<PAGE>
As filed with the Securities and Exchange Commission on October 16, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORMS F-4 AND S-4*
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TERRA NOVA INSURANCE TERRA NOVA (BERMUDA)
(UK) HOLDINGS PLC HOLDINGS LTD.
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its charter)
<TABLE>
<S> <C> <C> <C> <C> <C>
England and Wales 6331 Not Applicable Bermuda 6331 Not Applicable
(State or other (Primary Standard (I.R.S. Employer (State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.) jurisdiction of Industrial Identification
incorporation or Classification incorporation or Classification No.)
organization) Code Number) organization) Code Number)
</TABLE>
Not Applicable Not Applicable
(Translation of Registrant's (Translation of Registrant's
name into English) name into English)
-----------
Terra Nova House Richmond House, 2nd Floor
41-43 Mincing Lane 12 Par-La-Ville Road
London EC3R 7SP, Great Britain Hamilton, HM 08, Bermuda
(171) 283-3000 (441) 292-7731
(Address, including zip code, and (Address, including zip code, and
telephone number, including area telephone number, including area
code, of Registrant's principal code, of Registrant's principal
executive offices) executive offices)
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CT Corporation System
1633 Broadway
New York, New York 10019
(212) 664-1666
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
-----------
Copies of Correspondence to:
JEAN M. WAGGETT EDWARD A. PERELL
Senior Vice President, General Counsel Debevoise & Plimpton
and Secretary 875 Third Avenue
Terra Nova (Bermuda) Holdings Ltd. New York, New York 10022
Richmond House, 2nd Floor (212) 909-6000
12 Par-La-Ville Road
Hamilton, HM CX, Bermuda
(441) 292-7731
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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- - ------------------
* This Registration Statement constitutes a filing on Form F-4 for the Exchange
Notes and on Form S-4 for the Guarantee.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed
Title of Each Class Amount to Be Offering Maximum Aggregate Amount of
of Securities to Be Registered Registered Price Per Unit(1) Offering Price(1) Registration Fee
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.2% Senior Notes due 2007 $75,000,000 100% $75,000,000 $22,750
- - ----------------------------------------------------------------------------------------------------------------
Guarantee of Terra Nova (Bermuda)
Holdings Ltd. (2) (2) (2) None
- - ----------------------------------------------------------------------------------------------------------------
Global Receipt(3) (2) (2) (2) None
================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
amount of registration fee.
(2) Not applicable.
(3) Global Receipt representing Senior Notes issued as a single global note in
bearer form.
-----------
The Issuer and the Guarantor hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective date until the
Issuer and the Guarantor shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
2
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 16, 1997
PROSPECTUS
OFFER TO EXCHANGE 7.2% SENIOR NOTES DUE 2007
OF TERRA NOVA INSURANCE (UK) HOLDINGS PLC
AND GUARANTEED BY TERRA NOVA (BERMUDA)
HOLDINGS LTD. WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 FOR ANY AND
ALL OLD NOTES (AS DEFINED BELOW)
-----------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1997, UNLESS EXTENDED. AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH RESPECT TO
THE EXCHANGE OFFER ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF THE EXCHANGE
OFFER.
Terra Nova Insurance (UK) Holdings plc, a public limited company organized
under the laws of England and Wales ("UK Holdings" or the "Issuer"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange up to $75.0 million
aggregate principal amount of its 7.2% Senior Notes due 2007 (the "Exchange
Notes") which will be fully and unconditionally guaranteed on a senior basis by
Terra Nova (Bermuda) Holdings Ltd. ("Bermuda Holdings"), and which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus is a part, for an
identical principal amount of its issued and outstanding 7.2% Senior Notes due
2007 (the "Old Notes"). The Exchange Notes and the Old Notes are collectively
referred to herein as the "Senior Notes." The Old Notes were originally issued
and sold in a transaction that was exempt from registration under the Securities
Act and resold inside the United States to certain qualified institutional
buyers in reliance on, and subject to the restrictions imposed pursuant to, Rule
144A under the Securities Act ("Rule 144A"). The terms of the Exchange Notes are
identical in all material respects to the terms of the Old Notes, except that
(i) the offer and sale of the Exchange Notes has been registered under the
Securities Act and therefore the Exchange Notes are not subject to certain
restrictions on transfer applicable to the Old Notes, will not bear legends
restricting the transferability thereof and will not be entitled to registration
rights or other rights under the Registration Rights Agreement (as defined
herein), and (ii) the Exchange Notes will not provide for any increase in the
interest rate pursuant to the Registration Rights Agreement, which rights and
provisions will terminate as to all of the Senior Notes upon the consummation of
the Exchange Offer. The Exchange Notes will be issued under the same Indenture
(as defined herein) as the Old Notes, and the Exchange Notes and the Old Notes
will constitute a single series of debt securities under the Indenture. In the
event the Exchange Offer is consummated, any Old Notes which remain outstanding
after consummation of the Exchange Offer and the Exchange Notes issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of a requisite percentage in outstanding principal amount of
Senior Notes have taken certain actions or exercised certain rights under the
Indenture. See "Description of Exchange Notes" and "The Exchange Offer."
The Exchange Notes will mature on August 15, 2007. Interest on the Exchange
Notes will accrue from August 26, 1997, the issue date of the Old Notes, and is
payable semiannually on February 15 and August 15 of each year, commencing on
February 15, 1998. The Exchange Notes will be redeemable, in whole or in part,
at the option of the Issuer and at any time, at a redemption price equal to the
sum of: (i) the principal amount of the Exchange Notes being redeemed, plus
accrued and unpaid interest thereon to the redemption date, and (ii) the Make-
Whole Amount (as defined under "Description of Exchange Notes--Optional
Redemption"), if any. The Exchange Notes also may be redeemed under
circumstances described under "Description of Exchange Notes--Tax Redemption" at
100% of the principal amount thereof, plus accrued and unpaid interest thereon
to the redemption date. The Exchange Notes will not be subject to any mandatory
sinking fund payment.
The Exchange Notes and the guarantee (the "Guarantee") of the Exchange
Notes by Bermuda Holdings will constitute unsecured senior obligations of the
Issuer and Bermuda Holdings, respectively. The Exchange Notes and the Guarantee
will rank pari passu in right of payment with all other senior indebtedness of
the Issuer and Bermuda Holdings, respectively, including indebtedness of
approximately $100 million pursuant to the Issuer's 10 3/4% Senior Notes due
2005 (the "1995 Senior Notes") which are fully and unconditionally guaranteed by
a guarantee of Bermuda Holdings, as well as any Old Notes not tendered for
exchange pursuant to the Exchange Offer. See "Description of Exchange Notes--
General" and "--Guarantee." As of the date hereof, there is no outstanding
indebtedness of either the Issuer or Bermuda Holdings which will be subordinate
to the Exchange Notes. Because the Issuer and Bermuda Holdings are holding
companies, in order for them to make interest and principal payments on the
Exchange Notes, they will be dependent on the payment of dividends by their
respective insurance company subsidiaries. As a consequence, the Exchange Notes
and the Guarantee will be effectively subordinated to all existing and future
liabilities of such insurance company subsidiaries, which at June 30, 1997
consisted principally of insurance liabilities and aggregated approximately $1.6
billion.
-----------
See "Risk Factors" commencing on page 12 for discussion of certain factors
that should be considered by holders of the Old Notes prior to tendering their
Old Notes in the Exchange Offer.
-----------
Until _____________, 1998 (180 days after the date of this Prospectus), all
dealers effecting transactions in registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS _____________, 1997.
