of 15 years and
are not shown as indebtedness on the issuer's applicable consolidated balance
sheet. In addition, the Proposed Legislation would generally deny corporate
issuers a deduction for interest in respect of certain debt obligations, such as
the New Junior Subordinated Debentures, issued on or after the date "of first
committee action,", if such debt obligations have a weighted average maturity of
more than 40 years. The Proposed Legislation has not yet been introduced by any
member of the 105th Congress. If other Proposed Legislation is enacted by
Congress and if such enactment gave rise to a Tax Event, the Company would be
permitted to cause a redemption of the Trust Securities at the Special Event
Redemption Price by electing to prepay the Junior Subordinated Debentures at the
Special Event Prepayment Price. See "Description of New Securities --
Conditional Right to Advance Maturity and Special Event Redemption," "--
Description of New Junior Subordinated Debentures -- Conditional Right to
Advance Maturity and Special Event Prepayment" and Certain Federal Income Tax
Consequences -- Proposed Tax Legislation.
Possible Adverse Effect on Market Prices
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures distributed to the holders of Capital Securities
if a termination of the Trust were to occur. Accordingly, the Capital Securities
or the Junior Subordinated Debentures may trade at a discount from the price
that the investor paid to purchase the Capital Securities offered hereby.
Because holders of Capital Securities may receive Junior Subordinated Debentures
in liquidation of the Trust and because Distributions are otherwise limited to
payments on the Junior Subordinated Debentures, prospective purchasers of
Capital Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of New Junior Subordinated Debentures."
Rights Under the Guarantee
The Chase Manhattan Bank will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The Chase
Manhattan Bank will also act as Property Trustee and as Debenture Trustee under
the Indenture. Chase Manhattan Bank Delaware will act as Delaware Trustee
under the Declaration. The Old Guarantee guarantees, and the New Guarantee will
guarantee, as the case may be, to the holders of the Capital Securities the
following payments, to the extent not paid by the Trust: (i) any accumulated and
unpaid Distributions required to be paid on the Capital Securities, to the
extent that the Trust has funds on hand legally available therefor; (ii) the
applicable Redemption Price with respect to any Capital Securities called for
redemption, to the extent that the Trust has funds on hand at that time legally
available therefor; and (iii) upon a voluntary or involuntary termination and
liquidation of the Trust (unless the Junior Subordinated Debentures are
distributed to holders of the Capital Securities), the lesser of (a) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions
to the date of payment, to the extent that the Trust has funds on hand at that
time legally available therefor and (b) the amount of assets of the Trust
remaining available for distribution to holders of the Capital Securities. The
obligations of the Company under the Guarantee are subordinated in the manner
set forth under " -- Ranking of Subordinate Obligations Under the Guarantee and
Junior Subordinated Debentures." The holders of a majority in Liquidation Amount
of the Capital Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee. Any holder of the Capital Securities may
institute a legal proceeding directly against the Company to enforce its rights
under the Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity. If the Company
defaults on its obligation to pay amounts payable under the Junior Subordinated
Debentures, the Trust will not have sufficient funds for the payment of
Distributions or amounts payable on redemption of the Capital Securities or
otherwise, and, in such event, holders of the Capital Securities will not be
able to rely upon the Guarantee for payment of such amounts. Instead, in the
event a Debenture Event of Default shall have occurred and be continuing and
such event is attributable to the failure of the Company to pay principal of
or premium, if any, or interest on the Junior Subordinated Debentures on the
payment date on which such payment is due and payable, then a holder of
Capital Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of the principal of or
premium, if any, or interest on such Junior Subordinated Debentures having
a principal amount equal to the Liquidation Amount of the Capital
Securities of such holder (a "Direct Action"). Notwithstanding any
payments made to a holder of Capital Securities by the Company in connection
with a Direct Action, the Company shall remain obligated to pay the principal
<PAGE>
of and premium, if any, and interest on the Junior Subordinated
Debentures, and the Company shall be subrogated to the rights of the holder of
such Capital Securities with respect to payments on the Capital Securities to
the extent of any payments made by the Company to such holder in any Direct
Action. Except as described herein, holders of Capital Securities will not
be able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures or to assert directly any other rights in
respect of the Junior Subordinated Debentures. See "Description of New Junior
Subordinated Debentures -- Enforcement of Certain Rights by Holders of Capital
Securities" and " -- Debenture Events of Default" and "Description of the
Guarantee." The Declaration will provide that each holder of Capital Securities
by acceptance thereof agrees to the provisions of the Indenture.
Limited Voting Rights
Holders of Capital Securities will generally have limited voting rights relating
only to the modification of the terms of the Capital Securities, the
dissolution, termination or liquidation of the Trust, and the exercise of the
Trust's rights as holder of the Junior Subordinated Debentures. Holders of
Capital Securities will not be entitled to vote to appoint, remove or replace,
or to increase or decrease the number of, the Issuer Trustees, which voting
rights are vested exclusively in the holder of the Common Securities, except as
described under "Description of New Securities -- Removal of Issuer Trustees."
The Issuer Trustees and the Company may amend the Declaration without the
consent of holders of Capital Securities to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust even
if such action adversely affects the interests of such holders. See "Description
of New Securities -- Voting Rights; Amendment of the Declaration."
Trading Price
The Capital Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder which uses the accrual method of accounting
for tax purposes (and a cash method holder, if the Junior Subordinated
Debentures are deemed to have been issued with OID) and which disposes of its
Capital Securities between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, possibly, OID), and to add such amount to its
adjusted tax basis in its share of the underlying Junior Subordinated Debentures
deemed disposed of. To the extent the selling price is less than the holder's
adjusted tax basis (which will include all accrued but unpaid interest), a
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes. See "Certain Federal Income Tax Consequences --
Interest Income and Original Issue Discount" and " -- Sales of Capital
Securities."
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under the Securities Act or
any state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Company and the Trust do not intend to register under
the Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Old Capital Securities are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement. See "Description of New
Securities--Voting Rights; Amendment of the Declaration."
The Old Capital Securities provide, among other things, that, if a registration
statement relating to the Exchange Offer has not been filed by June 7, 1997 and
declared effective by July 7, 1997, the Distribution rate borne by the Old
Capital Securities commencing on July 8, 1997 will increase by 0.25% per annum
until the Exchange Offer is consummated. Upon consummation of the Exchange
Offer, holders of Old Capital Securities will not be entitled to any increase in
the Distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See
"Description of Old Securities."
<PAGE>
Absence of Public Market
The Old Capital Securities were issued to, and the Company believes such
securities are currently owned by, a relatively small number of beneficial
owners. The Old Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability if they are not
exchanged for the New Capital Securities. Although the New Capital Securities
may be resold or otherwise transferred by the holders (who are not affiliates of
the Company or the Trust) without compliance with the registration requirements
under the Securities Act, they will constitute a new issue of securities with no
established trading market. Old Capital Securities may be transferred by the
holders thereof only in blocks having a Liquidation Amount of not less than
$100,000 (100 Old Capital Securities). New Capital Securities may be transferred
by the holders thereof in blocks having a Liquidation Amount of $1,000 (one New
Capital Security) or integral multiples thereof. The Company and the Trust have
been advised by the Initial Purchasers that the Initial Purchasers presently
intend to make a market in the New Capital Securities. However, the Initial
Purchasers are not obligated to do so and any market-making activity with
respect to the New Capital Securities may be discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act and may be limited during the
Exchange Offer. Accordingly, no assurance can be given that an active public or
other market will develop for the New Capital Securities or the Old Capital
Securities or as to the liquidity of or the trading market for the New Capital
Securities or the Old Capital Securities. If an active public market does not
develop, the market price and liquidity of the New Capital Securities may be
adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices will depend on many factors, including, among other things,
prevailing interest rates, the Company's results and the market for similar
securities. Depending on prevailing interest rates, the market for similar
securities and other factors, including the financial condition of the Company,
the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the Exchange
Offer, holders who are "affiliates" (as defined under Rule 405 of the Securities
Act) of the Company or the Trust may publicly offer for sale or resell the New
Capital Securities only in compliance with the provisions of Rule 144 under the
Securities Act.
Each broker-dealer that receives New Capital Securities for its own account in
exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old Capital Securities
pursuant to the Exchange Offer will be made only after a timely receipt by the
Trust of such Old Capital Securities, a properly completed and duly executed
Letter of Transmittal and all other required documents. Therefore, holders of
the Old Capital Securities desiring to tender such Old Capital Securities in
exchange for New Capital Securities should allow sufficient time to ensure
timely delivery. Neither the Company nor the Trust is under any duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
<PAGE>
MARKEL CORPORATION
Markel Corporation is an insurance holding company which, through its
subsidiaries, markets and underwrites specialty insurance products and programs
to a variety of niche markets. The Company believes that its specialty product
focus and niche market strategy enable it to develop particular expertise and
specialized knowledge of its markets. Such specialization allows the Company to
provide added value to its customers and to compete on a basis other than price.
The year ended December 31, 1995 marked the Company's fourth consecutive year of
underwriting profitability and the ninth year of underwriting profitability in
the last ten years. The Company emphasizes quality service in all phases of its
operations and believes that this approach fosters strong relationships with its
producers and greater customer loyalty.
The Company's primary businesses are professional and products liability, excess
and surplus lines, specialty programs, specialty personal and commercial lines
and brokered excess and surplus lines. The Company's distribution channels
include retail and wholesale brokers, general agents, direct marketing,
including telemarketing and direct mail, and affinity groups. The Company offers
products and coverages designed to meet the needs of insureds in niche or
emerging markets or insureds with specialized exposures or risks that are not
adequately served by the standard markets. Significant products include
professional liability coverages for doctors, lawyers, architects, engineers and
other professionals, comprehensive programs for summer camps and other youth
recreation organizations, conference centers, child care centers, private
schools, martial arts schools, gymnastics schools, dance studios and horse
farms, and property and liability coverages for restaurants and bars, vacant
properties and hard-to- place property risks, yachts, jet skis and other
watercraft, mobile homes and other non-standard dwellings, taxi fleets and other
commercial vehicles. Each risk is generally considered on an individual basis,
and coverages typically include limit restrictions, deductibles, exclusions,
surcharges and other features which respond to distinctive risk characteristics.
The Company had earned premiums of $285.1 million and $225.1 million for the
year ended December 31, 1995 and for the nine months ended September 30, 1996,
respectively. As of September 30, 1996, the Company had total assets of
approximately $1.4 billion and shareholders' equity of $247.8 million.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. In consideration for
issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Trust will receive Old Capital Securities in
like Liquidation Amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and canceled.
The proceeds to the Trust from the sale of the Old Capital Securities (without
giving effect to expenses payable by the Company) was $150,000,000. All of the
proceeds were used to purchase Junior Subordinated Debentures from the Company.
The Company intends to use the net proceeds from the sale of the Junior
Subordinated Debentures to reduce indebtedness and for general corporate
purposes, which may include, without limitation, investments in and advances of
credit to the Company's subsidiaries, other investments and possible future
acquisitions.
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to combined
fixed charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended
________________________________ September 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C>
Ratio of Earnings to Fixed Charges............................. 2.3 6.3 5.2 4.3 6.5 6.2
Ratio of Earnings to Fixed Charges, Excluding Net Realized
Gains from Sales of Investments and Gains from Sales of
Brokerage Programs............................................. 1.6 2.2 3.1 3.8 5.2 5.7
</TABLE>
For purposes of computing the ratios of earnings to fixed charges for the
Company and its subsidiaries, earnings represent income before income taxes plus
fixed charges. Fixed charges have been calculated by adding gross interest
expense and that portion of rent expense deemed representative of the interest
factor in such rent expense. The Company's consolidated insurance company
subsidiaries are subject to certain regulatory restrictions on the payment of
dividends or advances to the Company. See "Risk Factors -- Holding Company
Structure; Restrictions on Dividends".
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company at
September 30, 1996, as adjusted to reflect the acquisition of Investors
Insurance Holding Corp. and related bank borrowings on October 31, 1996, and as
further adjusted to give effect to the issuance of the Old Capital Securities.
The following data should be read in conjunction with the financial information
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995, as amended, and Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, which are incorporated herein by reference. See
"Incorporation of Certain Documents by Reference." The issuance of the New
Securities in the Exchange Offer will have no effect on the Capitalization of
the Company.
<TABLE>
<CAPTION>
September 30, 1996
Actual as As Further
Adjusted (1) Adjusted (2)
(Dollars in thousands)
(Unaudited)
<S> <C>
Borrowings under Revolving Line of Credit................................... $15,000 $15,000
Long-Term Debt (Net of Debt Issuance Costs of $372)......................... 99,678 99,678
Markel Corporation -- Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trust Holding Solely Subordinated Debt Securities of
Markel Corporation........................................................ -- 150,000
Shareholders' Equity:
Common Stock................................................................ 23,970 23,970
Retained Earnings........................................................... 198,690 198,690
Net Unrealized Gains on Fixed Maturities and Equity Securities,
Net of Taxes................................................................ 25,158 25,158
------ ------
Total Shareholders' Equity.................................................. 247,818 247,818
------- -------
Total Capitalization........................................................ $362,496 $512,496
-------- --------
</TABLE>
(1) As adjusted to reflect the acquisition of Investors Insurance Holding Corp.
on October 31, 1996 and the related $15 million of borrowings under the
Company's revolving line of credit.
(2) Reflects the issuance of the Old Capital Securities.
<PAGE>
SUMMARY FINANCIAL DATA
The summary below should be read in connection with the financial information
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995, as amended and Quarterly Report on 10-Q for the quarter ended
September 30, 1996. Interim unaudited data for the nine months ended September
30, 1996 and 1995 reflect, in the opinion of management of the Company, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Results for the nine months ended September 30,
1996 are not necessarily indicative of results which may be expected for any
other interim period or for the year ended December 31, 1996 as a whole.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
----------------------- -------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(Dollars in millions, except per share data) (Unaudited)
<S> <C>
Results of Operations
Gross premium volume............................ $406 $304 $313 $349 $402 $310 $318
Net premiums written............................ 152 156 222 257 298 229 240
Earned premiums................................. 152 153 193 243 285 210 225
Net investment income........................... 31 27 24 29 43 31 37
Net realized gains.............................. 8 8 16 4 12 8 3
Total operating revenues........................ 223 206 235 280 344 251 267
Operating income before interest and taxes...... 27 22 38 33 56 39 38
Gain on sale of brokerage programs.............. 2 23 -- -- -- -- --
Interest expense................................ 11 5 6 8 8 6 6
Income taxes.................................... 4 14 8 6 14 9 (10)
Net income...................................... 14 26 24 19 34 24 42
Primary Earnings per Share
Core operations................................. $2.61 $3.03 $3.31 $3.77 $5.15 $3.68 $4.18
Net realized gains.............................. 0.94 0.89 1.83 0.45 1.39 0.89 0.34
Nonrecurring items.............................. 0.28 1.90 0.00 0.00 0.00 0.00 3.25
Amortization expense............................ (1.15) (1.18) (0.91) (0.89) (0.39) (0.31) (0.27)
------ ------ ------ ------ ------ ------ ------
Net income...................................... $2.68 $4.64 $4.23 $3.33 $6.15 $4.26 $7.50
----- ----- ----- ----- ----- ----- -----
GAAP Underwriting Results
Loss ratio...................................... 66% 67% 62% 64% 65% 65% 67%
Expense ratio................................... 40% 30% 35% 33% 34% 34% 33%
Combined ratio.................................. 106% 97% 97% 97% 99% 99% 100%
Financial Position
Total investments (1)........................... $415 $434 $597 $612 $909 $889 $956
Reinsurance recoverable (2)..................... 55 419 300 226 180 186 166
Intangible assets............................... 71 60 53 45 42 42 40
Total assets.................................... 700 1,129 1,135 1,103 1,315 1,312 1,388
Unpaid losses and loss adjustment expenses
(2)............................................. 346 733 688 653 734 730 766
Unearned premium (2)............................ 64 90 128 147 171 178 187
Long-term debt.................................. 94 101 78 101 107 118 100
Total shareholders' equity (1).................. 83 109 151 139 213 194 248
</TABLE>
(1) The change in accounting for net unrealized gains (losses) on fixed
maturities in accordance with provisions of Statement of Financial Accounting
Standards No. 115 affects 1993 and subsequent years.
(2) The gross reinsurance reporting provisions of Statement of Financial
Accounting Standards No. 113 affect 1992 and subsequent years.
<PAGE>
MARKEL CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law by the filing
of a certificate of trust with the Delaware Secretary of State on December 30,
1996. The Trust is governed by the Declaration. The Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities, which
represent undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Junior Subordinated
Debentures and (iii) engaging in only those other activities necessary,
advisable or incidental thereto. Accordingly, the Junior Subordinated Debentures
will be the sole assets of the Trust and payments under the Junior Subordinated
Debentures will be the sole revenues of the Trust. All of the Common Securities
are owned by the Company. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Capital Securities, except that
upon the occurrence and during the continuance of an Event of Default under the
Declaration resulting from a Debenture Event of Default, the rights of the
Company as holder of the Common Securities to payments in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated and rank junior to the rights of the holders of the Capital
Securities. See "Description of New Securities -- Subordination of Common
Securities." The Company has acquired Common Securities in a Liquidation Amount
equal to 3% of the total capital of the Trust. The Trust has a term of 50 years,
but may terminate earlier as provided in the Declaration. The Trust's business
and affairs are conducted by trustees (the "Issuer Trustees") appointed by the
Company as the holder of the Common Securities. The Issuer Trustees will be The
Chase Manhattan Bank as the Property Trustee (the "Property Trustee"), The Chase
Manhattan Bank Delaware as the Delaware Trustee (the "Delaware Trustee"), and
three individual trustees (the "Administrative Trustees"). The Chase Manhattan
Bank, as Property Trustee, will act as sole indenture trustee under the
Declaration. The Chase Manhattan Bank will also act as indenture trustee under
the Guarantee and the Indenture. See "Description of the Guarantee" and
"Description of New Junior Subordinated Debentures." The holder of the Common
Securities of the Trust or, if an Event of Default under the Declaration has
occurred and is continuing, the holders of a majority in Liquidation Amount of
the Capital Securities, will be entitled to appoint, remove or replace the
Property Trustee and/or the Delaware Trustee. In no event will the holders of
the Capital Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights will be vested exclusively in the
holder of the Common Securities. The duties and obligations of each Issuer
Trustee are governed by the Declaration. The Company will pay, directly or
indirectly, all fees, expenses, debts and obligations (other than, except to the
extent guaranteed by the Company, the Trust Securities) related to the Trust and
the offering and exchange of the Capital Securities, including all ongoing
costs, expenses and liabilities of the Trust. The principal executive office of
the Trust is c/o Markel Corporation, 4551 Cox Road, Glen Allen, Virginia 23060
((804) 747-0136). The Chase Manhattan Bank serves as the trustee under the
indenture for the Company's $100 million aggregate principal amount of 7.25%
Notes due November 1, 2003, and participates as a lender in the Company's
revolving credit facility. In addition, from time to time one or more affiliates
of The Chase Manhattan Bank may provide the Company with investment banking and
related financial services.
THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the Old Capital Securities, the Company and the
Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Company and the Trust agreed to file and to
use their reasonable efforts to cause to become effective with the Commission a
registration statement with respect to the exchange of the Old Capital
Securities for capital securities with terms identical in all material respects
to the terms of the Old Capital Securities. A copy of the Registration Rights
Agreement has been filed as an Exhibit to the Registration Statement of which
this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of the
Company and the Trust under the Registration Rights Agreement. The form and
terms of the New Capital Securities are the same as the form and terms of the
Old Capital Securities except that the New Capital Securities have been
registered under the Securities Act and will not be subject to the $100,000
minimum Liquidation Amount transfer restriction and certain other restrictions
on transfer applicable to the Old Capital Securities and will not provide for
any increase in the Distribution rate thereon. In that regard, the Old Capital
Securities provide, among other things, that, if a registration statement
relating to the Exchange Offer has not been filed by June 7, 1997 and declared
effective by July 7, 1997, the Distribution rate borne by the Old Capital
Securities commencing on July 8, 1997 will increase by 0.25% per annum until the
Exchange Offer is consummated. Upon consummation of the Exchange Offer, holders
of Old Capital Securities will not be entitled to any increase in the
Distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders for
exchange from, holders of Old Capital Securities in any jurisdiction in which
the Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person
whose Old Capital Securities are held of record by The Depository Trust Company
("DTC") who desires to deliver such Old Capital Securities by book-entry
transfer at DTC.
<PAGE>
Pursuant to the Exchange Offer, the Company will exchange as soon as practicable
after the date hereof, the Old Guarantee for the New Guarantee and the Old
Junior Subordinated Debentures, in an amount corresponding to the Old Capital
Securities accepted for exchange, for a like aggregate principal amount of the
New Junior Subordinated Debentures. The New Guarantee and New Junior
Subordinated Debentures have been registered under the Securities Act.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus and in the accompanying Letter of Transmittal, to exchange up
to $150,000,000 aggregate Liquidation Amount of New Capital Securities for a
like aggregate Liquidation Amount of Old Capital Securities properly tendered on
or prior to the Expiration Date and not properly withdrawn in accordance with
the procedures described below. The Trust will issue, promptly after the
Expiration Date, an aggregate Liquidation Amount of up to $150,000,000 of New
Capital Securities in exchange for a like principal amount of outstanding Old
Capital Securities tendered and accepted in connection with the Exchange Offer.
Holders may tender their Old Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 (100 Capital Securities) or any
integral multiple of $1,000 Liquidation Amount (one Capital Security) in excess
thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of Old
Capital Securities being tendered. As of the date of this Prospectus,
$150,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered or are tendered but not accepted in connection with the Exchange
Offer will remain outstanding and be entitled to the benefits of the
Declaration, but will not be entitled to any further registration rights under
the Registration Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Capital Securities will be
returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange Offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of Old Capital Securities in connection with the Exchange Offer. The
Company will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE COMPANY, THE BOARD OF DIRECTORS OF THE COMPANY NOR ANY ISSUER
TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER BASED ON SUCH HOLDERS OWN FINANCIAL POSITION AND REQUIREMENTS.
The term "Expiration Date" means 5:00 p.m., New York City time, on , 1997 unless
the Exchange Offer is extended by the Company or the Trust (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended).
The Company and the Trust expressly reserve the right in their sole and absolute
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Trust determines, in its sole and
absolute discretion, that any of the events or conditions referred to under
"--Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Old Capital Securities tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Capital Securities to withdraw their
tendered Old Capital Securities as described under "--Withdrawal Rights," and
(iv) to waive any condition or otherwise amend the terms of the Exchange Offer
in any respect. If the Exchange Offer is amended in a manner determined by the
Company and the Trust to constitute a material change, or if the Company and the
Trust waive a material condition of the Exchange Offer, the Company and the
Trust will promptly disclose such amendment by means of a prospectus supplement
that will be distributed to the holders of the Old Capital Securities, and the
Company and the Trust will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
Without limiting the manner in which the Company and the Trust may choose to
make any public announcement and subject to applicable law, the Company and
the Trust shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to
an appropriate news agency.
<PAGE>
Acceptance for Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer, the Trust
will exchange, and will issue to the Exchange Agent, New Capital Securities for
Old Capital Securities validly tendered and not withdrawn promptly after the
Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old Capital
Securities tendered and accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of (i) Old Capital
Securities or a book-entry confirmation of a book-entry transfer of Old Capital
Securities into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-entry
transfer of Old Capital Securities into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Trust will be
deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance for exchange of
Old Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Trust's rights set forth herein,
the Exchange Agent may, nevertheless, on behalf of the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "--Withdrawal
Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities will
warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Trust will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and the Old Capital Securities tendered for exchange
are not subject to any adverse claims or proxies. The holder also will warrant
and agree that it will, upon request, execute and deliver any additional
documents deemed by the Trust or the Exchange Agent to be necessary or desirable
to complete the exchange, sale, assignment, and transfer of the Old Capital
Securities tendered pursuant to the Exchange Offer.
Procedures for Tendering Old Capital Securities
VALID TENDER. Except as set forth below, in order for Old Capital Securities to
be validly tendered pursuant to the Exchange Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at one of its addresses set forth under "--Exchange Agent," and
either (i) tendered Old Capital Securities must be received by the Exchange
Agent, or (ii) such Old Capital Securities must be tendered pursuant to the
procedures for book-entry transfer set forth below and a book-entry confirmation
must be received by the Exchange Agent, in each case on or prior to the
Expiration Date, or (iii) the guaranteed delivery procedures set forth below
must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering holder
should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account with respect
to the Old Capital Securities at DTC for purposes of the Exchange Offer within
two business days after the date of this Prospectus. Any financial institution
that is a participant in DTC's book-entry transfer facility system may make a
book-entry delivery of the Old Capital Securities by causing DTC to transfer
such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "--Exchange
Agent" on or prior to the Expiration Date, or the guaranteed delivery procedure
set forth below must be complied with.
<PAGE>
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Capital Securities need not be
endorsed and signature guarantees on the Letter of Transmittal are unnecessary
unless (a) a certificate for the Old Capital Securities is registered in a name
other than that of the person surrendering the certificate or (b) such holder
completes the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" in the Letter of Transmittal. In the case of (a) or (b) above,
such certificates for Old Capital Securities must be duly endorsed or
accompanied by a properly executed bond power, with the endorsement or signature
on the bond power and on the Letter of Transmittal guaranteed by a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution," including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (an
"Eligible Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or prior to the Expiration Date, or the
procedure for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(1) such tenders are made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the Expiration
Date; and
(3) the certificates (or a book-entry confirmation) representing all tendered
Old Capital Securities, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry confirmations
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered pursuant
to any of the procedures described above will constitute a binding agreement
between the tendering holder and the Trust upon the terms and subject to the
conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tendered Old Capital Securities will be determined by the Company and the Trust,
in their sole discretion, whose determination shall be final and binding on all
parties. The Company and the Trust reserve the absolute right, in their sole and
absolute discretion, to reject any and all tenders determined by them not to be
in proper form or the acceptance of which, or exchange for, may, in the opinion
of counsel to the Company and the Trust, be unlawful. The Company and the Trust
also reserve the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer as set forth under "--Conditions to the
Exchange Offer" or any condition or irregularity in any tender of Old Capital
Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The interpretation by the Company and the Trust of the terms and conditions of
the Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. Neither the Company, the Trust, any affiliates
or assigns of the Company or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in
tenders or incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or any
other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by the Company and the Trust,
proper evidence satisfactory to the Company and the Trust, in their sole
discretion, of such person's authority to so act must be submitted.
<PAGE>
A beneficial owner of Old Capital Securities that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
Resales of New Capital Securities
The Trust is making the Exchange Offer for the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Company nor the Trust sought
its own interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance of the Commission, and subject to the two
immediately following sentences, the Company and the Trust believe that New
Capital Securities issued pursuant to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an "affiliate" of the Company or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing New Capital Securities, or
any broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the Securities Act,
(a) will not be able to rely on the interpretations of the staff of the Division
of Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such Old
Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading activities and
exchanges such Old Capital Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Company and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Company and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Exchange Act) on behalf of whom such holder holds the Capital
Securities to be exchanged in the Exchange Offer. Each broker-dealer that
receives New Capital Securities for its own account pursuant to the Exchange
Offer must acknowledge that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Company and the Trust believe
that Participating Broker-Dealers who acquired Old Capital Securities for their
own accounts as a result of market-making activities or other trading activities
may fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities (other
than Old Capital Securities which represent an unsold allotment from the
original sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 90-days after the Expiration Date (subject to
extension under certain limited circumstances described below) or, if earlier,
when all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." However, a Participating
Broker-Dealer who intends to use this Prospectus in connection with the resale
of New Capital Securities received in exchange for Old Capital Securities
pursuant to the Exchange Offer must notify the Company or the Trust, or cause
the Company or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the space
provided for that purpose in the Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses set forth herein under "--Exchange
Agent." Any Participating Broker-Dealer who is an "affiliate" of the Company or
the Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
<PAGE>
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If the Company or the Trust
gives such notice to suspend the sale of the New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable), it shall
extend the 90-day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection with the resale
of New Capital Securities by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the New Capital
Securities or to and including the date on which the Company or the Trust has
given notice that the sale of New Capital Securities (or the New Guarantee or
the New Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital Securities may be
withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "--Exchange Agent" on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "--Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties.
Neither the Company, the Trust, any affiliates or assigns of the Company or the
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital Securities
which have been tendered but which are withdrawn will be returned to the holder
thereof promptly after withdrawal.
Distributions on New Capital Securities
Holders of Old Capital Securities whose Old Capital Securities are accepted for
exchange will not receive Distributions on such Old Capital Securities and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after January 13, 1997. Accordingly,
holders of New Capital Securities as of the record date for the payment of
Distributions on July 1, 1997 will be entitled to receive Distributions
accumulated from and after January 13, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any extension of
the Exchange Offer, the Company and the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
<PAGE>
(a) there shall occur a change in the current interpretation by the staff of
the Commission which permits the New Capital Securities issued pursuant to
the Exchange Offer in exchange for Old Capital Securities to be offered for
resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an "affiliate" of the Company or
the Trust within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Capital Securities are acquired in the
ordinary course of such holders' business and such holders have no arrangement
or understanding with any person to participate in the distribution of such New
Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or enacted
which, in the judgment of the Company or the Trust, would reasonably be expected
to impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement
or proceedings shall have been initiated or, to the knowledge of the Company or
the Trust, threatened for that purpose any governmental approval has not been
obtained, which approval the Company or the Trust shall, in its sole discretion,
deem necessary for the consummation of the Exchange Offer as contemplated
hereby.
If the Company or the Trust determines in its sole and absolute discretion that
any of the foregoing events or conditions has occurred or exists or has not been
satisfied, it may, subject to applicable law, terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any such condition or otherwise amend the terms of the
Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Company or the Trust will promptly
disclose such waiver or amendment by means of a prospectus supplement that will
be distributed to the registered holders of the Old Capital Securities and will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Exchange Agent
The Chase Manhattan Bank has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
By Mail In Person
- ------- ---------
The Chase Manhattan Bank The Chase Manhattan Bank
Transfer Department Institutional Trust Group Window
450 West 33rd Street 1 Chase Manhattan Plaza
8th Floor Floor 1-B
New York, New York 10001 New York, New York 10081
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket expenses
in connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Capital Securities, and in handling or tendering
for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Neither the Company nor the Trust will make any payment to brokers, dealers or
other nominees soliciting acceptances of the Exchange Offer.
<PAGE>
DESCRIPTION OF NEW SECURITIES
Description of New Capital Securities
Pursuant to the terms of the Declaration, the Trust has issued the Old Capital
Securities and the Common Securities and will issue the New Capital Securities.
The New Capital Securities will represent preferred beneficial interests in the
Trust and the holders of the New Capital Securities and the Old Capital
Securities will be entitled to a preference over the Common Securities in
certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust. See
"--Subordination of Common Securities." The Declaration has been qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). This
summary of certain provisions of the New Capital Securities and the Declaration
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Declaration, including the
definitions therein of certain terms.
The Capital Securities (including the Old Capital Securities and the New Capital
Securities) are limited to $150,000,000 aggregate Liquidation Amount at any one
time outstanding. The Capital Securities will rank PARI PASSU, and payments will
be made thereon PRO RATA, with the Old Capital Securities and the Common
Securities except as described under "--Subordination of Common Securities."
Legal title to the Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the Capital Securities and
Common Securities. The New Guarantee will be a guarantee on a subordinated basis
but will not guarantee payment of Distributions or amounts payable on redemption
of the New Capital Securities or on liquidation of the Trust when the Trust does
not have funds on hand legally available for such payments. See "Description of
the Guarantee."
<PAGE>
Distributions
Distributions on the New Capital Securities will be cumulative, will accumulate
from January 13, 1997 and will be payable semi-annually in arrears on January 1
and July 1 of each year, commencing July 1, 1997, at the annual rate of 8.71% of
the Liquidation Amount to the holders of the New Capital Securities on the
relevant record dates. The record dates will be the dates fifteen days prior to
the relevant Distribution Date (as defined herein). The amount of Distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which Distributions are payable on
the New Capital Securities is not a Business Day (as defined herein), payment of
the Distributions payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect to
any such delay), in each case with the same force and effect as if made on such
date (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday or a Sunday, or a day on which banking institutions in New York,
New York are authorized or required by law or executive order to remain closed.
So long as no Debenture Event of Default shall have occurred and be continuing,
the Company will have the right under the Indenture to elect to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity Date. Upon any such election, semi-annual
Distributions on the New Capital Securities will be deferred by the Trust during
such Extension Period. Distributions to which holders of the New Capital
Securities are entitled during any such Extension Period will accumulate
additional Distributions thereon at the rate per annum of 8.71% thereof,
compounded semi-annually from the relevant Distribution Date, but not exceeding
the interest rate then accruing on the Junior Subordinated Debentures. The term
"Distributions," as used herein shall include any such additional Distributions.
During any such Extension Period, the Company may extend such Extension Period,
provided that such extension does not cause such Extension Period to exceed 10
consecutive semi-annual periods or to extend beyond the Stated Maturity Date.
Upon the termination of any such Extension Period and the payment of all amounts
then due, and subject to the foregoing limitations, the Company may elect to
begin a new Extension Period. The Company must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of any
Extension Period or any extension thereof at least five Business Days prior to
the earlier of (i) the date the Distributions on the New Capital Securities
would have been payable except for the election to begin or extend such
Extension Period and (ii) the date the Administrative Trustees are required to
give notice to any securities exchange or to holders of the New Capital
Securities of the record date or the date such Distributions are payable, but in
any event not less than five Business Days prior to such record date. There is
no limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of New Junior Subordinated Debentures --
Option to Extend Interest Payment Date" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
<PAGE>
During any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal of or
premium, if any, or interest on or repay, repurchase or redeem any debt
securities of the Company (including Other Debentures) that rank pari passu with
or junior in right of payment to the Junior Subordinated Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company (including Other Guarantees) if
such guarantee ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Company, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class, or series of the Company's capital stock for another class or series
of the Company's capital stock, (e) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases or issuances of common stock in connection with any of the
Company's stock option, stock purchase, stock loan or other benefit plans for
its directors, officers or employees or any of the Company's dividend
reinvestment plans, in each case as now existing or hereafter established or
amended).
Although the Company may in the future exercise its option to defer payments of
interest on the Junior Subordinated Debentures, the Company has no such current
intention.
The revenue of the Trust available for distribution to holders of the Capital
Securities will be limited to payments under the Junior Subordinated Debentures
in which the Trust will invest the proceeds from the issuance and sale of the
Trust Securities. See "Description of New Junior Subordinated Debentures." If
the Company does not make interest payments on the Junior Subordinated
Debentures, the Property Trustee will not have funds available to pay
Distributions on the Capital Securities. The payment of Distributions (if and to
the extent the Trust has funds on hand legally available for the payment of such
Distributions) will be guaranteed by the Company on a limited basis as set forth
herein under "Description of the Guarantee."
Conditional Right to Advance Maturity and Special Event Redemption
If a Tax Event (as defined herein) occurs, then the Company will have the right
(i) prior to the termination of the Trust, to advance the Stated Maturity Date
of the Junior Subordinated Debentures to the minimum extent required in order to
allow for payments of interest in respect of the Junior Subordinated Debentures
to continue to be tax deductible, but in no event shall the resulting maturity
of the Junior Subordinated Debentures be less than 20 years from January 13,
1997, or (ii) to terminate the Trust (if not previously terminated) and advance
the Stated Maturity Date of the Junior Subordinated Debentures to the minimum
extent required in order to allow for the payments of interest in respect of the
Junior Subordinated Debentures to continue to be tax deductible for United
States federal income tax purposes, but in no event shall the resulting maturity
of the Junior Subordinated Debentures be less than 40 years from January 13,
1997. In either case, such maturity date shall be advanced only if, in the
opinion of counsel to the Company experienced in such matters, after advancing
the maturity date, interest paid on the Junior Subordinated Debentures will be
deductible for federal income tax purposes (the action referred to in either
clause (i) or (ii) above being referred to herein as a "Tax Event Maturity
Advancement").
If a Tax Event occurs and in the opinion of counsel to the Company experienced
in such matters, there would in all cases, after effecting a Tax Event Maturity
Advancement, be more than an insubstantial risk that an Adverse Tax Consequence
(as defined herein) would continue to exist, or, if an Investment Company Event
(as defined herein) occurs, then the Company will have the right, within 90 days
following the occurrence of such Tax Event or Investment Company Event, as the
case may be, to redeem the Junior Subordinated Debentures in whole (but not in
part) in the manner set forth under "Description of New Junior Subordinated
Debentures -- Conditional Right to Advance Maturity and Special Event
Prepayment," and therefore to cause a mandatory redemption of the Capital
Securities prior to the Stated Maturity Date (the circumstances under which the
Company has the right to so redeem the Junior Subordinated Debentures in
connection with a Tax Event being referred to
<PAGE>
herein as a "Conditional Tax Redemption Event"). Each of a Conditional Tax
Redemption Event or an Investment Company Event are sometimes referred to herein
as a "Special Event."
Redemption
Upon the repayment on the Stated Maturity Date or prepayment prior to the Stated
Maturity Date of the Junior Subordinated Debentures, the proceeds from such
repayment or prepayment shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days' notice of a date of redemption (the "Redemption Date") at
the applicable Redemption Price, which shall be equal to (i) in the case of the
repayment of the Junior Subordinated Debentures on the Stated Maturity Date, the
Maturity Redemption Price (equal to the principal of and accrued interest on the
Junior Subordinated Debentures), (ii) in the case of the optional prepayment of
the Junior Subordinated Debentures upon the occurrence and continuation of a
Special Event prior to January 1, 2007, the Special Event Redemption Price
(equal to the Special Event Prepayment Price in respect of the Junior
Subordinated Debentures) and (iii) in the case of the optional prepayment of the
Junior Subordinated Debentures on or after January 1, 2007, the Optional
Redemption Price (equal to the Optional Prepayment Price in respect of the
Junior Subordinated Debentures). See "Description of New Junior Subordinated
Debentures -- Optional Prepayment" and " -- Conditional Right to Advance
Maturity and Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Junior Subordinated Debentures to be paid in accordance with their terms and
(ii) with respect to a distribution of Junior Subordinated Debentures upon the
liquidation of the Trust, Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of the Trust Securities of the holder to
whom such Junior Subordinated Debentures are distributed.
The Company will have the option to prepay the Junior Subordinated Debentures,
(i) in whole or in part, on or after January 1, 2007, at the applicable Optional
Prepayment Price and (ii) in whole but not in part, at any time, upon the
occurrence of a Special Event prior to January 1, 2007, at the Special Event
Prepayment Price.
Liquidation of the Trust and Distribution of Junior Subordinated Debentures
The Company will have the right at any time to dissolve the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust. Such right is conditioned on the
Administrative Trustees having received an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Capital Securities.
The Trust shall automatically dissolve and its affairs shall be wound up upon
the first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Company; (ii) the distribution of a Like Amount of the Junior
Subordinated Debentures to the holders of the Trust Securities, if the Company,
as Sponsor, has given written direction to the Property Trustee to dissolve the
Trust (which direction is optional and, except as described above, wholly within
the discretion of the Company, as Sponsor) and provided that the distribution is
conditioned on the receipt of an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities; (iii)
redemption of all of the Trust Securities as described under " -- Redemption"
above; (iv) expiration of the term of the Trust; and (v) the entry of an order
for the dissolution of the Trust by a court of competent jurisdiction.
If a dissolution occurs as described in clause (i), (ii), (iv) or (v) of the
preceding paragraph, the Trust shall be liquidated by the Administrative
Trustees as expeditiously as the Administrative Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to the holders of the Trust Securities a
Like Amount of the Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
holders will be entitled to receive out of the assets of the Trust legally
available for distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the Liquidation Amount plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If the Liquidation Distribution can be paid only in part because
the Trust has insufficient assets on hand legally available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
<PAGE>
Trust on the Capital Securities and the Common Securities shall be paid on a pro
rata basis, except that if a Debenture Event of Default has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities. See " -- Subordination of Common Securities." If an early
dissolution occurs as described in clause (v) above, the Junior Subordinated
Debentures will be subject to optional prepayment, in whole but not in part, on
or after January 1, 2007.
If the Company elects not to prepay the Junior Subordinated Debentures prior to
maturity in accordance with their terms and either elects not to or is unable to
liquidate the Trust and distribute the Junior Subordinated Debentures to holders
of the Trust Securities, the Trust Securities will remain outstanding until the
repayment of the Junior Subordinated Debentures on the Stated Maturity Date.
After the liquidation date is fixed for any distribution of Junior Subordinated
Debentures to holders of the Trust Securities, (i) the Trust Securities will no
longer be deemed to be outstanding, (ii) each registered global certificate
representing Trust Securities and held by DTC or its nominee will receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution and (iii) any
certificates representing Trust Securities not held by DTC or its nominee will
be deemed to represent Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of such Trust Securities, and bearing accrued
and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Trust Securities until such certificates are presented to
the Administrative Trustees or their agent for cancellation, whereupon the
Company will issue to such holder, and the Debenture Trustee will authenticate,
a certificate representing such Junior Subordinated Debentures.
There can be no assurance as to the market prices for the Capital Securities or
the Junior Subordinated Debentures that may be distributed in exchange for the
Trust Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may purchase, or the Junior
Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Capital Securities.
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the applicable Redemption
Price with the proceeds from the contemporaneous repayment or prepayment of the
Junior Subordinated Debentures. Any redemption of Trust Securities shall be made
and the applicable Redemption Price shall be payable on the Redemption Date only
to the extent that the Trust has funds legally available for the payment of such
applicable Redemption Price. See also " -- Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Capital Securities,
then, by 12:00 noon, New York City time, on the Redemption Date, to the extent
funds are legally available, with respect to the Capital Securities held by DTC
or its nominees, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price. See " -- Form, Denomination,
Book-Entry Procedures and Transfer." With respect to the Capital Securities held
in certificated form, the Property Trustee, to the extent funds are legally
available, will irrevocably deposit with the paying agent for the Capital
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the applicable
Redemption Price to the holders thereof upon surrender of their certificates
evidencing the Capital Securities. See " -- Payment and Paying Agency" below.