3
<PAGE>
(Cover Page Continued)
The Issuer is making the Exchange Offer 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 no-action letters
addressed to third parties in other transactions (including Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated
(available June 5, 1991), K-III Communications Corporation (available May 14,
1993) and Shearman & Sterling (available July 2, 1993)). However, neither the
Issuer nor Bermuda Holdings has sought its own no-action 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, and subject
to the two immediately following sentences, the Issuer believes that the
Exchange Notes issued pursuant to this Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by a holder thereof
(other than a holder who is a broker-dealer or an "affiliate" of the Issuer or
Bermuda Holdings within the meaning of Rule 405 of the Securities Act) without
further compliance with the registration and prospectus delivery requirements of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any Person to
participate, in a distribution (within the meaning of the Securities Act) of
such Exchange Notes. Any holder of Old Notes who is an "affiliate" of the Issuer
or Bermuda Holdings or who intends to participate in the Exchange Offer for the
purpose of distributing Exchange Notes, or any broker-dealer who purchased Old
Notes from the Issuer or Bermuda Holdings to resell pursuant to Rule 144A under
the Securities Act ("Rule 144A") or any other available exception 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 Notes in the Exchange Offer and (c) must comply with the registration
and prospectus delivery requirement of the Securities Act in connection with any
sale or other transfer of such Old Notes unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Notes acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Notes for
Exchange Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Notes.
Each holder of Old Notes who wishes to exchange Old Notes for Exchange
Notes in the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Issuer or Bermuda Holdings, (ii) any Exchange Notes to be
received by it are being acquired in the ordinary course of its business, and
(iii) it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such Exchange Notes.
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Notes for its
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes. A broker-
dealer that acquired Old Notes in a transaction other than as part of its
market-making or other trading activities will not be able to participate in the
Exchange Offer. 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 no-action letters referred to above, the Issuer believes that broker-dealers
who acquired Old Notes for their own account as a result of market-making
activities or other trading activities ("Participating Broker-Dealers"), may
fulfill their prospectus delivery requirements with respect to the Exchange
Notes received upon exchange of such Old Notes (other than Old Notes which
represent an unsold allotment from the original sale of the Old Notes) with a
prospectus meeting the requirements of the Securities Act, which may be a
prospectus prepared for an exchange offer so long as it contains a description
of the plan of distribution with respect to the resale of such Exchange Notes.
Subject to certain provisions set forth in the Registration Rights Agreement,
the Issuer and Bermuda Holdings have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Notes for a period
ending 180 days after the Expiration Date referred to below or, if earlier, when
all such Exchange Notes have been disposed of by such Participating Broker-
Dealer. See "Plan of Distribution." Any Participating Broker-Dealer who is an
"affiliate" of the Issuer or Bermuda Holdings may not rely on such no-action
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 the Exchange Notes."
The Exchange Notes will be a new issue of securities for which there
currently is no market and there can be no assurance as to the liquidity of any
markets that may develop for the Exchange Notes or the ability of the holders to
5
<PAGE>
(Cover Page Continued)
sell their Exchange Notes, as the case may be. Neither the Issuer nor Bermuda
Holdings currently intends to apply for listing of the Exchange Notes on any
securities exchange other than on the Luxembourg Stock Exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System.
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding, will continue to accrue interest and will be entitled to all the
same rights and will be subject to the same limitations applicable thereto under
the Indenture (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Old Notes will continue to be subject to the existing restrictions upon transfer
thereof, and neither the Issuer nor Bermuda Holdings will have any further
obligation to such holders to provide for registration under the Securities Act
of the Old Notes held by such holders. To the extent that Old Notes are tendered
and accepted in the Exchange Offer, a holder's ability to sell untendered Old
Notes could be adversely affected. See "Prospectus Summary--Certain Consequences
of a Failure to Exchange Old Notes."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
Old Notes may be tendered for exchange on or prior to 5:00 p.m., New York
City time, _________, 1997 (such time on such date being hereinafter called the
"Expiration Date"), unless the Exchange Offer is extended by the Issuer (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). Tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions and to the terms and provisions of the Registration Rights Agreement.
Old Notes may be tendered in whole or in part in a principal amount of $1,000
and integral multiples thereof. See "The Exchange Offer--Fees and Expenses."
Each Exchange Note will bear interest from the most recent date to which
interest has been paid or duly provided for on the Old Note surrendered in
exchange for such Exchange Note or, if no such interest has been paid or duly
provided for on such Old Note, from August 26, 1997. Holders of the Old Notes
whose Old Notes are accepted for exchange will not receive accrued interest on
such Old Notes.
Any waiver, extension or termination of the Exchange Offer will be publicly
announced by the Issuer or Bermuda Holdings through a release to the Dow Jones
News Service and as otherwise required by applicable law or regulations.
The Exchange Notes will be represented by one or more global receipts (each
a "Global Receipt") deposited with, or on behalf of, The Depository Trust
Company, as Depositary, and the Exchange Notes are expected to trade in the
Depositary's Same-Day Funds Settlement System. Secondary market trading
activity, if any, for the Exchange Notes will therefore settle in immediately
available funds. See "Description of Depositary Agreement."
There has not previously been any public market for the Exchange Notes.
There can be no assurance that an active market for the Exchange Notes will
develop. Moreover, to the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for untendered and for tendered but
unaccepted Old Notes could be adversely affected.
The Issuer intends to list the Exchange Notes on the Luxembourg Stock
Exchange.
Neither the Issuer nor Bermuda Holdings will receive any proceeds from the
Exchange Offer. The Issuer and Bermuda Holdings have agreed to pay all expenses
of the Exchange Offer. No dealer manager is being utilized in connection with
the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
6
<PAGE>
AVAILABLE INFORMATION
Bermuda Holdings is subject to the periodic reporting and other information
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Issuer is exempt from such requirements, but summary financial
information of the Issuer will be provided in the reports filed by Bermuda
Holdings, as permitted by the rules and regulations of the Commission. Under
current law, for as long as the 1995 Senior Notes or Bermuda Holdings' Class A
Ordinary Shares, par value $5.80 per share, are listed on the New York Stock
Exchange, Inc., Bermuda Holdings will be required to file with the Commission
annual, quarterly and current financial information on Forms 10-K, 10-Q and 8-K.
Such reports and other information filed by Bermuda Holdings pursuant to the
Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, Suite 1300, New York, New York 10048, and such
material is contained on the worldwide web site maintained by the Commission at
http:\\www.sec.gov. Copies of such material may also be obtained at prescribed
rates by writing to the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, reports and
other material concerning Bermuda Holdings can be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Whether or not required by the Exchange Act or the rules and regulations of
the Commission thereunder, so long as any Senior Notes are outstanding, Bermuda
Holdings has agreed to furnish to the holders of Senior Notes all financial
information that would be required to be contained in a filing with the
Commission on Form 10-K, 10-Q or 8-K if Bermuda Holdings were required to file
such Form, including a "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and, with respect to the annual financial
statements only, a report thereon by Bermuda Holdings' independent public
accountants. In addition, whether or not required by the Exchange Act or the
rules and regulations of the Commission thereunder, Bermuda Holdings will file a
copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to investors who request it in writing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Bermuda Holdings with the Commission
are incorporated into this Prospectus by reference:
(1) Bermuda Holdings' Annual Report on Form 10-K for the year ended
December 31, 1996;
(2) Bermuda Holdings' Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997; and
(3) Bermuda Holdings' Current Report on Form 8-K, dated August 28,
1997.
Any documents filed by Bermuda Holdings pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the Exchange Notes and the Guarantee offered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Bermuda Holdings will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the foregoing documents). Any such request should
be directed to Jean M. Waggett, Esq., Terra Nova (Bermuda) Holdings Ltd.,
Richmond House, 2nd Floor, 12 Par-La-Ville Road, Hamilton HM 08, Bermuda
(Telephone: 441-292-7731)). In order to ensure timely delivery of the documents,
any such request should be made by _______ __, 1997.
<PAGE>
ENFORCEABILITY OF CIVIL LIABILITIES
The Issuer is a public limited company incorporated under the laws of
England and Wales, and Bermuda Holdings is a company incorporated under the laws
of Bermuda. All of the directors and executive officers of the Issuer, all of
the executive officers of Bermuda Holdings, six of the eleven directors of
Bermuda Holdings, and the experts named herein are non-residents of the United
States, and all or a substantial portion of the assets of the Issuer, Bermuda
Holdings and such persons are located outside the United States. It may not be
possible for investors to effect service of process within the United States
upon such persons or to enforce against any of them, the Issuer or Bermuda
Holdings judgments of courts of the United States predicated upon the civil
liability provisions of the federal or state securities laws of the United
States. The Issuer and Bermuda Holdings have been advised by their respective
counsel, Clifford Chance and Conyers, Dill & Pearman, that there is doubt as to
the enforceability in the United Kingdom and in Bermuda, in original actions or
in actions for enforcement of judgments of United States courts, of civil
liabilities predicated solely upon such securities laws.
Bermuda Holdings has been informed by Conyers, Dill & Pearman that the
United States and Bermuda do not have a treaty providing for reciprocal
recognition and enforcement of judgments of U.S. courts in civil and commercial
matters and that a final judgment for the payment of money rendered by any
federal or state court in the United States based on civil liability, whether or
not predicated solely upon the U.S. federal securities laws, would, therefore,
not be automatically enforceable in Bermuda. Bermuda Holdings has also been
advised by Conyers, Dill & Pearman that a final and conclusive judgment obtained
in federal or state courts in the United States under which a sum of money is
payable as compensatory damages (i.e., not being a sum claimed by a revenue
authority for taxes or other charges of a similar nature by a governmental
authority, or in respect of a fine or penalty or multiple or punitive damages)
may be the subject of an action on a debt in the Supreme Court of Bermuda under
the common law doctrine of obligation. Such an action should be successful upon
proof that the sum of money is due and payable, without having to prove the
facts supporting the underlying judgment, as long as: (i) the court that gave
the judgment was competent to hear the action in accordance with private
international law principles as applied by the courts in Bermuda; and (ii) the
judgment was not contrary to public policy in Bermuda, was not obtained by fraud
or in proceedings contrary to the natural justice of Bermuda, and was not based
on an error in Bermuda law. A Bermuda court may impose civil liability on
Bermuda Holdings or its directors or officers in a suit brought in the Supreme
Court of Bermuda against Bermuda Holdings or such persons with respect to a
violation of U.S. federal securities laws, provided that the facts surrounding
such violation constitute or give rise to a cause of action under Bermuda law.
Bermuda Holdings and the Issuer have each appointed CT Corporation System,
New York, New York, as its agent to receive service of process in actions
brought against it, arising out of or in connection with U.S. federal or state
securities laws or out of violations of such laws, in any federal or state court
in the United States relating to the transactions covered by this Prospectus.
CURRENCY
In this Prospectus, references to "U.S. dollars," "$" or "cents" are to
U.S. currency, and references to "pounds," "sterling," "(Pounds)", "pence" or
"p" are to U.K. currency. Bermuda Holdings publishes its consolidated financial
statements in U.S. dollars, which is its functional currency.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified by the more detailed information and
financial statements and notes thereto appearing elsewhere in this Prospectus or
incorporated herein by reference. Unless the context requires otherwise and
except as provided below, all references in this Prospectus to the "Company"
refer to Terra Nova (Bermuda) Holdings Ltd. ("Bermuda Holdings"), a Bermuda
holding corporation, and all of its direct and indirect subsidiaries, including
its principal subsidiaries, the Issuer, Terra Nova Insurance Company Limited
("Terra Nova"), Terra Nova (Bermuda) Insurance Company Ltd. ("Terra Nova
(Bermuda)"), Compagnie de Reassurance d'Ile de France ("Corifrance"). Octavian
Syndicate Management Limited ("Octavian") and Terra Nova Capital Limited ("Terra
Nova Capital"), through which it conducts substantially all of its operations.
Unless otherwise noted, all financial data and ratios included herein have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP").
COMPANY OVERVIEW
Overview and Markets
The Company is a specialty property, casualty and marine insurance and
reinsurance company operating on a worldwide basis through subsidiaries in the
London company market and Lloyd's of London (together the "London Market"), in
the Bermuda Market, in the European Market and through branch offices in
Toronto, Canada and Brussels, Belgium. Terra Nova Insurance Company Limited
("Terra Nova"), the Company's predecessor and principal subsidiary, was
established in 1969 and is believed by management to be one of the largest
London Market companies (as defined below). The Company had gross premiums
written of $331.8 million for the six months ended June 30, 1997, and had
combined shareholders' equity of $422.3 million at June 30, 1997.
The London Market is one of the world's largest insurance and reinsurance
marketplaces and attracts business from clients throughout the world who seek
flexible and innovative protection for a wide variety of risks. The London
Market is composed of Lloyd's and companies with underwriting offices in
proximity to Lloyd's ("London Market companies") and, management believes, had
gross written premiums of approximately $26.0 billion in 1995.
The Bermuda Market, comprised of both captive and independent companies, in
recent years has become one of the world's largest insurance and reinsurance
markets in which international business is written. Management believes that the
Bermuda Market's gross premiums written were approximately $23.4 billion in
1995, up from approximately $13.0 billion in 1990.
Business, Profitability and Financial Strength
The Company's principal lines of business consist of classes of (i) non-
marine property coverage written largely on a reinsurance basis, (ii) non-marine
casualty coverage written both on a primary and a reinsurance basis, and (iii)
marine coverage written both on a primary and a reinsurance basis, accounting
for approximately 49.5%, 18.9% and 31.1%, respectively, of the Company's gross
premiums written for 1996. Additionally, of the Company's gross premiums written
for 1996, approximately 66.8% consisted of reinsurance business and
approximately 46.4%, 10.8%, 20.4% and 22.4% were attributable to clients from
the U.S., U.K., Europe and the rest of the world, respectively.
The Company and Terra Nova have a demonstrated history of profits, having
been profitable in every year of their combined 27-year existence, except for
1980 and 1992. The combined ratio and operating ratio of the Company's insurance
subsidiaries averaged 101.9% and 77.1%, respectively, for the period from 1993
through 1996. For the six months ended June 30, 1997, the Company had a combined
ratio and operating ratio of 99.4% and 75.8%, respectively. The Company's income
from continuing operations before income taxes, interest expense, depreciation,
amortization and minority interests ("EBITDA") was $97.0 million for 1996 and
$51.2 million for the six months ended June 30, 1997.
At June 30, 1997, approximately 85.1% of the Company's $1.3 billion
investment portfolio consisted of fixed maturity debt securities, 97.6% were
rated "A" or better by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's") and the remaining 2.4%, although not rated,
were, in the opinion of management, at least the equivalent in quality of "AA"
rated investments. The Company currently has no investments in high yield fixed
income securities, real estate or mortgages.