Distributions payable on or prior to the Redemption Date shall be payable to the
holders of such Capital Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of the Capital Securities will cease, except the right of the holders of
the Capital Securities to receive the applicable Redemption Price, but without
interest on such Redemption Price, and the Capital Securities will cease to be
outstanding. In the event that any Redemption Date of Capital Securities is not
a Business Day, then the applicable Redemption Price payable on such date will
be paid on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the applicable
Redemption Price is improperly withheld or refused and not paid either by the
Trust or by the Company pursuant to the Guarantee as described under
"Description of
<PAGE>
the Guarantee," Distributions on Capital Securities called for redemption will
continue to accumulate at the then applicable rate, from the Redemption Date
originally established by the Trust to the date such applicable Redemption Price
is actually paid, in which case the actual payment date will be the Redemption
Date for purposes of calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation, United States federal
securities law), the Company or its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
Notice of any redemption will be mailed at least 30 days but not more than 60
days prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless the Company defaults in payment of the applicable
Prepayment Price on, or in the repayment of, the Junior Subordinated Debentures,
on and after the Redemption Date Distributions will cease to accrue on the Trust
Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital Securities
and the Common Securities, as applicable, shall be made pro rata based on the
Liquidation Amount of the Capital Securities and Common Securities; provided,
however, that if on any Distribution Date or Redemption Date a Debenture Event
of Default shall have occurred and be continuing, no payment of any Distribution
on, or applicable Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
the Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Capital
Securities for all Distribution periods terminating on or prior thereto or, in
the case of Capital Securities called for redemption on a Redemption Date on or
prior thereto, the full amount of the Redemption Price therefor, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Capital Securities then due and payable.
In the case of any Event of Default, the Company as holder of the Common
Securities will be deemed to have waived any right to act with respect to such
Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Capital Securities and not on behalf of the
Company as holder of the Common Securities, and only the holders of the Capital
Securities will have the right to direct the Property Trustee to act on their
behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see "Description of New Junior
Subordinated Debentures -- Debenture Events of Default") constitutes an "Event
of Default" under the Declaration.
Within five Business Days after the occurrence of any Event of Default actually
known to the Property Trustee, the Property Trustee shall transmit notice of
such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Company, as Sponsor, unless such Event of
Default shall have been cured or waived. The Company, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities as described under
" -- Liquidation of the Trust and Distribution of Junior Subordinated
Debentures" and "-- Subordination of Common Securities" above.
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be continuing, any
Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital
<PAGE>
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Company as the holder of the Common Securities. No resignation or removal of an
Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Declaration.
Merger or Consolidation of Issuer Trustees
Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Issuer Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Issuer Trustee, shall be the successor of such Issuer
Trustee under the Declaration, provided such corporation shall be otherwise
qualified and eligible.
Mergers, Conversions, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge or convert with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below. The Trust may, at the request of the Company, as
Sponsor, with the consent of the Administrative Trustees but without the consent
of the Property Trustee, the Delaware Trustee or holders of the Capital
Securities, merge or convert with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to a trust organized as such under the
laws of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of the Trust with respect to the Capital
Securities or (b) substitutes for the Capital Securities other securities having
substantially the same terms as the Capital Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Capital
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee with respect to the Junior Subordinated Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Capital Securities are then listed, if any, (iv) such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Capital Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect (other than with respect to a
dilution of such holder's interest in the new entity), (vi) such successor
entity has a purpose identical to that of the Trust, (vii) prior to such merger,
conversion, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Company has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (a) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Capital Securities (including any Successor Securities) in any material respect
(other than with respect to a dilution of such holder's interest in the new
entity), and (b) following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
(viii) the Company or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge or convert with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge or convert with or into, or replace it
if such consolidation, amalgamation, merger, conversion, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity not
to be classified as a grantor trust for United States federal income tax
purposes.
<PAGE>
Voting Rights; Amendment of the Declaration
Except as provided below and under " -- Mergers, Conversions, Consolidations,
Amalgamations or Replacements of the Trust" above and "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Declaration, the holders of the Capital Securities will have no voting rights.
The Declaration may be amended from time to time by the Company and the Issuer
Trustees, without the consent of the holders of the Trust Securities (i) to cure
any ambiguity, correct or supplement any provisions in the Declaration that may
be inconsistent with any other provision of the Declaration, or to add any other
provisions with respect to matters or questions arising under the Declaration,
which shall not be inconsistent with the other provisions of the Declaration, or
(ii) to modify, eliminate or add to any provisions of the Declaration to such
extent as shall be necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Trust will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of the holders of the
Trust Securities, and any amendments of the Declaration shall become effective
when notice thereof is given to the holders of the Trust Securities. The
Declaration may be amended by the Issuer Trustees and the Company (i) with the
consent of holders representing a majority (based upon Liquidation Amount) of
the outstanding Trust Securities, and (ii) upon receipt by the Issuer Trustees
of an opinion of counsel to the effect that such amendment or the exercise of
any power granted to the Issuer Trustees in accordance with such amendment will
not affect the Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status as an "investment
company" under the Investment Company Act; (it being understood that the New
Capital Securities and any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Declaration) provided that, without the consent of each
holder of Trust Securities, the Declaration may not be amended to (i) change the
amount or timing of any Distribution or other payment on or in respect of the
Trust Securities or otherwise adversely affect the amount of any Distribution or
other payment required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property Trustee,
the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive certain past defaults under the
Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a meeting
of such holders convened for such purpose or pursuant to written consent. The
Property Trustee will cause a notice of any meeting at which holders of Capital
Securities are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be given to each holder of record of
Capital Securities in the manner set forth in the Declaration.
<PAGE>
No vote or consent of the holders of Capital Securities will be required for the
Trust to redeem and cancel the Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of the Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
Form, Denomination, Book-Entry Procedures and Transfer
The New Capital Securities initially will be represented by one or more Capital
Securities certificates in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for DTC, in New York, New York,
and registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Capital Securities may not be
exchanged for Capital Securities in certificated form except in the limited
circumstances described below. See " -- Exchange of Book-Entry Capital
Securities for Certificated Capital Securities".
Other Capital Securities will be issued only in registered, certificated (i.e.,
non-global) form. Other Capital Securities may not be exchanged for beneficial
interests in any Global Capital Securities except in the limited circumstances
described below. See " -- Exchange of Book-Entry Capital Securities for
Certificated Capital Securities".
Depositary Procedures
DTC has advised the Trust and the Company that DTC is a limited-purpose trust
company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Capital Securities, DTC will
credit the accounts of Participants designated by the Initial Purchasers with
portions of the Liquidation Amount of the Global Capital Securities and (ii)
ownership of such interests in the Global Capital Securities will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Capital Securities).
Except as described below, owners of beneficial interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
receive physical delivery of Capital Securities in certificated form and will
not be considered the registered owners or holders thereof under the Declaration
for any purpose.
Payments in respect of the Global Capital Security registered in the name of DTC
or its nominee will be payable by the Property Trustee to DTC in its capacity as
the registered holder under the Declaration. Under the terms of the Declaration,
the Property Trustee will treat the persons in whose names the Capital
Securities, including the Global Capital Securities, are registered as the
owners thereof for the purpose of receiving such payments and for any and all
other purposes whatsoever. Consequently, neither the Property Trustee nor any
agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Capital Securities, or for maintaining, supervising or reviewing any of
DTC's records or any Participant's or Indirect Participant's records relating to
the beneficial ownership interests in the Global Capital Securities or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Trust and the Company
that its current practice, upon receipt of any payment in respect of securities
such as the Capital Securities, is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Capital
Securities will be governed by standing instructions and customary practices and
will be the responsibility of the Participants or the Indirect Participants and
will not be the responsibility of DTC, the Property Trustee, the Trust or the
Company. Neither the Trust or the Company nor the Property Trustee will be
liable for any delay by DTC or any of its Participants in identifying the
beneficial owners of the Capital Securities, and the Trust or the Company and
the Property Trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee for all purposes.
<PAGE>
Beneficial interests in the Global Capital Securities will trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants.
DTC has advised the Trust and the Company that it will take any action permitted
to be taken by a holder of Capital Securities only at the direction of one or
more Participants to whose account with DTC interests in the Global Capital
Securities are credited and only in respect of such portion of the Liquidation
Amount of the Capital Securities as to which such Participant or Participants
has or have given such direction. However, if there is an Event of Default under
the Declaration, DTC reserves the right to exchange the Global Capital
Securities for legended Capital Securities in certificated form and to
distribute such Capital Securities to its Participants.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for New Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) the Company in its sole discretion elects to cause the issuance of the
Capital Securities in certificated form or (iii) there shall have occurred and
be continuing an Event of Default or any event which after notice or lapse of
time or both would be an Event of Default under the Declaration. In addition,
beneficial interests in a Global Capital Security may be exchanged for
certificated New Capital Securities upon request but only upon at least 20 days
prior written notice given to the Property Trustee by or on behalf of DTC in
accordance with customary procedures. In all cases, certificated New Capital
Securities delivered in exchange for any Global Capital Security or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures) and will bear the legend referred to in "Notice to
Investors", unless the Property Trustee determines otherwise in compliance with
applicable law.
<PAGE>
Payment and Paying Agency
Payments in respect of the Capital Securities held in global form shall be made
to the Depositary, which shall credit the relevant accounts at the Depositary on
the applicable Distribution Dates or in respect of the Capital Securities that
are not held by the Depositary, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
register. The paying agent (the "Paying Agent") shall initially be the Property
Trustee and any co-paying agent chosen by the Property Trustee and acceptable to
the Administrative Trustees and the Company. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days written notice to the Property Trustee
and the Company. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees shall appoint a successor (which shall
be a bank or trust company acceptable to the Administrative Trustees and the
Company) to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the Capital
Securities.
Registration of transfers of the New Capital Securities will be effected without
charge by or on behalf of the Trust but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required to register or cause to be registered
the transfer of the New Capital Securities after they have been called for
redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after such Event of Default, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. The Property Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if repayment or adequate indemnity is not reasonably
assured to the Property Trustee. From time to time, the Property Trustee and/or
its affiliates extend credit and may provide investment banking and other
financial services to the Company. See " Markel Capital Trust I."
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the affairs
of and to operate the Trust in such a way that the Trust will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act of 1940, as amended or classified as an association taxable as a
corporation for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Company for
United States federal income tax purposes. In this connection, the Company and
the Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Trust or the Declaration,
that the Company and the Administrative Trustees determine in their discretion
to be necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Trust
Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any of
its assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued under an Indenture, as supplemented from
time to time (as so supplemented, the "Indenture"), between the Company and The
Chase Manhattan Bank, as trustee (the "Debenture Trustee"). The Indenture has
been qualified under the Trust Indenture Act. This summary of certain terms and
provisions of the Junior Subordinated Debentures and the Indenture does not
purport to be complete, and where reference is made to particular provisions of
the Indenture, such provisions, including the definitions of certain terms, some
of which are not otherwise defined herein, are qualified in their entirety by
reference to all of the provisions of the Indenture and those terms made a part
of the Indenture by the Trust Indenture Act.
Concurrently with the issuance of the Capital Securities, the Trust invested the
proceeds thereof, together with the consideration paid by the Company for the
Common Securities, in Old Junior Subordinated Debentures issued by the Company.
Pursuant to the Exchange Offer, the Company will exchange the Old Junior
Subordinated Debentures, in an amount corresponding to the Old Capital
Securities accepted for exchange, for a like aggregate principal amount of the
New Junior Subordinated Debentures as soon as practicable after the date hereof.
The New Junior Subordinated Debentures will bear interest at the annual rate of
8.71% of the principal amount thereof, payable semi-annually in arrears on
January 1 and July 1 of each year (each, an "Interest Payment Date"), commencing
July 1, 1997, to the person in whose name each Junior Subordinated
Debenture is registered, subject to certain exceptions, at the close of
business on the date fifteen days prior to the relevant Interest Payment Date.
It is anticipated that, until the liquidation, if any, of the Trust, each
<PAGE>
Junior Subordinated Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of 8.71% thereof, compounded semi-annually. The term
"interest", as used herein, shall include semi-annual interest payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined herein), as applicable.
The Junior Subordinated Debentures will be issued in denominations of $1,000 and
integral multiples thereof. The Junior Subordinated Debentures will mature on
January 1, 2046 (the "Stated Maturity Date"), except as described below.
The New Junior Subordinated Debentures will rank pari passu with the Old Junior
Subordinated Debentures and all Other Debentures and will be unsecured and
subordinate and rank junior in right of payment to the extent and in the manner
set forth in the Indenture to all Senior Indebtedness. See " -- Subordination"
below. The Company is a holding company and almost all of the operating assets
of the Company and its consolidated subsidiaries are owned by such subsidiaries.
The Company relies primarily on dividends from such subsidiaries to meet its
obligations. The Company is a legal entity separate and distinct from its
subsidiaries. The principal sources of the Company's income are dividends,
interest and fees from its subsidiaries. As a holding company, the Company's
ability to meet debt service obligations and pay operating expenses depends on
receipt of sufficient funds from its direct and indirect subsidiaries. The
inability of the Company's direct and indirect subsidiaries to pay dividends to
the Company in an amount sufficient to meet debt service obligations and pay
operating expenses would have a material adverse effect on the Company and the
Trust. The payment of dividends by the Company's subsidiaries without prior
regulatory approval is subject to restrictions set forth in the insurance laws
and regulations of Virginia, Illinois, Delaware, New Jersey, California and
Arizona, the states of domicile of the Company's insurance subsidiaries. The
Company currently does not expect such regulatory requirements to impair its
ability to meet interest payment obligations and to pay operating expenses in
the future. However, the Company can give no assurance that dividends will be
declared or paid by its subsidiaries. As of December 31, 1995, the Company's
direct and indirect insurance subsidiaries had sufficient capital and earnings
to pay up to $36.2 million of dividends to the Company during 1996 without prior
regulatory approval. In addition, payment of dividends to the Company by the
insurance subsidiaries is subject to ongoing review by insurance regulators and
is subject to various statutory limitations and in certain circumstances
requires approval by insurance regulatory authorities. Because the Company is a
holding company, the right of the Company to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of the subsidiary, except
to the extent the Company may itself be recognized as a creditor of that
subsidiary. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Junior Subordinated Debentures should look only to
the assets of the Company for payments on the Junior Subordinated Debentures. In
addition, because many of the Company's subsidiaries are insurance companies
subject to regulatory control by various state insurance departments, the
ability of such subsidiaries to pay dividends to the Company without prior
regulatory approval is limited by applicable laws and regulations. The Indenture
does not limit the incurrence or issuance of other secured or unsecured debt of
the Company, including Senior Indebtedness, or other obligations. See " --
Subordination" below.
Form, Registration and Transfer
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities, the Junior Subordinated Debentures may be represented by one
or more global certificates registered in the name of Cede & Co. as the nominee
of DTC. The depositary arrangements for such Junior Subordinated Debentures are
expected to be substantially similar to those in effect for the Capital
Securities. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Description of New Securities -- Form,
Denomination, Book-Entry Procedures and Transfer."
Payment and Paying Agents
Payment of principal of and premium, if any, and any interest on Junior
Subordinated Debentures will be made at the office of the Debenture Trustee in
The City of New York or at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time, except that at the option of the
Company payment of any interest may be made, except in the case of Junior
Subordinated Debentures in global form, (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the register for
Junior Subordinated Debentures or (ii) by transfer to an account maintained by
the Person entitled thereto as specified in such register, provided that proper
transfer instructions have been received by the relevant Record Date. Payment of
any interest on any Junior Subordinated Debenture will be made to the Person in
whose name such Junior Subordinated Debenture is registered at the close of
business on the Record Date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent; however the Company will at all
times be required to maintain a Paying Agent in each Place of Payment for the
Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by the Company in trust, for the payment of the principal of and premium,
if any, or interest on any Junior Subordinated Debenture and remaining unclaimed
for two years after such principal and premium, if any, or interest has become
due and payable shall, at the request of the Company, be repaid to the Company
and the holder of such Junior Subordinated Debenture shall thereafter look, as a
general unsecured creditor, only to the Company for payment thereof.
<PAGE>
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing, the
Company will have the right under the Indenture at any time during the term of
the Junior Subordinated Debentures to defer the payment of interest at any time
or from time to time for a period not exceeding 10 consecutive, semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity Date. At the end of an Extension Period,
the Company must pay all interest then accrued and unpaid (together with
interest then accrued at the annual rate of 8.71%, compounded semi-annually, to
the extent permitted by applicable law). During an Extension Period, interest
will continue to accrue and holders of Junior Subordinated Debentures (and
holders of the Trust Securities while Trust Securities are outstanding) will be
required to accrue interest income for United States federal income tax purposes
prior to the receipt of cash attributable to such income. See "Certain Federal
Income Tax Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company (including any Other Debentures) that rank pari passu
with or junior in right of payment to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any subsidiary of the Company (including any Other
Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of or options, warrants or rights to subscribe for or
purchase shares of, common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (e) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases or issuances of common
stock under any of the Company's stock option, stock purchase, stock loan or
other benefit plans for its directors, officers or employees or any of the
Company's dividend reinvestment plans, in each case as now existing or hereafter
established or amended).
Prior to the termination of any such Extension Period, the Company may further
extend such Extension Period, provided that such extension does not cause such
Extension Period to exceed 10 consecutive semi-annual periods or to extend
beyond the Stated Maturity Date. Upon the termination of any such Extension
Period and the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of any
Extension Period (or an extension thereof) at least five Business Days prior to
the earlier of (i) the date the Distributions on the Trust Securities would have
been payable except for the election to begin or extend such Extension Period or
(ii) the date the Administrative Trustees are required to give notice to any
securities exchange or to holders of Capital Securities of the record date or
the date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. The Debenture Trustee shall give notice
of the Company's election to begin or extend a new Extension Period to the
holders of the Capital Securities. There is no limitation on the number of times
that the Company may elect to begin an Extension Period.
<PAGE>
Optional Prepayment
The Junior Subordinated Debentures will be prepayable, in whole or in part, at
the option of the Company on or after January 1, 2007 (the "Initial Optional
Prepayment Date"), at a prepayment price (the "Optional Prepayment Price") equal
to the percentage of the outstanding principal amount of the Junior Subordinated
Debentures specified below, plus, in each case, accrued interest thereon to the
date of prepayment if redeemed during the 12-month period beginning January 1 of
the years indicated below:
Year Percentage
2007.................................................. 104.355%
2008.................................................. 103.920%
2009.................................................. 103.484%
2010.................................................. 103.049%
2011.................................................. 102.613%
2012.................................................. 102.178%
2013.................................................. 101.742%
2014.................................................. 101.307%
2015.................................................. 100.871%
2016.................................................. 100.436%
2017 and thereafter................................... 100.000%
Conditional Right to Advance Maturity and Special Event Prepayment
If a Tax Event (as defined herein) occurs, then the Company will have the right
(i) prior to the termination of the Trust, to advance the Stated Maturity Date
of the Junior Subordinated Debentures to the minimum extent required in order to
allow for the payments of interest in respect of the Junior Subordinated
Debentures to continue to be tax deductible, but in no event shall the resulting
maturity of the Junior Subordinated Debentures be less than 20 years from
January 13, 1997, or (ii) to terminate the Trust (if not previously terminated)
and advance the Stated Maturity Date of the Junior Subordinated Debentures to
the minimum extent required in order to allow for the payments of interest in
respect of the Junior Subordinated Debentures to continue to be tax deductible,
but in no event shall the resulting maturity of the Junior Subordinated
Debentures be less than 40 years from January 13, 1997. In either case, such
maturity date shall be advanced only if, in the opinion of counsel to the
Company experienced in such matters, after advancing the maturity date, interest
paid on the Junior Subordinated Debentures will be deductible for federal income
tax purposes (the action referred to in either clause (i) or (ii) above being
referred to herein as a "Tax Event Maturity Advancement").
If a Special Event (as defined below) shall occur and be continuing prior to the
Initial Optional Prepayment Date, the Company may, at its option, prepay the
Junior Subordinated Debentures in whole (but not in part) at any time within 90
days of the occurrence of such Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the greater of (i) 100% of the
principal amount of such Junior Subordinated Debentures or (ii) the sum, as
determined by a Quotation Agent, of the present values of the principal amount
and premium payable with respect to an optional redemption of Junior
Subordinated Debentures on January 1, 2007, together with scheduled payments of
interest on the Junior Subordinated Debentures from the prepayment date to and
including the Initial Optional Prepayment Date discounted to the prepayment date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate, plus, in each case, accrued interest
thereon to the date of prepayment.
"Special Event" means a Conditional Tax Redemption Event (as defined under
"Description of the New Securities -- Conditional Right to Advance Maturity and
Special Event Redemption") or an Investment Company Event, as the case may be.
"Tax Event" means the receipt by the Company and the Trust of an opinion,
requested by the Company, of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative written decision or
<PAGE>
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is made on or after January 13, 1997, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
of such opinion, subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, (ii) interest
payable by the Company on the Junior Subordinated Debentures is not, or within
90 days of the date of such opinion will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes, or (iii) the
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges
(each of the circumstances referred to in clauses (i), (ii) and (iii) being an
"Adverse Tax Consequence").
"Investment Company Event" means that the Company and the Trust shall have
received an opinion, requested by the Company, of counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), to the effect that, as a result of the occurrence of a change in
law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in Investment Company Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act,
which Change in Investment Company Act Law becomes effective on or after the
Issue Date.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such prepayment date, calculated on the third
Business Day preceding the prepayment date, plus in each case (a) 1.25% if such
prepayment date occurs on or prior to the first anniversary of the issuance of
the Capital Securities offered hereby and (b) 0.50% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security selected
by the Quotation Agent as having a maturity comparable to the remaining term to
the Stated Maturity Date of the Junior Subordinated Debentures that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Junior Subordinated Debentures.
"Quotation Agent" means the Reference Treasury Dealer appointed by the Company.
"Reference Treasury Dealer" means: (i) Donaldson, Lufkin & Jenrette Securities
Corporation and respective successors; provided, however, that if the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by
the Debenture Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any prepayment date, (i) the
average of the bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the third Business Day
preceding such prepayment date, as set forth in the daily statistical release
(or any successor release) published by the Federal Reserve Bank of New York and
designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or
(ii) if such release (or any successor release) is not published or does not
contain such prices on such Business Day, (A) the average of the Reference
Treasury Dealer Quotations for such prepayment date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any prepayment date, the average, as determined by the
Debenture Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
"Additional Sums" means such additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not
<PAGE>
be reduced as a result of any additional taxes, duties or other governmental
charges to which the Trust has become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of Junior Subordinated Debentures
to be prepaid at its registered address. Unless the Company defaults in payment
of the prepayment price, on and after the prepayment date interest ceases to
accrue on such Junior Subordinated Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
Certain Covenants of the Company
The Company will also covenant that it will not, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company (including Other Debentures) that rank pari passu with
or junior in right of payment to the Junior Subordinated Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company (including under Other
Guarantees) if such guarantee ranks pari passu or junior in right of payment to
the Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholder's rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock, (e) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases or issuances of common stock in connection with any of the
Company's stock option, stock purchase, stock loan or other benefit plans for
its directors, officers or employees or any of the Company's dividend
reinvestment plans, in each case as now existing or hereafter established or
amended) if at such time (1) there shall have occurred any event of which the
Company has actual knowledge that (a) is, or with the giving of notice or the
lapse of time, or both, would be, a Debenture Event of Default and (b) in
respect of which the Company shall not have taken reasonable steps to cure, (2)
if such Junior Subordinated Debentures are held by the Trust, the Company shall
be in default with respect to its payment of any obligations under the Guarantee
or (3) the Company shall have given notice of its election of an Extension
Period, or any extension thereof, as provided in the Indenture and shall not
have rescinded such notice, and such Extension Period, or any extension thereof,
shall have commenced.
For so long as such Trust Securities remain outstanding, the Company will
covenant (i) to directly or indirectly maintain 100 percent ownership of the
Common Securities of such Markel Capital Trust; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of such Common Securities, (ii) to use its reasonable
efforts to cause such Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of such Trust, the redemption of all
of the Trust Securities of such Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Trust, and (b) to
continue not to be classified as an association taxable as a corporation or a
partnership for United States federal income tax purposes and (iii) to use its
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures.
Debenture Events of Default
The Indenture provides that any one or more of the following described events
with respect to the Junior Subordinated Debentures constitutes a "Debenture
Event of Default" (whatever the reason for such Debenture Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to
<PAGE>
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(i) failure for 30 days to pay any interest on the Junior
Subordinated Debentures or any Other Debentures, when due (subject to
the deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the Junior
Subordinated Debentures or any Other Debentures when due whether
at maturity, upon redemption, by declaration of acceleration of
maturity or otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Indenture for 90 days after
written notice to the Company from the Debenture Trustee or the
holders of at least 25% in aggregate outstanding principal amount of
Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the nonpayment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default except a default
in the payment of principal of or premium, if any, on or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and premium, if any, and principal due otherwise than by acceleration
has been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Junior Subordinated
Debenture.
The Indenture requires the annual filing by the Company with the Debenture
Trustee of a certificate as to the absence of certain defaults under the
Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of an
Indenture Event of Default from the holders of a series of Junior Subordinated
Debentures (except an Indenture Event of Default in payment of principal of, or
of interest or premium on, the Junior Subordinated Debentures) if the Debenture
Trustee considers it in the interest of such holders to do so.
Enforcement of Certain Rights by Holders of Capital Securities
If a Debenture Event of Default shall have occurred and be continuing and shall
be attributable to the failure of the Company to pay principal of or interest or
premium, if any, on the Junior Subordinated Debentures on the due date, a holder
of Capital Securities may institute a Direct Action. The Company may not amend
the Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Capital Securities.
Notwithstanding any payments made to a holder of Capital Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of (or premium, if any) or interest on the Junior
Subordinated Debentures, and the Company shall be subrogated to the rights of
the holder of such Capital Securities with respect to payments on the Capital
Securities to the extent of any payments made by the Company to such holder in
any Direct Action.
The holders of the Capital Securities will not be able to exercise directly any
remedies, other than those set forth in the preceding paragraph, available to
the holders of the Junior Subordinated Debentures unless there shall have been
an Event of Default under the Declaration. See "Description of New Securities --
Events of Default; Notice".
<PAGE>
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to the
Company, unless: (i) in case the Company consolidates with or merges into
another Person or conveys or transfers its properties and assets substantially
as an entirety to any Person, the successor Person is organized under the laws
of the United States or any State or the District of Columbia, and such
successor Person expressly assumes the Company's obligations on the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
Modification of the Indenture
From time to time the Corporation and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the Junior
Subordinated Debentures of all series affected by such modification at the time
outstanding, to modify the Indenture or any supplemental indenture or the rights
of the holders of the Junior Subordinated Debentures; provided that no such
modification shall (i) extend the fixed maturity of any Security, or reduce the
principal amount thereof (including in the case of a discounted Security the
amount payable thereon in the event of acceleration or the amount provable in
bankruptcy) or any redemption premium thereon, or reduce the rate or extend the
time of payment of interest thereon, or make the principal of, or interest or
premium on, the Junior Subordinated Debentures payable in any coin or currency
other than that provided in the Junior Subordinated Debentures, or impair or
affect the right of any holder of Junior Subordinated Debentures to institute
suit for the payment thereof or the right of prepayment, if any, at the option
of the holder, without the consent of the holder of each Security so affected,
or (ii) reduce the aforesaid percentage of Junior Subordinated Debentures the
consent of the holders of which is required for any such modification without
the consent of the holders of each Security affected.
Satisfaction and Discharge
The Indenture generally provides that when all Junior Subordinated Debentures
not previously delivered to the Debenture Trustee for cancellation (i) have
become due and payable or (ii) will become due and payable at maturity within
one year, and the Company deposits or causes to be deposited with the Debenture
Trustee funds, in trust, for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on the Junior Subordinated Debentures not
previously delivered to the Debenture Trustee for cancellation, for the
principal and interest to the date of the deposit or to the Stated Maturity
Date, as the case may be, then the Indenture will cease to be of further effect
(except as to the Company's obligations to pay all other sums due pursuant to
the Indenture and to provide the officers' certificates and opinions of counsel
described therein), and the Company will be deemed to have satisfied and
discharged the Indenture.
Subordination
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency,
<PAGE>
debt restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Indebtedness will
first be entitled to receive payment in full in respect of such Senior
Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full in respect
of such Senior Indebtedness before the holders of Junior Subordinated Debentures
will be entitled to receive or retain any payment in respect of the Junior
Subordinated Debentures.
No payments on account of principal or premium, if any, or interest, if any, in
respect of the Junior Subordinated Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Senior Indebtedness" means, with respect to the Company and its Subsidiaries:
(a) all liabilities, obligations and indebtedness for borrowed money, whether or
not evidenced by bonds, debentures, notes or other similar instruments, (b) all
obligations to pay the deferred purchase price of property or services (other
than trade payables due and arising in the ordinary course of business), (c) all
Capital Lease Obligations, (d) all debt of any other Person secured by a Lien on
any asset of the Company or any of its Subsidiaries, (e) all Contingent
Obligations, (f) all obligations, contingent or otherwise, relating to the face
amount of letters of credit, whether or not drawn, and banker's acceptances, but
excluding any obligation relating to an undrawn letter of credit if the undrawn
letter of credit is issued in connection with a liability for which a reserve
has been established by the Company or the applicable Subsidiary in accordance
with United States generally accepted accounting principles, and (g) all
obligations incurred pursuant to Hedging Agreements which are due and payable;
provided, that the term Senior Indebtedness shall not include the Junior
Subordinated Debentures, the Guarantees or other Qualified Debt Obligations.
"Qualified Debt Obligations" means, without duplication, (a) debt securities of
the Company, provided that the terms of any such debt security (i) permit the
deferral of principal and interest payments for a period of up to five years
(but not beyond the maturity date), as elected by the Company, (ii) have a
maturity for payment of principal of not less than ten (10) years after the date
of issuance, and (iii) include provisions making the debt security expressly
subordinate to all other debt of the Company; (b) preferred securities issued by
a Subsidiary, the sole purpose of which is to issue such preferred securities
and invest the proceeds thereof in debt securities of the type described in
clause (a) above, and which preferred securities are payable solely out of the
proceeds of payments on account of such debt securities; and (c) the obligations
recorded on the consolidated balance sheet of the Company and its Subsidiaries
with respect to debt securities of the type described in clause (a) above and
preferred securities of the type described in clause (b) above.
By reason of such subordination, in the event of an insolvency, creditors of the
Company who are holders of Senior Indebtedness, as well as certain general
creditors of the Company, may recover more, ratably, than the holders of the
Junior Subordinated Debentures. Additionally, the Company currently conducts
substantially all of its operations through subsidiaries, and the holders of
Junior Subordinated Debentures will be structurally subordinated to the
creditors of the Company's subsidiaries. See "Risk Factors -- Ranking of
Subordinate Obligations Under the Guarantee and the Junior Subordinated
Debentures."
The Indenture places no limitation on the amount of additional secured or
unsecured debt, including Senior Indebtedness, or other obligations, that may be
incurred by the Company. The Company expects from time to time to incur
additional indebtedness and obligations, including Senior Indebtedness.
<PAGE>
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the Indenture under the
Trust Indenture Act, the Debenture Trustee shall have and be subject to all the
duties and responsibilities specified with respect to an indenture trustee under
the Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the Indenture
at the request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
From time to time, the Debenture Trustee and/or its affiliates extend credit and
may provide investment banking and other financial services to the Company. See
"Markel Capital Trust I."
DESCRIPTION OF THE GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently with
the issuance by the Trust of the Old Capital Securities for the benefit of the
holders from time to time of the Old Capital Securities. As soon as practicable
after the date hereof, the Old Guarantee will be exchanged by the Company for
the New Guarantee for the benefit of the holders from time to time of the New
Capital Securities. The Chase Manhattan Bank will act as guarantee trustee
("Guarantee Trustee") under the Guarantee. The New Guarantee has been qualified
under the Trust Indenture Act. This summary of certain provisions of the
Guarantee does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the Guarantee, including
the definitions therein of certain terms, and the Trust Indenture Act. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Capital Securities.
General
The Company will irrevocably agree to pay in full on a subordinated basis, to
the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the New Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Capital Securities, to the extent not paid by or on behalf of the Trust (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on New Capital Securities, to the
extent the Trust has funds on hand at such time legally available therefor, (ii)
the Redemption Price with respect to any New Capital Securities called for
redemption, to the extent that the Trust has funds on hand at such time legally
available therefor, or (iii) upon a voluntary or involuntary termination and
liquidation of the Trust (unless the Junior Subordinated Debentures are
distributed to holders of the Capital Securities), the lesser of (a) the
Liquidation Distribution and (b) the amount of assets of the Trust remaining
available for distribution to holders of New Capital Securities. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the New Capital Securities or
by causing the Trust to pay such amounts to such holders.
The New Guarantee will rank subordinate and junior in right of payment to all
Senior Indebtedness to the extent provided therein and, in the event of
bankruptcy or insolvency proceedings involving the Company, will rank
subordinate and junior in right of payment to all liabilities (other than Other
Guarantees) of the Company, but senior to any obligations in respect of any
class of capital stock of the Company. See " -- Status" below. Because the
Company is a holding company, the right of the Company to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Company may itself be recognized as a
creditor of that subsidiary. Accordingly, the Company's obligations under the
Guarantee will be effectively subordinated to all existing and future
liabilities of the Company's direct and indirect subsidiaries, and claimants
should look only to the assets of the Company for payments thereunder. See
"Description of New Junior Subordinated Debentures -- General." The New
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Indebtedness, whether under the
Indenture, any other indenture that the Company may enter into in the future or
otherwise.
The Company will, through the Guarantee, the Declaration, the Junior
Subordinated Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the Capital
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Capital Securities. See "Relationship Among the New Capital Securities, the New
Junior Subordinated Debentures and the New Guarantee."
Status
The New Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
in the same manner as Junior Subordinated Debentures, except in the event of
bankruptcy or insolvency proceedings involving the Company, in which case the
New Guarantee will rank subordinate and junior in right of payment to all
liabilities (other than Other Guarantees) of the Company.
<PAGE>
The New Guarantee will rank pari passu with the Old Guarantee and all Other
Guarantees issued by the Company. The Guarantee will constitute a guarantee of
payment and not of collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against any other person
or entity). The Guarantee will be held for the benefit of the holders of the
Capital Securities. The Guarantee will not be discharged except by payment of
the Guarantee Payments in full to the extent not paid by the Trust or upon
distribution to the holders of the Capital Securities of the Junior Subordinated
Debentures. The Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect the
rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of a majority of the Liquidation Amount of such outstanding Capital
Securities. The manner of obtaining any such approval will be as set forth under
"Description of New Securities -- Voting Rights; Amendment of the Declaration."
All guarantees and agreements contained in the Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the Capital Securities then
outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in Liquidation Amount of the Capital Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity.
The Company, as guarantor, will be required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
Certain Covenants of the Company
In the New Guarantee the Company will covenant that, so long as any Capital
Securities remain outstanding, the Company shall not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on, or repay or repurchase or redeem any debt
securities of the Company (including any Other Debentures) that rank pari passu
with or junior in right of payment to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any subsidiary of the Company (including Other
Guarantees) if such guarantee ranks pari passu or junior in right of payment to
the Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants, rights to subscribe for or purchase shares of,
common stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholder's rights, plan, or the issuance of
stock under any such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under the Guarantee, (d) as a result
of a reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, and (f) purchases or issuances of common stock in connection with any
of the Company's stock option, stock purchase, stock loan or other benefit plans
for its directors, officers or employees or any of the Company's dividend
reinvestment plans, in each case as now existing or hereafter established or
<PAGE>
amended), if at such time (i) there shall have occurred any event of which the
Company has actual knowledge that (a) is, or with the giving of notice or the
lapse of time, or both, would be an event of default under the Guarantee and (b)
in respect of which the Company shall not have taken reasonable steps to cure,
(ii) if such Junior Subordinated Debentures are held by the Property Trustee,
the Company shall be in default with respect to its payment of any obligations
under the Guarantee or (iii) the Company shall have given notice of its election
of the exercise of its right to extend the interest payment period pursuant to
the Indenture and any such extension shall be continuing.
Termination
The Guarantee will terminate and be of no further force and effect upon full
payment of the applicable Redemption Price of the Capital Securities, upon full
payment of the Liquidation Amount payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Capital
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Capital Securities must
restore payment of any sums paid under the Capital Securities or the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the continuance of a default with
respect to a Guarantee, will undertake to perform only such duties as are
specifically set forth in such Guarantee and, after default, must exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provisions, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of Capital Securities, unless offered reasonable indemnity
against the costs, expenses and liabilities which might be incurred thereby. The
Guarantee Trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if it
reasonably believes that repayment or adequate indemnity is not reasonably
assured to it.
From time to time the Guarantee Trustee and/or its affiliates extend credit and
may provide investment banking and other financial services to the Company. See
"Markel Capital Trust I."
Governing Law
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all materials respects
to the New Securities, except that the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange Offer,
except under limited circumstances), the New Capital Securities will not contain
the $100,000 minimum Liquidation Amount transfer restriction and certain other
restrictions on transfer applicable to Old Capital Securities, the New Capital
Securities will not provide for any increase in the Distribution rate thereon,
the New Junior Subordinated Debentures will not contain the $100,000 minimum
principal amount transfer restriction and the New Junior Subordinated Debentures
will not provide for any increase in the interest rate thereon. The Old
Securities provide that, in the event that a registration statement relating to
the Exchange Offer has not been filed by June 7, 1997 and been declared
effective by July 7, 1997, or, in certain limited circumstances, in the event a
shelf registration statement (the "Shelf Registration Statement") with respect
to the resale of the Old Capital Securities is not declared effective by July 7,
1997, then interest will accrue (in addition to the stated interest rate on the
Old Junior Subordinated Debentures) at the rate of 0.25% per annum on the
principal amount of the Old Junior Subordinated Debentures and Distributions
will accrue (in addition to the stated Distribution rate on the Old Capital
Securities) at the rate of 0.25% per annum on the Liquidation Amount of the Old
Capital Securities, for the period from the occurrence of such event until such
time as such required Exchange Offer is consummated or any required Shelf
Registration Statement is effective. The New Securities are not, and upon
consummation of the Exchange Offer the Old Securities will not be, entitled to
any such additional interest or Distributions. Accordingly, holders of Old
Capital Securities should review the information set forth under "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities" and
"Description of New Securities."
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES, THE
NEW JUNIOR SUBORDINATED DEBENTURES AND THE NEW GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the New Capital Securities
(to the extent the Trust has funds on hand legally available for the payment of
such Distributions) will be irrevocably guaranteed by the Company as and to the
extent set forth under "Description of the Guarantee." Taken together, the
Company's obligations under the New Junior Subordinated Debentures, the
Indenture, the Declaration and the New Guarantee will provide, in the aggregate,
a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the New Capital Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the New Capital
Securities. If and to the extent
<PAGE>
that the Company does not make the required payments on the New Junior
Subordinated Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the New Capital Securities. The
Guarantee will not cover any such payment when the Trust does not have
sufficient funds on hand legally available therefor. In such event, the remedy
of a holder of Capital Securities is to institute a Direct Action. The
obligations of the Company under the New Guarantee will be subordinate
and junior in right of payment to all Senior Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the New Capital Securities, primarily
because: (i) the aggregate principal amount or Prepayment Price of the New
Junior Subordinated Debentures will be equal to the sum of the Liquidation
Amount or Redemption Price, as applicable, of the New Capital Securities and
Common Securities; (ii) the interest rate and interest and other payment dates
on the New Junior Subordinated Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities; (iii) the Company
shall pay for all and any costs, expenses and liabilities of the Trust except
the Trust's obligations to holders of Trust Securities under such Trust
Securities; and (iv) the Declaration will provide that the Trust is not
authorized to engage in any activity that is not consistent with the limited
purposes thereof.
Enforcement of Rights of Holders of Capital Securities
A holder of any Capital Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Indebtedness would not constitute
a default or Event of Default under the Declaration. However, in the event of
payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Indenture will provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Declaration.
Limited Purpose of the Trust
The Capital Securities will represent preferred beneficial interests in the
Trust, and the Trust exists for the sole purpose of issuing and selling the
Trust Securities, using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debentures and engaging in only those other
activities necessary, advisable or incidental thereto. A principal difference
between the rights of a holder of a Capital Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture will
be entitled to receive from the Company the principal amount of and premium, if
any, and interest on Junior Subordinated Debentures held, while a holder of
Capital Securities is entitled to receive Distributions from the Trust (or, in
certain circumstances, from the Company under the Guarantee) if and to the
extent the Trust has funds on hand legally available for the payment of such
Distributions.
Rights Upon Termination
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary termination and liquidation
of the Trust, the holders of the Trust Securities will be entitled to receive,
out of assets held by the Trust, the Liquidation Distribution in cash. See
"Description of Securities -- Liquidation of the Trust and Distribution of
Junior Subordinated Debentures." Upon any voluntary or involuntary liquidation
or bankruptcy of the Company, the Property Trustee, as holder of the Junior
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated in right of payment to all Senior Indebtedness as set forth in the
Indenture, but entitled to receive payment in full of principal (and premium, if
any) and interest, before any stockholders of the Company receive payments or
distributions. Since the Company will be the guarantor under the Guarantee and
will agree to pay for all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to the holders of its Trust Securities), the
positions of a holder of Capital Securities and a holder of Junior Subordinated
Debentures relative to other creditors and to stockholders of the Company in the
event of liquidation or bankruptcy of the Company are expected to be similar,
although, in the event of bankruptcy or insolvency proceedings involving the
Company, the Company's obligations under the Guarantee will rank subordinate and
junior in right of payment to all liabilities (other than Other Guarantees) of
the Company but senior to any obligations in respect of any class of capital
stock of the Company.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of McGuire, Woods, Battle & Boothe, L.L.P., counsel to the
Company and the Trust ("Tax Counsel"), the following is a summary of certain of
the material United States federal income tax consequences of the purchase,
ownership and disposition of Capital Securities held as capital assets by a
holder that purchased the Old Capital Securities upon initial issuance at their
original offering price. It does not deal with special classes of holders such
as banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Capital Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Capital
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Capital Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder, the administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly on
a retroactive basis.