3
<PAGE>
Strategy/Strategic Initiatives
The Company seeks to enhance its record of profitable growth through its
operating and growth strategies. The key elements of its operating strategy
consist of:
. Flexible operating structure. The Company, with subsidiaries in the
London company market, Lloyd's, the Bermuda Market and in Paris and
having offices in London, Bermuda, Toronto and Brussels, believes that it
has a significant competitive advantage through its presence in many of
the principal markets where insurance and reinsurance business is
transacted. By writing business in many of the major international
markets, the Company is able to diversify the risk of its portfolio
geographically and, at the same time, take advantage of differences in
rates and deductibles throughout the world. Having developed an expertise
in writing specific classes of non-marine property, non-marine casualty
and marine businesses which may react differently to varying market
conditions, the Company may shift its mix of business to those lines
where the Company believes the potential for profitable results is
greater, while continuing to maintain a smaller presence in less
profitable lines in anticipation of market improvements.
. Low operating costs. Through an international brokerage system, the
Company has access not only to the London and Bermuda Markets, but also
to other international insurance and reinsurance centers. By using this
variable cost distribution system and operating through a centralized
administration organization in London, the Company is able to minimize
its fixed overhead costs and therefore better control expense levels as
market conditions for writing insurance and reinsurance fluctuate. In
addition, with operations in Bermuda, the Company is able to take
advantage of Bermuda's favorable tax regime.
. Significant levels of investment income. With a $1.3 billion
conservatively managed investment portfolio as of June 30, 1997, the
Company has been able to generate significant and consistent levels of
investment income that have helped to stabilize profits. Of the $1.3
billion of invested assets at June 30, 1997, $816.5 million were held by
Terra Nova and $451.0 million were held by Terra Nova (Bermuda), with the
balance held by other group companies. The impact of investment income on
the Company's results is evidenced by the average operating ratio of the
Company's insurance subsidiaries over the last four years of 77.1%.
The proceeds from the offering of the Old Notes have and will enable
the Company to further its growth strategy, which includes:
. Capital growth. With an expected total capitalization of $597.3 million
after giving effect to proceeds from the offering of the Old Notes, the
Company expects to continue to increase its business writings in selected
areas and to pursue strategic acquisitions which management believes will
enhance the Company's presence in targeted markets or provide products
for the group as a whole, including the acquisition of Corifrance (as
described below).
. Expected further participation in the Octavian Syndicates. The Company
has provided $293.9 million of the Octavian Syndicates' total
underwriting capacity for the 1997 year of account. Based on the Octavian
Syndicates' recent utilization of capacity, the Company estimates that
such premiums written and included in its 1997 financial statements will
be between $175 and $200 million. The Company expects to increase the
capacity available to the Octavian Syndicates for the 1998 year of
account. In addition to providing additional capacity to the Octavian
Syndicates, the Company may increase its involvement in Lloyd's in the
future, through acquiring the rights to manage additional syndicates or
employing additional underwriters. The number of syndicates managed by
Octavian increased to seven for the 1997 year of account.
. Growth in continental Europe. On September 8, 1997, the Company acquired
Compagnie de Reassurance d'Ile de France, Corifrance, based in Paris.
Corifrance is a French reinsurance company which transacts business
internationally, although mainly outside the United States. Its premium
volume in 1996 was $25 million.
4
<PAGE>
Organization
The Company and its principal subsidiaries are currently organized as
follows:
----------------
Terra Nova
(Bermuda)
Holdings Ltd.
("Bermuda
Holdings")
----------------
-----------------
Terra Nova
Insurance
(UK) Holdings
plc (the
("Issuer")
-----------------
- - ---------------- ------------- ----------------- -------------------
Terra Nova Octvian Terra Nova Terra Nova
Insurance Syndicate Capital Limited (Bermuda)
Company Management ("Terra Nova Insurance Co.
Limited Limited Capital") Ltd. ("Terra Nova
("Terra Nova") ("Octavian") (Bermuda)")
- - ---------------- ------------- ----------------- -------------------
- - -----------------
Compagnie de
Reassurance
d'lle de France
Corifrance
("Corifrance")
- - -----------------
5
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer................... Up to $75.0 million aggregate principal
amount of Exchange Notes are being
offered in exchange for a like aggregate
principal amount of Old Notes. The
Issuer is making the Exchange Offer in
order to satisfy its obligations under
the Registration Rights Agreement, dated
as of August 20, 1997, by and among the
Issuer, Bermuda Holdings and the Initial
Purchaser (the "Registration Rights
Agreement") relating to the Old Notes.
For a description of the procedures for
tendering Old Notes, see "The Exchange
Offer--Procedures for Tendering Old
Notes."
Expiration Date...................... 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 Issuer or Bermuda
Holdings (in which case the term
"Expiration Date" shall mean the latest
date and time to which the Exchange
Offer is extended). Any waiver,
extension or termination of the Exchange
Offer will be publicly announced by the
Issuer or Bermuda Holdings through a
release to the Dow Jones News Service
and as otherwise required by applicable
law or regulations. See "The Exchange
Offer--Terms of the Exchange Offer;
Period for Tendering Old Notes."
Certain Conditions to the Exchange
Offer............................... The Exchange Offer is subject to certain
conditions. The Issuer reserves the
right, subject to applicable law, at any
time and from time to time, (i) to delay
the acceptance of the Old Notes for
exchange, (ii) to amend or terminate the
Exchange Offer if certain specified
conditions have not been satisfied, as
set forth under "The Exchange Offer--
Certain Conditions to the Exchange
Offer," (iii) to extend the Expiration
Date of the Exchange Offer and retain
all Old Notes tendered pursuant to the
Exchange Offer, subject, however, to the
right of holders of Old Notes to
withdraw their tendered Old Notes, or
(iv) to amend the terms of the Exchange
Offer in any manner deemed by it to be
advantageous to the holders of the Old
Notes. See "The Exchange Offer--Terms of
the Exchange Offer; Period for Tendering
Old Notes."
Withdrawal Rights.................... Tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration
Date by delivering a written notice of
such withdrawal to the Exchange Agent in
conformity with certain procedures set
forth below under "The Exchange Offer--
Withdrawal Rights."
Procedures for Tendering Old Notes... Tendering holders of Old Notes must
complete and sign a Letter of
Transmittal in accordance with the
instructions contained herein and
therein and forward the same by mail,
facsimile or hand delivery, together
with any other required documents, to
the Exchange Agent (as defined below) at
the address set forth herein and effect
a tender of Old Notes pursuant to the
procedures for book-entry transfers as
provided for herein by the Expiration
Date, either with a timely confirmation
of Book-Entry transfer (a "Book-Entry
Confirmation") or in compliance with the
specified procedures for guaranteed
delivery of Old Notes. Certain brokers,
dealers, commercial banks, trust
companies and other nominees may also
effect tenders by book-entry transfer.
Holders of Old Notes 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 Notes pursuant to the
Exchange Offer. See "The Exchange
Offer--Procedures for Tendering Old
Notes." Letters of Transmittal and Book-
Entry Confirmations should not be sent
to the Issuer or Bermuda Holdings. Such
documents should only be sent to the
Exchange Agent. Questions regarding how
to tender and requests for information
should be directed to the Exchange
Agent. See "The Exchange Offer--Exchange
Agent."
Guaranteed Delivery Procedures....... Holders of Old Notes who wish to tender
their Old Notes and who cannot deliver
Book-Entry Confirmations, a Letter of
Transmittal or any other document
required by the Letter of Transmittal to
the Exchange Agent
6
<PAGE>
prior to the Expiration Date, must
tender their Old Notes according to the
guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed
Delivery Procedures."
Resales of Exchange Notes............ The Issuer is making the Exchange Offer
in reliance on the position of the staff
of the Division Corporation Finance of
the Commission as set forth in certain
no-action letters addressed to third
parties in other transactions (including
Exxon Capital Holdings Corporation
(available May 13, 1988), Morgan Stanley
& Co. Incorporated (available June 5,
1991), K-III Communications Corporation
(available May 14, 1993) and Shearman &
Sterling (available July 2, 1993)).