Exchange of Capital Securities
The exchange of Old Capital Securities for New Capital Securities should not be
a taxable event to holders for United States federal income tax purposes. The
exchange of Old Capital Securities for New Capital Securities pursuant to the
Exchange Offer should not be treated as an "exchange" for United States federal
income tax purposes because the New Capital Securities should not be considered
to differ materially in kind or extent from the Old Capital Securities and
because the exchange will occur by operation of the terms of the Old Capital
Securities. If, however, the exchange of the Old Capital Securities for the New
Capital Securities were treated as an exchange for United States federal income
tax purposes, such exchange should constitute a recapitalization for federal
income tax purposes. Accordingly, the New Capital Securities should have the
same issue price as the Old Capital Securities, and a holder should have the
same adjusted tax basis and holding period in the New Capital Securities as the
holder had in the Old Capital Securities immediately before the exchange.
Classification of the Junior Subordinated Debentures
In connection with the issuance of the Old Junior Subordinated Debentures, Tax
Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Junior Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the Company. An
opinion of Tax Counsel, however, is not binding on the Internal Revenue Service
(the "IRS") or the courts. Prospective investors should note that no rulings
have been or are expected to be sought from the IRS with respect to any of these
issues and no assurance can be given that the IRS will not take contrary
positions. Moreover, no assurance can be given that any of the opinions
expressed herein will not be challenged by the IRS or, if challenged, that such
a challenge would not be successful.
Classification of the Trust
In connection with the issuance of the Old Capital Securities, Tax Counsel has
rendered its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures, and each holder will
be required to include in its gross income any interest (or OID accrued) with
respect to its allocable share of those Junior Subordinated Debentures.
Interest Income and Original Issue Discount
Under recently issued Treasury regulations (the "Regulations") applicable to
debt instruments issued on or after August 13, 1996, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with OID. The Company believes that the likelihood of
its exercising its option to defer payments of interest is "remote" because
exercising that option would prevent the Company from declaring dividends on any
class of its equity securities. Accordingly, the Company intends to take the
position, based on the advice of Tax Counsel, that the Junior Subordinated
Debentures will not be considered to be issued with OID and, accordingly, stated
interest on the Junior Subordinated Debentures generally will be taxable to a
holder as ordinary income at the time it is paid or accrued in accordance with
such holder's method of accounting.
<PAGE>
Under the Regulations, if the Company were to exercise its option to defer
payments of interest, the New Junior Subordinated Debentures would at that time
be treated as issued with OID, and all stated interest on the New Junior
Subordinated Debentures would thereafter be treated as OID as long as the New
Junior Subordinated Debentures remain outstanding. In such event, all of a
holder's taxable interest income with respect to the New Junior Subordinated
Debentures would thereafter be accounted for on an economic accrual basis
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as taxable income. Consequently, a
holder of New Capital Securities would be required to include in gross income
OID even though the Company would not make actual cash payments during an
Extension Period. Moreover, under the Regulations, if the option to defer the
payment of interest was determined not to be "remote", the Junior Subordinated
Debentures would be treated as having been originally issued with OID. In such
event, all of a holder's taxable interest income with respect to the Junior
Subordinated Debentures would be accounted for on an economic accrual basis
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust
The Company will have the right at any time to liquidate the Trust and cause the
New Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Under current law, such a distribution, for United States federal
income tax purposes, would be treated as a nontaxable event to each holder, and
each holder would receive an aggregate tax basis in the New Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Capital Securities.
A holder's holding period in the New Junior Subordinated Debentures so received
in liquidation of the Trust would include the period during which the Capital
Securities were held by such holder. If, however, the Trust is characterized for
United States federal income tax purposes as an association taxable as a
corporation at the time of its dissolution, the distribution of the New Junior
Subordinated Debentures may constitute a taxable event to holders of Capital
Securities and a holder's holding period in New Junior Subordinated Debentures
would begin on the date such Junior Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of New
Securities"), the Junior Subordinated Debentures may be redeemed for cash and
the proceeds of such redemption distributed to holders in redemption of their
Capital Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Capital Securities, and a holder could recognize gain or loss as if it
sold such redeemed Capital Securities for cash. See " -- Sales of Capital
Securities" below.
Sales of Capital Securities
A holder that sells Capital Securities will recognize gain or loss equal to the
difference between its adjusted tax basis in the Capital Securities and the
amount realized on the sale of such Capital Securities (other than with respect
to accrued and unpaid interest which has not yet been included in income, which
will be treated as ordinary income). A holder's adjusted tax basis in the
Capital Securities generally will be its initial purchase price increased by OID
(if any) previously includable in such holder's gross income to the date of
disposition and decreased by payments (if any) received on the Capital
Securities in respect of OID. Such gain or loss generally will be a capital gain
or loss and generally will be a long-term capital gain or loss if the Capital
Securities have been held for more than one year.
The Capital Securities may trade at a price that does not accurately reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are deemed to have been issued with OID) who disposes of such holder's Capital
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income (i.e.,
interest or, possibly, OID), and to add such amount to such holder's adjusted
tax basis in such holder's pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid
interest), a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
Proposed Tax Legislation
On February 6, 1997, as part of the Clinton Administration's Fiscal 1998 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which would, among other things, generally deny corporate issuers
a deduction for interest in respect of certain debt obligations, such as the New
Junior Subordinated Debentures, issued on or after the date "of first committee
action," if such debt obligations have a maximum term in excess of 15 years and
are not shown as indebtedness on the issuer's applicable consolidated
balance sheet. In addition, the Proposed Legislation would generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the New Junior Subordinated Debentures, issued on or after
the date "of first committee action," if such debt obligations have a weighted
average maturity of more than 40 years. The Proposed Legislation has not yet
been introduced by the 105th Congress. If the Proposed Legislation is enacted by
Congress and if such enactment gave rise to a Tax Event, the Company would be
permitted to cause a redemption of the Trust Securities at the Special Event
Redemption Price by electing to prepay the Junior Subordinated Debentures at the
Special Event Prepayment Price. See "Description of New Junior Subordinated
Debentures -- Special Event Prepayment."
<PAGE>
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or which is a citizen or
individual resident (or is treated as a citizen or individual resident) of the
United States for federal income tax purposes, a corporation or partnership
created or organized (or treated as created or organized for federal income tax
purposes) in or under the laws of the United States or any political subdivision
thereof, or a trust or estate the income of which is includable in its gross
income for federal income tax purposes without regard to its source.
Notwithstanding the foregoing, for taxable years beginning after December 31,
1996 (or for the immediately preceding taxable year, if the trustee of a trust
so elects), a trust is a U.S. Holder for federal income tax purposes if, and
only if, (i) a court within the United States is able to exercise primary
supervision over the administration of the trust and (ii) one or more United
States trustees have the authority to control all substantial decisions of the
trust.
Under present United States federal income tax laws: (i) payments by the Trust
or any of its paying agents to any holder of a Capital Security who or which is
a United States Alien Holder will not be subject to United States federal
withholding tax; provided that, (a) the beneficial owner of the Capital Security
does not actually or constructively own 10 percent or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (b) the
beneficial owner of the Capital Security is not a controlled foreign corporation
that is related to the Company through stock ownership, and (c) either (A) the
beneficial owner of the Capital Security certifies to the Trust or its agent,
under penalties of perjury, that it is not a United States holder and provides
its name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Capital
Security in such capacity, certifies to the Trust or its agent, under penalties
of perjury, that such statement has been received from the beneficial owner by
it or by a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and (ii) a United States
Alien Holder of a Capital Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Capital Security.
Information Reporting to Holders
Generally, income on the New Capital Securities will be reported to holders on
Form 1099, which forms should be mailed to holders of New Capital Securities by
January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Capital Securities may be
subject to a "backup" withholding tax of 31 percent unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP DISPOSITION AND EXCHANGE
OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Company, which is the obligor with respect to the Junior Subordinated
Debentures held by the Trust, and its affiliates and the Property Trustee may be
considered a "party in interest" (within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to many employee
benefit plans ("Plans") that are subject to ERISA. Any purchaser proposing to
acquire Capital Securities with assets of any Plan should consult with its
counsel. The purchase and/or holding of Capital Securities by a Plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement arrangements and other plans described in Section 4975(e)(1) of
the Code) and with respect to which the Company, the Property Trustee or any
affiliate is a service provider (or otherwise is a party in interest or a
disqualified person)
may constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code, unless such Capital Securities are acquired pursuant to and in
accordance with an applicable exemption, such as Prohibited Transaction Class
Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by an
independent qualified professional asset manager), PTCE 91-38 (an exemption for
certain transactions involving bank collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts) or PTCE 95-60 (an exemption for transactions involving certain
insurance company general accounts) and PTCE 95-23 (an exemption for certain
transactions determined by an in-house manager). In addition, a Plan fiduciary
considering the purchase of Capital Securities should be aware that the assets
of the Trust may be considered "plan assets" for ERISA purposes. Therefore, a
Plan fiduciary should consider whether the purchase of
<PAGE>
Capital Securities could result in a delegation of fiduciary authority to the
Property Trustee, and, if so, whether such a delegation of authority is
permissible under the Plan's governing instrument or any investment management
agreement with the Plan. In making such determination, a Plan fiduciary
should note that the Property Trustee is a U.S. bank qualified to be an
investment manager (within the meaning of section 3(38) of ERISA) to which such
a delegation of authority generally would be permissible under ERISA.
Further, prior to an Event of Default with respect to the Junior Subordinated
Debentures, the Property Trustee will have only limited custodial and
ministerial authority with respect to Trust assets.
Under the U.S. Department of Labor regulations defining "plan assets" for ERISA
purposes (the "Plan Assets Regulations"), the assets of the Trust may be
considered plan assets of Plans owning New Capital Securities unless the
aggregate investment in New Capital Securities by "benefit plan investors" is
not deemed "significant" or the New Capital Securities qualify as "publicly
offered securities" as defined in such Regulations. For this purpose, equity
participation by benefit plan investors will not be considered "significant" on
any date only if, immediately after the most recent acquisition of Capital
Securities, the aggregate interest in the New Capital Securities held by benefit
plan investors will be less than 25% of the value of the New Capital Securities.
For purposes of the Plan Asset Regulations, the term "benefit plan investor"
includes Plans and arrangements that are not subject to ERISA, as well as Plans
that are subject to ERISA, and entities whose assets include plan assets by
reason of a Plan's investment in that entity. Although it is possible that the
equity participation by benefit plan investors in New Capital Securities on any
date will not be "significant" for purposes of the Plan Assets Regulations, such
result cannot be assured.
The New Capital Securities may qualify as "publicly offered securities" under
the Plan Assets Regulations if at the time of the Exchange Offer they are also
"widely held" and "freely transferable." Under the Regulations, a class of
securities is "widely held" only if it is a class of securities that is owned by
100 or more investors independent of the issuer and of one another. Although it
is possible that at the time of the Exchange Offer the New Capital Securities
will be "widely held," such result cannot be assured. Whether a security is
"freely transferable" for purposes of the Regulations is a factual question to
be determined on the basis of all relevant facts and circumstances. If at the
time of the Exchange Offer the New Capital Securities qualify as "publicly
offered securities," the assets of the Trust should not be "plan assets" with
respect to Plans acquiring New Capital Securities. If at the time of the
Exchange Offer the New Capital Securities do not qualify as "publicly offered
securities," the "plan asset" considerations discussed in the preceding
paragraphs could be applicable in connection with the investment by Plans in the
New Capital Securities.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker- Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Company and the Trust have agreed
that this Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of such
New Capital Securities for a period ending 90 days after the Expiration Date
(subject to extension under certain limited circumstances described herein) or,
if earlier, when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. However, a Participating Broker-Dealer who intends
to use this Prospectus in connection with the resale of New Capital Securities
received in exchange for Old Capital Securities pursuant to the Exchange Offer
must notify the Company or the Trust, or cause the Company or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer--Exchange Agent." See
"The Exchange Offer--Resales of New Capital Securities."
The Company or the Trust will not receive any cash proceeds from the issuance of
the New Capital Securities offered hereby. New Capital Securities received by
broker-dealers for their own accounts in connection with the Exchange Offer may
be sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the New
Capital Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or
the purchasers of any such New Capital Securities.
Any broker-dealer that resells New Capital Securities that were received by it
for its own account in connection with the Exchange Offer and any broker or
dealer that participates in a distribution of such New Capital Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any such resale of New Capital Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE>
NOTICE TO INVESTORS
Because of the following restriction, purchasers are advised to consult legal
counsel prior to making any offer, resale or pledge or transfer of Capital
Securities. Each holder of the New Capital Securities, by its acceptance
thereof, will be deemed to have acknowledged, represented to and agreed with the
Trust and the Company as follows:
It (a) is not itself, and is not acquiring Capital Securities with "plan assets"
of, an employee benefit or other plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code") (each, a "Plan), or
an entity whose underlying assets include "plan assets" by reason of any Plan's
investment in the entity (a "Plan Asset Entity"), or (b) is acquiring and
holding the Capital Securities in a transaction that is not otherwise prohibited
by either ERISA or the Code. The Capital Securities will bear legends reflecting
the above restrictions.
CERTAIN LEGAL MATTERS
The validity of the New Junior Subordinated Debentures and the New Guarantee and
certain legal matters relating thereto will be passed upon by McGuire, Woods,
Battle & Boothe, L.L.P., Richmond, Virginia. Certain matters of Delaware law
relating to the validity of the New Capital Securities will be passed upon by
Richards, Layton & Finger, special Delaware counsel to the Company and the
Trust. McGuire, Woods, Battle & Boothe, L.L.P. will rely on Richards, Layton &
Finger as to matters of Delaware law and on Brown & Wood LLP as to matters of
New York law. In addition, McGuire, Woods, Battle & Boothe, L.L.P. will pass
upon certain United States federal income taxation matters for the Company and
the Trust.
EXPERTS
The consolidated financial statements and related financial statement schedules
of the Company appearing in the Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1995, incorporated by reference herein
have been incorporated by reference herein in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants and upon the
authority of such firm as experts in accounting and auditing. Such reports refer
to the Company's adoption of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting for
Certain Investments in Debt and Equity Securities," effective December 31, 1993.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 10 of the Virginia Stock Corporation Act allows, in general, for
indemnification, in certain circumstances, by a corporation of any person
threatened with or made a party to any action, suit or proceeding by reason of
the fact that he or she is, or was, a director, officer, employee or agent of
such corporation. Indemnification is also authorized with respect to a criminal
action or proceeding where the person had no reasonable cause to believe that
his conduct was unlawful. Article 9 of the Virginia Stock Corporation Act
provides limitations on damages payable by officers and directors, except in
cases of willful misconduct or knowing violation of criminal law or any federal
or state securities law.
Article VII of the Company's Amended and Restated Articles of Incorporation
provides for mandatory indemnification of directors and officers to the maximum
extent now or hereafter permitted by the Virginia Stock Corporation Act,
including indemnification against liability incurred in proceedings instituted
or threatened by third parties, or by or on behalf of the Company itself, unless
incurred as a result of gross negligence, willful misconduct or as a result of a
knowing violation of the criminal law.
The Company maintains a standard policy of officers' and directors' liability
insurance.
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
<TABLE>
<S><C>
4.1 Indenture of Markel Corporation relating to the Junior Subordinated Debentures
4.2 Form of Certificate of New Junior Subordinated Debenture (included as Exhibit A to
Exhibit 4.1)
4.3 Certificate of Trust of Markel Capital Trust I
4.4 Declaration of Trust of Markel Capital Trust I
4.5 Amended and Restated Declaration of Trust for Markel Capital Trust I
4.6 Form of New Capital Security Certificate for Markel Capital Trust I (included as Exhibit
A-1 to Exhibit 4.5)
4.7 Form of New Guarantee of Markel Corporation relating to the New Capital Securities
4.8 Registration Rights Agreement
5.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to legality of the
New Junior Subordinated Debentures and the New Guarantee to be issued by Markel
Corporation*
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to legality of the
New Capital Securities to be issued by Markel Capital Trust I*
5.3 Opinion and consent of Brown & Wood, L.L.P. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be issued by Markel Corporation*
8 Opinion of McGuire, Woods, Battle & Boothe, L.L.P., special tax counsel, as to certain
federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McGuire, Woods, Battle & Boothe, L.L.P. (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)*
23.4 Consent of Brown & Wood, L.L.P. (included in Exhibit 5.3)*
24 Power of Attorney of certain officers and directors of Markel Corporation and Administrative Trustees
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as trustee under
the Indenture
25.2 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank to act as trustee under the Amended
and Restated Declaration of Trust of Markel Capital
Trust I
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank under the New
Guarantee for the benefit of the holders of New Capital Securities of Markel Capital
Trust I
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
</TABLE>
- --------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by each undersigned Registrant of
expenses incurred or paid by a director, officer of controlling person of each
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Markel
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Richmond, and Commonwealth of Virginia, on the
12th day of February, 1997.
MARKEL CORPORATION
By /s/ STEVEN A. MARKEL*
-----------------------
(Steven A. Markel, Vice Chairman)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE DATE
<S> <C>
/s/ ALAN I. KIRSHNER* Chairman and Chief Executive February 12, 1997
- --------------------- Officer and Director
(Alan I. Kirshner)
/s/ ANTHONY F. MARKEL* President and Chief Operating Officer February 12, 1997
- --------------------- and Director
(Anthony F. Markel)
/s/ STEVEN A. MARKEL* Vice Chairman and Director February 12, 1997
- ---------------------
(Steven A. Markel)
/s/ DARRELL D. MARTIN* Executive Vice President, Chief February 12, 1997
- --------------------- Financial Officer and Treasurer and
(Darrell D. Martin) Director
/s/ GARY L. MARKEL* Director February 12, 1997
- ---------------------
(Gary L. Markel)
/s/ LESLIE A. GRANDIS* Director February 12, 1997
- ---------------------
(Leslie A. Grandis)
/s/ STEWART M. KASEN* Director February 12, 1997
- ---------------------
(Stewart M. Kasen)
/s/ V. PREM WATSA* Director February 12, 1997
- ---------------------
(V. Prem Watsa)
* Pursuant to Power of Attorney
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Markel
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Richmond, and Commonwealth of Virginia, on the
12th day of February, 1997.
MARKEL CAPITAL TRUST I
By: /s/ STEVEN A. MARKEL*
-----------------------------
Steven A. Markel
as Administrative Trustee
By: /s/ ANTHONY F. MARKEL*
-----------------------------
Anthony F. Markel
as Administrative Trustee
By: /s/ DARRELL D. MARTIN*
------------------------------
Darrell D. Martin
as Administrative Trustee
* Pursuant to Power of Attorney
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
4.1 Indenture of Markel Corporation relating to the
Junior Subordinated Debentures
4.2 Form of Certificate of New Junior Subordinated
Debenture (included as Exhibit A to Exhibit 4.1)
4.3 Certificate of Trust of Markel Capital Trust I
4.4 Declaration of Trust of Markel Capital Trust I
4.5 Amended and Restated Declaration of Trust for Markel
Capital Trust I
4.6 Form of New Capital Security Certificate for Markel
Capital Trust I (included as Exhibit A-1 to Exhibit
4.5)
4.7 Form of New Guarantee of Markel Corporation relating
to the New Capital Securities
4.8 Registration Rights Agreement
5.1 Opinion and consent of McGuire, Woods, Battle &
Boothe, L.L.P. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be
issued by Markel Corporation*
5.2 Opinion of Richards, Layton & Finger, special
Delaware counsel, as to legality of the New Capital
Securities to be issued by Markel Capital Trust I*
5.3 Opinion and consent of Brown & Wood, L.L.P. as to
legality of the New Junior Subordinated Debentures
and the New Guarantee to be issued by Markel
Corporation*
8 Opinion of McGuire, Woods, Battle & Boothe, L.L.P.,
special tax counsel, as to certain federal income tax
matters*
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McGuire, Woods, Battle & Boothe, L.L.P.
(included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.2)*
23.4 Consent of Brown & Wood, L.L.P. (included in Exhibit
5.3)*
24 Power of Attorney of certain officers and directors
of Markel Corporation and Administrative Trustees
25.1 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank to act as trustee under the Amended
and Restated Declaration of Trust of Markel Capital
Trust I
25.3 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank under the New Guarantee for the
benefit of the holders of New Capital Securities of
Markel Capital Trust I
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
- --------
* To be filed by amendment.
<PAGE>
================================================================================
MARKEL CORPORATION
__________________
__________________
INDENTURE
Dated as of January 13, 1997
____________________________
THE CHASE MANHATTAN BANK
as Trustee
________________
8.71% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
================================================================================
<PAGE>
*CROSS REFERENCE TABLE
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a) (1) ....................... 6.09
(a) (2) ....................... 6.09
310 (a) (3) ....................... N/A
(a) (4) ....................... N/A
310 (a) (5) ....................... 6.10, 6.11
310 (b) ........................... 6.08
310 (c) ........................... N/A
311 (a) and (b) ................... 6.13
311 (c) ........................... N/A
312 (a) ........................... 4.01, 4.02
312 (b) and (c) ................... 4.02
313 ............................... 4.04
314 (a) ........................... 4.03
314 (b) ........................... N/A
314 (c) ........................... 13.06
314 (e) ........................... 13.06
314 (f) ........................... N/A
315 (a) (c) and (d) ............... 6.01
315 (b) ........................... 5.08
315 (e) ........................... 5.09
316 (a) (1) ....................... 5.07
316 (a) (2) ....................... N/A
316 (a) last sentence ............. 2.09, 7.04
316 (b) ........................... 9.02
316 (c) ........................... N/A
317 (a) ........................... 5.02, 5.05
317 (b) ........................... 3.04, 6.05
318 (a) and (c) ................... 13.08
_________________________________
* THIS CROSS REFERENCE TABLE IS NOT PART OF THE INDENTURE AS EXECUTED AND SHALL
NOT AFFECT THE INTERPRETATION OF ANY OF ITS TERMS OR PROVISIONS
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
DEFINITIONS
<S> <C>
SECTION 1.01. Definitions............................................................................. 1
Additional Sums............................................................................... 1
Adjusted Treasury Rate........................................................................ 2
Adverse Tax Consequence....................................................................... 2
Affiliate..................................................................................... 2
Authenticating Agent.......................................................................... 2
Bankruptcy Law................................................................................ 2
Board of Directors............................................................................ 2
Board Resolution.............................................................................. 2
Business Day.................................................................................. 2
Capital Leases................................................................................ 3
Capital Securities............................................................................ 3
Capital Securities Guarantee.................................................................. 3
Commission.................................................................................... 3
Common Securities............................................................................. 3
Common Securities Guarantee................................................................... 3
Common Stock.................................................................................. 4
Company ..................................................................................... 4
Company Request............................................................................... 4
Comparable Treasury Issue..................................................................... 4
Comparable Treasury Price..................................................................... 4
Compounded Interest........................................................................... 4
Conditional Tax Redemption Event.............................................................. 4
Contingent Obligation......................................................................... 4
Credit Agreement.............................................................................. 5
Custodian..................................................................................... 5
Declaration................................................................................... 5
Default ..................................................................................... 5
Deferred Interest............................................................................. 5
Definitive Securities......................................................................... 5
Depositary.................................................................................... 5
Dissolution Event............................................................................. 5
Event of Default.............................................................................. 6
Exchange Act.................................................................................. 6
</TABLE>
i
<PAGE>
Table of Contents (cont'd)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exchange Offer................................................................................ 6
Extended Interest Payment Period.............................................................. 6
GAAP ..................................................................................... 6
Global Security............................................................................... 6
Guarantees.................................................................................... 6
Hedging Agreement............................................................................. 6
Indebtedness for Money Borrowed............................................................... 6
Indenture..................................................................................... 7
Initial Optional Prepayment Date.............................................................. 7
Interest Payment Date......................................................................... 7
Investment Company Event...................................................................... 7
Issue Date.................................................................................... 7
Lien ..................................................................................... 7
Liquidated Damages............................................................................ 7
Markel Capital Trust.......................................................................... 7
Maturity Date................................................................................. 7
Mortgage ..................................................................................... 7
Non Book-Entry Capital Securities............................................................. 8
Officers ..................................................................................... 8
Officers' Certificate......................................................................... 8
Opinion of Counsel............................................................................ 8
Optional Prepayment Price..................................................................... 8
Other Debentures.............................................................................. 8
Other Guarantees.............................................................................. 8
outstanding................................................................................... 8
Person ..................................................................................... 9
Predecessor Security.......................................................................... 9
Prepayment Price.............................................................................. 9
Principal office of the Trustee............................................................... 9
Property Trustee.............................................................................. 9
Purchase Agreement............................................................................ 9
Qualified Debt Obligations.................................................................... 9
Quotation Agent............................................................................... 10
Reference Treasury Dealer..................................................................... 10
Reference Treasury Dealer Quotations.......................................................... 10
Registration Rights Agreement................................................................. 10
Responsible Officer........................................................................... 10
</TABLE>
ii
<PAGE>
Table of Contents (cont'd)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Restricted Security........................................................................... 10
Rule 144A..................................................................................... 11
Securities.................................................................................... 11
Securities Act................................................................................ 11
Securityholder................................................................................ 11
Security Register............................................................................. 11
Senior Indebtedness........................................................................... 11
Series A Securities........................................................................... 11
Series B Securities........................................................................... 11
Special Event................................................................................. 12
Special Event Prepayment Price................................................................ 12
Subsidiary.................................................................................... 12
Tax Event..................................................................................... 12
Tax Event Maturity Advancement................................................................ 13
Trustee ..................................................................................... 13
Trust Indenture Act of 1939................................................................... 13
Trust Securities.............................................................................. 13
U.S. Government Obligations................................................................... 13
ARTICLE II.
SECURITIES
SECTION 2.01. Forms Generally......................................................................... 14
SECTION 2.02. Execution and Authentication............................................................ 14
SECTION 2.03. Form and Payment........................................................................ 15
SECTION 2.04. Legends................................................................................. 15
SECTION 2.05. Global Security......................................................................... 15
SECTION 2.06. Interest................................................................................ 17
SECTION 2.07. Transfer and Exchange................................................................... 18
SECTION 2.08. Replacement Securities.................................................................. 20
SECTION 2.09. Treasury Securities..................................................................... 21
SECTION 2.10. Temporary Securities.................................................................... 21
SECTION 2.11. Cancellation............................................................................ 22
SECTION 2.12. Defaulted Interest...................................................................... 22
SECTION 2.13. CUSIP Numbers........................................................................... 23
</TABLE>
iii
<PAGE>
Table of Contents (cont'd)
<TABLE>
<CAPTION>
ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY
Page
----
<S> <C>
SECTION 3.01. Payment of Principal, Premium and
Interest................................................................................ 23
SECTION 3.02. Offices for Notices and Payments, etc................................................... 24
SECTION 3.03. Appointments to Fill Vacancies in
Trustee's Office........................................................................ 24
SECTION 3.04. Provision as to Paying Agent............................................................ 25
SECTION 3.05. Certificate to Trustee.................................................................. 26
SECTION 3.06. Compliance with Consolidation
Provisions.............................................................................. 26
SECTION 3.07. Limitation on Dividends................................................................. 26
SECTION 3.08. Covenants as to Markel Capital Trust.................................................... 27
SECTION 3.09. Payment of Expenses..................................................................... 28
SECTION 3.10. Payment Upon Resignation or Removal..................................................... 28
ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.................................................................. 29
SECTION 4.02. Preservation and Disclosure of Lists.................................................... 29
SECTION 4.03. Reports of the Company.................................................................. 31
SECTION 4.04. Reports by the Trustee.................................................................. 33
ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default....................................................................... 33
SECTION 5.02. Payment of Securities on Default; Suit
Therefor................................................................................ 35
SECTION 5.03. Application of Moneys Collected by
Trustee................................................................................. 38
SECTION 5.04. Proceedings by Securityholders.......................................................... 38
SECTION 5.05. Proceedings by Trustee.................................................................. 39
SECTION 5.06. Remedies Cumulative and Continuing...................................................... 40
</TABLE>
iv
<PAGE>
Table of Contents (cont'd)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of
Securityholders......................................................................... 40
SECTION 5.08. Notice of Defaults...................................................................... 41
SECTION 5.09. Undertaking to Pay Costs................................................................ 42
ARTICLE VI.
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.................................................. 42
SECTION 6.02. Reliance on Documents, Opinions, etc.................................................... 44
SECTION 6.03. No Responsibility for Recitals, etc..................................................... 45
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May
Own Securities.......................................................................... 46
SECTION 6.05. Moneys to be Held in Trust.............................................................. 46
SECTION 6.06. Compensation and Expenses of Trustee.................................................... 46
SECTION 6.07. Officers' Certificate as Evidence....................................................... 47
SECTION 6.08. Conflicting Interest of Trustee......................................................... 47
SECTION 6.09. Eligibility of Trustee.................................................................. 47
SECTION 6.10. Resignation or Removal of Trustee....................................................... 48
SECTION 6.11. Acceptance by Successor Trustee......................................................... 50
SECTION 6.12. Successor by Merger, etc................................................................ 51
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor................................................................................ 51
SECTION 6.14. Authenticating Agents................................................................... 51
ARTICLE VII.
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders............................................................... 53
SECTION 7.02. Proof of Execution by Securityholders................................................... 54
SECTION 7.03. Who Are Deemed Absolute Owners.......................................................... 54
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding............................................................................. 54
SECTION 7.05. Revocation of Consents; Future Holders
Bound................................................................................... 55
</TABLE>
v
<PAGE>
Table of Contents (cont'd)
<TABLE>
<CAPTION>
Page
----
ARTICLE VIII.
SECURITYHOLDERS' MEETINGS
<S> <C>
SECTION 8.01. Purpose of Meetings..................................................................... 55
SECTION 8.02. Call of Meetings by Trustee............................................................. 56
SECTION 8.03. Call of Meetings by Company or
Securityholders......................................................................... 56
SECTION 8.04. Qualifications for Voting............................................................... 56
SECTION 8.05. Regulations............................................................................. 57
SECTION 8.06. Voting.................................................................................. 57
ARTICLE IX.
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders...................................................... 58
SECTION 9.02. With Consent of Securityholders......................................................... 60
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures....................................................... 61
SECTION 9.04. Notation on Securities.................................................................. 61
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee....................................................... 62
ARTICLE X.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on
Certain Terms........................................................................... 62
SECTION 10.02. Successor Corporation to be Substituted
for Company............................................................................. 63
SECTION 10.03. Opinion of Counsel to be Given Trustee.................................................. 63
ARTICLE XI.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.................................................................. 64
</TABLE>
vi
<PAGE>
Table of Contents (cont'd)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by
Trustee................................................................................ 65
SECTION 11.03. Paying Agent to Repay Moneys Held...................................................... 65
SECTION 11.04. Return of Unclaimed Moneys............................................................. 65
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations........................................................... 65
SECTION 11.06. Reinstatement......................................................................... 67
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations........................................................................... 68
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors............................................................................ 68
SECTION 13.02. Official Acts by Successor Corporation................................................ 68
SECTION 13.03. Surrender of Company Powers........................................................... 69
SECTION 13.04. Address for Notices, etc.............................................................. 69
SECTION 13.05. Governing Law......................................................................... 69
SECTION 13.06. Evidence of Compliance with
Conditions Precedent.................................................................. 69
SECTION 13.07. Business Days......................................................................... 70
SECTION 13.08. Trust Indenture Act to Control........................................................ 70
SECTION 13.09. Table of Contents, Headings, etc...................................................... 70
SECTION 13.10. Execution in Counterparts............................................................. 70
SECTION 13.11. Separability.......................................................................... 71
SECTION 13.12. Assignment............................................................................ 71
SECTION 13.13. Acknowledgement of Rights............................................................. 71
</TABLE>
<PAGE>
vii
Table of Contents (cont'd)
<TABLE>
<CAPTION>
Page
----
ARTICLE XIV.
PREPAYMENT OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
<S> <C>
SECTION 14.01. Special Event Prepayment.............................................................. 72
SECTION 14.02. Optional Prepayment by Company........................................................ 72
SECTION 14.03. No Sinking Fund....................................................................... 73
SECTION 14.04. Notice of Prepayment; Selection of
Securities............................................................................ 73
SECTION 14.05. Payment of Securities Called for
Prepayment............................................................................ 74
SECTION 14.06. Conditional Right to Advance Maturity................................................. 75
ARTICLE XV.
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.............................................................. 75
SECTION 15.02. Default on Senior Indebtedness........................................................ 76
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.................................................. 77
SECTION 15.04. Subrogation........................................................................... 78
SECTION 15.05. Trustee to Effectuate Subordination................................................... 79
SECTION 15.06. Notice by the Company................................................................. 80
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.......................................................................... 81
SECTION 15.08. Subordination May Not Be Impaired..................................................... 82
ARTICLE XVI.
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.................................................. 82
SECTION 16.02. Notice of Extension................................................................... 83
</TABLE>
viii
<PAGE>
THIS INDENTURE, dated as of January 13, 1997, between Markel
Corporation, a Virginia corporation (hereinafter sometimes called the
"Company"), and The Chase Manhattan Bank, a New York banking corporation, as
trustee (hereinafter sometimes called the "Trustee").
W I T N E S S E T H:
In consideration of the premises, and the purchase of the
Securities 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 Securities, 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, or which are by reference therein defined in the
Securities Act, shall (except as herein otherwise expressly provided or unless
the context otherwise requires) have the meanings assigned to such terms in said
Trust Indenture Act and in said Securities Act as in force at the date of this
Indenture as originally executed. The following terms have the meanings given to
them in the Declaration: (i) Clearing Agency; (ii) Delaware Trustee; (iii)
Depository; (iv) Capital Security Certificate; (v) Property Trustee; (vi)
Administrative Trustees; (vii) Direct Action; (viii) Series A Capital
Securities; (ix) Series B Capital Securities; (x) Series A Capital Securities
Guarantee; and (x) Series B Capital Securities Guarantee. 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
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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 Sums" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" shall mean, with respect to any
prepayment date, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such prepayment date, in each case
calculated on the third Business Day preceding such prepayment date, plus in
each case (a) 1.25% if such prepayment date occurs on or prior to the first
anniversary of the Issue Date and (b) 0.50% in all other cases.
"Adverse Tax Consequence" shall have the meaning set forth in
the definition of Tax Event.
"Affiliate" shall mean, with respect to a specified Person,
(a) any Person directly or indirectly owning, controlling or holding the power
to vote 10% or more of the outstanding voting securities or other ownership
interests of the specified Person, (b) any Person 10% or more of whose
outstanding voting securities or other ownership interests are directly or
indirectly owned, controlled or held with power to vote by the specified Person,
(c) any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person, (d) a partnership in which the
specified Person is a general partner, (e) any officer or director of the
specified Person, and (f) if the specified Person is an individual, any entity
of which the specified Person is an officer, director or general partner.
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"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors
of the Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to close.
"Capital Leases" means, with respect to the Company and its
Subsidiaries, any lease of any property that should, in accordance with GAAP, be
classified and accounted for as a capital lease on a consolidated balance sheet
of the Company and its Subsidiaries.
"Capital Securities" shall mean undivided beneficial interests
in the assets of Markel Capital Trust which rank pari passu with the Common
Securities issued by Markel Capital Trust; provided, however, that if an Event
of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled. References to "Capital
Securities" shall include collectively any Series A Capital Securities and
Series B Capital Securities.
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"Capital Securities Guarantee" shall mean any guarantee that
the Company may enter into with Markel Capital Trust or other Persons that
operate directly or indirectly for the benefit of holders of Capital Securities
of Markel Capital Trust and shall include a Series A Capital Securities
Guarantee and a Series B Capital Securities Guarantee with respect to the Series
A Capital Securities and the Series B Capital Securities, respectively.
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act of 1939, then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests
in the assets of Markel Capital Trust which rank pari passu with Capital
Securities issued by Markel Capital Trust; provided, however, that if an Event
of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that
the Company may enter into with any Person or Persons that operate directly or
indirectly for the benefit of holders of Common Securities of Markel Capital
Trust.
"Common Stock" shall mean the Common Stock, no par value, of
the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean Markel Corporation, a Virginia
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
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"Company Request" or "Company Order" shall mean a written
request or order signed in the name of the Company by the Chairman, the Chief
Executive Officer, the President, a Vice Chairman, a Vice President, the
Controller, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Comparable Treasury Issue" shall mean the United States
Treasury security selected by the Quotation Agent as having a maturity
comparable to the remaining term to the Stated Maturity Date of the Securities
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Securities.
"Comparable Treasury Price" shall mean, with respect to any
prepayment date pursuant to Section 14.01, (i) the average of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) on the third Business Day preceding such prepayment
date, as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A) the average of five Reference Treasury Dealer Quotations for
such prepayment date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Conditional Tax Redemption Event" shall have the meaning set
forth in Section 14.06.
"Contingent Obligation" means, with respect to the Company and
its Subsidiaries, without duplication, any obligation, contingent or otherwise,
of any such Person pursuant to which such Person has directly or indirectly
guaranteed any debt or other obligation of any other Person and, without
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limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take or pay, or to
maintain financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Contingent
Obligation shall not include (i) obligations under insurance or reinsurance
policies, or (ii) endorsements for collection or deposit in the ordinary course
of business.
"Credit Agreement" shall mean the Credit Agreement dated as of
December 18, 1996 by and among the Company, the lenders referred to therein and
First Union National Bank of North Carolina, as Agent.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Declaration" shall mean the Amended and Restated Declaration
of Trust of Markel Capital Trust, dated as of January 13, 1997.
"Default" shall mean any event, act or condition that with
notice or lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth
in Section 16.01.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities of any
series, for which the Company shall determine that such Securities will be
issued as a Global Security, 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).
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"Dissolution Event" shall mean the liquidation of the Trust
pursuant to the Declaration, and the distribution of the Securities held by the
Property Trustee to the holders of the Trust Securities issued by the Markel
Capital Trust pro rata in accordance with the Declaration.
"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 Offer" shall mean the exchange offer (including any
private exchange offer) contemplated in Section 2(a) of the Registration Rights
Agreement.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
"GAAP" means generally accepted accounting principles, as
recognized by the American Institute of Certificated Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained on a
consistent basis for the Company and its Subsidiaries throughout the period
indicated and consistent with the prior financial practice of the Company and
its Subsidiaries.
"Global Security" shall mean, with respect to the Securities,
a Security 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.
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"Guarantees" shall mean, collectively, the Series A
Capital Securities Guarantee, the Series B Capital Securities Guarantee and the
Common Securities Guarantee.
"Hedging Agreement" means any agreement with respect to an
interest rate swap, collar, cap, floor or a forward rate agreement or other
agreement regarding the hedging of interest rate risk exposure executed in
connection with hedging the interest rate exposure of the Company under the
Credit Agreement and any confirming letter executed pursuant to such hedging
agreement, all as amended or modified from time to time.
"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, if amended as herein provided, as so amended.
"Initial Optional Prepayment Date" shall mean January
1, 2007.
"Interest Payment Date" shall have the meaning set
forth in Section 2.06.
"Investment Company Event" shall mean that Markel Capital
Trust and the Company shall have received an opinion, requested by the Company,
of counsel experienced in practice under the Investment Company Act of 1940, as
amended (the "1940 Act"), to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk
that Markel Capital Trust is or will be considered an "investment company" which
is required to be registered under the 1940 Act, which Change in 1940 Act Law
becomes effective on or after the Issue Date.
"Issue Date" shall mean January 13, 1997.
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"Lien" means, with respect to any asset, any Mortgage, lien,
pledge, charge, security interest or encumbrance of any kind with respect to
such asset. For the purposes of this Indenture, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
"Liquidated Damages" shall have the meaning set forth
in the Registration Rights Agreement.
"Markel Capital Trust" shall mean Markel Capital Trust I, a
Delaware business trust created for the purpose of issuing its undivided
beneficial interests in connection with the issuance of Securities under this
Indenture.
"Maturity Date" shall mean January 1, 2046, or such other date
to which the maturity of the Securities is changed pursuant to the right of the
Company to advance the maturity date pursuant to the provisions of Section
14.06.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning
set forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, a Vice President, the Controller,
the Secretary or an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Company.
"Officers' Certificate" shall mean a certificate signed
by two Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Company, and who shall be acceptable to the
Trustee.
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"Optional Prepayment Price" shall have the meaning set
forth in Section 14.02.
"Other Debentures" shall mean all junior subordinated
debentures issued by the Company from time to time and sold to trusts to be
established by the Company (if any), in each case similar to Markel Capital
Trust.
"Other Guarantees" shall mean all guarantees to be issued by
the Company with respect to capital securities (if any) and issued to other
trusts to be established by the Company (if any), in each case similar to the
Markel Capital Trust.
The term "outstanding" when used with reference to Securities,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or an
Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or
an Authenticating Agent or delivered to the
Trustee for cancellation;
(b) Securities, 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); provided that,
if such Securities, or portions thereof, are to be
prepaid prior to maturity thereof, notice of such
prepayment shall have been given as in Article XIV
provided or provision satisfactory to the Trustee
shall have been made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
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"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Predecessor Security" of any particular Security shall mean
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Prepayment Price" shall mean the Special Event
Prepayment Price or the Optional Prepayment Price, as the context
requires.
"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.
"Property Trustee" shall have the same meaning as set
forth in the Declaration.
"Purchase Agreement" shall mean the Purchase Agreement,
dated January 8, 1997, among the Company, Markel Capital Trust
and the initial purchasers named therein.
"Qualified Debt Obligations" means, without duplication, (a)
debt securities of the Company, provided that the terms of any such debt
security (i) permit the deferral of principal and interest payments for a period
of up to five years (but not beyond the maturity date), as elected by the
Company, (ii) have a maturity for payment of principal of not less than ten (10)
years after the date of issuance, and (iii) include
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provisions making the debt security expressly subordinate to all other debt of
the Company, (b) preferred securities issued by a Subsidiary, the sole purpose
of which is to issue such preferred securities and invest the proceeds thereof
in debt securities of the type described in clause (a) above, and which
preferred securities are payable solely out of the proceeds of payments on
account of such debt securities; and (c) the obligations recorded on the
consolidated balance sheet of the Company and its Subsidiaries with respect to
debt securities of the type described in clause (a) above and preferred
securities of the type described in clause (b) above.
"Quotation Agent" shall mean the Reference Treasury
Dealer appointed by the Company.
"Reference Treasury Dealer" shall mean (i) Donaldson, Lufkin &
Jenrette Securities Corporation, and its successors; provided, however, that if
the foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury
Dealer selected by the Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" shall mean, with
respect to each Reference Treasury Dealer and any prepayment date pursuant to
Section 14.01, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) at 5:00 p.m. New York City time on the third Business
Day preceding such prepayment date, quoted in writing to the Trustee by such
Reference Treasury Dealer.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of January 13, 1997 by and among the Company, Markel
Capital Trust and the initial purchasers named therein as such agreement may be
amended, modified or supplemented from time to time.
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"Responsible Officer", when used with respect to the Trustee,
shall mean any officer of the Trustee with responsibility for the administration
of this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the legends set forth in Exhibit A hereto, other than those
legends to be set forth only on a Global Security.
"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.
"Securities" shall mean, collectively, the Series A Securities
and the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Securityholder", "holder of Securities", or other similar
terms, shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution
Event, the list of holders provided to the Trustee pursuant to Section 4.01, and
(ii) following a Dissolution Event, any security register maintained by a
security registrar for the securities appointed by the Company following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean with respect to the Company
and its Subsidiaries: (a) all liabilities, obligations and indebtedness for
borrowed money, whether or not evidenced by bonds, debentures, notes or other
similar instruments, (b) all obligations to pay the deferred purchase price of
property or services (other than trade payables due and arising in the ordinary
course of business), (c) all Capital Lease Obligations,
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(d) all debt of any other Person secured by a Lien on any asset of the Company
or any of its Subsidiaries, (e) all Contingent Obligations, (f) all obligations,
contingent or otherwise, relating to the face amount of letters of credit,
whether or not drawn, and banker's acceptance, but excluding any obligation
relating to an undrawn letter of credit if the undrawn letter of credit is
issued in connection with a liability for which a reserve has been established
by the Company or the applicable Subsidiary in accordance with GAAP, and (g) all
obligations incurred pursuant to Hedging Agreements which are due and payable;
provided, that Senior Indebtedness shall not include the Securities, the
Guarantees or other Qualified Debt Obligations.
"Series A Securities" means the Company's 8.71% Series A
Junior Subordinated Deferrable Interest Debentures due January 1, 2046, as
authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B 8.71%
Junior Subordinated Deferrable Interest Debentures due January 1, 2046, as
authenticated and issued under this Indenture.
"Special Event" means either a Conditional Tax Redemption
Event or an Investment Company Event.
"Special Event Prepayment Price" shall mean, with respect to
any prepayment of the Securities pursuant to Section 14.01 hereof, an amount in
cash equal to the greater of (i) 100% of the principal amount of the Securities
to be prepaid and (ii) the sum, as determined by a Quotation Agent, of the
present values of the principal amount and premium payable as part of the
Optional Prepayment Price with respect to an optional prepayment of such
Securities pursuant to Section 14.02 on the Initial Optional Prepayment Date
together with scheduled payments of interest on the Securities from the
prepayment date to and including the Initial Optional Prepayment Date discounted
to the prepayment date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each
case, accrued and unpaid interest thereon, including Compounded Interest and
Additional Sums, if any, to the date of such prepayment.
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"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of whose 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.
"Tax Event" shall mean the receipt by Markel Capital Trust and
the Company of an opinion, requested by the Company, of counsel experienced in
such matters to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws or any regulations
thereunder of the United States or any political subdivision or taxing authority
thereof or therein or as a result of any official administrative written
decision or pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is made on or after the Issue Date, there is more than
an insubstantial risk that (i) Markel Capital Trust is, or will be within 90
days of the date of such opinion, subject to United States Federal income tax
with respect to income received or accrued on the Securities, (ii) interest
payable by the Company on the Securities is not, or within 90 days of the date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States Federal income tax purposes, or (iii) Market Capital Trust is,
or will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges (each of the
circumstances referred to in clauses (i), (ii) and (iii) being referred to
herein as an "Adverse Tax Consequence").
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"Tax Event Maturity Advancement" shall have the meaning
specified in Section 14.06.
"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.
"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"
shall mean, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case
under clauses (i) or (ii) are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
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ARTICLE II.
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
The Securities shall be signed on behalf of the Company by the
Chairman, a Vice Chairman, the Chief Executive Officer, the President, a Vice
President or the Controller and attested by its Secretary or an Assistant
Secretary. Any signature may be in the form of a manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office at
the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Securities shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, $154,640,000 aggregate principal amount
of the Securities; except as provided in Sections 2.07, 2.08, 2.10 and 14.05.
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SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons. Principal
of and premium, if any, and interest on the Securities issued in certificated
form will be payable, the transfer of such Securities will be registrable and
such Securities will be exchangeable for Securities bearing identical terms and
provisions at the office or agency of the Trustee; provided, however, that
payment of interest with respect to the Securities (other than Securities issued
in global form, the payment of interest on which shall be made in immediately
available funds) may be made at the option of the Company (i) by check mailed to
the holder at such address as shall appear in the Security Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper transfer instructions have been received in writing by the relevant
record date. Notwithstanding the foregoing, so long as the holder of any
Securities is the Property Trustee, the payment of the principal of and premium,
if any, and interest (including Compounded Interest and Additional Sums, if any)
on such Securities held by the Property Trustee will be made in immediately
available funds at such place and to such account as may be designated by the
Property Trustee.
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 Security shall bear the applicable legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set forth on
Exhibit A hereto.
(b) The Company shall issue and the Trustee shall authenticate
Series B Securities in exchange for Series A Securities accepted for exchange in
the Exchange Offer, which Series B Securities shall not bear the legends
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required by subsection (a) above, in each case unless the Trustee is notified in
writing by the Company that the holder of such Series A Securities is either (A)
a broker-dealer who purchased such Series A Securities 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 Series A
Securities or (C) a Person who is an affiliate (as defined in Rule 144 under the
Securities Act) of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held
in book-entry form, the related Definitive Securities shall be
presented to the Trustee (if an arrangement with the Depositary has
been maintained) by the Property Trustee in exchange for one or more
Global Securities (as may be required pursuant to Section 2.07) in an
aggregate principal amount equal to the aggregate principal amount of
all outstanding Securities, to be registered in the name of the
Depositary, or a custodian therefor, or its nominee, and delivered by
the Trustee to the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the Administrative
Trustees; the Company upon any such presentation shall execute one or
more Global Securities in such aggregate principal amount and deliver
the same to the Trustee for authentication and delivery in accordance
with this Indenture; and payments on the Securities issued as a Global
Security will be made to the Depositary; and
(ii) if any Capital Securities are held
in certificated form, the related Definitive Securities may be
presented to the Trustee by the Property Trustee and any Capital
Security certificate which represents Capital Securities other than
Capital Securities in book-entry form ("Non Book-Entry Capital
Securities") will be deemed to represent beneficial interests in
Securities presented to the Trustee by the Property Trustee having an
aggregate principal amount equal to the aggregate liquidation amount of
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the Non Book-Entry Capital Securities until such Capital Security
certificates are presented to the Security Registrar for transfer or
reissuance, at which time such Capital Security certificates will be
cancelled and a Security, registered in the name of the holder of the
Capital Security certificate, with an aggregate principal amount equal
to the aggregate liquidation amount of the Capital Security certificate
cancelled, will be executed by the Company and delivered to the Trustee
for authentication and delivery in accordance with this Indenture. Upon
the issuance of such Securities, Securities with an equivalent
aggregate principal amount that were presented by the Property Trustee
to the Trustee will be deemed to have been cancelled.
(b) The Global Securities shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
prepayments. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Trustee, in accordance with instructions given by the
Company as required by this Section 2.05.
(c) The Global Securities 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.
(d) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or the Depositary has ceased to
be a clearing agency registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be, the
Company will execute, and the Trustee, upon receipt of a Company Order, will
authenticate and make available for delivery the Definitive Securities, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the
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Global Security in exchange for such Global Security. If there is an Event of
Default, the Depositary shall have the right to exchange the Global Securities
for Definitive Securities. In addition, the Company may at any time determine
that the Securities shall no longer be represented by a Global Security. 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 the Definitive Securities, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security in exchange for such Global Security. Upon the
exchange of the Global Security for such Definitive Securities, in authorized
denominations, the Global Security shall be cancelled by the Trustee. Such
Definitive Securities issued in exchange for the Global Security 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 Securities
to the Depositary for delivery to the Persons in whose names such Definitive
Securities are so registered.
SECTION 2.06. Interest.
(a) Each Security will bear interest at the rate of 8.71% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or, if no interest has been paid, from January 13, 1997, until the
principal thereof becomes due and payable, and on any overdue principal 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 (subject to the provisions of Article XVI) semi-annually
in arrears on January 1 and July 1 of each year (each, an "Interest Payment
Date") commencing on July 1, 1997 to the Person in whose name such Security or
any predecessor Security is registered, at the close of business on the regular
record date for such interest installment, which shall be the date fifteen days
prior to the relevant Interest Payment Date.
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(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days elapsed in such month. In the event that any
Interest Payment Date falls on a day that is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on such date.
(c) During such time as the Property Trustee is the holder of
any Securities, the Company shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by Markel Capital Trust on the outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which Markel Capital Trust has become subject as a result of a Tax
Event ("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. The Series A Securities, and those
Series B Securities 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. Until the Securities are
registered under the Securities Act, the Securities may be transferred only in
blocks having an aggregate principal amount of not less than $100,000. Any such
transfer of the Securities in a block having an aggregate principal amount of
less than $100,000 shall be deemed to be void and of no legal effect whatsoever.
Any such transferee shall be deemed not to be holder of such Securities for any
purpose, including but not limited to the receipt of payments on such
Securities, and such transferee shall be deemed to have no interest whatsoever
in such Securities. Upon any distribution of the Securities following a
Dissolution Event, the Company and the Trustee shall enter into a supplemental
indenture pursuant to Section 9.01 to provide for the transfer restrictions and
procedures with respect to the Securities substantially similar to those
contained in the Declaration to the extent applicable in the circumstances
existing at such time.
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(b) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Definitive Securities and Global Securities. All
Definitive Securities and Global Securities issued upon any registration of
transfer or exchange of Definitive Securities or Global Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Definitive Securities or Global
Securities surrendered upon such registration of transfer or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of prepayment or any
notice of selection of Securities for prepayment under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) register the
transfer of or exchange any Security so selected for prepayment in whole or in
part, except the unprepaid portion of any Security being prepaid in part.
Prior to due presentment for the registration of a transfer of
any Security, the Trustee, any agent and the Company may deem and treat the
Person in whose name any Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and premium, if
any, and interest on such Securities, and neither the Trustee, any agent nor the
Company shall be affected by notice to the contrary.
(c) Exchange of Series A Securities for Series B
Securities. The Series A Securities may be exchanged for Series B Securities
pursuant to the terms of the Exchange Offer. The Trustee shall make the
exchange as follows:
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The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer have
been consummated: and
(B) the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented
by a Global Security and the principal amount of
Series A Securities properly tendered in the Exchange
Offer that are represented by Definitive Securities,
the name of each holder of such Definitive
Securities, the principal amount at maturity properly
tendered in the Exchange Offer by each such holder
and the name and address to which Definitive
Securities for Series B Securities shall be
registered and sent for each such holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Securities have
been registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act of 1939 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 Security for Series B
Securities in aggregate principal amount equal to the aggregate principal amount
of Series A Securities represented by a Global Security indicated in such
Officers' Certificate as having been properly tendered and (B) Definitive
Securities representing Series B Securities registered in the names of, and in
the principal amounts indicated in, such Officers' Certificate.
If the principal amount at maturity of the Global Security for
the Series B Securities is less than the principal amount at maturity of the
Global Security for the Series A Securities, the Trustee shall make an
endorsement on such Global Security for the Series A Securities indicating a
reduction in the principal amount at maturity represented thereby.
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The Trustee shall deliver such Definitive Securities for
Series B Securities to the holders thereof as indicated in such Officers'
Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee and any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Company or the Trustee
may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.09. Treasury Securities.
In determining whether the holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities 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 Securities that a Responsible Officer of the Trustee actually
knows to be so owned shall be so considered.
SECTION 2.10. Temporary Securities.
Pending the preparation of Definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, typewritten,
lithographed, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
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If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The Definitive
Securities 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 Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Company for such purpose pursuant to Section 3.02
hereof, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in exchange therefor the same
aggregate principal amount of Definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as Definitive Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or destroy cancelled Securities in accordance with
its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The Company
may not issue new Securities to replace Securities that have been redeemed or
paid or that have been delivered to the Trustee for cancellation. All cancelled
Securities not destroyed by the Trustee shall be delivered to the Company.
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SECTION 2.12. Defaulted Interest.
Any interest on any Security 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
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall not be more than
15 nor less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class
postage prepaid, to each Securityholder 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 Securities (or their respective Predecessor
Securities) are registered on such special record date and shall be no
longer payable pursuant to the following clause (b).
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(b) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the requirements
of any securities exchange on which such Securities 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 Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of prepayment as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a prepayment and that reliance may be placed only on the other identification
numbers printed on the Securities, 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, Premium and Interest
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on the Securities at the
place, at the respective times and in the manner provided herein. The Company
further covenants to pay any and all amounts including, without limitation,
Liquidated Damages, if any, on the dates and in the manner required under the
Registration Rights Agreement.
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SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remains outstanding, the
Company will maintain in the Borough of Manhattan, The City of New York, an
office or agency where the Securities may be presented for payment, an office or
agency where the Securities 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 Securities 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 Trustee in the Borough of Manhattan, The City of New
York. In case the Company shall fail to maintain any such office or agency in
the Borough of Manhattan, The City of New York, or shall fail to give such
notice of the location or of any change in the location thereof, presentations
and demands may be made and notices may be served at the principal 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 Borough of
Manhattan, The City of New York, where the Securities 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 Borough of Manhattan,
The City of New York, for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof;
provided, further, that the Company shall at all times maintain a paying agent
in each such office or agency.
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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 Securities, 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,
(1) that it will hold all sums held by it as
such agent for the payment of the principal
of and premium, if any, or interest on the
Securities (whether such sums have been paid
to it by the Company or by any other obligor
on the Securities) in trust for the benefit
of the holders of the Securities; and
(2) that it will give the Trustee notice of any
failure by the Company (or by any other
obligor on the Securities) to make any
payment of the principal of and premium or
interest on the Securities when the same
shall be due and payable.
(b) If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of
and premium, if any, or interest on the Securities,
set aside, segregate and hold in trust for the
benefit of the holders of the Securities a sum
sufficient to pay such principal, premium 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
Securities) to make any payment of the principal of
and premium, if any, or interest on the Securities
when the same shall become due and payable.
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(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 Securities hereunder, or for any
other reason, pay or cause to be paid to the Trustee
all sums held in trust for any such Securities 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.
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 Securities 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.
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SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to, any other Person unless the
provisions of Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) or (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Company
(including any Other Debentures) that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company (including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Common Stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholder's rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Capital
Securities Guarantee, (d) as a result of a reclassification of the Company's
capital stock or the exchange or the conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock, (e) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, and (f) purchases or
issuances of Common Stock in connection with any of the Company's stock option,
stock purchase, stock loan or other benefit plans for its directors, officers or
employees or any of the Company's dividend
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reinvestment plans, in each case as now existing or hereafter established or
amended) if at such time (i) there shall have occurred any event of which the
Company has actual knowledge that (a) with the giving of notice or the lapse of
time, or both, would constitute an Event of Default and (b) in respect of which
the Company shall not have taken reasonable steps to cure, (ii) if such
Securities are held by the Property Trustee, the Company shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee or (iii) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period pursuant to Section
16.01 and any such extension shall be continuing.
SECTION 3.08. Covenants as to Markel Capital Trust
In the event Securities are issued to Markel Capital Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
Markel Capital Trust, for so long as such Trust Securities remain outstanding,
the Company will (i) directly or indirectly maintain 100% ownership of the
Common Securities of Markel Capital Trust; provided, however, that any successor
of the Company, permitted pursuant to Article X, may succeed to the Company's
ownership of such Common Securities, (ii) use its reasonable efforts to cause
Markel Capital Trust (a) to remain a business trust, except in connection with a
distribution of Securities to the holders of the Trust Securities in a
liquidation of Markel Capital Trust, the redemption of all of the Trust
Securities of Markel Capital Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of Markel Capital Trust, and
(b) to continue to be treated as a grantor trust and not as an association
taxable as a corporation or a partnership for United States federal income tax
purposes and (iii) to use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to Markel Capital Trust and in connection with the sale of the Trust
Securities by Markel Capital Trust, the Company, in its capacity as borrower
with respect to the Securities, shall:
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(a) pay all costs and expenses relating to the offering, sale
and issuance of the Securities, including commissions to the initial purchasers
payable pursuant to the Purchase Agreement, fees and expenses in connection with
any exchange offer or other action to be taken pursuant to the Registration
Rights Agreement and compensation of the Trustee in accordance with the
provisions of Section 6.06;
(b) pay all costs and expenses of Markel Capital Trust
(including, but not limited to, costs and expenses relating to the organization
of Markel Capital Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the initial purchasers payable pursuant to the
Purchase Agreement in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing and disposition of the assets of Markel Capital
Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to Markel Capital Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of Markel Capital
Trust; and
(e) pay all other fees, expenses, debts and obligations
(other than the Trust Securities) related to Markel Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
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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. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Property Trustee, as the case may be,
pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Property Trustee, as the case may be, all amounts
accrued and owing to the date of such termination, removal or resignation.
ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE
SECTION 4.01. Securityholders' 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 Securities, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Securityholders as of such record
date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the
Company of any such request, a list of similar form
and content as of a date not more than 15 days prior
to the time such list is furnished;
except that, no such lists need be furnished so long as the Trustee is in
possession thereof by reason of its acting as Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
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(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 Securities
(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 Securities 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 Securities
(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
Security for a period of at least six months
preceding the date of such application, and such
application states that the applicants desire to
communicate with other holders of Securities or with
holders of all Securities with respect to their
rights under this Indenture and is accompanied by a
copy of the form of proxy or other communication
which such applicants propose to transmit, then the
Trustee shall within 5 Business Days after the
receipt of such application, at its election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section
4.02; or
(2) inform such applicants as to the approximate number
of holders of all Securities, 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 Securityholders
the form of proxy or other communication, if any,
specified in such application.
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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 Securityholder 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 five 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 Securities or would be in
violation of applicable law. Such written statement
shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the
objections specified in the written statement so
filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order
sustaining one or more of such objections, the
Commission shall find, after notice and opportunity
for hearing, that all the objections so sustained
have been met and shall enter an order so declaring,
the Trustee shall mail copies of such material to all
such Securityholders 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 Securities, 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
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of the disclosure of any such information as to the
names and addresses of the holders of Securities 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 days after the date on which the
Company is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies
of such portions of any of the foregoing as 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
security listed and registered on a national
securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the
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.
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(c) The Company covenants and agrees to transmit by mail
to all holders of Securities, 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 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
Securities 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 of Restricted
Securities and to each beneficial owner and
prospective purchaser of Securities identified by any
holder of Restricted Securities, 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
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the
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Trust Indenture Act of 1939 at the times and in the
manner provided pursuant thereto. If required by
Section 313(a) of the Trust Indenture Act of 1939,
the Trustee shall, within sixty days after each May
15 following the date of this Indenture, commencing
May 15, 1997, deliver to Securityholders a brief
report, dated as of such May 15, which complies with
the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the
Trustee with each stock exchange, if any, upon which
the Securities are listed, with the Commission and
with the Company. The Company will promptly notify
the Trustee when the Securities are listed on any
stock exchange.
ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS 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 upon any
Security or any Other Debentures when it becomes due
and payable, and continuance of such default for a
period of 30 days; provided, however, that a
valid extension of an interest payment period by the
Company in accordance with the terms hereof or, in
the case of any Other Debentures, the indenture
related thereto, shall not constitute a default in
the payment of interest for this purpose; or
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(b) default in the payment of all or any part of the
principal of (or premium, if any, on) any Security
or any Other Debentures 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) default in any material respect in the
performance, or breach, of any covenant or
warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance
of such default or breach for a period of 90 days
after there has been given, by registered or
certified mail, to the Company by the Trustee or
to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the
outstanding Securities a written notice specifying
such default or breach and requiring it to be
remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of
the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the
Company or for any substantial part of its
property, or ordering the winding-up or
liquidation of its affairs and such decree or
order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
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similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an
involuntary case under any such law, or shall
consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar
official) of the Company or of any substantial
part of its property, or shall make any general
assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become
due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such
case the Trustee or the holders of not less than 25% in aggregate principal
amount of the Securities then outstanding may declare the principal amount of
all Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the holders of the outstanding
Securities), and upon any such declaration the same shall become immediately due
and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Securities shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest upon all the
Securities and the principal of and premium, if any, on any and all Securities
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest, at the same rate as the rate of interest specified in the Securities
to the date of such payment or deposit) and (B) such amount as shall be
sufficient to pay to the Trustee and each predecessor Trustee all amounts
payable pursuant to Section 6.06, and (ii) any and all Events of Default under
the Indenture shall have been cured, waived or otherwise remedied as provided
herein, then, in every such case, the holders of a majority in aggregate
principal amount of the Securities then outstanding, by written notice to the
Company and to the Trustee, may rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
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In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be made
in the payment of any installment of interest upon any of the Securities as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of the principal of or premium, if any, on any of the Securities as and
when the same shall have become due and payable, whether at maturity of the
Securities or upon prepayment or by declaration of acceleration of maturity or
otherwise, then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Securities, the whole amount that
then shall have become due and payable on all such Securities for principal and
premium, if any, or interest, or both, as the case may be, with interest upon
the overdue principal and premium, if any, and (to the extent that payment of
such interest is enforceable under applicable law and, if the Securities are
held by Markel Capital Trust or a trustee of such trust, without duplication of
any other amounts paid by Markel Capital Trust or a trustee in respect thereof)
upon the overdue installments of interest at the rate borne by the Securities;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
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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 Securities and collect in the manner provided by law out of the
property of the Company or any other obligor on the Securities 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 Securities
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 Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Securities 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 Securities
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 all amounts payable pursuant to Section
6.06 to the Trustee and each predecessor Trustee) and of the Securityholders
allowed in such judicial proceedings relative to the Company or any other
obligor on the Securities, or to the creditors or property of the Company or
such other obligor, unless prohibited by applicable law and
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regulations, to vote on behalf of the holders of the Securities 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
Securityholders 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
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
pay to the Trustee and each predecessor Trustee all amounts payable pursuant to
Section 6.06.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, 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 Securities.
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 Securities, and it shall not be necessary to make any holders
of the Securities parties to any such proceedings.
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SECTION 5.03. 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 Securities 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 the Trustee under
Section 6.06, including the costs and expenses of collection applicable to the
Securities 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 the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XV;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities for
principal of (and premium, if any) and interest on the Securities, in respect of
which or for the benefit of which money has been collected, ratably, without
preference of priority of any kind, according to the amounts due on such
Securities for principal (and premium, if any) and interest, respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
Except as contemplated by this Section 5.04, no holder of any
Security 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
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previously shall have given to the Trustee written notice of an Event of Default
and of the continuance thereof with respect to the Securities specifying such
Event of Default, as hereinbefore provided, and unless also the holders of not
less than 25% in aggregate principal amount of the Securities then 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, it being understood and
intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities 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 Securities, 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 Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive payment of the
principal of (premium, if any) and interest on such Security, 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 Security hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Security with every
other such taker and holder and the Trustee, that no one or more holders of
Securities 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 Securities, 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 Securities. For the protection and
enforcement of the provisions of this Section, each and every Securityholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
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The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and the
Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities
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 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee
or to the Securityholders 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 Securities, 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
Securities, and no delay or omission of the Trustee or of any holder of any of
the Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 5.04, every power and remedy
given by this Article V or by law to the Trustee or to the Securityholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
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SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities 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 maturity of the Securities, the holders of a majority in aggregate principal
amount of the Securities at the time outstanding may on behalf of the holders of
all of the Securities waive any past default or Event of Default and its
consequences except a default (a) in the payment of principal of or premium, if
any, or interest on any of the Securities or (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Security affected; provided, however, that if the Securities are
held by the Property Trustee, such waiver or modification to such waiver shall
not be effective until the holders of a majority in aggregate liquidation amount
of Trust Securities shall have consented to such waiver or modification to such
waiver; provided further, that if the consent of the holder of each outstanding
Security is required, such waiver shall not be effective until each holder of
the Trust Securities shall have consented to such waiver. 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 Securities 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 Securities and this Indenture be deemed to
have been cured and to be not continuing.
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SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities known to the Trustee, mail to all
Securityholders, as the names and addresses of such holders appear upon the
Security 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) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective of
the giving of written notice specified in clause (c) of Section 5.01); and
provided that, except in the case of default in the payment of the principal of
or premium, if any, or interest on any of the Securities, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Securityholders; and provided further, that in
the case of any default of the character specified in Section 5.01(c) no such
notice to Securityholders shall be given until at least 60 days after the
occurrence thereof but shall be given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this 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
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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 5.09 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding in the aggregate more than 10% in aggregate principal
amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Security against the Company on or after the
same shall have become due and payable.
ARTICLE VI. CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities 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
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(1) the duties and obligations of the Trustee
shall be determined solely by the express
provisions of this Indenture, and the
Trustee shall not be liable except for the
performance of such duties and obligations
as are specifically set forth in this
Indenture, and no implied covenants or
obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and
the correctness of the opinions expressed
therein, upon any certificates or opinions
furnished to the Trustee and conforming to
the requirements of this Indenture; but, in
the case of any such certificates or
opinions that 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 Securityholders 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 and that adequate indemnity against such risk is not
reasonably assured to it.
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;
(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently
evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution
may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant
Secretary of the Company;
(c) the Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full
and complete authorization and protection in respect
of any action taken or suffered 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 Securityholders, pursuant
to the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee
reasonable security or indemnity against the
costs, expenses and liabilities which may be
incurred therein or thereby;
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(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed
by it to be authorized or within the discretion or
rights or powers conferred upon it by this
Indenture; nothing contained herein shall,
however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default (that
has not been cured or waived), to exercise such of
the rights and powers vested in it by this
Indenture, and to use the same degree of care and
skill in their exercise, as a prudent 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
aggregate principal amount of the outstanding
Securities; provided, however, that if the payment
within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be
incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expense
or liability as a condition to so proceeding; and
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(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.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (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 Securities. The Trustee and
the Authenticating Agent shall not be accountable for the use or application by
the Company of any Securities or the proceeds of any Securities 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
Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
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.
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SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as borrower, covenants and agrees to pay to the
Trustee from time to time, and the Trustee shall be entitled to, such
compensation as shall be agreed to in writing between the Company and the
Trustee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
each of the Trustee or any predecessor Trustee (and its officers, agents,
directors and employees) for, and to hold each of them harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad faith on
the part of the Trustee and arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Company under this Section 6.06 shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to that
of the Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the holders of particular
Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
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The provisions of this Section shall survive the resignation
or removal of the Trustee and the defeasance or other 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, the Trustee and
the Company shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
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.
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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.
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 Securities at their addresses as they shall
appear on the Security 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 Securityholders, the
resigning Trustee may petition any court of
competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has
been a bona fide holder of a Security 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.
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(b) In case at any time any of the following shall
occur:
(1) the Trustee shall fail to comply with the
provisions of Section 6.08 after written
request therefor by the Company or by any
Securityholder who has been a bona fide
holder of a Security or Securities for at
least six months, or
(2) 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 Securityholder, or
(3) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any
public officer shall take charge or control
of the Trustee or of its property or affairs
for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the
Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or,
subject to the provisions of Section 5.09, any
Securityholder who has been a bona fide holder of a
Security 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.
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(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding
may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed
as successor trustee unless within 10 days after
such nomination the Company objects thereto or if
no successor trustee shall have been so appointed
and shall have accepted appointment within 30 days
after such removal, in which case the Trustee so
removed or any Securityholder, 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
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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 Securities at their addresses as
they shall appear on the Security register. If the Company fails to mail such
notice within 10 days after the acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 6.12. Successor by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any Securities 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
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Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities 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 Securities 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 Securities 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 Securities 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 Securities; 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 Securities. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by federal, state,
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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 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 Securityholders 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.
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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 SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Securities 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 Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders 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 Securityholders.
If the Company shall solicit from the Securityholders 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
Securityholders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of Outstanding Securities have authorized or agreed or consented to such
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request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the Outstanding Securities shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders 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 Securityholders.
Subject to the provisions of Sections 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder 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 Securities shall be proved by the
Security Register or by a certificate of the Security 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 Securityholders' 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
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the Person in whose name
such Security shall be registered upon the Security Register to be, and may
treat him as, the absolute owner of such Security (whether or not such Security
shall be overdue) for the purpose of receiving payment of or on account of the
principal of and premium, if any, and interest on such Security 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 Security 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 Security.
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SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company, except for the Securities owned by or on behalf of Markel Capital
Trust, or any other obligor on the Securities shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities 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 Securities 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 aggregate principal amount of the Security specified in
this Indenture in connection with such action, any holder of a Security (or any
Security 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 Securities
the holders of which have consented to such action may, by filing written notice
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with the Trustee at its principal office and upon proof of holding as provided
in Section 7.02, revoke such action so far as concerns such Security (or so far
as concerns the principal amount represented by any exchanged or substituted
Security). Except as aforesaid, any such action taken by the holder of any
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Security, and of any Security issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Security or any Security issued in exchange or
substitution therefor.
ARTICLE VIII.
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purpose of Meetings
A meeting of Securityholders 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 Securityholders pursuant to
any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate
principal amount of such Securities under any other
provision of this Indenture or under applicable law.
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SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders
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 Securityholders, 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 Securities 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
Securityholders.
In case at any time the Company pursuant to a resolution of
the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Trustee to
call a meeting of Securityholders, 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 Securityholders 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 Securityholders a
Person shall be (a) a holder of one or more Securities or (b) a Person appointed
by an instrument in writing as proxy by a holder of one or more Securities. The
only Persons who shall be entitled to be present or to speak at any meeting of
Securityholders 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.
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SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security 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 Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders 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.
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SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Securities 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 Securities 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 Securityholders 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
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. The holders of the Series A Securities
and the Series B Securities shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE IX.
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend this Indenture, without the
consent of the Securityholders, 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 Securityholders as the Board
of Directors and the Trustee shall consider to be
for the protection of the Securityholders, and to
make the occurrence, or the occurrence and
continuance, of a default in any of such
additional covenants, restrictions or conditions a
Default or an Event of Default permitting the
enforcement of all or any of the remedies provided
in this Indenture as herein set forth; provided,
however, that in respect of any such additional
covenant, restriction or condition such amendment may
provide for a particular period of grace after
default (which period may be shorter or longer than
that allowed in the case of other Defaults) or may
provide for an immediate enforcement upon such
default or may limit the remedies available to the
Trustee upon such default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the
Securities issued hereunder in fully registered form
and to make all appropriate changes for such purpose;
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(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 Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(f) to make provision for transfer procedures,
certification, book-entry provisions, the form of
restricted securities legends, if any, to be
placed on Securities, and all other matters
required pursuant to Section 2.07 or otherwise
necessary, desirable or appropriate in connection
with the issuance of Securities to holders of
Capital Securities in the event of a distribution
of Securities by Markel Capital Trust following a
Dissolution Event;
(g) to qualify or maintain qualification of this
Indenture under the Trust Indenture Act of 1939;
or
(h) to make any change that does not adversely affect
the rights of any Securityholder 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.
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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 Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of a majority in aggregate principal amount of the Securities 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 Securities; provided, however, that no such amendment shall
without the consent of the holders of each Security then outstanding and
affected hereby (i) extend the Maturity Date of any Security, or reduce the rate
or extend the time of payment of interest thereon (except as contemplated by
Article XVI), or reduce the principal amount thereof (including in the case of a
discounted Security the amount payable thereon in the event of acceleration or
the amount provable in bankruptcy), or reduce any amount payable on redemption
thereof, or make the principal thereof or any interest or premium thereon
payable in any coin or currency other than that provided in the Securities, or
impair or affect the right of any Securityholder to institute suit for payment
thereof, or (ii) reduce the aforesaid percentage of Securities the holders of
which are required to consent to any such amendment to this Indenture, provided,
however, that if the Securities are held by Markel Capital Trust, such amendment
shall not be effective until the holders of a majority in liquidation amount of
Trust Securities shall have consented to such amendment; provided, further, that
if the consent of the holder of each outstanding Security is required, such
amendment shall not be effective until each holder of the Trust Securities shall
have consented to such amendment.
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Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders 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.
It shall not be necessary for the consent of the
Securityholders 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;
Effect of Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article IX shall comply with the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article IX,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Securities 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 Securities.
Securities 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 Securities 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 Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
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 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
Securities 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
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be), or successive consolidations or mergers in which the Company, as the case
may be, 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,
as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company, as the case may be, 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 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 Securities
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Company shall be expressly assumed, by supplemental indenture (which shall
conform to the provisions of the Trust Indenture Act of 1939, as then in effect)
satisfactory in form to the Trustee, and executed and delivered to the Trustee
by the Person formed by such consolidation, or into which the Company, as the
case may be, shall have been merged, or by the Person which shall have acquired
such property, and (c) after giving effect to such consolidation, merger, sale,
conveyance, transfer or lease, no Default or Event of Default shall have
occurred and be continuing.
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 Securities 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
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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
Securities. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of Markel Corporation, any or all of
the Securities 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
Securities 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 Securities which such successor Person thereafter shall cause to be
signed and delivered to the Trustee or the Authenticating Agent for that
purpose. All the Securities so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities 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.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
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replaced or paid as provided in Section 2.08) and not theretofore cancelled, or
(b) all the Securities not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for prepayment within one
year under arrangements satisfactory to the Trustee for the giving of notice of
prepayment, and the Company shall deposit or cause to be deposited with the
Trustee, in trust, funds sufficient to pay on the Maturity Date or upon
prepayment all of the Securities (other than any Securities 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 premium, if any) and interest due or
to become due to the Maturity Date or prepayment date, as the case may be, but
excluding, however, the amount of any moneys for the payment of principal (or
premium, if any) or interest on the Securities (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 hereof shall survive until such
Securities 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 Securities.
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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 Securities 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, premium, if
any, 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 Securities.
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 Securities (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 premium, if any, or interest on
Securities and not applied but remaining unclaimed by the holders of Securities
for two years after the date upon which the principal of or premium, if any, or
interest on such Securities, 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 Securities 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.
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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 respective obligations with respect to the Securities on
the 91st day after the applicable conditions set forth below have been satisfied
with respect to the Securities at any time after the applicable conditions set
forth below have been satisfied:
(1) 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 Securities (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 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 and
premium, if any, on the outstanding Securities on the
dates such installments of principal, premium or
interest are due;
(2) if the Securities 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 Securities to be delisted from such exchange;
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(3) no Default or Event of Default with respect to
the Securities shall have occurred and be continuing
on the date of such deposit;
(4) 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 Securities
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
on 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; and
(5) the Company shall have delivered to the Trustee and
the Defeasance Agent, if any, an Officers'
Certificate and an Opinion of Counsel each stating
that all conditions precedent herein provided for
relating to the satisfaction and discharge of this
Indenture have been complied with.
"Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Securities and to have satisfied all the obligations under this
Indenture relating to the Securities (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except (A)
the rights of holders of Securities to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest and premium, if
any, on the Securities when such payments are due; (B) the Company's obligations
with respect to the Securities under Sections 2.07, 2.08, 5.02 and 11.04; and
(C) the rights, powers, trusts, duties and immunities of the Trustee hereunder.
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"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:
(1) 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
(2) 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 Securities 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.
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ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely
Corporate Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, 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 Security, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor Person to the Company, either
directly or through the Company 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 Securities.
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.
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SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of
2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company, as the case may be, and as
to any successor Person.
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 Securities 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, 4551 Cox Road, Glen Allen, Virginia 23060-3382 Attention:
Corporate Counsel. Any notice, direction, request or demand by any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the office of
the Trustee, 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Corporate Trustee Administration Department (unless another address
is provided by the Trustee to the Company for the purpose). All such notices
shall be deemed to have been given when received in person, telecopied with
receipt confirmed, and mailed by first class mail, postage prepaid, except that
if a notice or other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or inability
to deliver.
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SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said State,
without regard to conflicts of laws principles thereof.
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
premium, if any, or interest on the Securities will not be a Business Day, the
payment of such principal of or premium, if any, or interest on the Securities
need not be made on such date but may be made on the next succeeding Business
Day (and without any interest or other payment in respect of any such delay),
with the same force and effect as if made on the date of payment and no interest
shall accrue for the period from and after such date.
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SECTION 13.08. Trust Indenture Act 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 Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
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SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of
its respective 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, as the case may be, 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. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities
held by Markel Capital Trust or a trustee of such trust, if the Property Trustee
of such Trust fails to enforce its rights under this Indenture as the holder of
the Securities held as the assets of Markel Capital Trust any holder of Capital
Securities may institute legal proceedings directly against the Company to
enforce such Property Trustee's rights under this Indenture without first
instituting any legal proceedings against such Property Trustee or any other
Person. Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Company to
pay principal of or premium, if any, or interest on the Securities when due, the
Company acknowledges that a holder of Capital Securities may directly institute
a proceeding for enforcement of payment to such holder of the principal of or
premium, if any, or interest on the Securities having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Securities.
ARTICLE XIV.
PREPAYMENT OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Prepayment.
If a Special Event has occurred and is continuing, then the
Company shall have the right, prior to the Initial Optional Prepayment Date,
notwithstanding Section 14.02(a) but subject to Section 14.02(b), upon (i) not
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less than 45 days written notice to the Trustee and (ii) not less than 30 days
nor more than 60 days written notice to the Securityholders, to prepay the
Securities, in whole (but not in part), at any time within 90 days following the
occurrence of such Special Event, at the Special Event Prepayment Price.
Following a Special Event, the Company shall take such action as is necessary to
promptly determine the Special Event Prepayment Price, including without
limitation the appointment by the Company of a Quotation Agent. The Special
Event Prepayment Price shall be paid prior to 12:00 noon, New York City time, on
the date of such prepayment or such earlier time as the Company determines,
provided that the Company shall deposit with the Trustee an amount sufficient to
pay the Special Event Prepayment Price by 10:00 a.m., New York City time, on the
date such Special Event Prepayment Price is to be paid.
SECTION 14.02. Optional Prepayment by Company.
(a) Subject to the provisions of this Article XIV, the Company
shall have the right to prepay the Securities, in whole or in part, from time to
time, on or after the Initial Optional Prepayment Date, at the optional
prepayment prices set forth below (expressed as percentages of outstanding
principal amount of the Securities to be prepaid), plus, in each case, accrued
and unpaid interest thereon (including Additional Sums and Compounded Interest,
if any) to the applicable date of prepayment (the "Optional Prepayment Price")
if prepaid during the 12-month period beginning January 1 of the years indicated
below.
Year Percentage
---- ----------
2007.......................... 104.355%
2008.......................... 103.920
2009.......................... 103.484
2010.......................... 103.049
2011.......................... 102.613
2012.......................... 102.178
2013.......................... 101.742
2014.......................... 101.307
2015.......................... 100.871
2016.......................... 100.436
2017 and thereafter............100.000%
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If the Securities are only partially prepaid pursuant to this
Section 14.02, the Securities will be prepaid pro rata or by lot or by any other
method utilized by the Trustee; provided that if at the time of prepayment, the
Securities are registered as a Global Security, the Depositary shall determine
in accordance with its procedures the principal amount of Securities held for
the account of its participants to be prepaid. The Optional Prepayment Price
shall be paid prior to 12:00 noon, New York City time, on the date of such
prepayment or at such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the Optional
Prepayment Price by 10:00 a.m., New York City time, on the date such Optional
Prepayment Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02, upon
the entry of an order for dissolution of Markel Capital Trust by a court of
competent jurisdiction, the Securities thereafter will be subject to optional
prepayment, in whole only, but not in part, on or after the Initial Optional
Prepayment Date, at the optional prepayment prices set forth in Section 14.02
and otherwise in accordance with this Article XIV.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.04. Notice of Prepayment; Selection of
Securities.
In case the Company shall desire to exercise the right to
prepay all, or, as the case may be, any part of the Securities in accordance
with their terms, it shall fix a date for prepayment and shall mail a notice of
such prepayment at least 30 and not more than 60 days prior to the date fixed
for prepayment to the holders of Securities so to be prepaid as a whole or in
part at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
prepayment as a whole or in part shall not affect the validity of the
proceedings for the prepayment of any other Security.
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Each such notice of prepayment shall specify the CUSIP number
of the Securities to be prepaid, the date fixed for prepayment, the prepayment
price at which the Securities are to be prepaid (or the method by which such
prepayment price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for prepayment will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be prepaid will cease to accrue. If less than all the Securities are
to be prepaid the notice of prepayment shall specify the numbers of the
Securities to be prepaid. In case any Security is to be prepaid in part only,
the notice of prepayment shall state the portion of the principal amount thereof
to be prepaid and shall state that on and after the date fixed for prepayment,
upon surrender of such Security, a new Security or Securities in principal
amount equal to the unprepaid portion thereof will be issued.