However, neither the Issuer nor Bermuda
Holdings has sought its own no-action
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, and subject to the
two immediately following sentences, the
Issuer believes that Exchange Notes
issued pursuant to this Exchange Offer
in exchange for Old Notes may be offered
for resale, resold and otherwise
transferred by a holder thereof (other
than a holder who is a broker-dealer or
an "affiliate" of the Issuer or Bermuda
Holdings within the meaning of Rule 405
of the Securities Act) without further
compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such
Exchange Notes are acquired in the
ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to
participate, in a distribution (within
the meaning of the Securities Act) of
such Exchange Notes. However, any holder
of Old Notes who is an "affiliate" of
the Issuer or Bermuda Holdings or who
intends to participate in the Exchange
Offer for the purpose of distributing
the Exchange Notes, or any broker-dealer
who purchased the Old Notes from the
Issuer or Bermuda Holdings 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 Notes in the Exchange Offer and
(c) must comply with registration and
prospectus delivery requirements of the
Securities Act in connection with any
sale or other transfer of such Old Notes
unless such sale is made pursuant to an
exemption from such requirements. In
addition, as described below, if any
broker-dealer holds Old Notes acquired
for its own account as a result of
market-making or other trading
activities and exchanges such Old Notes
for Exchange Notes, then such broker-
dealer must deliver a prospectus meeting
the requirements of the Securities Act
in connection with any resales of such
Exchange Notes.
Each holder of Old Notes who wishes to
exchange Old Notes for Exchange Notes in
the Exchange Offer will be required to
represent that (i) it is not an
"affiliate" of the Issuer or Bermuda
Holdings within the meaning of Rule 405
under the Securities Act, (ii) any
Exchange Notes to be received by it are
being acquired in the ordinary course of
its business, and (iii) it has no
arrangement or understanding with any
person to participate in a distribution
(within the meaning of the Securities
Act) of such Exchange Notes. Each
broker-dealer that receives Exchange
Notes for its own account pursuant to
the Exchange Offer must acknowledge that
it acquired the Old Notes for its own
account as the result of market-making
activities or other trading activities
and must agree that it will deliver a
prospectus
7
<PAGE>
meeting the requirements of the
Securities Act in connection with any
resale of such Exchange Notes. A broker-
dealer that acquired Old Notes in a
transaction other than as part of its
market-making or other trading
activities will not be able to
participate in the Exchange Offer. 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 no-action letters referred to above,
the Issuer believes that broker-dealers
who acquired Old Notes for their own
accounts as a result of market-making
activities or other trading activities
("Participating Broker-Dealers") may
fulfill their prospectus delivery
requirements with respect to the
Exchange Notes received upon exchange of
such Old Notes with a prospectus meeting
the requirements of the Securities Act,
which may be the prospectus prepared for
an exchange offer so long as it contains
a description of the plan of
distribution with respect to the resale
of such Exchange Notes. Subject to
certain provisions set forth in the
Registration Rights Agreement and the
limitations described below under "The
Exchange Offer--Resale of Exchange
Notes," the Issuer and Bermuda Holdings
have agreed that this Prospectus, as it
may be amended or supplemented from time
to time, may be used by a Participating
Broker-Dealer in connection with resales
of such Exchange Notes for a period
ending 180 days after the Expiration
Date (subject to extension under certain
limited circumstances) or, if earlier,
when all such Exchange Notes have been
disposed of by such Participating
Broker-Dealer. See "Plan of
Distribution." Any Participating Broker-
Dealer who is an "affiliate" of the
Issuer or Bermuda Holdings may not rely
on such no-action letters and must
comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any
resale transaction. See "The Exchange
Offer--Resales of Exchange Notes."
Acceptance of Old Notes for Exchange. Subject to the terms and conditions of
the Exchange Offer, including the
reservation of certain rights by the
Issuer and Bermuda Holdings, the Issuer
will accept for exchange any and all Old
Notes which are properly tendered in the
Exchange Offer, and not withdrawn, prior
to the Expiration Date. Subject to such
terms and conditions, the Exchange Notes
issued pursuant to the Exchange Offer
will be delivered promptly following the
Expiration Date. See "The Exchange
Offer--Acceptance of Old Notes for
Exchange."
Exchange Agent....................... The exchange agent with respect to the
Exchange Offer is The Chase Manhattan
Bank (the "Exchange Agent"). The address
and telephone and facsimile numbers of
the Exchange Agent are set forth in "The
Exchange Offer--Exchange Agent" and in
the Letter of Transmittal.
Use of Proceeds...................... Neither the Issuer nor Bermuda Holdings
will receive any cash proceeds from the
issuance of the Exchange Notes offered
hereby. See "Use of Proceeds."
Certain United States Federal Income
Tax Considerations.................. Holders of Old Notes should review the
information set forth under "Certain Tax
Consequences of the Exchange Offer"
prior to tendering Old Notes in the
Exchange Offer.
8
<PAGE>
THE EXCHANGE NOTES
Securities Offered................... Up to $75.0 million principal amount of
7.2% Senior Notes due 2007. The Exchange
Notes will be issued and the Old Notes
were issued under an Indenture dated as
of August 26, 1997 (the "Indenture")
between the Issuer, Bermuda Holdings and
The Chase Manhattan Bank (the
"Trustee"). The Exchange Notes and any
Old Notes which remain outstanding after
consummation of the Exchange Offer will
constitute a single series of debt
securities under the Indenture and,
accordingly, will vote together as a
single class for purposes of determining
whether holders of the requisite
percentage in outstanding principal
amount thereof have taken certain
actions or exercised certain rights
under the Indenture. See "Description of
Exchange Notes--General." The terms of
the Exchange Notes are identical in all
material respects to the terms of the
Old Notes, except that (i) the offer and
sale of the Exchange Notes have been
registered under the Securities Act and
therefore the Exchange Notes are not
subject to certain restrictions on
transfer applicable to the Old Notes,
will not bear legends relating thereto
and will not be entitled to registration
rights or other rights under the
Registration Rights Agreement, and (ii)
the Exchange Notes will not provide for
any increase in the interest rate
thereof, which rights and provision will
terminate as to all of the Senior Notes
upon the consummation of the Exchange
Offer. See "Description of Old Notes"
and "Description of Exchange Notes."
Maturity Date........................ August 15, 2007.
Interest............................. Interest on the Exchange Notes will
accrue at the rate of 7.2% per annum and
is payable semi-annually on February 15
and August 15 of each year, commencing
on February 15, 1998. Each Exchange Note
will bear interest from August 26, 1997,
the issue date for the Old Notes.
Holders of the Old Notes whose Old Notes
are accepted for exchange will not
receive accrued interest on such Old
Notes and will be deemed to have waived
the right to receive any interest on
such Old Notes accrued, from and after
August 26, 1997.
Guarantee............................ The Exchange Notes will be fully and
unconditionally guaranteed on a senior
basis by Bermuda Holdings. See
"Description of Exchange Notes--
Guarantee."
Ranking.............................. The Exchange Notes and the Guarantee
will constitute unsecured senior
obligations of the Issuer and Bermuda
Holdings, respectively, and will rank
pari passu in right of payment with all
other senior indebtedness, if any, of
the Issuer and Bermuda Holdings,
respectively. Because the Issuer and
Bermuda Holdings are holding companies,
the Exchange Notes and the Guarantee
will be effectively subordinated to all
existing and future liabilities of their
respective insurance company
subsidiaries. See "Risk Factors--Holding
Company Structure; Dividend
Restrictions."