Prior to 10:00 a.m., New York City time, on the prepayment
date specified in the notice of prepayment given as provided in this Section,
the Company will deposit with the Trustee or with one or more paying agents an
amount of money sufficient to prepay on the prepayment date all the Securities
so called for prepayment at the appropriate Prepayment Price, together with
accrued interest to the date fixed for prepayment.
The Company will give the Trustee notice not less than 45 days
prior to the prepayment date as to the aggregate principal amount of Securities
to be prepaid and the Trustee shall select, in such manner as in its sole
discretion it shall deem appropriate and fair, the Securities or portions
thereof (in integral multiples of $1,000, except as otherwise set forth in the
applicable form of Security) to be prepaid.
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SECTION 14.05. Payment of Securities Called for
Prepayment.
If notice of prepayment has been given as provided in Section
14.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Prepayment Price, together
with interest accrued to the date fixed for prepayment (subject to the rights of
holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the prepayment
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Prepayment Price, together with interest
accrued to said date) interest on the Securities or portions of Securities so
called for prepayment shall cease to accrue. On presentation and surrender of
such Securities at a place of payment specified in said notice, the said
Securities or the specified portions thereof shall be paid and prepaid by the
Company at the applicable Prepayment Price, together with interest accrued
thereon to the date fixed for prepayment (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date).
Upon presentation of any Security prepaid in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations, in principal amount equal to the
unprepaid portion of the Security so presented.
SECTION 14.06. Conditional Right to Advance Maturity.
If a Tax Event occurs, then the Company will have the right (i) prior
to the termination of Markel Capital Trust, to advance the Maturity Date of the
Securities to the minimum extent required, but not to a date earlier than twenty
years from the Issue Date, or (ii) to terminate Markel Capital Trust (if not
previously terminated) and advance the Maturity Date of the Securities to the
minimum extent required, but not to a date earlier than forty years from the
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Issue Date, in each case such that, in the written opinion of counsel
experienced in such matters delivered to the Company, after advancing the
Maturity Date, interest paid on the Securities shall be deductible for federal
income tax purposes (the action referred to in either clause (i) of (ii) above
being referred to herein as a "Tax Event Maturity Advancement").
If a Tax Event occurs and in the written opinion of counsel to the
Company experienced in such matters there would in all cases, after effecting a
Tax Event Maturity Advancement, be more than an insubstantial risk that an
Adverse Tax Consequence would continue to exist, a Special Event shall be deemed
to have occurred and the Securities shall then be subject to prepayment in
accordance with the provisions of Section 14.01. The circumstances under which
the Company has the right to prepay the Securities in connection with a Tax
Event is referred to herein as a "Conditional Tax Redemption Event".
ARTICLE XV.
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that the Securities
shall be issued subject to the provisions of this Article XV; and each holder of
a Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of and premium, if
any, and interest on all Securities issued hereunder shall, to the extent and in
the manner hereinafter set forth, be subordinated and junior in right of payment
to the prior payment in full of all amounts with respect to Senior Indebtedness,
whether outstanding at the date of this Indenture or thereafter incurred.
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No provision of this Article XV shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Company with respect to the principal (including
prepayments) of or premium, if any, or interest on the Securities.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with respect to the
principal (including prepayments) of or premium, if any, or interest on the
Securities until the holders of all Senior Indebtedness outstanding at the time
of such acceleration shall receive payment in full of all amounts due in respect
of such Senior Indebtedness (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent of the amounts due in respect of such Senior Indebtedness and only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing, within 90 days of
such payment, of the amounts then due and owing on such Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
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SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest on the Securities;
and upon any such dissolution or winding-up or liquidation or reorganization,
any payment by the Company, or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from the Company,
except for the provisions of this Article XV, shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Securityholders or by the Trustee
under this Indenture if received by them or it, directly to the holders of
Senior Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior Indebtedness is paid in full, or provision is made
for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
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delivered to the holders of such Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
and their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all amounts due in respect of such Senior Indebtedness
in full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Securities to the payment of Senior Indebtedness that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale,
conveyance, transfer or lease of its property as an entirety, or substantially
as an entirety, to another Person upon the terms and conditions provided for in
Article X of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 15.03 if such
other Person shall, as a part of such consolidation, merger, sale, conveyance,
transfer or lease, comply with the conditions stated in Article X of this
Indenture. Nothing in Section 15.02 or in this Section 15.03 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 6.06 of this
Indenture.
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SECTION 15.04. Subrogation.
Subject to the payment in full of all amounts due in respect
of Senior Indebtedness, the rights of the Securityholders shall be subrogated to
the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Indebtedness until the principal of (and premium,
if any) and interest on the Securities shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Securityholders or the Trustee would be entitled except for the provisions of
this Article XV, and no payment over pursuant to the provisions of this Article
XV to or for the benefit of the holders of such Senior Indebtedness by
Securityholders or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the holders of the
Securities, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XV are
and are intended solely for the purposes of defining the relative rights of the
holders of the Securities, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Securities
and creditors of the Company, as the case may be, other than the holders of
Senior Indebtedness of the Company, as the case may be, nor shall anything
herein or therein prevent the Trustee or the holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article XV of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
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Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XV. Notwithstanding the
provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article XV, unless
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and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee therefor; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 15.06 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest on
any Security), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company, as the case may be (or a trustee on behalf of such
holder), to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
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Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee and the Securityholders shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Article VI of this Indenture, the
Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to Securityholders, the Company or any other Person
money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
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SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
ARTICLE XVI.
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
(a) So long as no Event of Default has occurred and is
continuing, the Company shall have the right, at any time and from time to time
during the term of the Securities, to defer payments of interest by extending
the interest payment period of such Securities for a period not exceeding 10
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consecutive semi-annual periods, including the first such semi-annual period
during such extension period (the "Extended Interest Payment Period"), during
which Extended Interest Payment Period no interest shall be due and payable;
provided that no Extended Interest Payment Period may extend beyond the Maturity
Date. To the extent permitted by applicable law, interest, the payment of which
has been deferred because of the extension of the interest payment period
pursuant to this Section 16.01, will bear interest thereon at the Coupon Rate
compounded semi-annually for each semi-annual period of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Securities, including any Additional Sums and Compounded Interest (together,
"Deferred Interest") that shall be payable to the holders of the Securities in
whose names the Securities are registered in the Security Register on the first
record date after the end of the Extended Interest Payment Period.
(b) Before the termination of any Extended Interest Payment Period, the
Company may further defer payments of interest by further extending such period,
provided that such period, together with all such previous and further
extensions within such Extended Interest Payment Period, shall not exceed 10
consecutive semi-annual periods, including the first such semi-annual period
during such Extended Interest Payment Period, or extend beyond the Maturity Date
of the Securities. Upon the termination of any Extended Interest Payment Period
and the payment of all Deferred Interest then due, the Company may elect to
commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof, but the Company may prepay at any
time all or any portion of the interest accrued during an Extended Interest
Payment Period.
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SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of
the Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Administrative Trustees,
the Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period at least five Business Days before the earlier of (i) the next
succeeding date on which distributions on the Trust Securities issued by Markel
Capital Trust would have been payable except for such election, or (ii) the date
the Administrative Trustees are required to give notice of the record date, or
the date such Distributions are payable, to any national securities exchange or
to holders of the Capital Securities issued by Markel Capital Trust, but in any
event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to any national securities exchange.
(c) The semi-annual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the 10 semi-annual periods permitted in the maximum Extended Interest Payment
Period permitted under Section 16.01. There is no limitation on the number of
times that the Company may elect to begin an Extended Interest Payment Period.
The Chase Manhattan Bank hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
MARKEL CORPORATION
By /s/ DARRELL D. MARTIN
------------------------
Name: Darrell D. Martin
Title: EVP/CFO
THE CHASE MANHATTAN BANK,
as Trustee
By /s/ C. J. HEINZELMANN
------------------------
Name: C. J. Heinzelmann
Title: Vice President
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: - THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC")
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
104
<PAGE>
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO THE COMPANY, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.
No. CUSIP No.
105
<PAGE>
MARKEL CORPORATION
8.71% SERIES _ JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE JANUARY 1, 2046
Markel Corporation, a Virginia corporation (the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to __________, or
registered assigns, the principal sum of $__________ Dollars on January 1, 2046,
or on such earlier date as the Company shall determine pursuant to Section 14.06
of the Indenture (the "Maturity Date"), unless previously prepaid, and to pay
interest on the outstanding principal amount hereof from January 13, 1997, or
from the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, semi-annually
(subject to deferral as set forth herein) in arrears on January 1 and July 1 of
each year, commencing July 1, 1997, at the rate of 8.71% per annum until the
principal hereof shall have become due and payable, and on any overdue principal
and premium, if any, and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months and, for any period less than a full
calendar month, the number of days elapsed in such month. In the event that any
date on which the principal of (or premium, if any) or interest on this Security
is payable is not a Business Day, then payment payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on such date.
The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, which
shall be the date fifteen days prior to the relevant Interest Payment Date. Any
106
<PAGE>
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and may
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a special record date to
be fixed by the Trustee for the payment of such defaulted interest, notice
whereof shall be given to the holders of Securities not less than 10 days prior
to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest on this
Security shall be payable at the office or agency of the Trustee in New York,
New York maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that, payment of interest may be
made at the option of the Company by (i) check mailed to the holder at such
address as shall appear in the Security Register or (ii) by transfer to an
account maintained by the Person entitled thereto, provided that proper written
transfer instructions have been received by the relevant record date; provided
that if this Security is in global form, the interest hereon shall be made in
immediately available funds. Notwithstanding the foregoing, so long as the
Holder of this Security is the Property Trustee, the payment of the principal of
(and premium, if any) and interest on this Security will be made at such place
and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
107
<PAGE>
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
108
<PAGE>
The provisions of this Security are continued on the reverse
side hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.
Dated___________________
MARKEL CORPORATION
By:______________________
Name:
Title:
Attest:
By:_____________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________
Authorized Officer
109
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of January
13, 1997 (the "Indenture"), duly executed and delivered between the Company and
The Chase Manhattan Bank, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior
to January 1, 2007 (the "Initial Optional Prepayment Date"), the Company shall
have the right to prepay this Security in whole (but not in part) at the Special
Event Prepayment Price. "Special Event Prepayment Price" shall mean an amount in
cash equal to the greater of (i) 100% of the principal amount of the Securities
to be prepaid and (ii) the sum, as determined by a Quotation Agent, of the
present values of the principal amount of and premium payable as part of the
Optional Prepayment Price with respect to an optional prepayment of such
Securities on the Initial Optional Prepayment Date, together with scheduled
payments of interest on the Securities from the prepayment date to and including
the Initial Optional Prepayment Date discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in each case, any accrued and unpaid
interest thereon, including Compounded Interest and Additional Sums, if any, to
the date of such prepayment.
In addition, the Company shall have the right to prepay this
Security, in whole or in part, at any time on or after the Initial Optional
Prepayment Date (an "Optional Prepayment"), at the Optional Prepayment Prices
set forth below (expressed as percentages of the principal amount to be prepaid)
plus accrued and unpaid interest thereon (including Additional Sums and
Compounded Interest, if any) to the applicable date of prepayment if prepaid
during the 12-month period beginning January 1 of the years indicated below:
110
<PAGE>
Year Percentage
2007......................... 104.355%
2008......................... 103.920%
2009......................... 103.484%
2010......................... 103.049%
2011......................... 102.613%
2012......................... 102.178%
2013......................... 101.742%
2014......................... 101.307%
2015......................... 100.871%
2016......................... 100.436%
2017 and thereafter ......... 100.000%
The Optional Prepayment Price or the Special Event Prepayment
Price, as the case requires, shall be paid prior to 12:00 noon, New York City
time, on the date of such prepayment, provided, that the Company shall deposit
with the Trustee an amount sufficient to pay the applicable Prepayment Price by
10:00 a.m., New York City time, on the date such Prepayment Price is to be paid.
Any prepayment pursuant to this paragraph will be made upon not less than 30
days nor more than 60 days notice. If the Securities are only partially prepaid
by the Company pursuant to an Optional Prepayment, the Securities will be
prepaid pro rata or by lot or by any other method utilized by the Trustee
provided that if at the time of prepayment, the Securities are registered as a
Global Security, the Depositary shall determine in accordance with its
procedures the principal amount of Securities held for the account of its
participants to be prepaid.
In the event of prepayment of this Security in part only, a
new Security or Securities for the unprepaid portion hereof will be issued in
the name of the holder hereof upon the cancellation hereof.
If a Tax Event occurs, then the Company will have the right
(i) prior to the termination of Markel Capital Trust, to advance the Maturity
Date of this Security to the minimum extent required, but not to a date earlier
than twenty years from January 13, 1997 (the "Issue Date"), or (ii) to terminate
111
<PAGE>
Markel Capital Trust (if not previously terminated) and advance the Maturity
Date of this Security to the minimum extent required, but not to a date earlier
than forty years from the Issue Date, in each case such that, in the written
opinion of counsel experienced in such matters delivered to the Company, after
advancing the Maturity Date, interest paid on the Securities shall be deductible
for federal income tax purposes.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Securities
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) extend the Maturity Date of any Securities, or reduce the principal
amount thereof, or reduce any amount payable on prepayment thereof, or reduce
the rate or extend the time of payment of interest thereon (subject to Article
XVI of the Indenture), or make the principal of, or interest or premium on, the
Securities payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any holder of Securities to institute suit for the payment
thereof, or (ii) reduce the aforesaid percentage of Securities, the holders of
which are required to consent to any such supplemental indenture. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Securities at the time outstanding affected thereby, on
behalf of all of the holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the payment
112
<PAGE>
of the principal of or premium, if any, or interest on any of the Securities or
a default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of Securities
then outstanding. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and of
any Security issued in exchange heretofore or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right, at any time and from time to
time during the term of the Securities, to defer payments of interest by
extending the interest payment period of such Securities for a period not
exceeding 10 consecutive semi-annual periods, including the first such
semi-annual period during such extension period, and not to extend beyond the
Maturity Date of the Securities (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and unpaid
together with interest thereon at the rate specified for the Securities (to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the Company
may further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
together with all such previous and further extensions within such Extended
Interest Payment Period, shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extended Interest Payment
Period, or extend beyond the Maturity Date of the Securities. Upon the
termination of any such Extended Interest Payment Period and the payment of all
accrued and unpaid interest and any additional amounts then due, the Company may
commence a new Extended Interest Payment Period, subject to the foregoing
requirements.
113
<PAGE>
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or-premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in right of
payment to the Securities or make any guarantee payments with respect to any
guarantee by the Company of the debt securities or any Subsidiary of the Company
if such guarantee ranks pari passu or junior in right of payment to the
Securities (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common Stock of the
Company, (b) any declaration of a dividend in connection with the implementation
of a stockholder's rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Capital Securities Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the exchange or
conversion of such capital stock or the security being exchanged or converted,
and (f) purchases or issuances of Common Stock in connection with any of the
Company's stock option, stock purchase, stock loan or other benefit plans for
its directors, officers or employees or any of the Company's dividend
reinvestment plans, in each case as now existing or hereinafter established or
amended) if at such time (i) there shall have occurred any event of which the
Company has actual knowledge that (a) is, or with the giving of notice or the
lapse of time, or both, would be, an Event of Default and (b) in respect of
which the Company shall not have taken reasonable steps to cure, (ii) if such
Securities are held by Markel Capital Trust, the Company shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee or (iii) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period and any such
extension shall be continuing.
114
<PAGE>
The Company will have the right at any time to liquidate
Markel Capital Trust and cause the Securities to be distributed to the holders
of the Trust Securities in liquidation of Markel Capital Trust.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, the transfer of this
Security is registrable by the holder hereof on the Security Register of the
Company, upon surrender of this Security for registration of transfer at the
office or agency of the Trustee in the City and State of New York accompanied by
a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any paying agent and the registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Security shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any registrar shall be
affected by any notice to the contrary.
115
<PAGE>
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
116
CERTIFICATE OF TRUST
OF
MARKEL CAPITAL TRUST I
THIS Certificate of Trust of Markel Capital Trust I (the
"Trust"), dated as of December 30, 1996, has been duly executed and is being
filed by the undersigned, as trustee, to form a business trust under the
Delaware Business Trust Act (12 Del. C. ss.3801, et seq.).
1. Name. The name of the business trust formed hereby is
Markel Capital Trust I.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of Delaware
are Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware
19801.
3. Effective Date. This Certificate of Trust shall be
effective upon filing.
IN WITNESS WHEREOF, the undersigned trustee of the Trust has
executed this Certificate of Trust as of the date first-above written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
trustee of the Trust
By: /s/ JOHN J. CASHIN
--------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
DECLARATION OF TRUST
OF
MARKEL CAPITAL TRUST I
THIS DECLARATION OF TRUST is made as of December 30, 1996 (this "Trust
Agreement"), by and between Markel Corporation, a Virginia corporation, as
sponsor (the "Sponsor"), and Chase Manhattan Bank Delaware, a Delaware banking
corporation, as trustee (the "Trustee"). The Sponsor and the Trustee hereby
agree as follows:
1. The trust created hereby shall be known as "Markel Capital Trust I"
(the "Trust"), in which name the Trustee or the Sponsor, to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of ten dollars ($10). Such amount shall constitute the initial
trust estate. It is the intention of the parties hereto that the Trust created
hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss. 3801, et seq. (the "Business Trust Act"), and that this
document constitute the governing instrument of the Trust. The Trustee is hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in accordance with the provisions of the Business
Trust Act.
3. The Sponsor and the Trustee will enter into an amended and restated
Trust Agreement or Declaration satisfactory to each such party to provide for
the contemplated operation of the Trust created hereby and the issuance of the
Capital Securities (the "Capital Securities") and the Common Securities (the
"Common Securities") referred to in the Offering Memorandum (as hereinafter
defined). Prior to the execution and delivery of such amended and restated Trust
Agreement or Declaration, the Trustee shall not have any duty or obligation
hereunder or with respect of the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise. Notwithstanding the foregoing, the Trustee may take all actions
deemed proper as are necessary to effect the transactions contemplated herein.
4. The Sponsor, as sponsor of the Trust, is hereby authorized, in its
discretion, (i) to prepare and distribute one or more offering memoranda in
preliminary and final form, including any necessary or desirable amendments,
relating to the offering and sale of Capital Securities of the Trust in a
transaction exempt from the registration requirements of the Securities Act of
1933, as amended (the "1933 Act"), and such other forms or filings as may be
required by the 1933 Act, the Securities Exchange Act of 1934, as amended, or
the Trust Indenture Act of 1939, as amended, in each case relating to the
Capital Securities of the Trust (the "Offering Memorandum"); (ii) to file and
execute on behalf of the Trust, such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and other
papers and documents that shall be necessary or desirable to register or
establish the exemption from registration of the Capital Securities of the Trust
under the securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on
behalf of the Trust, may deem necessary or desirable; (iii) to
-1-
<PAGE>
execute and file an application, and all other applications, statements,
certificates, agreements and other instruments that shall be necessary or
desirable to cause the Capital Securities to be listed on the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market, with PORTAL,
and, if and at such time as determined by the Sponsor, with the New York Stock
Exchange or any other national stock exchange or the Nasdaq National Market for
listing or quotation of the Capital Securities of the Trust; (iv) to execute and
deliver letters or documents to, or instruments for filing with, a depository
relating to the Capital Securities of the Trust; (v) to execute, deliver and
perform on behalf of the Trust one or more underwriting or purchase agreements,
registration rights agreements, dealer manager agreements, escrow agreements,
subscription agreements and other similar or related agreements providing for or
relating to the sale of the Capital Securities of the Trust; and (vi) to execute
on behalf of the Trust any and all documents, papers and instruments as may be
desirable in connection with any of the foregoing.
In the event that any filing referred to in this Section 4 is required
by the rules and regulations of the Commission, PORTAL or state securities or
Blue Sky laws to be executed on behalf of the Trust by a Trustee, the Trustee or
any trustee of the Trust appointed pursuant to Section 6 hereof, in its capacity
as trustee of the Trust, is hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing, it
being understood that any such trustee of the Trust, in its capacity as trustee
of the Trust, shall not be required to join in any such filing or execute on
behalf of the Trust any such document unless required by the rules and
regulations of the Commission, PORTAL or state securities or Blue Sky laws.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be one and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor which may
increase or decrease (but not below one) the number of trustees of the Trust;
provided, however, that to the extent required by the Business Trust Act, one
trustee of the Trust shall either be a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware. Subject to the foregoing, the
Sponsor is entitled to appoint or remove without cause any trustee of the Trust
at any time. Any trustee of the Trust may resign upon thirty days' prior notice
to the Sponsor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
MARKEL CORPORATION,
as Sponsor
By: /s/ DARRELL D. MARTIN
----------------------------------
Name: Darrell D. Martin
Title: EVP/CFO
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as trustee of the Trust
By: /s/ JOHN J. CASHIN
------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
-3-
AMENDED AND RESTATED DECLARATION
OF TRUST
OF
MARKEL CAPITAL TRUST I
January 13, 1997
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
310(a),(b)........................................... 5.3
310(c)............................................... N/A
311(a),(b)........................................... 2.1,2.2
311(c)............................................... N/A
312(a)............................................... 2.2
312(b)............................................... 2.2
313.................................................. 2.3
314(a)............................................... 2.4
314(b)............................................... N/A
314(c),(e)........................................... 2.5
314(d)............................................... N/A
314(f)............................................... N/A
315(a)............................................... 3.9
315(b)............................................... 2.7
315(c)............................................... 3.9
315(d)............................................... 3.9,3.10
315(e)............................................... 3.10
316(a)............................................... 2.6
316(b)............................................... 2.6
316(c)............................................... 12.2
317(a)............................................... 3.8
317(b)............................................... 7.5
318.................................................. 2.1
- -------------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
(i)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions............................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.......................... 10
SECTION 2.2 Lists of Holders of Securities............................ 11
SECTION 2.3 Reports by the Property Trustee........................... 11
SECTION 2.4 Periodic Reports to Property Trustee...................... 11
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................................. 11
SECTION 2.6 Events of Default; Waiver................................. 12
SECTION 2.7 Event of Default; Notice.................................. 14
ARTICLE III
ORGANIZATION
SECTION 3.1 Name...................................................... 14
SECTION 3.2 Office.................................................... 15
SECTION 3.3 Purpose................................................... 15
SECTION 3.4 Authority................................................. 15
SECTION 3.5 Title to Property of the Trust............................ 15
SECTION 3.6 Powers and Duties of the Administrative
Trustees.................................................. 16
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees.............................................. 19
SECTION 3.8 Powers and Duties of the Property
Trustee................................................... 20
SECTION 3.9 Certain Duties and Responsibilities of
the Property Trustee...................................... 22
SECTION 3.10 Certain Rights of Property Trustee........................ 24
SECTION 3.11 Delaware Trustee.......................................... 27
SECTION 3.12 Execution of Documents.................................... 27
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities............................................. 28
SECTION 3.14 Duration of Trust......................................... 28
(ii)
<PAGE>
SECTION 3.15 Mergers................................................... 28
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities................... 30
SECTION 4.2 Responsibilities of the Sponsor........................... 30
SECTION 4.3 Right to Proceed.......................................... 31
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of
Co-Trustee................................................ 31
SECTION 5.2 Delaware Trustee.......................................... 32
SECTION 5.3 Property Trustee; Eligibility............................. 32
SECTION 5.4 Certain Qualifications of Administrative
Trustees and Delaware Trustee Generally................... 33
SECTION 5.5 Administrative Trustees................................... 33
SECTION 5.6 Delaware Trustee.......................................... 34
SECTION 5.7 Appointment, Removal and Resignation of
Trustees.................................................. 34
SECTION 5.8 Vacancies Among Trustees.................................. 36
SECTION 5.9 Effect of Vacancies....................................... 36
SECTION 5.10 Meetings.................................................. 37
SECTION 5.11 Delegation of Power....................................... 37
Section 5.12 Merger, Conversion, Consolidation or
Succession to Business.................................... 38
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................. 38
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities................... 38
SECTION 7.2 Execution and Authentication.............................. 39
SECTION 7.3 Form and Dating........................................... 40
SECTION 7.4 Registrar, Paying Agent and Exchange
Agent..................................................... 42
SECTION 7.5 Paying Agent to Hold Money in Trust....................... 43
(iii)
<PAGE>
SECTION 7.6 Replacement Securities.................................... 43
SECTION 7.7 Outstanding Capital Securities............................ 43
SECTION 7.8 Capital Securities in Treasury............................ 44
SECTION 7.9 Temporary Securities...................................... 44
SECTION 7.10 Cancellation.............................................. 45
SECTION 7.11 CUSIP Numbers............................................. 46
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust...................................... 46
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.................................... 47
SECTION 9.2 Transfer Procedures and Restrictions...................... 48
SECTION 9.3 Deemed Security Holders................................... 58
SECTION 9.4 Book Entry Interests...................................... 58
SECTION 9.5 Notices to Clearing Agency................................ 59
SECTION 9.6 Appointment of Successor Clearing
Agency.................................................... 59
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................. 59
SECTION 10.2 Exculpation............................................... 60
SECTION 10.3 Fiduciary Duty............................................ 60
SECTION 10.4 Indemnification........................................... 61
SECTION 10.5 Outside Businesses........................................ 65
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year............................................... 66
SECTION 11.2 Certain Accounting Matters................................ 66
SECTION 11.3 Banking................................................... 67
SECTION 11.4 Withholding............................................... 67
(iv)
<PAGE>
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments................................................ 67
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent................................. 69
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of
Property Trustee.......................................... 71
SECTION 13.2 Representations and Warranties of
Delaware Trustee.......................................... 72
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement;
Liquidated Damages........................................ 73
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices................................................... 75
SECTION 15.2 Governing Law............................................. 76
SECTION 15.3 Intention of the Parties.................................. 76
SECTION 15.4 Headings.................................................. 77
SECTION 15.5 Successors and Assigns.................................... 77
SECTION 15.6 Partial Enforceability.................................... 77
SECTION 15.7 Counterparts.............................................. 77
ANNEX I Terms of 8.71% Series A/Series B Capital
Securities 8.71% Common Securities........................I-1
EXHIBIT A-1 Form of Capital Security Certificate.....................A1-1
EXHIBIT A-2 Form of Common Security Certificate......................A2-1
(v)
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MARKEL CAPITAL TRUST I
January 13, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of January 13, 1997, by the Trustees (as defined herein),
the Sponsor (as defined herein) and by the Holders (as defined herein), from
time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Delaware Trustee and the Sponsor established
Markel Capital Trust I (the "Trust"), a trust created under the Delaware
Business Trust Act pursuant to a Declaration of Trust dated as of December 30,
1996 (the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on December 30, 1996, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (each as hereinafter
defined);
WHEREAS, prior to the date hereof, no Trust Securities have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act (as
defined herein) and that this Declaration constitute the governing instrument of
such business trust, the Trustees declare that all assets contributed to the
Trust will be held in trust for the benefit of the Holders (as defined herein),
from time to time, of the securities representing undivided beneficial interests
in the assets of the Trust issued hereunder, subject to the provisions of this
Declaration.
1
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined
in the preamble above or elsewhere herein have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration (including Appendix I hereto and Exhibit A
hereto) as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires;
(f) a term defined in the Indenture (as defined herein) has
the same meaning when used in this Declaration unless otherwise defined
in this Declaration or the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Administrative Trustee" has the meaning set forth in Section
5.1.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
2
<PAGE>
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that
is authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which banking institutions in The City of New York are authorized or
required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time or any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series
A Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Capital
Securities.
3
<PAGE>
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section
7.1(a).
"Common Securities Guarantee" means the guarantee agreement
dated as of January 13, 1997 of the Guarantor in respect of the Common
Securities.
"Company Indemnified Person" means (a) any Administrative
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or agents
of any Administrative Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Property Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 450 West 33rd Street, 15th Floor, New
York, New York 10001.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holders of Securities.
4
<PAGE>
"Debenture Issuer" means Markel Corporation, a Virginia
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and
the Series B Debentures.
"Default" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set
forth in Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section
3.8(e).
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
5
<PAGE>
"Exchange Offer" means the exchange offer (including any
private exchange offer) contemplated in Section 2(a) of the Registration Rights
Agreement.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Capital Securities" has the meaning set forth in
Section 7.3(a).
"Guarantor" means Markel Corporation, a Virginia corporation,
or any successor entity resulting from any consolidation, amalgamation, merger
or other business combination in its capacity as guarantor under each of the
Securities Guarantees, as the case may be.
"Holder" means a Person in whose name a Security is
registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of January 13, 1997,
among the Debenture Issuer and the Debenture Trustee, as amended from time to
time.
"Initial Optional Redemption Date" has the meaning set forth
in Section 4(b) of Annex I hereto.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Liquidation Amount" with respect to any Security means the
amount designated as such with respect thereto in Annex I hereto.
6
<PAGE>
"Majority in Liquidation Amount" means, with respect to the
Trust Securities, except as provided in the terms of the Capital Securities or
by the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of the
aggregate Liquidation Amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Ministerial Action" has the meaning set forth in Annex I
hereto.
"Offering Memorandum" has the meaning set forth in Section
3.6(b).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two of the following: the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, a Vice President, the Controller or the
Secretary or an Assistant Secretary, the Treasurer or an Assistant Treasurer of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
7
<PAGE>
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Sponsor, and who shall be acceptable to the
Property Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Property Trustee" has the meaning set forth in Section
5.3(a).
"Property Trustee Account" has the meaning set forth in
Section 3.8(c).
"Purchase Agreement" means the Purchase Agreement for the
initial offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in
Rule 144A.
"Quorum" means a majority of the Administrative Trustees or,
if there are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of January 13, 1997, by and among the Trust, the Debenture
Issuer and the Initial Purchasers named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
8
<PAGE>
"Regulation S" means Regulation S under the Securities Act, as
such regulation may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.
"Regulation S Global Capital Security" has the meaning set
forth in Section 7.3(a).
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property Trustee
with responsibility for the administration of this Declaration and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of and familiarity
with the particular subject.
"Restricted Definitive Capital Securities" has the meaning set
forth in Section 7.3(c).
"Restricted Capital Security" means a Capital Security
required by Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in
Section 9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act,
or any successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Rule 144A Global Capital Security" has the meaning set forth
in Section 7.3(a).
9
<PAGE>
"Securities" or "Trust Securities" means the Common Securities
and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee
and the Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in
Section 7.1(a).
"Series A Capital Securities Guarantee" means the guarantee
agreement dated as of January 13, 1997 of the Guarantor in respect of the Series
A Capital Securities.
"Series A Debentures" means the 8.71% Series A Junior
Subordinated Deferrable Interest Debentures due January 1, 2046 of the Debenture
Issuer issued pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in
Section 7.1(a).
"Series B Capital Securities Guarantee" means the guarantee
agreement to be entered in connection with the Exchange Offer by the Guarantor
in respect of the Series B Capital Securities.
"Series B Debentures" means the 8.71% Series B Junior
Subordinated Deferrable Interest Debentures due January 1, 2046 of the Debenture
Issuer issued pursuant to the Indenture.
"Special Event" has the meaning set forth in Section 4(c) of
Annex I hereto.
"Special Event Redemption Price" has the meaning set forth in
Section 4(c) of Annex I hereto.
"Sponsor" means Markel Corporation, a Virginia corporation, or
any successor entity resulting from any merger, consolidation, amalgamation or
other business combination, in its capacity as sponsor of the Trust.
10
<PAGE>
"Successor Entity" has the meaning specified in Section
3.15(b).
"Successor Delaware Trustee" has the meaning specified in
Section 5.7(b)(ii).
"Successor Property Trustee" has the meaning specified in
Section 5.7(b)(i).
"Successor Securities" has the meaning specified in Section
3.15(b).
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"10% in Liquidation Amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate Liquidation
Amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee (including the Property Trustee, the Delaware Trustee
and the Administrative Trustees), so long as such Person shall continue as a
trustee of the Trust in accordance with the terms hereof, and all other Persons
who may from time to time be duly appointed, qualified and serving as Trustees
in accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
11
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set
forth in Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that would be required to be part of this Declaration if this
Declaration were a qualified indenture under the Trust Indenture Act and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by ss.ss. 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide the Property Trustee, unless the Property
Trustee is Registrar for the Securities, (i) within 5 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Administrative Trustees on behalf of the Trust shall be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Property Trustee by
12
<PAGE>
the Sponsor and the Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust of a written request for
a List of Holders as of a date no more than 14 days before such List of Holders
is given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity), provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15,
1997, the Property Trustee shall provide to the Holders of the Capital
Securities such reports as are required by ss. 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by ss. 313 of the Trust Indenture
Act. The Property Trustee shall also comply with the requirements of ss. 313(d)
of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such documents, reports and
information as are required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and an Administrative Trustee on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent provided for in this Declaration that relate to any of
the matters set forth in ss. 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to ss. 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
13
<PAGE>
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in Liquidation Amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in aggregate principal amount of the holders of the Debentures
(a "Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in aggregate Liquidation Amount of
the Capital Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other Default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
14
<PAGE>
(b) The Holders of a Majority in Liquidation Amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are deemed
to have waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate Liquidation Amount of the Common Securities
that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences if all Events of Default with respect to
the Capital Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Capital Securities and only the Holders of the Capital Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu
of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver, any such Default shall cease to exist and any Event of Default
with respect to the Common Securities arising therefrom shall be deemed to have
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been cured for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other Default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after a
Responsible Officer of the Property Trustee obtains knowledge of the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all Defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such Defaults have been cured before the giving of such notice; provided
that, except for a Default in the payment of principal of (or premium, if any)
or interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge
of any Default or Event of Default except:
(i) Default or Event of Default under Sections 5.01(a)
and 5.01(b) of the Indenture; or
(ii) any Default or Event of Default as to which the
Property Trustee shall have received written notice or of which a
Responsible Officer of the Property Trustee charged with the
administration of the Declaration shall have actual knowledge.
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(c) Within five Business Days after the occurrence of any
Event of Default actually known to the Property Trustee, the Property Trustee
shall transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Markel Capital Trust I" as such name may
be modified from time to time by the Administrative Trustees following written
notice to the Property Trustee, the Delaware Trustee and the Holders of
Securities. The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Markel
Corporation, 4551 Cox Road, Glen Allen, Virginia 23060- 3382. On ten Business
Days written notice to the Property Trustee, the Delaware Trustee and the
Holders of Securities, the Administrative Trustees may designate another
principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities, (b) to use the gross proceeds from the sale of the
Securities to acquire the Debentures, and (c) except as otherwise limited
herein, to engage in only those other activities necessary, advisable or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power,
duty and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the Common
Securities in accordance with this Declaration; provided, however, that except,
in the case of (i) and (ii), as contemplated in Section 7.1(a), (i) the Trust
may issue no more than one series of Capital Securities and no more than one
series of Common Securities, (ii) there shall be no interests in the Trust other
than the Securities, and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of both Capital Securities and Common Securities at any
Closing Time;
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(b) in connection with the issue and sale of the Capital
Securities and the consummation of the Exchange Offer, at the direction of the
Sponsor, to:
(i) execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form, including any
amendments or supplements thereto, prepared by the Sponsor, in relation
to the offering and sale of Series A Capital Securities to qualified
institutional buyers in reliance on Rule 144A under the Securities Act,
to institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) and outside the United States
to non-U.S. persons in offshore transactions in reliance on Regulation
S under the Securities Act, and to execute and file with the
Commission, at such time as determined by the Sponsor, any Registration
Statement, including any amendments thereto, as contemplated by the
Registration Rights Agreement;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the Capital Securities
in any State in which the Sponsor has determined to qualify or register
such Capital Securities for sale;
(iii) at the direction of the Sponsor, execute and file
an application, prepared by the Sponsor, to the New York Stock Exchange
or any other national stock exchange or the Nasdaq Stock Market's
National Market for listing or quotation of the Capital Securities;
(iv) after the date of this Declaration, execute and
deliver letters, documents, or instruments with DTC and other Clearing
Agencies relating to the Capital Securities; and
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act;
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(c) to acquire the Series A Debentures with the proceeds of
the sale of the Series A Capital Securities and the Common Securities and to
exchange, or to direct the Property Trustee in writing to exchange, the Series A
Debentures for a like principal amount of Series B Debentures, pursuant to the
Exchange Offer; provided, however, that the Administrative Trustees shall cause
legal title to the Debentures to be held of record in the name of the Property
Trustee for the benefit of the Holders of the Capital Securities and the Holders
of Common Securities;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including and with
respect to, for the purposes of ss. 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by ss.314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Administrative Trustee;
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(k) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar
and Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and
to Holders of the Securities of any notice received from the Debenture Issuer of
its election to defer payments of interest on the Debentures by extending the
interest payment period under the Indenture;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the laws
of the State of Delaware and of each other jurisdiction in which such existence
is necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration
or with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United
States federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the Debenture
Issuer for United States federal income tax purposes; and
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(q) to take all action necessary to consummate the Exchange
Offer or otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement; and to notify the Property Trustee in the event
any payments are due pursuant to Section 14.1 hereof.
(r) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Administrative Trustees, on
behalf of the Trust.
The Administrative Trustees must exercise the powers set forth
in this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative Trustees
shall not take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall
have none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant
to this Section 3.6 shall be reimbursed by the Sponsor.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property
Trustee) shall not cause the Trust to, engage in any activity other than as
required or authorized by this Declaration. The Trust shall not:
(a) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
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(b) acquire any assets other than as expressly provided
herein;
(c) possess Trust property for other than a Trust
purpose;
(d) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(e) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(f) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities; or
(g) other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of conducting any proceeding
with respect to any remedy available to the Debenture Trustee, or
exercising any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or annul any
declaration that the principal of all the Debentures shall be due and
payable, or (D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required
unless the Trust shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters to the
effect that such amendment, modification or termination will not cause
more than an insubstantial risk that, for United States federal income
tax purposes, the Trust will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.7. Such
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vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Property Trustee,
deposit such funds into the Property Trustee Account and make, or cause
any Paying Agent to make, payments to the Holders of the Capital
Securities and Holders of the Common Securities from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an account
that is maintained with a banking institution the rating on whose
long-term unsecured indebtedness is at least equal to the rating
assigned to the Capital Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain events.
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(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant to
the terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take
any Legal Action which arises out of or in connection with an Event of Default
of which a Responsible Officer of the Property Trustee has actual knowledge or
the Property Trustee's duties and obligations under this Declaration or the
Trust Indenture Act and if the Property Trustee shall have failed to take such
Legal Action, the Holders of the Capital Securities may take such Legal Action,
to the same extent as if such Holders of Capital Securities held an aggregate
principal amount of Debentures equal to the aggregate Liquidation Amount of such
Capital Securities, without first proceeding against the Property Trustee or the
Trust; provided, however, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay the principal of or premium, if any, or interest on the Debentures on the
date such principal, premium, if any, or interest is otherwise payable (or in
the case of redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on the
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such Holder (a "Direct Action") on or after the
respective due date specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Securities will be subrogated to
the rights of such Holder of Capital Securities to the extent of any payment
made by the Debenture Issuer to such Holder of Capital Securities in such Direct
Action. Except as provided in the preceding sentences, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
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(ii) a Successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 5.7(b).
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to this
Declaration and the terms of the Securities.
(h) The Property Trustee shall be authorized to undertake any
actions set forth in ss.317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent,
the Property Trustee may authorize one or more Persons to act as additional
Paying Agents and to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all securities and any such
Paying Agent shall comply with ss.317(b) of the Trust Indenture Act. Any such
additional Paying Agent may be removed by the Property Trustee at any time the
Property Trustee remains as Paying Agent and a successor Paying Agent or
additional Paying Agents may be (but are not required to be) appointed at any
time by the Property Trustee.
(j) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
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SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event
of Default and after the curing or waiving of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and in the Securities and no implied covenants
shall be read into this Declaration against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and in the Securities and the Property
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or
obligations shall be read into this Declaration against the
Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; provided, however, that in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
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(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the Debentures
and the Property Trustee Account shall be to deal with such property in
a similar manner as the Property Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
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(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
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(iv) the Property Trustee shall have no duty to see to
any recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or reregistration
thereof;
(v) the Property Trustee may consult with counsel or
other experts of its selection and the advice or opinion of such
counsel and experts with respect to legal matters or advice within the
scope of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless such
Holder shall have provided to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee, against the
costs, expenses (including reasonable attorneys' fees and expenses and
the expenses of the Property Trustee's agents, nominees or custodians)
and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Property Trustee; provided, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
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indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or attorneys and the
Property Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be given
by the Holders of the same proportion in Liquidation Amount of the
Securities as would be entitled to direct the Property Trustee under
the terms of the Securities in respect of such remedy, right or action,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in or accordance with
such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
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(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Administrative Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of ss.3807 of the Business Trust Act and taking such actions as are
required to be taken by the Delaware Trustee under the Business Trust Act. In
the event the Delaware Trustee shall at any time be required to take any action
or perform any duty hereunder, the Delaware Trustee shall be entitled to the
benefits of Section 3.9(b)(ii) through (vii) and Section 3.10. No implied
covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Administrative Trustees,
and except as otherwise required by the Business Trust Act, any Administrative
Trustee is authorized to execute on behalf of the Trust any documents that the
Administrative Trustees have the power and authority to execute pursuant to
Section 3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Administrative Trustees.
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SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence up to January 31, 2047.
SECTION 3.15 Mergers.
(a) The Trust may not merge or convert with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the
consent of the Administrative Trustees or, if there are more than two, a
majority of the Administrative Trustees and without the consent of the Holders
of the Securities, the Delaware Trustee or the Property Trustee, merge or
convert with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
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(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so long as the Successor Securities
rank the same as the Securities rank with respect to
Distributions and payments upon liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the holder of the Debentures;
(iii) the Successor Securities are listed or quoted, or
any Successor Securities will be listed or quoted upon notification of
issuance, on any national securities exchange or with another
organization on which the Capital Securities are then listed or quoted,
if any;
(iv) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause
the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating
organization;
(v) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the Holders
of the Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the new entity);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Sponsor
has received an opinion of an independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does
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not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect
to any dilution of the Holders' interest in the new entity);
(B) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity will be required to
register as an Investment Company under the Investment Company
Act; and
(C) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer, or lease, the
Trust (or the Successor Entity) will continue to be classified
as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor or any permitted successor or assignee
owns all of the common securities of such Successor Entity and
guarantees the obligations of such Successor Entity under the Successor
Securities at least to the extent provided by the Capital Securities
Guarantee and the Common Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of all Holders of the Securities in liquidation amount
of the Securities, consolidate, amalgamate, merge or convert with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other Person or permit any
other Person to consolidate, amalgamate, merge or convert with or into, or
replace it if such consolidation, amalgamation, merger, conversion, replacement,
conveyance, transfer or lease would cause the Trust or the Successor Entity not
to be classified as a grantor trust for United States federal income tax
purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of the
Common Securities then issued by the Trust, in an amount at least equal to 3% of
the capital of the Trust, at the same time as the Series A Capital Securities
are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare the Offering Memorandum, including any
amendments or supplements thereto, and to prepare for filing by the Trust with
the Commission any Registration Statement, including any amendments thereto as
contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Capital Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust an application to the New York Stock Exchange or
any other national stock exchange or the Nasdaq National Market for listing or
quotation of the Capital Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital Securities
and to execute the same on behalf of the Trust.
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SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Company to pay interest
or principal on the Debentures, to institute Direct Actions against the
Debenture Issuer for enforcement of its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; provided, however, that, the number of
Trustees shall in no event be less than two (2); provided further, that (1) one
Trustee shall be the Delaware Trustee; (2) there shall be at least one Trustee
who is an employee or officer of, or is affiliated with the Sponsor (an
"Administrative Trustee"); and (3) one Trustee shall be the Property Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the time be
located, the Holders of a Majority in Liquidation Amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
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of all or any part of the Trust's property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, provided that, if the Property Trustee has its principal
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application to the Property Trustee in its
capacity as Property Trustee.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
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corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by federal, state, territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of ss.310(b) of the Trust Indenture
Act, the Property Trustee and the Holder of the Common Securities (as if it were
the obligor referred to in ss.310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in ss.310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street, 15th
Floor New York, New York 10001
Attention: Corporate Trustee
Administration Department
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
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SECTION 5.5 Administrative Trustees.
(a) The initial Administrative Trustees shall be:
Steven A. Markel
c/o Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060
Anthony F. Markel
c/o Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060
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Darrell D. Martin
c/o Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060
(b) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with respect to any
matter over which the Administrative Trustees have power to act, any power of
the Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(c) Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Administrative Trustee is authorized to execute on behalf of
the Trust any documents which the Administrative Trustees have the power and
authority to cause the Trust to execute pursuant to Section 3.6, provided, that,
the registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by all of the Administrative Trustees; and
(d) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trustee
Administration Department
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b), any Trustee may be
appointed or removed without cause at any time:
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(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) in the case of Administrative Trustees, after the
issuance of any Securities, by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities;
(iii) in the case of the Property Trustee and the
Delaware Trustee, unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders
of a Majority in Liquidation Amount of the Common Securities voting as
a class at a meeting of the Holders of the Common Securities; and
(iv) in the case of the Property Trustee and the
Delaware Trustee, if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, by vote of Holders of
a Majority in Liquidation Amount of the Capital Securities voting as a
class at a meeting of Holders of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a successor Trustee possessing
the qualifications to act as Property Trustee under Section 5.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the removed Property Trustee, the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.7(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
removed Delaware Trustee, the Administrative Trustees and the Sponsor.
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(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Administrative Trustees, the Sponsor and the resigning
Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Administrative Trustees, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
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(f) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies Among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Administrative
Trustees or, if there are more than two, a majority of the Administrative
Trustees, shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 5.7, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.10 Meetings.
If there is more than one Administrative Trustee, meetings of
the Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice of
any telephonic meetings of the Administrative Trustees or any committee thereof
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
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a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the written consent of the Administrative Trustees. In the event there is
only one Administrative Trustee, any and all action of such Administrative
Trustee shall be evidenced by a written consent of such Administrative Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
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Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the
Delaware Trustee or any Administrative Trustee that is not a natural person, as
the case may be, may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of such
Trustee, shall be the successor of such Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Each Holder shall receive Distributions in accordance with the
applicable terms of such Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest (as
defined in the Indenture) and Additional Sums (as defined in the Indenture)),
premium and/or principal or any other payments on the Debentures held by the
Property Trustee or Liquidated Damages (as defined in the Registration Rights
Agreement) or any other payments pursuant to the Registration Rights Agreement
with respect to the Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders in accordance
with the respective terms of the Securities held by them.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the Trust
issue one class of capital securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in Annex
I (the "Series A Capital Securities") and one class of common securities
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representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities"). The
Administrative Trustees shall on behalf of the Trust issue one class of capital
securities representing undivided beneficial interests in the Trust having such
terms as set forth in Annex I (the "Series B Capital Securities") in exchange
for Series A Capital Securities accepted for exchange in the Exchange Offer,
which Series B Capital Securities shall not bear the legends required by Section
9.2(i) unless the Holder of such Series A Capital Securities is either (A) a
broker-dealer who purchased such Series A Capital Securities directly from the
Trust for resale pursuant to Rule 144A or any other available exemption under
the Securities Act, (B) a Person participating in the distribution of the Series
A Capital Securities or (C) a Person who is an affiliate (as defined in Rule
144A) of the Trust. The Trust shall issue no securities or other interests in
the assets of the Trust other than the Capital Securities and the Common
Securities.
(b) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
The Securities shall be signed on behalf of the Trust
by an Administrative Trustee. Such signature may be by manual or facsimile
signature. Typographical and other minor errors or defects in any reproduction
of any such signature shall not affect the validity of any Security. In case any
Administrative Trustee who shall have signed any of the Securities shall cease
to be such Administrative Trustee before the Securities so signed shall be
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delivered by the Trust, such Securities nevertheless may be delivered as though
the Person who signed such Securities had not ceased to be such Administrative
Trustee; and any Securities may be signed on behalf of the Trust by such Persons
who, at the actual date of execution of such Security, shall be the
Administrative Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such Person was not such an Administrative
Trustee.
A Capital Security shall not be valid until authenticated by
the manual signature of an authorized officer of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the number set forth in the Terms in Annex I hereto except
as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Capital Securities. An authenticating
agent may authenticate Capital Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Capital Securities and the Property Trustee's certificate
of authentication shall be substantially in the form of Exhibit A-1 and the
Common Securities shall be substantially in the form of Exhibit A-2, each of
which is hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks of
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identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Administration Trustees, as evidenced by their execution thereof). The
Trust at the direction of the Sponsor shall furnish any such legend not
contained in Exhibit A-1 to the Property Trustee in writing. Each Capital
Security shall be dated the date of its authentication. The terms and provisions
of the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent
applicable, the Property Trustee and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby.
(a) Global Securities. The Capital Securities offered and
sold to QIBs in reliance on Rule 144A or offered and sold outside the United
States to non-U.S. persons in offshore transactions in reliance on Regulation S,
as provided in the Purchase Agreement, shall be issued in the form of one or
more, permanent global Securities in definitive, fully registered form without
Distribution coupons with the appropriate global legends and the Restricted
Securities Legend set forth in Exhibit A-1 hereto (respectively, a "Rule 144A
Global Capital Security" or "Regulation S Global Capital Security"), which shall
be deposited on behalf of the purchasers of the Capital Securities represented
thereby with the Property Trustee or the Registrar, as custodian for the
Clearing Agency, and registered in the name of the Clearing Agency or a nominee
of the Clearing Agency, duly executed by the Trust and authenticated by the
Property Trustee as hereinafter provided. The number of Capital Securities
represented by the Rule 144A Global Capital Security and the Regulation S Global
Capital Security may from time to time be increased or decreased by adjustments
made on the records of the Property Trustee and the Clearing Agency or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Rule 144A Global Capital Securities, the Regulation S Global Capital
Securities and such other Capital Securities in global form as may be authorized
by the Trust to be deposited with or on behalf of the Clearing Agency.
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The Administrative Trustees shall execute and the Property
Trustee shall, in accordance with this Section 7.3, authenticate and make
available for delivery initially one or more Rule 144A Global Capital Securities
and one or more Regulation S Global Capital Securities that (i) shall be
registered in the name of Cede & Co. or other nominee of such Clearing Agency
and (ii) shall be delivered by the Trustee to such Clearing Agency or pursuant
to such Clearing Agency's written instructions or held by the Property Trustee
or the Registrar as custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to any
Rule 144A Global Capital Security or any Regulation S Global Capital Security
held on their behalf by the Clearing Agency or by the Property Trustee or the
Registrar as the custodian of the Clearing Agency or under such Rule 144A Global
Capital Security or such Regulation S Global Capital Security, and the Clearing
Agency may be treated by the Trust, the Property Trustee and any agent of the
Trust or the Property Trustee as the absolute owner of such Rule 144A Global
Capital Security or such Regulation S Global Capital Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Trust, the Property Trustee or any agent of the Trust or the Property Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Clearing Agency or impair, as between the Clearing Agency and
its Participants, the operation of customary practices of such Clearing Agency
governing the exercise of the rights of a holder of a beneficial interest in any
Rule 144A Global Capital Security or any Regulation S Global Capital Security.
(c) Definitive Capital Securities. Except as provided in
Section 7.9, owners of beneficial interests in a Rule 144A Global Capital
Security or a Regulation S Global Capital Security will not be entitled to
receive physical delivery of certificated Capital Securities ("Definitive
Capital Securities"). Purchasers of Securities who are "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and did
not purchase Capital Securities in reliance on Regulation S will receive Capital
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Securities in the form of individual certificates in definitive, fully
registered form without distribution coupons and with the Restricted Securities
Legend set forth in Exhibit A-1 hereto ("Restricted Definitive Capital
Securities"); provided, however, that upon registration of transfer of such
Restricted Definitive Capital Securities to a QIB, such Restricted Definitive
Capital Securities will, unless the Rule 144A Global Capital Security has
previously been exchanged, be exchanged for an interest in a Rule 144A Global
Capital Security pursuant to the provisions of Section 9.2. Restricted
Definitive Capital Securities will bear the Restricted Securities Legend set
forth on Exhibit A-1 unless removed in accordance with this Section 7.3 or
Section 9.2.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the Borough of Manhattan, The City
of New York, (i) an office or agency where Capital Securities may be presented
for registration of transfer ("Registrar"), (ii) an office or agency where
Capital Securities may be presented for payment ("Paying Agent") and (iii) an
office or agency where Securities may be presented for exchange ("Exchange
Agent"). The Registrar shall keep a register of the Capital Securities and of
their transfer. The Trust may appoint the Registrar, the Paying Agent and the
Exchange Agent and may appoint one or more co-registrars, one or more additional
paying agents and one or more additional exchange agents in such other locations
as it shall determine. The term "Registrar" includes any additional registrar,
"Paying Agent" includes any additional paying agent and the term "Exchange
Agent" includes any additional exchange agent. The Trust may change any Paying
Agent, Registrar, co-registrar or Exchange Agent without prior notice to any
Holder. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Property Trustee and the Sponsor. The Trust shall
notify the Property Trustee of the name and address of any Agent not a party to
this Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Exchange Agent. The Property Trustee shall act as Paying Agent, Registrar and
Exchange Agent for the Common Securities.
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The Trust initially appoints the Property Trustee as
Registrar, Paying Agent, and Exchange Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Property Trustee all money held by the Paying
Agent for the payment of Liquidation Amounts or Distributions on the Securities,
and will notify the Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property Trustee may
require a Paying Agent to pay all money held by it to the Property Trustee. The
Trust at any time may require a Paying Agent to pay all money held by it to the
Property Trustee and to account for any money disbursed by it. Upon payment over
to the Property Trustee the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If the Holder of a Security claims that the Security has been
lost, destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Administrative Trustees shall execute and the Property
Trustee shall authenticate a replacement Security if the Property Trustee's and
the Administrative Trustees' requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee, is sufficient to protect the Trustees, the Sponsor or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Trust may charge such Holder for its expenses in replacing a
Security.
Every replacement Security is an additional beneficial
interest in the Trust.
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SECTION 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all the
Capital Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant
to Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
Except as otherwise provided herein, a Capital Security does
not cease to be outstanding because one of the Trustees, the Sponsor or an
Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Capital
Securities which a Responsible Officer of the Property Trustee actually knows
are so owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Trust considers appropriate for temporary Securities. Without unreasonable
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delay, the Trust shall prepare and, in the case of the Capital Securities, the
Property Trustee shall authenticate Definitive Securities in exchange for
temporary Securities.
(b) A Global Capital Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing Agency
pursuant to Section 7.3 shall be transferred to the beneficial owners thereof in
the form of certificated Capital Securities only if such transfer complies with
Section 9.2 and (i) the Clearing Agency notifies the Company that it is
unwilling or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a "clearing agency"
registered under the Exchange Act and a clearing agency is not appointed by the
Sponsor within 90 days of such notice, (ii) a Default or an Event of Default has
occurred and is continuing or (iii) the Trust at its sole discretion elects to
cause the issuance of certificated Capital Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of certificated Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to the
Property Trustee located in the Borough of Manhattan, The City of New York, to
be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall authenticate and make available for delivery, upon
such transfer of each portion of such Global Capital Security, an equal
aggregate Liquidation Amount of Securities of authorized denominations in the
form of certificated Capital Securities. Any portion of a Global Capital
Security transferred pursuant to this Section shall be registered in such names
as the Clearing Agency shall direct. Any Capital Security in the form of
certificated Capital Securities delivered in exchange for an interest in the
Restricted Global Capital Security shall, except as otherwise provided by
Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth in Exhibit
A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of
a Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.
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(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Capital Securities in fully
registered form without Distribution coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Exchange
Agent shall forward to the Property Trustee any Capital Securities surrendered
to them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities surrendered for
registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of canceled Capital Securities in accordance with
its customary procedures unless any Administrative Trustee otherwise directs the
Property Trustee in writing. The Trust may not issue new Capital Securities to
replace Capital Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any Holder has exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall automatically be terminated and dissolved and
its affairs wound up upon the earliest to occur of the following events:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor, or the
revocation of the Sponsor's charter and the expiration of 90 days after
the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders of the Securities, provided that, the
Property Trustee has received written notice from the Sponsor directing
the Property Trustee to terminate the Trust (which direction is
optional, and except as otherwise expressly provided below, within the
discretion of the Sponsor) and provided, further, that such direction
and such distribution is conditioned on the Administrative Trustees'
receipt of an opinion of an independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on
published rulings of the Internal Revenue Service, to the effect that
the Holders of the Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of the
dissolution of the Trust and the distribution of the Debentures;
(iv) upon the entry of a decree of judicial dissolution
of the Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities; or
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(vi) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and the completion of the winding up of the Trust
and after satisfaction of all liabilities of the Trust, the Administrative
Trustees shall file a certificate of cancellation with the Secretary of State of
the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive
the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(c) Subject to Section 3.15, the Sponsor and any Related Party
may only transfer the Common Securities to the Sponsor or a Related Party after
the delivery to the Property Trustee of an Officers' Certificate certifying that
the transferee is either the Sponsor or a Related Party.
(d) The Property Trustee shall provide for the registration of
Securities and of the transfer of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Property Trustee may
require) in respect of any tax or other governmental charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Securities, the Administrative Trustees shall execute and the
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Property Trustee shall cause one or more new Securities to be issued in the name
of the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Property Trustee duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Security
surrendered for registration of transfer shall be delivered to the Property
Trustee and canceled in accordance with Section 7.10. A transferee of a Security
shall be entitled to the rights and subject to the obligations of a Holder
hereunder upon the receipt by such transferee of a Security. By acceptance of a
Security, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General. Except as otherwise provided in Section 9.2(b),
if Capital Securities are issued upon the registration of transfer, exchange or
replacement of Capital Securities bearing the Restricted Securities Legend set
forth in Exhibit A-1 hereto, or if a request is made to remove such Restricted
Securities Legend on Capital Securities, the Capital Securities so issued shall
bear the Restricted Securities Legend, or the Restricted Securities Legend shall
not be removed, as the case may be, unless there is delivered to the Sponsor and
the Property Trustee such satisfactory evidence, which shall include an Opinion
of Counsel licensed to practice law in the State of New York, as may be
reasonably required by the Sponsor and the Property Trustee, that neither the
legend nor the restrictions on transfer set forth therein are required to ensure
that transfers thereof are made pursuant to an exception from the registration
requirements of the Securities Act or, with respect to Restricted Securities,
that such Securities are not "restricted" within the meaning of Rule 144. Upon
provision of such satisfactory evidence, the Property Trustee, at the written
direction of the Sponsor, shall authenticate and deliver Capital Securities that
do not bear the legend.
(b) Transfers After Effectiveness of a Registration Statement.
After the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply, and beneficial interests in a Capital Security in global
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form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring Holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest in
the Rule 144A Global Capital Security or the Regulation S Global Capital
Security, as the case may be. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Rule 144A Global Capital
Security or the Regulation S Global Capital Security shall be effective unless
the transferor delivers to the Property Trustee a certificate in a form
substantially similar to that attached hereto as the "Form of Assignment" in
Exhibit A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and the
Property Trustee, upon a written order of the Trust signed by one Administrative
Trustee, shall authenticate a Capital Security in global form without the
Restricted Securities Legend (the "Unrestricted Global Capital Security") to
deposit with the Clearing Agency to evidence transfers of beneficial interests
from the (i) Rule 144A Global Capital Security or the Regulation S Global
Capital Security and (ii) Restricted Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities.
When Definitive Capital Securities are presented to the Registrar or
co-Registrar:
(x) to register the transfer of such Definitive Capital
Securities, or
(y) to exchange such Definitive Capital Securities which
became mutilated, destroyed, defaced, stolen or lost, for an equal
number of Definitive Capital Securities,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co-Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
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(ii) in the case of Definitive Capital Securities that
are Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from
such Holder to that effect; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form
substantially similar to that attached hereto as the "Form of
Assignment" in Exhibit A-1, and (ii) if the Trust or the
Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in
the Restricted Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security
for a Beneficial Interest in a Global Capital Security. A Definitive Capital
Security may not be exchanged for a beneficial interest in a Global Capital
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Capital Security, duly endorsed
or accompanied by appropriate instruments of transfer, in form satisfactory to
the Property Trustee, together with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification from the transferor in a form
substantially similar to that attached hereto as the "Form of
Assignment" in Exhibit A-1; provided, however, that such Definitive
Capital Security may only be exchanged for an interest in a Regulation
S Global Security where such Definitive Capital Security is being
transferred pursuant to Regulation S or Rule 144 (if available); and
(ii) whether or not such Definitive Capital Security is
a Restricted Capital Security, written instructions directing the
Property Trustee to make, or to direct the Clearing Agency to make, an
adjustment on its books and records with respect to the appropriate
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Global Capital Security to reflect an increase in the number of the
Capital Securities represented by such Global Capital Security,
then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of Capital
Securities represented by the appropriate Global Capital Security to be
increased accordingly. If no Global Capital Securities are then outstanding, the
Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital Securities
in global form.
(e) Transfer and Exchange of Global Capital Securities.
Subject to Section 9.2(f), the transfer and exchange of Global Capital
Securities or beneficial interests therein shall be effected through the
Clearing Agency, in accordance with this Declaration (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital
Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global
Capital Security may upon request, but only upon 20 days prior notice
to the Property Trustee, and if accompanied by the information
specified below, exchange such beneficial interest for a Definitive
Capital Security representing the same number of Capital Securities.
Upon receipt by the Property Trustee from the Clearing Agency or its
nominee on behalf of any Person having a beneficial interest in a
Global Capital Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest
in a Restricted Capital Security and a certification from the
transferor (in a form substantially similar to that attached hereto as
the "Form of Assignment" in Exhibit A-1), which may be submitted by
facsimile, then the Property Trustee will cause the aggregate number of
Capital Securities represented by Global Capital Securities to be
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reduced on its books and records and, following such reduction, the
Trust will execute and the Property Trustee will authenticate and make
available for delivery to the transferee a Definitive Capital Security;
(ii) Definitive Capital Securities issued in exchange
for a beneficial interest in a Global Capital Security pursuant to this
Section 9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Participants or indirect participants or otherwise, shall instruct the
Property Trustee in writing. The Property Trustee shall deliver such
Capital Securities to the Persons in whose names such Capital
Securities are so registered in accordance with such instructions of
the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (h) of this Section 9.2), a Global
Capital Security may not be transferred as a whole except by the Clearing Agency
to a nominee of the Clearing Agency or another nominee of the Clearing Agency or
by the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
Prior to the expiration of the restricted period, as
contemplated by Regulation S, beneficial interests in the Regulation S Global
Capital Security may be exchanged for beneficial interests in the Rule 144A
Global Capital Security only if such exchange occurs in connection with a
transfer of the Capital Securities pursuant to Rule 144A and the transferor
first delivers to the Property Trustee a written certificate (in a form
substantially similar to that attached hereto as the "Form of Assignment" in
Exhibit A-1) to the effect that the Capital Securities are being transferred to
a person who the transferor reasonably believes is a QIB, purchasing for its own
account or the account of a QIB in a transaction meeting the requirements of
Rule 144A and in accordance with all applicable securities laws of the states of
the United States and other jurisdictions.
Beneficial interests in the Rule 144A Global Capital Security
may be transferred to a person who takes delivery in the form of an interest in
the Regulation S Global Capital Security, whether before or after the expiration
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of such restricted period, as contemplated by Regulation S, only if the
transferor first delivers to the Property Trustee a written certificate (in a
form substantially similar to that attached hereto as the "Form of Assignments"
in Exhibit A-1) to the effect that such transfer is being made in accordance
with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if
such transfer occurs prior to the expiration of such restricted period, the
interest transferred will be held immediately thereafter through Euroclear or
CEDEL.
(h) Authentication of Definitive Capital Securities. If at any
time Global Capital Securities are outstanding:
(i) there occurs a Default or an Event of Default which
is continuing, or
(ii) the Trust, in its sole discretion, notifies the
Property Trustee in writing that it elects to cause the issuance of
Definitive Capital Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Administrative Trustee requesting the
authentication and delivery of Definitive Capital Securities to the Persons
designated by the Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of Capital
Securities represented by the Global Capital Securities, in exchange for such
Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following paragraph
(ii), each Capital Security certificate evidencing the Global Capital
Securities and the Definitive Capital Securities (and all Capital
Securities issued in exchange therefor or substitution thereof) shall
bear a legend (the "Restricted Securities Legend") in substantially the
following form:
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THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY)
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
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NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF
THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO
CLAUSE (E), TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUST
A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX
A TO THE OFFERING MEMORANDUM DATED JANUARY 8, 1997. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT (A) IS NOT ITSELF,
AND IS NOT ACQUIRING CAPITAL SECURITIES WITH "PLAN ASSETS" OF,
AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY
PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), OR (B)
IS ACQUIRING AND HOLDING THE CAPITAL SECURITIES IN A
TRANSACTION THAT IS NOT OTHERWISE PROHIBITED BY EITHER ERISA OR
THE CODE.
and in the case of the Regulation S Global Capital Security the following
additional legend:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
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STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented by a
Global Capital Security) pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144 under the
Securities Act after such registration statement ceases to be
effective:
(A) in the case of any Restricted Capital Security
that is a Definitive Capital Security, the Registrar shall
permit the Holder thereof to exchange such Restricted Capital
Security for a Definitive Capital Security that does not bear
the Restricted Securities Legend and rescind any restriction
on the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security
that is represented by a Global Capital Security, the
Registrar shall permit the Holder of such Global Capital
Security to exchange such Global Capital Security for another
Global Capital Security that does not bear the Restricted
Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security. At
such time as all beneficial interests in a Global Capital Security have either
been exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be canceled by the Property
Trustee. At any time prior to such cancellation, if any beneficial interest in a
Global Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Property Trustee (if it
is then the custodian for such Global Capital Security) with respect to such
Global Capital Security, by the Property Trustee or the Securities custodian, to
reflect such reduction.
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(k) Obligations with Respect to Transfers and Ex- changes of
Capital Securities.
(i) To permit registrations of transfers and exchanges,
the Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at the
Registrar's or co-Registrar's request in accordance with the terms of
this Declaration.
(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such indemnity as
the Trust, the Property Trustee or the Sponsor may require) in respect
of any tax or other governmental charge that may be imposed in relation
to it.
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange (a) Capital Securities during a
period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of business on the
day of such mailing; or (b) any Capital Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Capital Security being redeemed in part.
(iv) Prior to the due presentation for registrations of
transfer of any Capital Security, the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar may deem and treat the
Person in whose name a Capital Security is registered as the absolute
owner of such Capital Security for the purpose of receiving
Distributions on such Capital Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Capital Securities issued upon any registration
of transfer or exchange pursuant to the terms of this Declaration shall
evidence the same security and shall be entitled to the same benefits
under this Declaration as the Capital Securities surrendered upon such
registration of transfer or exchange.
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(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility
or obligation to any beneficial owner of a Global Capital Security, a
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of any
Participant thereof, with respect to any ownership interest in the
Capital Securities or with respect to the delivery to any Participant,
beneficial owner or other Person (other than the Clearing Agency) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Capital Securities. All notices
and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made
only to or upon the order of the registered Holders (which shall be the
Clearing Agency or its nominee in the case of a Global Capital
Security). The rights of beneficial owners in any Global Capital
Security shall be exercised only through the Clearing Agency subject to
the applicable rules and procedures of the Clearing Agency. The
Property Trustee may conclusively rely and shall be fully protected in
relying upon information furnished by the Clearing Agency or any agent
thereof with respect to its Participants and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Capital Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global Capital
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Declaration, and to
examine the same to determine substantial compliance as to form with
the express requirements hereof.
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(m) Exchange of Series A Capital Securities for Series B
Capital Securities. The Series A Capital Securities may be exchanged for Series
B Capital Securities pursuant to the terms of the Exchange Offer. The Property
Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities,
the transactions contemplated by the Exchange Offer have been
consummated; and
(B) the number of Series A Capital Securities
properly tendered in the Exchange Offer that are represented
by a Global Capital Security and the number of Series A
Capital Securities properly tendered in the Exchange Offer
that are represented by Definitive Capital Securities, the
name of each Holder of such Definitive Capital Securities, the
liquidation amount of Capital Securities properly tendered in
the Exchange Offer by each such Holder and the name and
address to which Definitive Capital Securities for Series B
Capital Securities shall be registered and sent for each such
Holder.
The Property Trustee, upon receipt of (i) such Officers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B
Capital Securities have been registered under Section 5 of the Securities Act
and the Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) a Company Order, shall authenticate (A) a Global Capital
Security for Series B Capital Securities in aggregate liquidation amount equal
to the aggregate liquidation amount of Series A Capital Securities represented
by a Global Capital Security indicated in such Officers' Certificate as having
been properly tendered and (B) Definitive Capital Securities representing Series
B Capital Securities registered in the names of, and in the liquidation amounts
indicated in such Officers' Certificate.
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If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the reduction in the
number and aggregate liquidation amount represented thereby as a result of the
Exchange Offer.
The Trust shall deliver such Definitive Capital Securities for
Series B Capital Securities to the Holders thereof as indicated in such
Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities may only be
transferred in minimum blocks of $100,000 aggregate Liquidation Amount until
such Series A Capital Securities are registered pursuant to an effective
registration statement filed under the Securities Act or "unrestricted" pursuant
to Rule 144 under the Securities Act.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security
shall be registered on the books and records of the Trust as the sole owner of
such Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trustees shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Global Capital Securities shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency, and no Capital Security Beneficial Owner will receive a
definitive capital security certificate (a "Capital Security Certificate")
representing such Capital Security Beneficial Owner's interests in such Global
Capital Securities, except as provided in Section 9.2. Unless and until
definitive, fully registered Capital Securities certificates have been issued to
the Capital Security Beneficial Owners pursuant to Section 9.2:
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(a) the provisions of this Section 9.4 shall be in full force
and effect;
(b) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Capital Securities and receiving approvals, votes
or consents hereunder) as the Holder of the Capital Securities and the sole
holder of the Global Certificates and shall have no obligation to the Capital
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants. DTC will make book entry transfers among the
Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital
Security Holders is required under this Declaration, the Trustees shall give all
such notices and communications specified herein to be given to the Holders of
Global Capital Security to the Clearing Agency, and shall have no notice
obligations to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
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ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the fees, expenses,
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
each Covered Person or Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
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such interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Sponsor shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
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conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Company Indemnified
Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust,
and with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees and
expenses) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Company Indemnified Person shall have been adjudged to be liable to the
Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such Person is fairly
and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of
an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be indemnified,
to the full extent permitted by law, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
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(iv) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made by
the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person is
proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (i) and (ii). Such determination
shall be made (1) by the Administrative Trustees by a majority vote of
a quorum consisting of such Administrative Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be
paid by the Sponsor in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Sponsor as authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Sponsor if a determination
is reasonably and promptly made (i) by the Administrative Trustees by a
majority vote of a quorum of disinterested Administrative Trustees,
(ii) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Administrative Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Administrative Trustees, counsel or the Common Security Holder at the
time such determination is made, such Company Indemnified Person acted
in bad faith or in a manner that such Person did not believe to be in
or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed
or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Administrative
Trustees, independent legal counsel or Common Security Holder
reasonably determine that such Person deliberately breached his duty to
the Trust or its Common or Capital Security Holders.
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(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Sponsor or Capital Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified
Person who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section
10.4(a) shall not affect any rights or obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any Person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or
not the Sponsor would have the power to indemnify him against such
liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any Person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
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(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a Person
who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a
Person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Property Trustee or the Delaware Trustee and the satisfaction and
discharge of this Declaration.
(c) The Sponsor agrees to pay the Property Trustee and the
Delaware Trustee, from time to time, such compensation for all services rendered
by the Property Trustee and the Delaware Trustee hereunder as may be mutually
agreed upon in writing by the Sponsor and the Property Trustee or the Delaware
Trustee, as the case may be, and, except as otherwise expressly provided herein,
to reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses, disbursements and advances incurred or made
by the Property Trustee or the Delaware Trustee, as the case may be, in
accordance with the provisions of this Declaration, except any such expense,
disbursement or advance as may be attributable to its or their negligence or bad
faith.
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SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
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and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss.
(c) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders of Securities, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each Holder as
is required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Administrative
Trustees shall endeavor to deliver all such information statements within 30
days after the end of each Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Administrative Trustees; provided, however,
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
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SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Administrative Trustees (or if there are more
than two Administrative Trustees a majority of the Administrative
Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee, the Property
Trustee; and
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(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from each of the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration (including the terms
of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that (x) such amendment is permitted by,
and conforms to, the terms of this Declaration (including the
terms of the Securities) and (y) all conditions precedent to
the execution and delivery of such amendment have been
satisfied,
provided, however, that the Property Trustee shall not be required to
sign any such amendment, and
(iii) to the extent the result of such amendment would be
to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
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(B) reduce or otherwise adversely affect the powers
of the Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(c) At such time after the Trust has issued any Securities
that remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 10.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities;
(f) The rights of the Holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
Liquidation Amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any
provision in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions with
respect to matters or questions arising under this Declaration which
shall not be inconsistent with the other provisions of the Declaration;
and
(ii) to modify, eliminate or add to any provisions of
the Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or
to ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act;
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provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of the Holders of the
Securities, and any amendments of this Declaration shall become effective when
notice thereof is given to the Holders of the Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration, the
terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in Liquidation Amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notices in a writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified shall
be counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least seven
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
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exchange on which the Capital Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent
in writing setting forth the action so taken is signed by the Holders
of Securities owning not less than the minimum amount of Securities in
Liquidation Amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Administrative
Trustees may specify that any written ballot submitted to the Security
Holder for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrative
Trustees;
(ii) each Holder of a Security may authorize any Person
to act for it by proxy on all matters in which a Holder of Securities
is entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Administrative Trustees or by such other
Person that the Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are then
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listed or trading, otherwise provides, the Administrative Trustees, in
their sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation
with trust powers and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. This Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
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(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration
with or notice to, any New York State or federal banking authority is required
for the execution, delivery or performance by the Property Trustee of this
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee and does not conflict with or
constitute a breach of the charter or by-laws of the Delaware Trustee. This
Declaration has been duly executed and delivered by the Delaware Trustee and
constitutes a legal, valid and binding obligation of the Delaware Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of equity and
the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration
with or notice to, any federal or Delaware banking
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authority is required for the execution, delivery or performance by the Delaware
Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement; Liquidated Damages.
The Holders of the Capital Securities, the Debentures and the
Capital Securities Guarantee (collectively, the "Registrable Securities") are
entitled to the benefits of a Registration Rights Agreement. Pursuant to the
Registration Rights Agreement, the Sponsor and the Trust have agreed for the
benefit of the Holders of Registrable Securities that (i) they will, at the
Sponsor's cost, within 150 days after January 8, 1997 (the "Issue Date"), use
their reasonable best efforts to file a registration statement (the "Exchange
Registration Statement") relating an Exchange Offer pursuant to which each
issuer of such respective Registrable Securities would issue amounts of such
Registrable Securities as are accepted in the Exchange Offer which shall be
identical in all respects to those exchanged, except they will have been
registered under the Securities Act and will no longer be subject to transfer
restrictions under the Securities Act or the $100,000 minimum aggregate
principal or Liquidation Amount transfer restriction and, if required pursuant
to the terms of the Registration Rights Agreement, file a shelf registration
statement (the "Shelf Registration Statement") with the Commission with respect
to resales of the Registrable Securities, (ii) they will use their reasonable
best efforts to cause such Exchange Registration Statement and/or Shelf
Registration Statement, as the case requires, to be declared effective by the
Commission within 180 days after the Issue Date and (iii) they will use their
reasonable best efforts to maintain the Shelf Registration Statement, if any,
continuously effective under the Securities Act until the third anniversary of
the effectiveness of the Shelf Registration Statement or such earlier date as is
provided in the Registration Rights Agreement (the "Effectiveness Period"). All
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references herein to such Registrable Securities shall be deemed to include, as
the context may require, the Registrable Securities into which such Securities
have been exchanged pursuant to the Exchange Offer ("Exchange Securities") and
all reference to numbers or amounts of such Securities shall be deemed to
include, as the context may require, such Exchanged Securities. Capitalized
terms used in this Article XIV but not otherwise defined herein shall have the
meanings ascribed to such terms in the Registration Rights Agreement.
If (i) (A) neither the Exchange Offer Registration Statement
nor a Shelf Registration Statement is filed with the Commission on or
prior to the 150th day after the Issue Date or (B) notwithstanding that
the Debenture Issuer and the Trust have consummated or will consummate
an Exchange Offer, the Debenture Issuer and the Trust are required to
file a Shelf Registration Statement and such Shelf Registration
Statement is not filed on or prior to date required by the Registration
Rights Agreement, then commencing on the day after the applicable
required filing date, additional Distributions shall accumulate on the
Liquidation Amount of the Capital Securities at a rate of 0.25% per
annum; or
(ii) (A) neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement is declared effective by
the Commission on or prior to the 30th day after the applicable
required filing date or (B) notwithstanding that the Debenture Issuer
and the Trust have consummated or will consummate an Exchange Offer,
the Debenture Issuer and the Trust are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not
declared effective by the Commission on or prior to the 30th day after
the date such Shelf Registration Statement was required to be filed,
then, commencing on the 31st day after the applicable required filing
date, additional Distributions shall accumulate on the Liquidation
Amount of the Capital Securities at a rate of 0.25% per annum; or
(iii) (A) the Trust has not exchanged Series B Capital
Securities for all Capital Securities or the Debenture Issuer or the
Guarantor has not exchanged the Series B Guarantees or the Series B
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Debentures for all Series A Capital Securities Guarantees or Series A
Debentures validly tendered, in accordance with the terms of the
Exchange Offer on or prior to the 30th day after the date on which the
Exchange Offer Registration Statement was declared effective or (B) if
applicable, the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective
at any time prior to the expiration of the Rule 144(k) Period (other
than after such time as all Capital Securities have been disposed of
thereunder or otherwise cease to be Registrable Securities), additional
Distributions shall accumulate on the Liquidation Amount of the Capital
Securities at a rate of 0.25% per annum commencing on (x) the 31st day
after such effective date, in the case of (A) above, or (y) the day
such Shelf Registration Statement ceases to be effective in the case of
(B) above;
provided, however, that the additional Distributions rate on the liquidation
amount of the Capital Securities may not exceed in the aggregate 0.25% per
annum; provided, further, however, that (1) upon the filing of the Exchange
Offer Registration Statement or a Shelf Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (ii) above),
or (3) upon the exchange of Exchange Capital Securities, Exchange Guarantees and
Exchange Subordinated Debentures for all Capital Securities, Guarantees and
Subordinated Debentures tendered (in the case of clause (iii)(A) above), or upon
the effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of clause (iii)(B) above), additional Distributions on
the Liquidation Amount of the Capital Securities as a result of such clause (or
the relevant subclause thereof), as the case may be, shall cease to accumulate.
Any amounts of additional Distributions due pursuant to
clauses (i), (ii) or (iii) above will be payable in cash on January 1 and July 1
of each year to the Holders of record at the close of business on the fifteenth
day prior to the relevant Distribution date.
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders of the Securities):
Markel Capital Trust I
c/o Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060-3382
Attention: Corporate Counsel
Telecopy: (804) 527-3810
(b) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as Delaware Trustee may give notice of to
the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19001
Attention: Corporate Trust Department
Telecopy: (302) 428-3390
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders of the Securities):
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Corporate Trustee Administration
Telecopy: (212) 946-8160
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(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060-3382
Attention: Corporate Counsel
Telecopy: (804) 527-3810
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes
as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
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SECTION 15.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to Persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
/s/ STEVEN A. MARKEL
------------------------------------
Steven A. Markel, solely in his
capacity as Administrative Trustee
/s/ ANTHONY F. MARKEL
------------------------------------
Anthony F. Markel, solely in his
capacity as Administrative Trustee
/s/ DARRELL D. MARTIN
------------------------------------
Darrell D. Martin, solely in his
capacity as Administrative Trustee
CHASE MANHATTAN BANK DELAWARE,
solely in its capacity as Delaware
Trustee
By: /s/ JOHN J. CASHIN
------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
THE CHASE MANHATTAN BANK,
solely in its capacity as Property
Trustee
By: /s/ C. J. HEINZELMANN
------------------------------------
Name: C. J. HEINZELMANN
Title: VICE PRESIDENT
MARKEL CORPORATION
as Sponsor
By: /s/ DARRELL D. MARTIN
------------------------------------
Name: Darrell D. Martin
Title: EVP/CFO
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ANNEX I
TERMS OF
8.71% SERIES A/SERIES B CAPITAL SECURITIES
8.71% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of January 13, 1997 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities and the
Common Securities (collectively, the "Securities") are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 150,000 Series A Capital Securities of
the Trust and 150,000 Series B Capital Securities of the Trust, each series with
an aggregate liquidation amount with respect to the assets of the Trust of One
Hundred Fifty Million dollars ($150,000,000) and each with a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "8.71% Series A Capital
Securities" and "8.71% Series B Capital Securities", respectively (collectively,
the "Capital Securities"). The certificates evidencing the Capital Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange or quotation system on which the Capital Securities are listed or
quoted.
(b) Common Securities. 4,640 Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Four Million Six Hundred Forty Thousand dollars ($4,640,000) and a liquidation
amount with respect to the assets of the Trust of $1,000 per security, are
hereby designated for the purposes of identification only as "8.71% Common
Securities" (the "Common Securities"). The certificates
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evidencing the Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a
rate per annum of 8.71% (the "Coupon Rate") of the liquidation amount of $1,000
per Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period will bear additional distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes distributions of
any such interest and Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from January 13, 1997, and will be payable
semi-annually in arrears on January 1 and July 1 of each year, commencing on
July 1, 1997, except as otherwise described below. The amount of Distributions
payable for any period will be computed on the basis of a 360-day year
consisting of twelve 30-day months and for any period less than a full calendar
month on the basis of the actual number of days elapsed in such month. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date shall be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on such
date (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). As long as no Event of Default has occurred
and is continuing under the Indenture,
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the Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time to
time on the Debentures for a period not exceeding 10 consecutive semi-annual
periods, including the first such semi-annual period during such period (each an
"Extension Period"), provided that no Extension Period shall extend beyond the
Maturity Date of the Debentures. Upon any such election, distributions will be
deferred during such Extension Period. Notwithstanding such deferral,
Distributions to which Holders of Securities are entitled shall continue to
accumulate with additional Distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which interest is then
accruing on the Debentures) at the Coupon Rate compounded semi-annually from the
relevant Distribution Date, during any such Extension Period. Prior to the
expiration of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Upon the expiration of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust at the
close of business on the date fifteen days prior to the relevant Distribution
Date, which Distribution Dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the provisions of
the Declaration, each such payment in respect of the Capital Securities will be
made as follows: (i) if the Capital Securities are held in global form by a
Clearing Agency (or its nominee), in accordance with the procedures of the
Clearing Agency; and (ii) if the Capital Securities are held in definitive form
by check mailed to the address of the Holder thereof as reflected in the records
of the Registrar unless otherwise agreed by the Trust. The relevant record dates
for the Common Securities shall be the same as the record dates for the Capital
Securities. Distributions payable on any Securities that are not punctually paid
on any Distribution Date, as a result of the Debenture
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Issuer having failed to make a payment under the Debentures, will cease to be
payable to the Holder on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Securities
are registered on the special record date or other specified date determined in
accordance with the Indenture.