Optional Redemption.................. The Exchange Notes are redeemable at the
option of the Issuer at any time in
whole or in part, at a redemption price
equal to the sum of (i) the principal
amount of the Exchange Notes being
redeemed, plus accrued and unpaid
interest thereon to the redemption date,
and (ii) the Make-Whole Amount, if any.
See "Description of Exchange Notes--
Optional Redemption."
9
<PAGE>
Tax Redemption....................... ++The Exchange Notes are redeemable at
the option of the Issuer, under certain
circumstances, at a price equal to 100%
of the principal amount thereof, plus
accrued and unpaid interest to the
redemption date, in the event that
withholding of taxes is required by any
Relevant Jurisdiction (as defined
herein) with respect to interest
payments to United States holders of the
Exchange Notes. See "Description of
Exchange Notes--Tax Redemption."
Listing.............................. The Issuer intends to list the Exchange
Notes on the Luxembourg Stock Exchange.
Absence of Market for the Exchange
Notes............................... The Exchange Notes will be a new issue
of securities for which there currently
is no market and there can be no
assurance as to the liquidity of any
market that may develop for the Exchange
Notes or the ability of the holders to
sell their Exchange Notes, as the case
may be. The Issuer and Bermuda Holdings
currently do not intend to apply for
listing of the Exchange Notes on any
securities exchange other than the
Luxembourg Stock Exchange or for
quotation through the National
Association of Securities Dealers
Automated Quotation System.
Use of Proceeds...................... Neither the Issuer nor Bermuda Holdings
will receive any cash proceeds from the
issuance of the Exchange Notes offered
hereby. The net proceeds received from
the issuance and sale of the Old Notes
were used to increase the capital and
surplus of the subsidiaries of the
Issuer and for general corporate
purposes, including the acquisition of
Corifrance. See "Use of Proceeds."
Book-Entry; Form...................... The Exchange Notes will initially be
issued as one or more global notes
without coupons in bearer form (the
"Global Note"), which will be deposited
with Chase Manhattan Bank Luxembourg
S.A., as custodian thereof (the
"Custodian"), for the benefit of The
Chase Manhattan Bank, as depositary (the
"Depositary"), pursuant to the
Depositary Agreement (as defined
herein). The Depositary will issue one
or more global receipts representing the
Exchange Notes, which will be delivered
and registered in the name of DTC or its
nominee. Beneficial interests in the
Exchange Notes will be shown on, and
transfers thereof effective only
through, the records maintained in book-
entry form by DTC and its participants.
See "Description of Exchange Notes--
General" and "Description of Depositary
Agreement--General."
CERTAIN CONSEQUENCES OF A FAILURE TO EXCHANGE OLD NOTES
The sale of the Old Notes was not registered under the Securities Act or
any state securities laws and therefore the Old Notes 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,
including the Issuer's, Bermuda Holdings' and the Trustee's right in certain
cases to require the delivery of opinions of counsel, certifications and other
information prior to any such transfer. Old Notes 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 Notes which remain outstanding will not be entitled to any
rights to have the resale of such Old Notes registered under the Securities Act
or to any similar rights under the Registration Rights Agreement. Neither the
Issuer nor Bermuda Holdings currently intends to register under the Securities
Act the resale of any Old Notes which remain outstanding after consummation of
the Exchange Offer.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. In addition, although the Old Notes are eligible for trading in the
Depositary's Same-Day
10
<PAGE>
Funds Settlement System, to the extent that Old Notes are tendered and accepted
in connection with the Exchange Offer, any trading market for Old Notes which
remain outstanding after the Exchange Offer could be adversely affected.
The Exchange Notes and any Old Notes which remain outstanding after
consummation of the Exchange Offer will constitute a single series of debt
securities under the Indenture and, accordingly, will vote together as a single
class for purposes of determining whether holders of the requisite percentage in
outstanding principal amount thereof have taken certain actions or exercised
certain rights under the Indenture. See "Description of Exchange Notes--
General."
The Old Notes provide that, in the event the Exchange Offer is not
consummated or a Shelf Registration Statement (as defined herein) is not
declared effective on or prior to February 26, 1998, then the annual interest
rate borne by the Old Notes shall be increased to 7.45%. If the Exchange Offer
is not consummated or a Shelf Registration Statement is not declared effective
by May 26, 1998, then the annual interest rate borne by the Old Notes shall be
increased to 7.7%. Upon consummation of the Exchange Offer or the effectiveness
of such Shelf Registration Statement, the interest rate borne by the Old Notes
will return to 7.2%.
11
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus the
following should be considered carefully in evaluating an investment in the
Exchange Notes offered hereby.
Holding Company Structure; Dividend Restrictions
The Issuer is a holding company whose primary assets are the capital stock
of Terra Nova, Octavian, Terra Nova Capital and Corifrance, and Bermuda Holdings
is a holding company whose primary assets are the capital stock of the Issuer
and Terra Nova (Bermuda). A substantial amount of the Issuer's cash flow is
derived from dividends from Terra Nova and substantially all of the Bermuda
Holdings' cash flow is derived from dividends from the Issuer and Terra Nova
(Bermuda). The payment of dividends and other payments by Terra Nova and Terra
Nova (Bermuda) is subject to restrictions under U.K. law and Bermuda law,
respectively.
Under U.K. company law, Terra Nova may not declare or pay a dividend except
from its distributable profits, which is its accumulated realized profits (so
far as not previously used by distribution or capitalization) less its
accumulated realized losses (so far as not previously written off in a reduction
or reorganization of capital). U.K. insurance company law and regulation require
an insurance company, such as Terra Nova, to maintain a minimum level of
solvency and provide that such a company may only pay a dividend to the extent
that the dividend would not reduce such company's net assets below its minimum
level of solvency. In addition, before Terra Nova may declare or pay any
dividend, it is required to give 14 days' advance notice to the U.K. Secretary
of State for Trade and Industry acting through the U.K. Department of Trade and
Industry (the "DTI"), which may direct that no such declaration or payment be
made.
Under Bermuda insurance law, Terra Nova (Bermuda) is prohibited from
declaring or paying any dividends during any financial year if it is in breach
of its "minimum solvency margin" or "minimum liquidity ratio" or if the
declaration or payment of such dividends would cause it to fail to meet such
margin or ratio. Furthermore, if Terra Nova (Bermuda) fails to meet its minimum
solvency margin or minimum liquidity ratio on the last day of any financial
year, it will be prohibited, without the approval of the Minister of Finance of
Bermuda (the "Minister"), from declaring or paying any dividends during the next
financial year. In addition, under The Companies Act 1981, a company may not pay
a dividend or make a distribution out of contributed surplus if there are
reasonable grounds for believing that (a) the company is, or would be, after the
payment unable to pay its liabilities as they become due, or (b) the realizable
value of the company's assets would thereby be less than the aggregate of its
liabilities and its issued share capital and share premium accounts.
There can be no assurance as to the exact amount of dividend payments, if
any, which the DTI will permit Terra Nova to make in the future or as to what
the standards for dividend payments by Terra Nova or Terra Nova (Bermuda) will
be in the future. Moreover, the surplus of each of Terra Nova and Terra Nova
(Bermuda) will be affected by the value of its respective investment portfolio,
which is sensitive to interest rate changes.
Because the Issuer and Bermuda Holdings are holding companies, the Exchange
Notes and the Guarantee are effectively subordinated to all existing and future
liabilities of their respective insurance company subsidiaries which at June 30,
1997 consisted principally of insurance liabilities and aggregated $1.6 billion
calculated in accordance with GAAP.
Ability to Service Interest and Principal Payments on the Senior Notes
The Issuer expects to satisfy its interest payment obligations with respect
to the Senior Notes from dividend payments made by Terra Nova as well as capital
subscriptions and other payments from Bermuda Holdings. Similarly, Bermuda
Holdings' ability to fulfill the Guarantee or to make capital subscriptions and
other payments to the Issuer is based on dividend payments by the Issuer or
Terra Nova (Bermuda). Neither the Issuer nor Bermuda Holdings intends to
establish a sinking fund with respect to the Senior Notes. To the extent
dividends or other monies received by the Issuer or Bermuda Holdings are
insufficient to make, directly or through the Guarantee, interest payments on
the Senior Notes and principal payments on the Senior Notes at maturity or upon
the occurrence of an Event of Default (as defined herein), the Company
anticipates that it may have to borrow additional funds or sell some of its
assets. There can be no assurance that such actions could be effected on
satisfactory terms, in a timely manner or at all, that they would enable the
Issuer or Bermuda Holdings to make any of the foregoing payments on the Senior
Notes or that any such actions would be permitted under the Indenture.
12
<PAGE>
Leverage
As of June 30, 1997, and after giving effect to the issuance and sale of
the Senior Notes, the Company had outstanding indebtedness of approximately $175
million and shareholders' equity of approximately $422.3 million.
The 1995 indenture pursuant to which the 1995 Senior Notes were issued,
subject to certain limitations, and the Indenture (collectively, the
"Indentures") permit the Company to incur additional indebtedness. Management
believes that cash flow from operations, together with other available sources
of liquidity, will be adequate to permit the Issuer to make required payments of
principal and interest on its indebtedness and to fund the working capital
requirements of its operating subsidiaries, although there can be no assurance
that this will be the case. To the extent that cash flow from operations is
insufficient to satisfy the Company's cash requirements, the Company may seek to
obtain funds from additional borrowings, sell a portion of the Company's
business, investment securities or other assets, engage in other transactions,
raise additional equity capital or acquire other businesses that would provide
cash flow (in all such cases to the extent permitted by the Indentures). There
can be no assurance that such actions could be effected on satisfactory terms,
in a timely manner or at all, that they would enable the Issuer or Bermuda
Holdings to make any of the payments due on the Senior Notes or that any such
actions would be permitted under the Indentures.
The Company's leverage could make the Company vulnerable to changes in
general economic conditions and impair the Company's ability to obtain
additional financing for working capital, acquisitions or general corporate
purposes. In addition, as noted above, Bermuda Holdings and the Issuer are
dependent on dividend payments from subsidiaries to meet their obligations,
including obligations under the Senior Notes.
Cyclicality of Insurance and Reinsurance Industry; Industry Developments
The property, casualty and marine insurance and reinsurance industry has a
history of being highly cyclical. Demand for reinsurance is influenced
significantly by underwriting results of primary property, casualty and marine
insurers and prevailing general economic and market conditions, all of which
affect liability retention decisions of primary insurers and reinsurance premium
rates. The supply of insurance and reinsurance is related directly to prevailing
prices and levels of surplus capacity which, in turn, fluctuate in response to
changes in rates of return on investments being realized in the property,
casualty and marine insurance and reinsurance industry.
As a result of the catastrophe losses suffered during the late 1980s and
the early 1990s and the contraction in reinsurance capacity caused by the
withdrawal of a number of the Company's competitors, property catastrophe
reinsurance rates hardened significantly and retentions increased sharply during
the period 1991 through 1993. In 1994, 1995 and 1996, property catastrophe
reinsurance rates fell from the strong levels of 1993. Management believes, in
light of its experience with the Company's renewals for 1997 business and
because of the absence of a major catastrophic event, that premium rates have
declined in 1997, but that rates and retention levels in the near future are
likely to remain substantially higher than those experienced in 1992.
Premium rates for U.S. casualty insurance and reinsurance have generally
declined since 1990, primarily because of more predictable forms of coverage,
such as claims made, and the effects of lower inflationary expectations. This
has resulted in more competitive conditions which have continued in 1997.
Since the substantial rate and deductible increases for marine insurance in
the 1992 and 1993 underwriting years, prices generally stabilized in 1994 and
1995 and fell in 1996. In 1997 management believes that increased competition
will lead generally to a further decline in rates. Increased deductibles play an
important role in reducing the number of very small claims. In the past, this
business was characterized by large volumes of very small claims, arising from
very low levels of deductibles which had remained unchanged for a number of
years, during which repair costs rose due to inflation and currency
fluctuations.
There can be no assurance that rates and/or underwriting terms and
conditions will not deteriorate further or at other times in the future as a
result of additional capital provided by recent or future market entrants or for
other reasons. Consolidations within the insurance industry may also reduce the
demand for reinsurance, which may adversely affect rates and/or underwriting
terms and conditions.
13
<PAGE>
Competition
The property and casualty insurance and reinsurance industry is highly
competitive. The Company competes for its business in the United States and
internationally with other Lloyd's syndicates, other London Market companies,
other domestic Bermuda reinsurers, domestic United States insurers and
reinsurers and other international insurers and reinsurers, many of whom are
larger and have greater financial resources than the Company. Additionally,
other well-capitalized insurers and reinsurers could start writing, or increase
their writing of, the classes of business in which the Company is primarily
engaged.
Competition in the classes of business which the Company writes is based on
many factors, including the perceived overall financial strength of the insurer
or reinsurer, claims paying ability rating, premiums charged and other terms and
conditions, services provided, reputation and perceived technical ability and
experience of staff. Management of the Company believes that its principal
competitive strengths are its management and operational flexibility, its
expertise in risk assessment and underwriting skills and its relationships with
Lloyd's brokers, other leading brokers and reinsurance intermediaries.
Ratings have become an increasingly important factor in establishing the
competitive position of insurance and reinsurance companies. Terra Nova and
Terra Nova (Bermuda) carry A, A- and A+ claims paying ability ratings by S&P,
A.M. Best and Duff & Phelps, respectively, which is lower than those held by
some of its principal competitors. S&P and Duff & Phelps ratings range from a
high "AAA" to a low "CCC", while A.M. Best ratings range from a high "A++" to a
low "C-."
Claims paying ability ratings are based upon a review of publicly available
information and communications between rating agency analysts and the insurance
company's management. Such ratings are the opinion of the rating agency giving
the rating and are not directed toward the protection of investors.
Adequacy of Loss Reserves
The Company establishes loss reserves for the ultimate payment of all
losses and loss adjustment expenses (LAE) incurred with respect to its business.
The loss and LAE liabilities consist of two components: case reserves and
incurred but not reported (IBNR) reserves. Case reserves are estimates of future
loss payments with respect to insured events which have been reported to the
insurer. These reports may be made formally by the cedent or informally by other
means, such as evaluation of claims by attorneys. The Company determines case
reserves on a contract by contract basis. The amount reserved is the amount
expected to be ultimately paid and is not discounted or otherwise adjusted for
the time value of money. IBNR reserves are actuarially determined and reflect
(i) the estimated ultimate loss amount which will be paid by the insurer and
(ii) an estimate of possible changes in the value of those claims which have
already been reported to the insurer. The particular method of setting IBNR
reserves depends upon the class of business involved. The specific techniques
involve the use of projections and models based on the Company's or the relevant
market's experience and exposure. IBNR reserves reflect a margin for the
uncertainty involved as determined by sensitivity tests. While management
believes that the Company's reserves for losses and LAE are adequate, there can
be no assurances that the Company's ultimate losses and LAE will not deviate,
perhaps substantially, from the estimates reflected in its financial statements.