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) pursuant to Section 8 among
the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust or the Sponsor
otherwise gives notice of its election to liquidate the Trust pursuant to
Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the Holders of the
Securities a Like Amount (as defined below) of the Debentures, unless such
distribution is determined by the Property Trustee not to be practicable, in
which event such Holders will be entitled to receive out of the assets of the
Trust legally available for distribution to Holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the Liquidation Amount of $1,000 per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal amount
of Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities of
the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Trust has
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insufficient assets on hand legally available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Securities shall be paid on a Pro Rata basis as set forth in Section 8.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures on the Maturity Date
(as defined in the Indenture, which includes any advancement of the Maturity
Date pursuant to Section 14.06 of the Indenture) thereof or prepayment thereof
(in whole or in part) prior thereto in accordance with the terms thereof, the
proceeds from such repayment or prepayment shall be simultaneously applied by
the Property Trustee (subject to the Property Trustee having received notice no
later than 45 days prior to such repayment or prepayment) to redeem a Like
Amount of the Securities at a redemption price equal to (i) in the case of the
repayment of the Debentures on the Maturity Date, the Maturity Redemption Price
(as defined below), (ii) in the case of the optional prepayment of the
Debentures upon the occurrence and continuation of a Special Event, the Special
Event Redemption Price (as defined below) and (iii) in the case of the optional
prepayment of the Debentures other than as a result of the occurrence and
continuance of a Special Event, the Optional Redemption Price (as defined
below). The Maturity Redemption Price, the Special Event Redemption Price and
the Optional Redemption Price are referred to collectively as the "Redemption
Price." Holders will be given not less than 30 nor more than 60 days notice of
such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued interest on the Debentures as of the Maturity Date thereof.
(ii) The Debenture Issuer shall have the right (subject to
the conditions in the Indenture) to elect to prepay the Debentures to whole or
in part at any time on or after January 1, 2007 (the "Initial Optional
Redemption Date"), upon not less than 30 days and not more than 60 days notice,
at the Optional Prepayment Price (as defined in the Indenture) and, simultaneous
with such prepayment, to cause a Like Amount of the Securities to be redeemed at
the Optional Redemption Price on a Pro Rata basis. "Optional Redemption Price"
shall mean a price
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equal to the percentage of the Liquidation Amount of Securities to be redeemed
plus accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12 month period beginning January 1 of the
years indicated below:
Year Percentage
2007 104.355%
2008 103.920%
2009 103.484%
2010 103.049%
2011 102.613%
2012 102.178%
2013 101.742%
2014 101.307%
2015 100.871%
2016 100.436%
2017 and thereafter 100.000%
(c) If at any time a Tax Event or an Investment Company Event
(each as defined below, and each a "Special Event") occurs, the Debenture Issuer
shall have the right (subject to the conditions set forth in the Indenture) at
any time prior to the Initial Optional Redemption Date, upon not less than 30
nor more than 60 days notice, to prepay the Debentures in whole, but not in
part, within the 90 days following the occurrence of such Special Event (the "90
Day Period"), and, simultaneous with such redemption, to cause a Like Amount of
the Securities to be redeemed by the Trust at the Special Event Redemption Price
on a Pro Rata basis.
"Tax Event" shall mean the receipt by the Sponsor and the
Trust of an Opinion of Counsel, requested by the Sponsor, (a "Tax Event
Opinion") experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
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official administrative written decision or pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is made on or after January 13,
1997, there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Debenture Issuer on the Debentures is not, or within 90
days of the date of such opinion, will not be, deductible by the Debenture
Issuer, in whole or in part, for United States federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means the Sponsor and the Trust
shall have received an opinion, requested by the Sponsor of counsel experienced
in practice under the Investment Company Act of 1940, as amended (the "1940
Act"), to the effect that, as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an "investment company" which is required to be
registered under the 1940 Act, which Change in 1940 Act Law becomes effective on
or after January 13, 1997.
"Special Event Redemption Price" shall mean an amount in cash
equal to the greater of (i) 100% of the Liquidation Amount of the Securities and
(ii) the sum, as determined by a Quotation Agent (as defined in the Indenture),
of the present values of the principal amount and premium payable as part of the
Optional Redemption Price on the Initial Optional Redemption Date together with
the scheduled payments of interest thereon from the prepayment date to and
including the Initial Optional Redemption Date, discounted to the redemption
date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined in the Indenture), plus, in
each case, accumulated and unpaid Distributions thereon, if any, to the date of
such redemption.
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<PAGE>
(d) On and from the date fixed by the Administrative Trustees
for any distribution of Debentures and liquidation of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Clearing Agency
or its nominee (or any successor Clearing Agency or its nominee), as the Holder
of the Capital Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any certificates representing Securities not held by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee) will be
deemed to represent beneficial interests in a Like Amount of Debentures until
such certificates are presented to the Administrative Trustees or their agent
for cancellation, whereupon the Debenture Issuer will issue to such holder, and
the Debenture Trustee will authenticate, a certificate representing such
Debentures.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on all
Securities for all semi-annual Distribution periods that expire on or before the
date of redemption.
(f) The procedure with respect to redemptions or
distributions of Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days
before the date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for repayment or prepayment
of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant
to this Section 4(f)(i), a Redemption/Distribution Notice shall be
deemed to be given on the day such notice is first mailed by first-class
mail, postage prepaid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or
in the mailing of
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<PAGE>
either thereof with respect to any Holder shall affect the validity of
the redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Capital Securities, it being understood that, in
respect of Capital Securities registered in the name of and held of
record by the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) or any nominee, the distribution of the proceeds
of such redemption will be made to the Clearing Agency and disbursed by
such Clearing Agency in accordance with the procedures applied by such
agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then
(A) with respect to Capital Securities registered in the name of or held
of record by a Clearing Agency or its nominee, by 12:00 noon, New York
City time, on the redemption date, provided that the Debenture Issuer
has paid the Property Trustee a sufficient amount of cash in connection
with the related maturity or prepayment of the Debentures by 10:00 a.m.,
New York City time, on the Maturity Date or the date of prepayment, as
the case may be, the Property Trustee will deposit irrevocably with the
Clearing Agency or its nominee (or successor Clearing Agency or its
nominee) funds sufficient to pay the applicable Redemption Price with
respect to such Capital Securities and will give the Clearing Agency
irrevocable instructions and authority to pay the Redemption Price to
the relevant Clearing Agency Participants, and (B) with respect to
Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related maturity or
prepayment of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to
the address of the relevant Holder appearing on the books and records of
the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if applicable,
then immediately
I-9
<PAGE>
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, Distributions will cease to accumulate
on the Securities so called for redemption and all rights of Holders of
such Securities so called for redemption will cease, except the right of
the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Securities shall
cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of
Holders of Securities on the close of business on a regular record date
in respect of a Distribution Date occurring on or prior to such
Redemption Date.
(v) Neither the Administrative Trustees nor the Trust shall be
required to register or cause to be registered the transfer of (i) any
Securities beginning on the opening of business 15 days before the day
of mailing of a notice of redemption or any notice of selection of
Securities for redemption or (ii) any Securities selected for redemption
(except the unredeemed portion of any Security being redeemed). If any
date fixed for redemption of Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and
effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is improperly withheld or
refused and not paid either by the Property Trustee or the Paying Agent
or by the Sponsor as guarantor pursuant to the relevant Securities
Guarantee, Distributions on such Securities will continue to accumulate
from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(vi) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital
Securities, the Clearing Agency or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been
issued or, if
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<PAGE>
Definitive Capital Security Certificates have been issued,
to the Holder thereof, and (B) in respect of the Common Securities to
the Holder thereof.
(vii) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws),
provided the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its Affiliates may at
any time and from time to time purchase outstanding Capital Securities
by tender, in the open market or by private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect to
the Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in Liquidation Amount
of all outstanding Capital Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Capital Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities except by subsequent vote of such Holders.
The Property Trustee shall notify each Holder of Capital Securities of any
notice of default with respect to the Debentures. In addition to obtaining the
foregoing approvals of such Holders of the Capital Securities, prior to taking
any of the foregoing actions, the Trustees
I-11
<PAGE>
shall obtain an opinion of counsel experienced in such matters to the effect
that the Trust will not be classified as an association taxable as a corporation
for United States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures on
any due date (including any Interest Payment Date or prepayment date or Maturity
Date), then a Holder of Capital Securities may directly institute a proceeding
for enforcement of payment to such Holder of the principal of or premium, if
any, or interest on a Like Amount of Debentures (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Common Securities Holder will be subrogated to
the rights of such Holder of Capital Securities to the extent of any payment
made by the Debenture Issuer to such Holder of Capital Securities in such Direct
Action. Except as provided in the second preceding sentence, the Holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may
be given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consent.
No vote or consent of the Holders of the Capital Securities
will be required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
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<PAGE>
Notwithstanding that Holders of Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred
and be continuing, any Trustee may be removed at any time by the Holder of the
Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed at such
time by the holders of a Majority in Liquidation Amount of the outstanding
Capital Securities. In no event will the Holders of the Capital Securities have
the right to vote to appoint, remove or replace the Administrative Trustees,
which voting rights are vested exclusively in the Sponsor as the holder of the
Common Securities. No resignation or removal of a Trustee and no appointment of
a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect to
the Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in Liquidation Amount
of all outstanding Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall
I-13
<PAGE>
be given by the Property Trustee without the prior approval of each Holder of
the Common Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common Securities except
by subsequent vote of such Holders. The Property Trustee shall notify each
Holder of Common Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders of
the Common Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an Opinion of Counsel experienced in such matters to the
effect that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures on
the due date (including any Interest Payment Date or prepayment date or Maturity
Date) (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with Direct Action, the rights of the Holders of Capital
Securities will be subrogated to the rights of such Holder of Common Securities
to the extent of any payment made by the Debenture Issuer to such Holder of
Common Securities in such Direct Action. Except as provided in the second
preceding sentence, the Holders of Common Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which Holders of Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of record of Common Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
I-14
<PAGE>
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor and
the Trustees, without the consent of the Holders of the Securities (i) to cure
any ambiguity, correct or supplement any provisions in the Declaration that may
be inconsistent with any other provisions, or to make any other provisions with
respect to matters or questions arising under the Declaration which shall not be
inconsistent with the other provisions of the Declaration, or (ii) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Securities are
outstanding or to ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any Holder of Securities. Any amendments of
the Declaration pursuant to the foregoing shall become effective when notice
thereof is given to the holders of the Securities. The Declaration also may be
amended by the Trustees and the Sponsor with (i) the consent of Holders
representing a Majority in Liquidation Amount of all outstanding Securities, and
(ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from status
as an investment company under the Investment Company Act, provided that,
without the consent of each Holder of Trust Securities, the Declaration may not
I-15
<PAGE>
be amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate Liquidation Amount of the Securities
held by the relevant Holder in relation to the aggregate Liquidation Amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate Liquidation Amount of Capital
Securities held by the relevant Holder relative to the aggregate Liquidation
Amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate Liquidation
Amount of all Common Securities outstanding.
9. Ranking.
The Capital Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the Common
Securities, except that, if an Event of Default under the Declaration occurs and
is continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the Holders of the Capital Securities shall be paid in full
the Distributions, Redemption Price, Liquidation Distribution and other payments
to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by
the acceptance thereof, agrees to the provisions
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<PAGE>
of the Capital Securities Guarantee and the Common Securities Guarantee,
respectively, including the subordination provisions therein and to the
provisions of the Indenture.
11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee or the Common Securities Guarantee (as may be
appropriate) and the Indenture (including any supplemental indenture) to a
Holder without charge on written request to the Sponsor at its principal place
of business.
I-17
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT:
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
[IF THIS GLOBAL SECURITY IS A RULE 144A GLOBAL SECURITY,
INSERT: UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER
THIS CAPITAL SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION.
A1-1
<PAGE>
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH MARKEL
CORPORATION ("THE COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT THE TRANSFEROR DELIVER
TO THE TRUST A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A
TO THE OFFERING MEMORANDUM DATED JANUARY 8, 1997. SUCH HOLDER FURTHER AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT (A) IS NOT ITSELF, AND IS NOT
ACQUIRING CAPITAL SECURITIES WITH "PLAN ASSETS" OF, AN EMPLOYEE BENEFIT OR OTHER
PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE
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<PAGE>
OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), OR AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A
"PLAN ASSET ENTITY"), OR (B) IS ACQUIRING AND HOLDING THE CAPITAL SECURITIES IN
A TRANSACTION THAT IS NOT OTHERWISE PROHIBITED BY EITHER ERISA OR THE CODE.
[IF THIS GLOBAL SECURITY IS A REGULATION S GLOBAL SECURITY,
INSERT: THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.]
A1-3
<PAGE>
Certificate Number Number of Capital Securities
CUSIP NO.
Certificate Evidencing Capital Securities
of
MARKEL CAPITAL TRUST I
8.71% Series _ Capital Securities
(Liquidation Amount $1,000 per Capital Security)
MARKEL CAPITAL TRUST I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
(the "Holder") is the registered owner
of capital securities of the Trust representing undivided beneficial interests
in the assets of the Trust designated the 8.71% Series _ Capital Securities
(Liquidation Amount $1,000 per Capital Security) (the "Capital Securities"). The
Capital Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of January 13, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By its acceptance hereof, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures
A1-4
<PAGE>
as indebtedness and the Capital Securities as evidence of indirect beneficial
ownership in the Debentures.
A1-5
<PAGE>
IN WITNESS WHEREOF, an Administrative Trustee on behalf of the
Trust has duly executed this certificate.
Date:_________________
MARKEL CAPITAL TRUST I
By:_____________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE CHASE MANHATTAN BANK, as
Property Trustee
By:________________________________
Authorized Officer
A1-6
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security
will be fixed at a rate per annum of 8.71% (the "Coupon Rate") of the
Liquidation Amount of $1,000 per Capital Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one semi-annual period will bear interest
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Property Trustee and to the extent
the Property Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or, if any Distributions have been paid, from January 13, 1997 and will be
payable semi-annually in arrears, on January 1 and July 1 of each year,
commencing on July 1, 1997, except as otherwise described below and in the
Declaration. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, the number of days elapsed in such month. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate
A1-7
<PAGE>
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Payments of Distributions that have
accumulated but not been paid during any Extension Period will be payable to
Holders as they appear on the books and records of the Trust on the records of
the Trust on the record date for the first scheduled Distribution payment date
following the expiration of such first record date after the end of the
Extension Period. Upon the expiration of any Extension Period and the payment of
all amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to certain conditions set forth in the Declaration and
the Indenture, the Property Trustee shall, at the direction of the Sponsor, at
any time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration upon the maturity or prepayment of the Debentures. The maturity date
of the Debentures is January 1, 2046, which date is subject to advancement as
described in the next sentence. If a Tax Event occurs, then the Sponsor will
have the right (i) prior to the termination of the Trust, to advance the
Maturity Date of the Debentures to the minimum extent required, but not to a
date earlier than twenty years from January 13, 1997 (the "Issue Date"), or (ii)
to terminate the Trust (if not previously terminated) and advance the Maturity
Date of the Debentures to the minimum extent required, but not to a date earlier
than forty years from the Issue Date, in each case such that, in the written
opinion of counsel experienced in such matters delivered to the Sponsor, after
advancing the Maturity Date, interest paid on the Debentures shall be deductible
for United States federal income tax purposes.
A1-8
<PAGE>
--------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________ agent
to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:____________________________________
Signature:______________________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee*:___________________
_______________________________________
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
A1-10
<PAGE>
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A1-11
<PAGE>
[Include the following if the Capital Security bears a Restricted
Capital Securities Legend --
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) (_) exchanged for the undersigned's own account
without transfer; or
(2) (_) transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933, as
amended; or
(3) (_) transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933, as
amended; or
(4) (_) to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or
(7) of Rule 501 under the Securities Act of 1933,
as amended, that is acquiring the Capital
Securities for its own account, or for the account
of such an institutional "accredited investor,"
for investment purposes and not with a view to, or
for offer or sale in connection with, any
distribution in violation of the Securities Act of
1933, as amended; or
(5) (_) transferred pursuant to another available
exemption from the registration requirements of
the Securities Act of 1933, as amended; or
(6) (_) transferred pursuant to an effective registration
statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Capital Securities evidenced by this certificate in the name of any
A1-12
<PAGE>
person other than the registered Holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Capital Securities such legal opinions, certifications
and other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended, such as the exemption provided by Rule 144 under such Act; provided,
further, that (i) if box 2 is checked, the transferee must also certify that it
is a qualified institutional buyer as defined in Rule 144A or (ii) if box (4) is
checked, the transferee must also provide to the Exchange Agent a Transferee
Letter of Representation in the form attached to the Offering Memorandum of the
Trust dated January 8, 1997; provided, further, that after the date that a
Registration Statement has been filed and so long as such Registration Statement
continues to be effective, the Exchange Agent may only permit transfers for
which box (5) has been checked.
Date:
Signature_________________________________
(Sign exactly as you name
appears on the other side
of this Capital Security
Certificate)
A1-13
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
THIS COMMON SECURITY MAY NOT BE TRANSFERRED EXCEPT TO
MARKEL CORPORATION OR A RELATED PARTY (AS DEFINED IN THE
DECLARATION).
A2-1
<PAGE>
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
Markel Corporate Trust I
8.71% Common Securities
(Liquidation Amount $1,000 per Common Security)
MARKEL CAPITAL TRUST I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Markel Corporation (the "Holder") is the registered owner of _________________
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 8.71% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of January 13, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
A2-2
<PAGE>
By its acceptance hereof, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of indirect beneficial ownership in the
Debentures.
A2-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of January, 1997.
MARKEL CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
A2-4
<PAGE>
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of 8.71% (the "Coupon Rate") of the liquidation amount of
$1,000 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one semi-annual period will bear interest thereon compounded semiannually
at the Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative,
will accrue from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from January 13, 1997 and will be payable
semi-annually in arrears, on January 1 and July 1 of each year, commencing on
July 1, 1997, except as otherwise described below and in the Declaration.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30 day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with interest thereon (to the extent permitted by
applicable law, but not at a rate exceeding the rate of interest then accruing
on the Debentures) at the Coupon Rate compounded
A2-5
<PAGE>
semi-annually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Payments of Distributions that have
accumulated will be payable to Holders as they appear on the books and records
of the Trust on the record date for the first Distribution Date following the
expiration of such Extension Period. Upon the expiration of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to certain conditions set forth in the Declaration and
the Indenture, the Property Trustee shall, at the direction of the Sponsor, at
any time liquidate the Trust and cause the Debentures to be distributed to the
holders to the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-6
<PAGE>
-------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints_____________________________________________________
_____________________________________________________________________________
_________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date:____________________________
Signature:______________________________
(Sign exactly as your name appears on the other side of this
Common Security Certificate)
Signature Guarantee*:___________________________________________________
______________________
* Signature must be guaranteed by an "eligible guarantor
institution" that is a bank, stockbroker, savings and loan
association or credit union meeting the requirements of the
Registrar, which requirements include membership or
A2-7
<PAGE>
participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934. as amended.
A2-8
<PAGE>
[Include the following if the Common Security bears a Restricted
Common Securities Legend -
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) (_) exchanged for the undersigned's own account
without transfer; or
(2) (_) transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933, as
amended; or
(3) (_) transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933, as
amended; or
(4) (_) to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or
(7) of Rule 501 under the Securities Act of 1933,
as amended that is acquiring the Preferred
Security for its own account, or for the account
of such an institutional "accredited investor,"
for investment purposes and not with a view to, or
for offer or sale in connection with, any
distribution in violation of the Securities Act of
1933, as amended; or
(5) (_) transferred pursuant to another available
exemption from the registration requirements of
the Securities Act of 1933; or
(6) (_) transferred pursuant to an effective registration
statement
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Common Securities evidenced by this certificate in the name of any
A2-9
<PAGE>
person other than the registered Holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Preferred Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended, such as the exemption provided by Rule 144 under such
Act; provided, further, that (i) if box 2 is checked, the transferee must also
certify that it is a qualified institutional buyer as defined in Rule 144A or
(ii) if box 4 is checked, the transferee must also provide a Transferee
Representation Letter in the form attached to the Offering Memorandum of the
Trust, dated January 8, 1997, after the date that a Registration Statement has
been filed and so long as such Registration Statement continues to be effective,
the Exchange Agent may only permit transfers for which box (5) has been checked.
Date: __________________________
Signature
(Sign exactly as your name
appears on the other side
of this Common Security
Certificate)
A2-10
========================================
Series B CAPITAL SECURITIES GUARANTEE AGREEMENT
Markel Corporation
Dated as of ________, 1997
========================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION........................................... 2
SECTION 1.1 Definitions and Interpretation................ 2
ARTICLE II
TRUST INDENTURE ACT...................................................... 6
SECTION 2.1 Trust Indenture Act; Application.............. 6
SECTION 2.2 Lists of Holders of Securities................ 6
SECTION 2.3 Reports by the Capital Securities
Guarantee Trustee............................. 7
SECTION 2.4 Periodic Reports to Capital Securities
Guarantee Trustee............................. 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent..................................... 7
SECTION 2.6 Events of Default; Waiver..................... 8
SECTION 2.7 Event of Default; Notice...................... 8
SECTION 2.8 Conflicting Interests......................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE..................................... 9
SECTION 3.1 Powers and Duties of the Capital
Securities Guarantee Trustee.................. 9
SECTION 3.2 Certain Rights of Capital Securities
Guarantee Trustee............................. 11
SECTION 3.3. Not Responsible for Recitals or Issuance
of Series B Capital Securities Guarantee
............................................. 13
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE..................................... 14
SECTION 4.1 Capital Securities Guarantee Trustee;
Eligibility................................... 14
SECTION 4.2 Appointment, Removal and Resignation of
Capital Securities Guarantee Trustee.......... 15
ARTICLE V
GUARANTEE................................................................ 16
SECTION 5.1 Guarantee..................................... 16
SECTION 5.2 Waiver of Notice and Demand................... 16
SECTION 5.3 Obligations Not Affected...................... 16
SECTION 5.4 Rights of Holders............................. 17
SECTION 5.5 Guarantee of Payment.......................... 18
SECTION 5.6 Subrogation................................... 18
2
<PAGE>
SECTION 5.7 Independent Obligations....................... 18
SECTION 5.8 Possibility of Advancement
of Maturity Date of Debentures....... 18
SECTION 6.1 Limitation of Transactions.................... 19
SECTION 6.2 Ranking....................................... 20
ARTICLE VII
TERMINATION.............................................................. 20
SECTION 7.1 Termination................................... 20
ARTICLE VIII
INDEMNIFICATION.......................................................... 20
SECTION 8.1 Exculpation................................... 20
SECTION 8.2 Indemnification............................... 21
ARTICLE IX
MISCELLANEOUS............................................................ 21
SECTION 9.1 Successors and Assigns........................ 21
SECTION 9.2 Amendments.................................... 21
SECTION 9.3 Notices....................................... 22
SECTION 9.4 Exchange Offer................................ 23
SECTION 9.5 Benefit....................................... 23
SECTION 9.6 Governing Law................................. 23
3
<PAGE>
Series B CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series B Capital Securities
Guarantee"), dated as of _______, 1997, is executed and delivered by Markel
Corporation, a Virginia corporation (the "Guarantor"), and The Chase Manhattan
Bank, a New York banking corporation, as trustee (the "Capital Securities
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Series B Capital Securities (as defined herein) of Markel
Capital Trust I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of January 13, 1997, among the trustees of
the Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof _____ capital securities, having an aggregate
liquidation amount of $_______, such capital securities being designated the
8.71% Series B Capital Securities in connection with the consummation of the
Exchange Offer (as defined in the Declaration).
WHEREAS, as incentive for the Holders to exchange the Series A
Capital Securities (as defined in the Declaration) for the Series B Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Series B Capital Securities Guarantee, to pay to
the Holders of the Series B Capital Securities the Guarantee Payments (as
defined below). The Guarantor agrees to make certain other payments on the terms
and conditions set forth herein.
WHEREAS, the Guarantor has executed and delivered a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Series B Capital Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event of
Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders of
Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under the Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the exchange by any Holder
of Series A Capital Securities for Series B Capital Securities, which exchange
the Guarantor hereby acknowledges
<PAGE>
shall benefit the Guarantor, the Guarantor executes and delivers this Series B
Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the
context otherwise requires:
(a) capitalized terms used in this Series B Capital
Securities Guarantee but not defined in the preamble
above have the respective meanings assigned to them
in this Section 1.1;
(b) terms defined in the Declaration as at the date of
execution of this Series B Capital Securities
Guarantee have the same meaning when used in this
Series B Capital Securities Guarantee unless
otherwise defined in this Series B Capital Securities
Guarantee;
(c) a term defined anywhere in this Series B Capital
Securities Guarantee has the same meaning throughout;
(d) all references to "the Series B Capital Securities
Guarantee" or "this Series B Capital Securities
Guarantee" are to this Series B Capital Securities
Guarantee as modified, supplemented or amended from
time to time;
(e) all references in this Series B Capital Securities
Guarantee to Articles and Sections are to Articles
and Sections of this Series B Capital Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the
same meaning when used in this Series B Capital
Securities Guarantee, unless otherwise defined in
this Series B Capital Securities Guarantee or unless
the context otherwise requires; and
(g) a reference to the singular includes the plural and
vice versa.
2
<PAGE>
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means The Chase
Manhattan Bank, a New York banking corporation, until a Successor Capital
Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Series B Capital Securities Guarantee
and thereafter means each such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at 450 West 33rd Street, 15th Floor, New York, New York
10001, Attention: Corporate Trustee Administration.
"Covered Person" means any Holder or beneficial owner of
Series B Capital Securities.
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the 8.71% Series B Junior Subordinated Deferrable
Interest Debentures due January 1, 2046 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Series B Capital Securities
Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Series B Capital
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Declaration) that are required to be
paid on such Series B Capital Securities to the extent the Issuer has funds on
hand legally available therefor at such time, (ii) the redemption price,
including all accumulated and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the
3
<PAGE>
Issuer has funds on hand legally available therefor at such time, with respect
to any Series B Capital Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary termination and liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Series B Capital Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accumulated and
unpaid Distributions on the Series B Capital Securities to the date of payment,
to the extent the Issuer has funds on hand legally available therefor, and (b)
the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer. If an Event of Default has occurred and is
continuing, no Guarantee Payments under the Common Securities Guarantee with
respect to the Common Securities or any guarantee payment under any Other Common
Securities Guarantees shall be made until the Holders of Series B Capital
Securities shall be paid in full the Guarantee Payments to which they are
entitled under this Series B Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Series B Capital Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Series B
Capital Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee
Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"Indenture" means the Indenture dated as of January 13, 1997,
among the Guarantor (the "Debenture Issuer") and The Chase Manhattan Bank, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee of the Issuer.
"Majority in liquidation amount of the Series B Capital
Securities" means, except as provided by the Trust Indenture Act, a vote by
Holder(s) of Series B Capital Securities, voting separately as a class, of more
than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Series B Capital Securities.
4
<PAGE>
"Officers' Certificate" means, with respect to any person, a
certificate signed by two of the following: the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, a Vice President, the Controller, the
Secretary, an Assistant Secretary, the Treasurer or Assistant Treasurer of the
Guarantor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Series B Capital Securities Guarantee
shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(c) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same
meaning as "Other Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures
issued by the Guarantor from time to time and sold to trusts to be established
by the Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees hereafter issued by
the Guarantor with respect to capital securities (if any) similar to the Series
B Capital Securities issued by other trusts to be established by the Guarantor
(if any), in each case similar to the Issuer.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of January 13, 1997, by and among the Guarantor, the Issuer
and the Initial Purchasers named therein as
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such agreement may be amended, modified or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital
Securities Guarantee Trustee, any officer of the Capital Securities Guarantee
Trustee, with responsibility for the administration of this Series B Capital
Securities Guarantee and also mean, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Capital Securities Guarantee Trustee" means a
successor Capital Securities Guarantee Trustee possessing the qualifications to
act as Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Common Securities and the Series
A Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be part of this
Series B Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series B
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities
Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise
the registrar of the Capital Securities) with a list, in such form as the
Capital Securities Guarantee Trustee may reasonably require, of the names and
addresses of the Holders of the Series B Capital Securities ("List of Holders")
as of such date, (i) within one Business Day after December 15 and
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June 15 of each year, and (ii) at any other time within 30 days of receipt by
the Guarantor of a written request for a List of Holders as of a date no more
than 14 days before such List of Holders is given to the Capital Securities
Guarantee Trustee provided, that the Guarantor shall not be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Capital Securities Guarantee Trustee by
the Guarantor. The Capital Securities Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing May 15,
1997, the Capital Securities Guarantee Trustee shall provide to the Holders of
the Series B Capital Securities such reports as are required by Section 313 of
the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Capital Securities Guarantee Trustee
shall also comply with the requirements of section 313(d) of the Trust Indenture
Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act. Delivery of such reports, information and
documents to the Capital Securities Guarantee Trustee is for informational
purposes only and the Capital Securities Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Capital
Securities Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Series B Capital
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Securities Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 14(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series B
Capital Securities may, by vote, on behalf of the Holders of all of the Series B
Capital Securities, waive any past Event of Default and its consequences. Upon
such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Series B Capital Securities Guarantee, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of a default with respect to this Capital Securities
Guarantee known to a Responsible Officer of the Capital Securities Guarantee
Trustee, mail by first class postage prepaid, to all Holders of the Series B
Capital Securities, notices of all defaults actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided, that, except in the case
of default in the payment of any Guarantee Payment, the Capital Securities
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Capital Securities Guarantee
Trustee in good faith determines that the withholding of such notice is in the
interests of the holders of the Series B Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice, or a Responsible Officer
of the Capital Securities Guarantee Trustee charged with the administration of
the Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Series B Capital Securities Guarantee for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B Capital Securities Guarantee shall be held
by the Capital Securities Guarantee Trustee for the benefit of the Holders of
the Series B Capital Securities, and the Capital Securities Guarantee Trustee
shall not transfer this Series B Capital Securities Guarantee to any Person
except a Holder of Series B Capital Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee has occurred and is
continuing, the Capital Securities Guarantee Trustee shall enforce this Series B
Capital Securities Guarantee for the benefit of the Holders of the Series B
Capital Securities.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Series B Capital Securities Guarantee, and no
implied covenants shall be read into this Series B Capital Securities Guarantee
against the Capital Securities Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Series B Capital Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Series B Capital Securities
Guarantee shall be construed to relieve the Capital Securities
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Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Capital
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Series B Capital Securities
Guarantee, and the Capital Securities Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Series B
Capital Securities Guarantee, and no implied covenants or
obligations shall be read into this Series B Capital
Securities Guarantee against the Capital Securities Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Capital Securities Guarantee Trustee and conforming to the
requirements of this Series B Capital Securities Guarantee;
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished
to the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Series B Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible
Officer of the Capital Securities Guarantee Trustee, unless it shall be
proved that the Capital Securities Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of a
Majority in liquidation amount of the Series B Capital Securities
relating to the time, method and place of conducting any proceeding for
any remedy available to the Capital Securities Guarantee Trustee, or
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exercising any trust or power conferred upon the Capital Securities
Guarantee Trustee under this Series B Capital Securities Guarantee; and
(iv) no provision of this Series B Capital Securities
Guarantee shall require the Capital Securities Guarantee Trustee to
expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of
any of its rights or powers, if the Capital Securities Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Series B Capital Securities Guarantee or indemnity,
reasonably satisfactory to the Capital Securities Guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Series B Capital Securities Guarantee may be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Series B Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
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(v) The Capital Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Capital Securities
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Series B Capital Securities
Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by
this Series B Capital Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the Capital
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Capital Securities Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Series B Capital
Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Capital Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Capital Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
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(ix) Any action taken by the Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders of the Series B
Capital Securities, and the signature of the Capital Securities
Guarantee Trustee or its agents alone shall be sufficient and effective
to perform any such action. No third party shall be required to inquire
as to the authority of the Capital Securities Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of
this Series B Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Securities Guarantee Trustee's or
its agent's taking such action.
(x) Whenever in the administration of this Series B Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Series B Capital
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Series B Capital Securities Guarantee.
(b) No provision of this Series B Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Series B Capital
Securities Guarantee
The recitals contained in this Series B Capital Securities
Guarantee shall be taken as the statements of the
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Guarantor, and the Capital Securities Guarantee Trustee does not assume any
responsibility for their correctness. The Capital Securities Guarantee Trustee
makes no representation as to the validity or sufficiency of this Series B
Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, state, territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
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SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Capital securities Guarantee
Trustee.
(f) Upon termination of this Series B Capital Securities
Guarantee or removal or resignation of the Capital Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities
Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee
accrued to the date of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full on a subordinated basis to the extent set forth in this Series B Capital
Securities Guarantee to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Series B Capital Securities Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Series B Capital Securities Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Series B Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Series B Capital Securities or
the extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Series B Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
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(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series
B Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series B Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to
enforce such Series B Capital Securities Guarantee, any Holder of Series B
Capital Securities may institute a legal proceeding directly against the
Guarantor to enforce the Capital Securities Guarantee Trustee's rights under
this Series B Capital Securities Guarantee, without first instituting a legal
proceeding against
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the Issuer, the Capital Securities Guarantee Trustee or any other person or
entity. The Guarantor waives any right or remedy to require that any action be
brought first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series B Capital Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Series B Capital Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Series B Capital
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Series B Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Series B Capital Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series B
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Series
B Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
SECTION 5.8 Possibility of Advancement of Maturity Date of Debentures
The parties hereto acknowledge that the Maturity Date (as
defined in the Indenture) of the Debentures may be advanced pursuant to the
provisions of Section 14.06 of the Indenture.
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common and preferred stock) or
(ii) make any payment of principal, interest or premium, if any, on, or repay or
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu or junior in
right of payment to the Debentures (other than (a) dividends or distributions in
shares of, or options, warrants, rights to subscribe for or purchase shares of,
common stock of the Guarantor, (b) any declaration of a dividend in connection
with the implementation of a stockholder's rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Capital Securities Guarantee,
(d) as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases or issuances of common
stock in connection with any of the Guarantor's stock option, stock purchase,
stock loan or other benefit plans for its directors, officers or employees or
any of the Guarantor's dividend reinvestment plans, in each case as now existing
or hereafter established or amended), if at such time (i) there shall have
occurred any event of which the Guarantor has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be an Event of
Default and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Series B Capital Securities Guarantee or (iii) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the Indenture
and any such extension shall be continuing.
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SECTION 6.2 Ranking
This Series B Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture (except as indicated below), it
being understood that the terms of Article XV of the Indenture shall apply to
the obligations of the Guarantor under this Series B Capital Securities
Guarantee as if (x) such Article XV were set forth herein in full and (y) such
obligations were substituted for the term "Securities" appearing in such Article
XV, except that with respect to Section 15.03 of the Indenture only, the term
"Senior Indebtedness" shall mean all liabilities of the Guarantor, whether or
not for money borrowed (other than obligations in respect of Other Guarantees),
(ii) pari passu with any Other Guarantee (as defined herein) and any Other
Common Securities Guarantee and (iii) senior to any obligations in respect of
any class of the Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series B Capital Securities Guarantee shall terminate and
be of no further force and effect (i) upon full payment of the Redemption Price
(as defined in the Declaration) of all Series B Capital Securities, or (ii) upon
liquidation of the Issuer, the full payment of the amounts payable in accordance
with the Declaration or the distribution of the Debentures to the Holders of all
of the Series B Capital Securities. Notwithstanding the foregoing, this Series B
Capital Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Series B Capital
Securities must restore payment of any sums paid under the Series B Capital
Securities or under this Series B Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified
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Person in good faith in accordance with this Series B Capital Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Series B Capital Securities Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's negligence or willful misconduct with respect to such
acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Series B Capital
Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Series B Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series B
Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Series B Capital Securities then outstanding.
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SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Series B Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in liquidation amount of
the Securities (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined). The provisions of Section 12.2 of
the Declaration with respect to meetings of Holders of the Securities apply to
the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Series B Capital Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Holders of the Common Securities):
Markel Capital Trust I
c/o Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060-3382
Attention: Corporate Counsel
Telecopy: (804) 527-3810
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give notice
of to the Holders of the Series B Capital Securities):
The Chase Manhattan Bank
450 W. 33rd Street
New York, New York 10001
Attention: Corporate Trust
Administration Department
Telecopy: (212) 946-8160
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Series B Capital Securities):
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Markel Corporation
4551 Cox Road
Glen Allen, Virginia 23060-3382
Attention: Corporate Counsel
Telecopy: (804) 527-3810
(d) If given to any Holder of Series B Capital Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Series B Capital Securities Guarantee is solely for the
benefit of the Holders of the Series B Capital Securities and, subject to
Section 3.1(a), is not separately transferable from the Series B Capital
Securities.
SECTION 9.5 Governing Law
THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
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THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of
the day and year first above written.
MARKEL CORPORATION, as
Guarantor
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Capital Securities Guarantee
Trustee
By:
-----------------------------------
Name:
Title:
REGISTRATION RIGHTS AGREEMENT
Dated January 13, 1997
among
MARKEL CORPORATION
MARKEL CAPITAL TRUST I
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
as Initial Purchasers
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of January 13, 1997 among MARKEL CORPORATION, a Virginia
corporation (the "Company"), MARKEL CAPITAL TRUST I, a business trust formed
under the laws of the state of Delaware (the "Trust"), and DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION ("DLJ") and Smith Barney Inc.
(collectively the "Initial Purchasers").
This Agreement is made in connection with the Purchase
Agreement dated January 8, 1997 (the "Purchase Agreement"), among the Company,
as issuer of the Series A 8.71% Junior Subordinated Deferrable Interest
Debentures due January 1, 2046 (the "Subordinated Debentures"), the Trust and
the Initial Purchasers, which provides for among other things, the sale by the
Trust to the Initial Purchasers of 150,000 of the Trust's Series A 8.71% Capital
Securities, liquidation amount $1,000 per Capital Security (the "Capital
Securities") the proceeds of which will be used by the Trust to purchase
Subordinated Debentures. The Capital Securities, together with the Subordinated
Debentures and the Company's guarantee of the Capital Securities (the "Capital
Securities Guarantee") are collectively referred to as the "Securities". In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company and the Trust have agreed to provide to the Initial Purchasers and their
direct and indirect transferees the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following
meanings:
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
<PAGE>
"Applicable Period" shall have the meaning set forth in
Section 3(t) hereof.
"Business Day" shall mean a day that is not a Saturday, a Sunday, or a
day on which banking institutions in New York, New York are authorized or
required to be closed.
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and
Restated Declaration of Trust, dated as of January 13, 1997, by the trustees
named therein and the Company as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in
Section 2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchange Offer" shall mean the offer by the Company and the Trust to
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities pursuant
to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
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<PAGE>
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in
Section 2(a) hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
Debentures, the Series B 8.71% Junior Subordinated Deferrable Interest
Debentures due January 1, 2046 (the "Exchange Debentures") containing terms
identical to the Subordinated Debentures (except that they will not contain
terms with respect to the transfer restrictions under the Securities Act, will
not require transfers thereof to be in minimum blocks of $100,000 principal
amount and will not provide for any increase in the interest rate thereon), (ii)
with respect to the Capital Securities, the Trust's Series B 8.71% Capital
Securities, liquidation amount $1,000 per Capital Security (the "Exchange
Capital Securities") which will have terms identical to the Capital Securities
(except they will not contain terms with respect to transfer restrictions under
the Securities Act, will not require minimum transfers thereof to be in blocks
of $100,000 liquidation amount and will not provide for any increase in the
Distribution rate thereon) and (iii) with respect to the Capital Securities
Guarantee, the Company's guarantee (the "Exchange Capital Securities Guarantee")
of the Exchange Capital Securities which will have terms identical to the
Capital Securities Guarantee.
"Holder" shall mean the Initial Purchasers, for so long as they own any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures dated as of January 13, 1997 among the
Company, as issuer, and The Chase
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Manhattan Bank, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble to this Agreement.
"Inspectors" shall have the meaning set forth in Section
3(n) hereof.
"Issue Date" shall mean the date of original issuance of the
Securities.
"Liquidated Damages" shall have the meaning set forth in
Section 2(e) hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set
forth in Section 3(t) hereof.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Private Exchange" shall have the meaning set forth in
Section 2(a) hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
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<PAGE>
other amendments and supplements to a prospectus, including posteffective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Records" shall have the meaning set forth in Section 3(n)
hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities; provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities or
Private Exchange Securities for the exchange or resale thereof, as the case may
be, shall have been declared effective under the Securities Act and such
Securities or Private Exchange Securities, as the case may be, shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities or
Private Exchange Securities, as the case may be, shall have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act, (iii) such Securities or Private Exchange
Securities, as the case may be, shall have ceased to be outstanding or (iv) with
respect to the Securities, such Securities have been exchanged for Exchange
Securities upon consummation of the Exchange Offer and are thereafter freely
tradeable by the holder thereof (other than an affiliate of the Company).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and disbursements
of counsel for any underwriters
5
<PAGE>
or Holders in connection with blue sky qualification of any of the Exchange
Securities or Registrable Securities) and compliance with the rules of the NASD,
(iii) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any Prospectus
and any amendments or supplements thereto, and in preparing or assisting in
preparing, printing and distributing any underwriting agreements, securities
sales agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of the independent certified public
accountants of the Company, including the expenses of any "cold comfort" letters
required by or incident to such performance and compliance, (vi) the fees and
expenses of the Trustee, and any exchange agent or custodian, (vii) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, and (viii) the
reasonable fees and expenses of any special experts retained by the Company in
connection with any Registration Statement.
"Registration Statement" shall mean any registration statement of the
Company and the Trust which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Rule 144(k) Period" shall mean the period of three years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the
preamble to this Agreement.
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<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the Private
Exchange Securities, as the case may be, on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"TIA" shall have the meaning set forth in Section 3(1) hereof.
"Trustees" shall mean any and all trustees with respect to (i) the
Capital Securities under the Declaration, (ii) the Subordinated Debentures under
the Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. To the extent not prohibited by any
applicable law or applicable interpretation of the staff of the SEC, the Company
and the Trust shall, for the benefit of the Holders, at the Company's cost, use
their reasonable best efforts to (i) cause to be filed with the SEC within 150
days after January 8, 1997 an Exchange Offer Registration Statement on an
appropriate form under the Securities Act covering the Exchange Offer, (ii)
cause such Exchange Offer Registration Statement to
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<PAGE>
be declared effective under the Securities Act by the SEC not later than the
date which is 180 days after January 8, 1997, and (iii) keep such Exchange Offer
Registration Statement effective for not less than 30 calendar days (or longer
if required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders. Upon the effectiveness of the Exchange Offer Registration
Statement, the Company and the Trust shall promptly commence the Exchange Offer,
it being the objective of such Exchange Offer to enable each Holder eligible and
electing to exchange Registrable Securities for a like principal amount of
Exchange Debentures or a like liquidation amount of Exchange Capital Securities,
together with the Exchange Guarantee, as applicable (assuming that such Holder
is not an affiliate of the Company within the meaning of Rule 405 under the
Securities Act and is not a broker-dealer tendering Registrable Securities
acquired directly from the Company for its own account, acquires the Exchange
Securities in the ordinary course of such Holder's business and has no
arrangements or understandings with any Person to participate in the Exchange
Offer for the purpose of distributing the Exchange Securities) to transfer such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and under state securities or blue sky
laws.
In connection with the Exchange Offer, the Company and the
Trust shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the Exchange Offer:
(iv) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last
8
<PAGE>
Business Day of the Exchange Period, by sending to the institution specified in
the notice, a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount of Securities delivered for
exchange, and a statement that such Holder is withdrawing his election to have
such Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws relating
to the Exchange Offer.
If any Initial Purchaser determines upon advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Company and the Trust of a written request from such Initial Purchaser, the
Company and the Trust, as applicable, shall issue and deliver to such Initial
Purchaser in exchange (the "Private Exchange") for the Securities held by such
Initial Purchaser, a like liquidation amount of Capital Securities of the Trust,
together with the Exchange Guarantee, or a like principal amount of the
Subordinated Debentures of the Company, as applicable, that are identical
(except that such securities may bear a customary legend with respect to
restrictions on transfer pursuant to the Securities Act) to the Exchange
Securities (the "Private Exchange Securities") and which are issued pursuant to
the Indenture, the Declaration or the Guarantee (which provides that the
Exchange Securities will not be subject to the transfer restrictions set forth
in the Indenture or the Declaration, as applicable, and that the Exchange
Securities, the Private Exchange Securities and the Securities will vote and
consent together on all matters as one class and that neither the Exchange
Securities, the Private Exchange Securities nor the Securities will have the
right to vote or consent as a separate class on any matter). The Private
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Exchange Securities shall be of the same series as the Exchange Securities and
the Company and the Trust will seek to cause the CUSIP Service Bureau to issue
the same CUSIP Numbers for the Private Exchange Securities as for the Exchange
Securities issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer
and, if applicable, the Private Exchange, the Company and the Trust, as the case
requires, shall:
(i) accept for exchange all Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer
or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable
Trustee for cancellation all Securities or portions thereof so
accepted for exchange by the Company; and
(iii) issue, and cause the applicable Trustee under the Indenture,
the Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securities,
as applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation amount
to the Capital Securities (together with the guarantee thereof) as are
surrendered by such Holder.
Distributions on each Exchange Capital Security and interest
on each Exchange Debenture and Private Exchange Security issued pursuant to the
Registered Exchange Offer and in the Private Exchange will accrue from the last
date on which a Distribution or interest was paid on the Capital Security or the
Subordinated Debenture surrendered in exchange therefore or, if no Distribution
or interest has been paid on such Capital Security or Subordinated Debenture,
from the Issue Date. To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company and the Trust shall use
their best efforts to complete the Exchange Offer as provided above, and shall
comply with the applicable requirements of the Securities Act, the Exchange Act
and other applicable laws in connection with the Exchange Offer. The Exchange
Offer shall not
10
<PAGE>
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the staff of the SEC.
Each Holder of Registrable Securities who wishes to exchange such Registrable
Securities for Exchange Securities in the Exchange Offer will be required to
make certain customary representations in connection therewith, including, in
the case of any Holder of Capital Securities, representations that (i) it is not
an affiliate of the Trust or the Company, (ii) the Exchange Securities to be
received by it were acquired in the ordinary course of its business and (iii) at
the time of the Exchange Offer, it has no arrangement with any person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Capital Securities. The Company and the Trust shall inform the
Initial Purchasers, after consultation with the Trustee, of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise facilitate
the tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Company and the Trust shall have no further obligation
to register the Registrable Securities (other than Private Exchange Securities)
pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the Company, the
Trust or the Majority Holders reasonably determine, after conferring with
counsel (which may be in-house counsel), that the Exchange Offer Registration
provided in Section 2(a) above is not available because of any change in law or
in currently prevailing interpretations of the staff of the SEC, (ii) the
Exchange Offer Registration Statement is not declared effective within 180 days
of January 8, 1997 or (iii) upon the request of any Initial Purchaser with
respect to any Registrable Securities held by it, if such Initial Purchaser is
not permitted, in the reasonable opinion of Brown & Wood LLP, pursuant to
applicable law or applicable interpretations of the
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staff of the SEC, to participate in the Exchange Offer and thereby receive
securities that are freely tradeable without restriction under the Securities
Act and applicable blue sky or state securities laws (any of the events
specified in (i)-(iii) being a "Shelf Registration Event" and the date of
occurrence thereof, the "Shelf Registration Event Date"), the Company and the
Trust shall, at their cost, use their reasonable best efforts to cause to be
filed as promptly as practicable after such Shelf Registration Event Date, as
the case may be, and, in any event, within 45 days after such Shelf Registration
Event Date (which shall be no earlier than 75 days after the Closing Time), a
Shelf Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, and shall use their reasonable best efforts to have such
Shelf Registration Statement declared effective by the SEC as soon as
practicable. No Holder of Registrable Securities shall be entitled to include
any of its Registrable Securities in any Shelf Registration pursuant to this
Agreement unless and until such Holder agrees in writing to be bound by all of
the provisions of this Agreement applicable to such Holder and furnishes to the
Company and the Trust in writing, within 15 days after receipt of a request
therefor, such information as the Company and the Trust may, after conferring
with counsel with regard to information relating to Holders that would be
required by the SEC to be included in such Shelf Registration Statement or
Prospectus included therein, reasonably request for inclusion in any Shelf
Registration Statement or Prospectus included therein. Each Holder as to which
any Shelf Registration is being effected agrees to furnish to the Company and
the Trust all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company and the Trust agree to use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective for the
Rule 144(k) Period (subject to extension pursuant to the last paragraph of
Section 3 hereof) or for such shorter period which will terminate when all of
the Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or cease to be outstanding
(the "Effectiveness Period"). The Company and the Trust shall not permit any
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<PAGE>
securities other than Registrable Securities to be included in the Shelf
Registration. The Company and the Trust will, in the event a Shelf Registration
Statement is declared effective, provide to each Holder a reasonable number of
copies of the Prospectus which is a part of the Shelf Registration Statement,
notify each such Holder when the Shelf Registration has become effective and use
its best efforts to take certain other actions as are required to permit certain
unrestricted resales of the Registrable Securities. The Company and the Trust
further agree, if necessary, to supplement or amend the Shelf Registration
Statement, if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement
or by the Securities Act or by any other rules and regulations thereunder for
shelf registrations, and the Company and the Trust agree to furnish to the
Holders of Registrable Securities copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses
in connection with the registration pursuant to Section 2(a) or 2(b) hereof and
will reimburse the Initial Purchasers for the reasonable fees and disbursements
of Brown & Wood LLP, counsel for the Initial Purchasers, incurred in connection
with the Exchange Offer and, if applicable, the Private Exchange Offer, and
either Brown & Wood LLP or any one other counsel designated in writing by the
Majority Holders to act as counsel for the Holders of the Registrable Securities
in connection with a Shelf Registration Statement, which other counsel shall be
reasonably satisfactory to the Company. Except as provided herein, each Holder
shall pay all expenses of its counsel, underwriting discounts and commissions
and transfer taxes if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that if, after it has been declared effective, the offering of Registrable
Securities pursuant to a Shelf Registration Statement is
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interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have been effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. The Company and the Trust will be
deemed not to have used their best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to remain, effective during the requisite period if either of them
voluntarily take any action that would result in any such Registration Statement
not being declared effective or in the Holders of Registrable Securities covered
thereby not being able to exchange or offer and sell such Registrable Securities
during that period unless such action is required by applicable law.
(e) Liquidated Damages. In the event that (i) (A)
neither the Exchange Offer Registration Statement nor a Shelf Registration
Statement is filed with the SEC on or prior to the 150th day after January 8,
1997 or (B) notwithstanding that the Company and the Trust have consummated or
will consummate an Exchange Offer, the Company and the Trust are required to
file a Shelf Registration Statement and such Shelf Registration Statement is not
filed on or prior to the date required by Section 2(b) hereof, then commencing
on the day after the applicable required filing date, additional interest shall
accrue on the principal amount of the Subordinated Debentures, and additional
Distributions shall accumulate on the liquidation amount of the Capital
Securities, each at a rate of 0.25% per annum; or
(ii) (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the SEC on or prior to the 30th
day after the applicable required filing date or (B) notwithstanding that the
Company and the Trust have consummated an Exchange Offer, the Company and the
Trust are required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the SEC on or prior to the
30th day after the date such Shelf Registration Statement was required to be
filed, then, commencing on the 31st day after the applicable required filing
date, additional
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interest shall accrue on the principal amount of the Subordinated Debentures and
additional Distributions shall accumulate on the liquidation amount of the
Capital Securities, each at a rate of 0.25% per annum; or
(iii) (A) the Trust has not exchanged Exchange Capital Securities for
all Capital Securities or the Company has not exchanged Exchange Guarantees or
Exchange Subordinated Debentures for all Guarantees or Subordinated Debentures
validly tendered, in accordance with the terms of the Exchange Offer on or prior
to the 30th day after the date on which the Exchange Offer Registration
Statement was declared effective or (B) if applicable, the Shelf Registration
Statement has been declared effective and such Shelf Registration Statement
ceases to be effective at any time prior to the expiration of the Rule 144(k)
Period (other than after such time as all Capital Securities have been disposed
of thereunder or otherwise cease to be Registrable Securities), then additional
interest shall accrue on the principal amount of Subordinated Debentures, and
additional Distributions shall accumulate on the liquidation amount of the
Capital Securities, each at a rate of 0.25% per annum commencing on (x) the 31st
day after such effective date, in the case of (A) above, or (y) the day such
Shelf Registration Statement ceases to be effective in the case of (B) above;
provided, however, that neither the additional interest rate on the Subordinated
Debentures, nor the additional distribution rate on the liquidation amount of
the Capital Securities, may exceed in the aggregate 0.25% per annum; provided,
further, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Exchange Offer Registration Statement or a
Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Capital Securities, Exchange Guarantees and Exchange
Subordinated Debentures for all Capital Securities, Guarantees and Subordinated
Debentures tendered (in the case of clause (iii)(A) above), or upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of clause (iii)(B) above), additional interest on the
Subordinated Debentures, and additional distributions on the
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liquidation amount of the Capital Securities as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue or
accumulate, as the case may be.
Any amounts of additional interest and additional Distributions due
pursuant to Section 2(e)(i), (ii) or (iii) above (the "Liquidated Damages") will
be payable in cash on January 1 and July 1 of each year to the holders of record
on the relevant record dates for the payment of interest and Distributions
pursuant to the Indenture and the Declaration respectively.
(f) Specific Enforcement. Without limiting the remedies
available to the Holders, the Company and the Trust acknowledge that any failure
by the Company or the Trust to comply with its obligations under Section 2(a)
and Section 2(b) hereof may result in material irreparable injury to the Holders
for which there is no adequate remedy at law, that it would not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, any Holder may obtain such relief as may be required to specifically
enforce the Company's and the Trust's obligations under Section 2(a) and Section
2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Company and the Trust with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the Trust
shall use their reasonable best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Company and the Trust, (ii) shall, in the case of a
Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders thereof and (iii) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the
SEC to be filed
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<PAGE>
therewith; and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof; provided, however, that if (1) such filing is
pursuant to Section 2(b), or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2(a) is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Trust shall furnish to and afford the
Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed. The Company and
the Trust shall not file any Registration Statement or Prospectus or
any amendments or supplements thereto in respect of which the Holders
must be afforded an opportunity to review prior to the filing of such
document if the Majority Holders or such Participating Broker-Dealer,
as the case may be, their counsel or the managing underwriters, if any,
shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be; and
cause each Prospectus to be supplemented, if so determined by the
Company or the Trust or requested by the SEC, by any required
prospectus supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) under the Securities
Act, and comply with the provisions of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder applicable to
it with respect to the disposition of all securities covered by each
Registration Statement during the Effectiveness Period or the
Applicable Period, as the case may be, in accordance
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<PAGE>
with the intended method or methods of distribution by the selling
Holders thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities included in the Shelf Registration
Statement, at least three Business Days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is
being filed and advising such Holder that the distribution of
Registrable Securities will be made in accordance with the method
selected by the Majority Holders; and (ii) furnish to each Holder of
Registrable Securities included in the Shelf Registration Statement and
to each underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or underwriter may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities included in the Shelf
Registration Statement in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) in the case of a Shelf Registration, use their reasonable
best efforts to register or qualify the Registrable Securities under
all applicable state securities or "blue sky" laws of such
jurisdictions by the time the applicable Registration Statement is
declared effective by the SEC as any Holder of Registrable Securities
covered by a Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall reasonably
request in writing in advance of such date of effectiveness, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder and underwriter to consummate the
disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company and the
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Trust shall not be required to (i) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d); (ii) file
any general consent to service of process in any jurisdiction where it
would not otherwise be subject to such service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not then
so subject;
(e) in the case of (1) a Shelf Registration or (2)
Participating Broker-Dealers from whom the Company or the Trust has
received prior written notice that they will be utilizing the
Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, are seeking to sell Exchange
Securities and are required to deliver Prospectuses, notify each Holder
of Registrable Securities, or such Participating Broker-Dealers, as the
case may be, their counsel and the managing underwriters, if any,
promptly and promptly confirm such notice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of a Registration Statement
or the qualification of the Registrable Securities or the Exchange
Securities to be offered or sold by any Participating Broker-Dealer in
any jurisdiction described in paragraph 3(d) hereof or the initiation
of any proceedings for that purpose, (iv) in the case of a Shelf
Registration, if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company and the
Trust contained in any purchase agreement, securities sales agreement
or other similar agreement, if any cease to be true and correct in all
material respects, and (v) of the happening of any event or the failure
of any event to occur or the discovery of any facts or otherwise,
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<PAGE>
during the Effectiveness Period which makes any statement made in such
Registration Statement or the related Prospectus untrue in any material
respect or which causes such Registration Statement or Prospectus to
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (vi) the Company and the Trust's reasonable
determination that a post-effective amendment to the Registration
Statement would be appropriate;
(f) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities included within the coverage of such
Shelf Registration Statement, without charge, at least one conformed
copy of each Registration Statement relating to such Shelf Registration
and any post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and in
such denominations (consistent with the provisions of the Indenture and
the Declaration) and registered in such names as the selling Holders or
the underwriters may reasonably request at least two Business Days
prior to the closing of any sale of Registrable Securities pursuant to
such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its best
efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
20
<PAGE>
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such
an event, and each Holder hereby agrees to suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus
to correct such misstatement or omission;
(j) in the case of a Shelf Registration, a reasonable time
prior to the filing of any document which is to be incorporated by
reference into a Registration Statement or a Prospectus after the
initial filing of a Registration Statement, provide a reasonable number
of copies of such document to the Holders; and make such of the
representatives of the Company and the Trust as shall be reasonably
requested by the Holders of Registrable Securities or the Initial
Purchasers on behalf of such Holders available for discussion of such
document;
(k) obtain a CUSIP number for all Exchange Capital Securities
and the Capital Securities (and if the Trust has made a distribution of
the Subordinated Debentures to the Holders of the Capital Securities,
the Subordinated Debentures or the Exchange Subordinated Debentures) as
the case may be, not later than the effective date of a Registration
Statement, and provide the Trustee with printed certificates for the
Exchange Securities or the Registrable Securities, as the case may be,
in a form eligible for deposit with the Depositary;
(l) cause the Indenture, the Declaration, the Guarantee and
the Exchange Guarantee to be qualified under the Trust Indenture Act of
1939 (the "TIA") in connection with the registration of the Exchange
Securities or Registrable Securities, as the case may be, and effect
such changes to such documents as may be required for them to be
21
<PAGE>
so qualified in accordance with the terms of the TIA and execute, and
use its best efforts to cause the relevant trustee to execute, all
documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable such
documents to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are customary in
underwritten offerings and take all such other appropriate actions as
are reasonably requested in order to expedite or facilitate the
registration or the disposition of such Registrable Securities, and in
such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten
registration, if requested by (x) any Initial Purchaser, in the case
where an Initial Purchaser holds Securities acquired by it as part of
its initial distribution and (y) other Holders of Securities covered
thereby: (i) make such representations and warranties to Holders of
such Registrable Securities and the underwriters (if any), with respect
to the business of the Trust, the Company and its subsidiaries as then
conducted and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company and the Trust and
updates thereof (which may be in the form of a reliance letter) in form
and substance reasonably satisfactory to the managing underwriters (if
any) and the Holders of a majority in principal amount of the
Registrable Securities being sold, addressed to each selling Holder and
the underwriters (if any) covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such underwriters (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions); (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the
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<PAGE>
independent certified public accountants of the Company and the Trust
(and, if necessary, any other independent certified public accountants
of any subsidiary of the Company and the Trust or of any business
acquired by the Company and the Trust for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by such underwriters in accordance with Statement on Auditing Standards
No. 72; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section
(including, without limitation, such underwriters and selling Holders).
The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section
2(b) or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2(a) is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, make
reasonably available for inspection by any selling Holder of such
Registrable Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents
23
<PAGE>
and properties of the Trust, the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Trust, the
Company and its subsidiaries to supply all relevant information in each
case reasonably requested by any such Inspector in connection with such
Registration Statement provided, however, that the foregoing inspection
and information gathering shall be coordinated on behalf of the
Purchasers by DLJ and on behalf of the other parties, by one counsel
designated by DLJ and on behalf of such other parties as described in
Section 2(c) hereof. Records which the Company and the Trust determine,
in good faith, to be confidential and any records which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or is
necessary in connection with any action, suit or proceeding or (iii)
the information in such Records has been made generally available to
the public. Each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to agree in writing
that information obtained by it as a result of such inspections shall
be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Trust or the Company
unless and until such is made generally available to the public. Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to further agree in
writing that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company
and allow the Company at its expense to undertake appropriate action to
prevent disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of the
SEC so long as any provision of this Agreement shall be applicable and
make generally available to its
24
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securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after
the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the
end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the
effective date of a Registration Statement, which statements shall
cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private
Exchange, if requested by a Trustee, obtain an opinion of counsel to
the Company addressed to the Trustee for the benefit of all Holders of
Registrable Securities participating in the Exchange Offer or the
Private Exchange, as the case may be, and which includes an opinion
that (i) the Company and the Trust, as the case requires, has duly
authorized, executed and delivered the Exchange Securities and Private
Exchange Securities, and (ii) each of the Exchange Securities or the
Private Exchange Securities, as the case may be, constitute a legal,
valid and binding obligation of the Company or the Trust, as the case
requires, enforceable against the Company or the Trust, as the case
requires, in accordance with its respective terms (in each case, with
customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to
the Company or the Trust, as applicable (or to such other Person as
directed by the Company or the Trust, respectively), in exchange for
the Exchange Securities or the Private Exchange Securities, as the case
may be, the Company or the Trust, as applicable, shall mark, or cause
to be marked, on such Registrable Securities delivered by such Holders
that such Registrable Securities are being cancelled in exchange for
the Exchange Securities or the Private Exchange Securities, as the case
may be; in no event
25
<PAGE>
shall such Registrable Securities be marked as paid or otherwise
satisfied;
(r) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD;
(s) use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution, which section shall be
reasonably acceptable to the Initial Purchasers or another
representative of the Participating Broker-Dealers, and which shall
contain a summary statement of the positions taken or policies made by
the staff of the SEC with respect to the potential "underwriter" status
of any broker-dealer (a "Participating Broker-Dealer") that holds
Registrable Securities acquired for its own account as a result of
market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of Exchange Securities to be received by such broker-dealer in the
Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial Purchasers or such other
representative, represent the prevailing views of the staff of the SEC,
including a statement that any such broker-dealer who receives Exchange
Securities for Registrable Securities pursuant to the Exchange Offer
may be deemed a statutory underwriter and must deliver a prospectus
meeting the requirements of the Securities Act in connection with any
resale of such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Company the notice
26
<PAGE>
referred to in Section 3(e), without charge, as many copies of each
Prospectus included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or supplement
thereto, as such Participating Broker-Dealer may reasonably request
(each of the Company and the Trust hereby consents to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or
any amendment or supplement thereto by any Person subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, in connection with the sale or transfer
of the Exchange Securities covered by the Prospectus or any amendment
or supplement thereto), (iii) use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such
Persons must comply with such requirements under the Securities Act and
applicable rules and regulations in order to resell the Exchange
Securities; provided, however, that such period shall not be required
to exceed 90 days (or such longer period if extended pursuant to the
last sentence of Section 3 hereof) (the "Applicable Period"), and (iv)
include in the transmittal letter or similar documentation to be
executed by an exchange offeree in order to participate in the Exchange
Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
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<PAGE>
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus
in connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement,
the Company and the Trust agree to deliver to the Initial Purchasers or
to another representative of the Participating Broker-Dealers, if
requested by any such Initial Purchasers or such other representative
of the Participating Broker-Dealers, on behalf of the Participating
Broker-Dealers upon consummation of the Exchange Offer (i) an opinion
of counsel in form and substance reasonably satisfactory to the Initial
Purchasers or such other representative of the Participating
Broker-Dealers, covering the matters customarily covered in opinions
requested in connection with Exchange Offer Registration Statements and
such other matters as may be reasonably requested (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions), (ii) an officers' certificate
containing certifications substantially similar to those set forth in
Section 5(d) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public offering of
debt securities and (iii) as well as upon the effectiveness of the
Exchange Offer Registration Statement, a comfort letter, in each case,
in customary form if permitted by Statement on Auditing Standards No.
72.
The Company or the Trust may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company or the Trust, as applicable, such information regarding such
seller as may be required by the staff of the SEC to be included in a
Registration Statement. The Company or the Trust may exclude from such
registration the Registrable Securities of any seller who unreasonably fails to
furnish such information within a reasonable time after receiving such request.
The Company shall have no obligation to register
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under the Securities Act the Registrable Securities of a seller who so fails to
furnish such information.
In the case of (1) a Shelf Registration Statement or (2)
Participating Broker-Dealers who have notified the Company and the Trust that
they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are seeking to sell
Exchange Securities and are required to deliver Prospectuses each Holder agrees
that, upon receipt of any notice from the Company or the Trust of the happening
of any event of the kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(i) hereof or until it is advised in writing (the "Advice") by the
Company and the Trust that the use of the applicable Prospectus may be resumed,
and, if so directed by the Company and the Trust, such Holder will deliver to
the Company or the Trust (at the Company's or the Trust's expense, as the case
requires) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities or Exchange Securities, as the case may be, current at
the time of receipt of such notice. If the Company or the Trust shall give any
such notice to suspend the disposition of Registrable Securities or Exchange
Securities, as the case may be, pursuant to a Registration Statement, the
Company and the Trust shall use their best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement to
the Registration Statement and shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days in the period from and including the date of the giving of
such notice to and including the date when the Company and the Trust shall have
made available to the Holders (x) copies of the supplemented or amended
Prospectus necessary to resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. In connection with any
Registration Statement, the Company and the Trust shall,
29
<PAGE>
jointly and severally, indemnify and hold harmless each Initial Purchaser, each
Holder, each underwriter who participates in an offering of the Registrable
Securities, each Participating Broker-Dealer, each Person, if any, who controls
any of such parties within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each of their respective directors, officers,
employees and agents, as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment
thereto), covering Registrable Securities or Exchange Securities,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of counsel chosen
by such Holder, such Participating Broker-Dealer, or any underwriter
(except to the extent otherwise expressly provided in Section 4(c)
hereof)), reasonably incurred in investigating, preparing or defending
30
<PAGE>
against any litigation, or any investigation or proceeding by any court
or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section
4(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company or the Trust by such Holder, such Participating Broker-Dealer or any
underwriter with respect to such Holder, Participating Broker-Dealer or any
underwriter, as the case may be, expressly for use in the Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) and (ii) the Company and the Trust shall not be liable to any such
Holder, Participating Broker-Dealer, any underwriter or controlling person, with
respect to any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary Prospectus to the extent that any such loss,
liability, claim, damage or expense of any Holder, Participating Broker-Dealer,
any underwriter or controlling person results from the fact that such Holder,
any underwriter or Participating Broker-Dealer sold Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final Prospectus as then amended or supplemented if the
Company had previously furnished copies thereof to such Holder, underwriter or
Participating Broker-Dealer and the loss, liability, claim, damage or expense of
such Holder, underwriter, Participating Broker-Dealer or controlling person
results from an untrue statement or omission of a material fact contained in the
preliminary Prospectus which was corrected in the final Prospectus. Any amounts
advanced by the Company or the Trust to an indemnified party pursuant to this
Section 4 as a result of such losses shall be returned to the Company or the
Trust if it shall be finally determined by such a court in a judgment not
subject to appeal or final review that
31
<PAGE>
such indemnified party was not entitled to indemnification by the Company or the
Trust.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Trust, any underwriter and the
other selling Holders and each of their respective directors, officers
(including each officer of the Company and the Trust who signed the Registration
Statement), employees and agents and each Person, if any, who controls the
Company, the Trust, any underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 4(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company or the Trust by such selling Holder with respect to such Holder
expressly for use in the Registration Statement (or any amendment thereto), or
any such Prospectus (or any amendment or supplement thereto); provided, however,
that, in the case of Shelf Registration Statement, no such Holder shall be
liable for any claims hereunder in excess of the amount of net proceeds received
by such Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 4, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action. If an indemnifying party so elects within a reasonable
time after receipt of such notice, an indemnifying party, severally or jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen
32
<PAGE>
by it and reasonably acceptable to the indemnified parties defendant in such
action, provided, however, that if (i) representation of such indemnified party
by the same counsel would present a conflict of interest or (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and any such indemnified party
reasonably determines that there may be legal defenses available to such
indemnified party which are different from or in addition to those available to
such indemnifying party, then in the case of clauses (i) and (ii) of this
Section 4(c) such indemnifying party and counsel for each indemnifying party or
parties shall not be entitled to assume such defense. If an indemnifying party
is not entitled to assume the defense of such action as a result of the proviso
to the preceding sentence, counsel for such indemnifying party and counsel for
each indemnified party or parties shall be entitled to conduct the defense of
such indemnified party or parties. If an indemnifying party assumes the defense
of such action, in accordance with and as permitted by the provisions of this
paragraph, such indemnifying parties shall not be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one counsel (in addition to local
counsel), separate from its own counsel, for-all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional written release in form and substance satisfactory to
the indemnified parties of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to
33
<PAGE>
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Notwithstanding the last sentence of Section 4(c), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel
pursuant to Section 4(a)(iii) above, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such indemnifying
party (1) reimburses such indemnified party in accordance with such request to
the extent it considers reasonable and (2) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Trust, and
the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, the Trust, and the Holders, as incurred; provided that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any Person that
was not guilty of such fraudulent misrepresentation. As between the Company, the
Trust, and the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company and Trust, on the one hand, and
34
<PAGE>
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Company and the Trust, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Trust, on the one hand, or by or on behalf of the
Holders, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Trust and the Holders of the Registrable Securities agree that
it would not be just and equitable if contribution pursuant to this Section 4
were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 4, each affiliate of a Holder, and
each director, officer, employee, agent and Person, if any, who controls a
Holder or such affiliate within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Holder, and each director of each of the Company or the Trust, each officer
of each of the Company or the Trust who signed the Registration Statement, and
each Person, if any, who controls each of the Company and the Trust within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as each of the Company or the Trust.
5. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents reasonably required under the
terms of such underwriting arrangements.
35
<PAGE>
6. Selection of Underwriters. The Holders of Registrable
Securities covered by the Shelf Registration Statement who desire to do so may
sell the securities covered by such Shelf Registration in an underwritten
offering. In any such underwritten offering, the underwriter or underwriters and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of the Registrable
Securities included in such offering; provided, however, that such underwriters
and managers must be reasonably satisfactory to the Company and the Trust.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company or the
Trust is subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and any Registrable Securities remain outstanding, the Company and
the Trust, as the case may be, will their its best efforts to file the reports
required to be filed by it under the Securities Act and Section 13(a) or 15(d)
of the Exchange Act and the rules and regulations adopted by the SEC thereunder,
that if it ceases to be so required to file such reports, it will, upon the
request of any Holder of Registrable Securities (a) make publicly available such
information as is necessary to permit sales of their securities pursuant to Rule
144 under the Securities Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales of their securities pursuant to Rule
144A under the Securities Act and it will take such further action as any Holder
of Registrable Securities may reasonably request, and (c) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time, (ii) Rule 144A under the Securities Act,
as such rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company and the Trusts will deliver to such Holder a
written statement as to whether it has complied with such requirements.
36
<PAGE>
(b) No Inconsistent Agreements. The Company or the Trust has
not entered into nor will the Company or the Trust on or after the date of this
Agreement enter into any agreement which is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's or the Trust's other issued and
outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Trust has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securities, by written
agreement signed by the Company, the Trust and DLJ, to cure any ambiguity,
correct or supplement any provision of this Agreement that may be inconsistent
with any other provision of this Agreement or to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with other provisions of this Agreement, (ii) this Agreement may be
amended, modified or supplemented, and waivers and consents to departures from
the provisions hereof may be given, by written agreement signed by the Company,
the Trust and DLJ to the extent that any such amendment, modification,
supplement, waiver or consent is, in their reasonable judgment, necessary or
appropriate to comply with applicable law (including any interpretation of the
Staff of the SEC) or any change therein and (iii) to the extent any provision of
this Agreement relates to the Initial Purchasers, such provision may be amended,
modified
37
<PAGE>
or supplemented, and waivers or consents to departures from such provisions may
be given, by written agreement signed by DLJ, the Company and the Trust.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if
to the Company or the Trust, initially at the Company's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
the Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in
38
<PAGE>
any manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities, such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers
shall be a third party beneficiary of the agreements made hereunder between the
Company and the Trust, on the one hand, and the Holders, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
39
<PAGE>
(k) Securities Held by the Company, the Trust or its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company, the Trust or its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
40
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
MARKEL CORPORATION
By: /s/ DARRELL D. MARTIN
----------------------------------
Name: Darrell D. Martin
Title: Executive Vice President
and Chief Financial Officer
MARKEL CAPITAL TRUST I
By: MARKEL CORPORATION,
as Sponsor
By: /s/ DARRELL D. MARTIN
----------------------------------
Name: Darrell D. Martin
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
Confirmed and accepted as of
the date first above
written:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
By: Donaldson, Lufkin & Jenrette Securities Corporation
as Representative of the
Several Initial Purchasers
By: TIMOTHY M. DWYER
----------------------------------
Name: Timothy M. Dwyer
Title: Senior Vice President
42
Exhibit 12.1
MARKEL CORPORATION
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
-------------- ------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- ------------------------------------------------------------------------
<S> <C>
Earnings:
Earnings from continuing operations
before income taxes 31,815 47,927 25,731 32,156 39,621 17,733
Fixed charges 6,162 8,653 7,777 7,740 7,533 13,789
-------------- ------------------------------------------------------------------------
Earnings from continuing
operations, as adjusted 37,977 56,580 33,508 39,896 47,154 31,522
============== ========================================================================
Fixed Charges:
Interest Expense 5,964 8,460 7,675 5,638 5,291 11,489
Portion of rental expense
representative of interest 198 193 102 2,102 2,242 2,300
============== ========================================================================
Fixed Charges 6,162 8,653 7,777 7,740 7,533 13,789
============== ========================================================================
Ratio of Earnings to Fixed Charges 6.2 6.5 4.3 5.2 6.3 2.3
Ratio of Earnings to Fixed Charges,
excluding Net Realized Gains
from Sales of Investments and
Gains from Sales of Brokerage
Programs 5.7 5.2 3.8 3.1 2.2 1.6
</TABLE>
Note:
o The Company's consolidated insurance company subsidiaries are subject to
certain regulatory restrictions on the payment of dividends or advances to
the Company.
EXHIBIT 23.1
The Board of Directors
Markel Corporation:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus. Our reports
refer to the Company's adoption of Statement of Financial Accounting Standards
No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES
efffective December 31, 1993.
/s/ KPMG PEAT MARWICK, LLP
Richmond, Virginia
February 10, 1997
POWER OF ATTORNEY
The undersigned hereby appoints Gregory B. Nevers or Richard W. Whitt
(each with full power to act alone), as his true and lawful attorneys-in-fact,
and grants unto said attorneys the authority in his name and on his behalf to
prepare, execute and file (individually and in the capacity stated below) any
and all documents relating to a registration statement on Form S-4 to be filed
by Markel Corporation (the "Company") and Markel Capital Trust I (the "Trust")
and any and all amendments or supplements to any of the foregoing, with all
exhibits and documents required to be filed in connection therewith. The
undersigned further grants unto said attorneys, and each of them, full power and
authority to perform each and every act necessary in order to accomplish the
foregoing registration as fully as he himself might do.
This power of attorney has been signed as of February 3, 1997.
/s/ ALAN I. KIRSHNER
- ----------------------------------------------
Alan I. Kirshner, Director, Chairman and Chief Executive Officer
/s/ LESLIE A. GRANDIS
- ----------------------------------------------
Leslie A. Grandis, Director
/s/ STEWART M. KASEN
- ----------------------------------------------
Stewart M. Kasen, Director
/s/ ANTHONY F. MARKEL
- ----------------------------------------------
Anthony F. Markel, Director, President
Administrative Trustee
/s/ GARY L. MARKEL
- ----------------------------------------------
Gary L. Markel, Director
/s/ STEVEN A. MARKEL
- ----------------------------------------------
Steven A. Markel, Director, Vice Chairman
Administrative Trustee
/s/ DARRELL D. MARTIN
- ----------------------------------------------
Darrell D. Martin, Director, Executive Vice President and Chief Financial
Officer
Administrative Trustee
/s/ V. PREM WATSA
- ----------------------------------------------
V. Prem Watsa, Director
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------------------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
MARKEL CORPORATION
(Exact name of obligor as specified in its charter)
Virginia 54-0292420
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
4551 Cox Road
Glenn Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Series B Junior Subordinated Deferrable
Interest Debentures of Markel Corporation
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement No. 333-06249,
which is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 31st day of January, 1997.
THE CHASE MANHATTAN BANK
By /s/ C. J. Heinzelmann
-----------------------
C. J. Heinzelmann
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................$ 11,095
Interest-bearing balances .................................... 4,998
Securities: ......................................................
Held to maturity securities........................................ 3,231
Available for sale securities...................................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ........................................... 8,018
Securities purchased under agreements to resell .............. 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve ........ 27
------------
Loans and leases, net of unearned income,
allowance, and reserve ....................... ............ 127,548
Trading Assets .................................................... 48,576
Premises and fixed assets (including capitalized
leases)....................................................... 2,850
Other real estate owned ........................................... 300
Investments in unconsolidated subsidiaries and
associated companies.......................................... 92
Customer's liability to this bank on acceptances
outstanding .................................................. 2,777
Intangible assets ................................................. 1,361
Other assets ...................................................... 12,204
-------
TOTAL ASSETS ...................................................... $261,859
=========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ......................................... $80,163
Noninterest-bearing .......................$30,596
Interest-bearing .......................... 49,567
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ................................................ 65,173
Noninterest-bearing .......................$ 3,616
Interest-bearing .......................... 61,557
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ..................................... 14,594
Securities sold under agreements to repurchase .............. 14,110
Demand notes issued to the U.S. Treasury ......................... 2,200
Trading liabilities .............................................. 30,136
Other Borrowed money:
With a remaining maturity of one year or less ............... 16,895
With a remaining maturity of more than one year .................. 449
Mortgage indebtedness and obligations under capitalized
leases....................................................... 49
Bank's liability on acceptances executed and outstanding.......... 2,764
Subordinated notes and debentures ................................ 5,471
Other liabilities................................................. 13,997
TOTAL LIABILITIES ................................................ 246,001
--------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ..................................................... 1,209
Surplus........................................................... 10,176
Undivided profits and capital reserves ........................... 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities ................................. (481)
Cumulative foreign currency translation adjustments .............. 19
TOTAL EQUITY CAPITAL ............................................. 15,308
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .................................... $261,859
=========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
MARKEL CAPITAL TRUST 1
(Exact name of obligor as specified in its charter)
Delaware 54-0292420
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
C/O Markel Corp.
4551 Cox Road
Glenn Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
-------------------------------------------------------
Series B Capital Securities of Markel Capital Trust I
(Title of the indenture securities)
-----------------------------------------------------------------
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement No. 333-06249,
which is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 31st day of January, 1997.
THE CHASE MANHATTAN BANK
By /s/ C.J. Heinzelmann
-------------------------
C. J. Heinzelmann
Vice President
- 3 -
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement No. 333-06249,
which is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 31st day of January, 1997.
THE CHASE MANHATTAN BANK
By /s/ C. J. Heinzelmann
-------------------------
C. J. Heinzelmann
Vice President
- 3 -
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................. $ 11,095
Interest-bearing balances ..................................... 4,998
Securities: .......................................................
Held to maturity securities......................................... 3,231
Available for sale securities....................................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ............................................ 8,018
Securities purchased under agreements to resell ............... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve ....... 27
-------
Loans and leases, net of unearned income,
allowance, and reserve ........................................ 127,548
Trading Assets ..................................................... 48,576
Premises and fixed assets (including capitalized
leases)........................................................ 2,850
Other real estate owned ............................................ 300
Investments in unconsolidated subsidiaries and
associated companies........................................... 92
Customer's liability to this bank on acceptances
outstanding ................................................... 2,777
Intangible assets .................................................. 1,361
Other assets ....................................................... 12,204
------
TOTAL ASSETS ....................................................... $261,859
=========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ........................................... $80,163
Noninterest-bearing ................................ $30,596
Interest-bearing ................................... 49,567
----------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ................................................. 65,173
Noninterest-bearing ................................ $ 3,616
Interest-bearing ................................... 61,557
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBF's
Federal funds purchased ....................................... 14,594
Securities sold under agreements to repurchase ................ 14,110
Demand notes issued to the U.S. Treasury ........................... 2,200
Trading liabilities ................................................ 30,136
Other Borrowed money:
With a remaining maturity of one year or less ................. 16,895
With a remaining maturity of more than one year .................... 449
Mortgage indebtedness and obligations under capitalized
leases......................................................... 49
Bank's liability on acceptances executed and outstanding............ 2,764
Subordinated notes and debentures .................................. 5,471
Other liabilities................................................... 13,997
TOTAL LIABILITIES .................................................. 246,001
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ....................................................... 1,209
Surplus............................................................. 10,176
Undivided profits and capital reserves ............................. 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities ................................... (481)
Cumulative foreign currency translation adjustments ................ 19
TOTAL EQUITY CAPITAL ............................................... 15,308
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL ...................................... $261,859
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
MARKEL CAPITAL TRUST 1
(Exact name of obligor as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
C/O Markel Corp.
4551 Cox Road
Glenn Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Markel Corp. Series B Guarantee with respect to the
Series B Capital Securities of Markel Capital Trust I
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany,
New York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 31st day of January, 1997.
THE CHASE MANHATTAN BANK
By /s/ C. J. Heinzelmann
------------------------
C. J. Heinzelmann
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ...............................................$ 11,095
Interest-bearing balances ....................................... 4,998
Securities: .........................................................
Held to maturity securities........................................... 3,231
Available for sale securities......................................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold .............................................. 8,018
Securities purchased under agreements to resell ................. 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve .... 27
-------
Loans and leases, net of unearned income,
allowance, and reserve .......................................... 127,548
Trading Assets ....................................................... 48,576
Premises and fixed assets (including capitalized
leases).......................................................... 2,850
Other real estate owned .............................................. 300
Investments in unconsolidated subsidiaries and
associated companies............................................ 92
Customer's liability to this bank on acceptances
outstanding .................................................... 2,777
Intangible assets ................................................... 1,361
Other assets ........................................................ 12,204
---------
TOTAL ASSETS ....................................................... $261,859
=========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .............................................. $80,163
Noninterest-bearing .................................. $30,596
Interest-bearing .......................................49,567
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 65,173
Noninterest-bearing ...................................$ 3,616
Interest-bearing ...................................... 61,557
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBF's Federal funds purchased .. 14,594
Securities sold under agreements to repurchase .................... 14,110
Demand notes issued to the U.S. Treasury ............................... 2,200
Trading liabilities .................................................... 30,136
Other Borrowed money:
With a remaining maturity of one year or less ..................... 16,895
With a remaining maturity of more than one year ........................ 449
Mortgage indebtedness and obligations under capitalized
leases............................................................. 49
Bank's liability on acceptances executed and outstanding................ 2,764
Subordinated notes and debentures ...................................... 5,471
Other liabilities....................................................... 3,997
TOTAL LIABILITIES ......................................................246,001
--------
Limited-Life Preferred stock and related surplus........................ 550
EQUITY CAPITAL
Common stock ........................................................... 1,209
Surplus................................................................. 10,176
Undivided profits and capital reserves ................................. 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities ....................................... (481)
Cumulative foreign currency translation adjustments .................... 19
TOTAL EQUITY CAPITAL ................................................... 15,308
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .........................................$261,859
==========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