If the Company's reserves should prove to be inadequate, the Company will be
required to increase reserves, which could have a material adverse effect on the
Company's financial condition.
Regulation
Terra Nova is a U.K. insurance company authorized by the DTI to carry on
insurance business (including reinsurance) in the U.K. and is subject to
regulation and supervision in the U.K. by the DTI. The Insurance Companies Act
1982, as amended, imposes on U.K. insurance companies numerous requirements,
including capital, solvency, liquidity and management standards and auditing and
reporting requirements, and further grants to the DTI powers to supervise,
investigate and intervene in the affairs of U.K. insurance companies. As is
often the practice of the DTI in connection with a substantial change of control
of a U.K. insurance company, Terra Nova is currently subject to a Notice of
Requirements issued by the DTI on May 22, 1995 (as modified by notices dated
April 3 and 4, 1996) which, among other things, (i) requires 14 days' advance
notice of the declaration or payment of dividends, which declaration or payment
may be limited or prohibited by the DTI, (ii) requires Terra Nova to give notice
and, in some instances, obtain DTI consent, prior to entering into certain
transactions with connected persons and (iii) limits the annual amount of gross
premiums that may be written by Terra Nova. Each of Terra Nova Capital and
Octavian are subject to regulation and supervision by Lloyd's, including the
imposition of capital, solvency and management standards.
14
<PAGE>
Terra Nova (Bermuda) is a registered Bermuda insurance company and is
subject to regulation and supervision in Bermuda. The Insurance Act 1978, as
amended, imposes on Bermuda insurance companies capital, solvency and
liquidity standards and auditing and reporting requirements.
Neither Terra Nova nor Terra Nova (Bermuda) is registered or licensed as an
insurance company in any jurisdiction in the United States. Nevertheless,
each state of the United States regulates to an extent the sale of insurance
by foreign insurers such as Terra Nova and Terra Nova (Bermuda). The
administration of insurance laws and regulations in the United States is
vested in state agencies that have broad powers and are concerned primarily
with the protection of policyholders. The status of foreign insurance
companies within the insurance regulatory framework in the United States has
been subject to increased scrutiny by the National Association of Insurance
Commissioners (the "NAIC"), state legislatures and insurance regulators, as
well as the U.S. Congress.
While it is not possible to predict the future impact of changing law or
regulation on the Company's operations, such changes could have a material
adverse effect on the Company and the insurance industry in general.
Tax Matters
The Company believes that neither Terra Nova nor Terra Nova (Bermuda) will
be subject to U.S. tax, other than U.S. excise tax on premiums of Terra Nova
(Bermuda) with respect to risks located in the United States and withholding
tax on certain U.S. source income, because neither engages in a trade or
business in the United States. However, since definitive identification of
activities that constitute being engaged in a U.S. trade or business is not
provided by the Internal Revenue Code (the "Code") or Treasury Regulations or
court decisions, there can be no assurance that the Internal Revenue Service
(the "Service") will not contend that Terra Nova (Bermuda) or Terra Nova is
engaged in a U.S. trade or business.
If Terra Nova (Bermuda) were considered to be engaged in a U.S. trade or
business, it would be subject to U.S. federal income tax at regular corporate
rates on income attributable to its U.S. trade or business, except to the
extent provided by the income tax treaty between the U.S. and Bermuda (the
"Bermuda Treaty"), and might also be subject to a 30% "branch profits" tax.
There can be no assurance that Terra Nova (Bermuda) is entitled, or in the
future will be entitled, to benefits under the Bermuda Treaty. However, if
Terra Nova (Bermuda) were so entitled and were considered to be engaged in a
U.S. trade or business, it would not be subject to U.S. federal income tax at
regular corporate rates except on income attributable to a U.S. permanent
establishment. Terra Nova (Bermuda) might, however, be subject to the U.S.
branch profits tax if it were engaged in a U.S. trade or business, even if it
did not have a permanent establishment in the United States. Although the
Company believes that Terra Nova (Bermuda) does not have a U.S. permanent
establishment, there can be no assurance that the Service will not contend
otherwise.
If any subsidiary of UK Holdings were considered to be engaged in a U.S.
trade or business, that entity would be subject to U.S. federal income tax at
regular corporate rates on income attributable to its U.S. trade or business
and might also be subject to branch profits tax, except to the extent
provided by the income tax treaty between the U.S. and U.K. (the "U.K.
Treaty"). The Company believes that the subsidiaries of UK Holdings will be
qualified residents of the U.K. entitled to benefits under the U.K. Treaty
and that, accordingly, even if any of those entities were considered to be
engaged in a U.S. trade or business, it would be subject to U.S. federal
income tax at regular corporate rates only on income attributable to a U.S.
permanent establishment and would not be subject to the branch profits tax.
Although the Company believes that none of the subsidiaries of UK Holdings
has a U.S. permanent establishment, there can be no assurance that the
Service will not contend otherwise.
If the Company or any of its subsidiaries were considered to be subject to
U.S. federal income tax in any of the ways described above, the Company's
results of operations could be materially adversely affected.
Absence of Public Market for the Exchange Notes
There is no existing market for the Exchange Notes and there can be no
assurance as to the liquidity of any markets that may develop for the
Exchange Notes or the ability of the holders to sell their Exchange Notes, as
the case may be. Future trading prices of the Exchange Notes will depend on
many factors including, among other things, general economic conditions,
government legislation or regulation, prevailing interest rates, the Issuer's
and Bermuda Holdings' operating results, and the market for similar
securities.
15
<PAGE>
Enforcement of Judgments
All of the directors and executive officers of the Issuer, all of the
executive officers of Bermuda Holdings, six of the eleven directors of
Bermuda Holdings, and the experts named herein are non-residents of the
United States, and all or a substantial portion of the assets of the Issuer,
Bermuda Holdings and most such persons are located outside the United States.
It may not be possible for investors to effect service of process within the
United States upon such persons or to enforce against any of them, the Issuer
or Bermuda Holdings judgments of courts of the United States predicated upon
the civil liability provisions of the federal or state securities laws of the
United States. The Issuer and Bermuda Holdings have been advised by their
respective counsel, Clifford Chance and Conyers, Dill & Pearman, that there
is doubt as to the enforceability in the United Kingdom and in Bermuda, in
original actions or in actions for enforcement of judgments of United States
courts, of civil liabilities predicated solely upon such securities laws.
Investment Performance
The Company's investment portfolio consists primarily of investment grade
securities with fixed maturities. The market value of the Company's
investments varies depending on economic and market conditions. Absent other
factors, the market values of fixed maturity securities are likely to decline
as interest rates rise. The Company may, from time to time, for business or
regulatory reasons, be required to sell certain of its investments at a time
when their market value is less than the cost of such investments.
16
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth summary consolidated financial information
with respect to the Company and Terra Nova, its predecessor, for the periods
indicated. This information should be read in conjunction with the
Consolidated Financial Statements of the Company and related notes thereto
and "Management's Discussion and Analysis of Results of Operations and
Financial Condition" which have been incorporated herein by reference.
In respect of Bermuda Holdings, the selected Statement of Operations Data
for the years ended December 31, 1995 and 1996 and the selected Balance Sheet
Data as of December 31, 1996 have been derived from the Company's audited
Consolidated Financial Statements incorporated herein by reference. The
selected Statement of Operations Data for the six months ended June 30, 1997
and the selected Balance Sheet Data as of June 30, 1997 have been derived
from the Company's unaudited condensed consolidated financial statements
incorporated by reference herein. The financial information for the Company
as of June 30, 1997 and for the six-month periods ended June 30, 1996 and
1997 is unaudited; however, in management's opinion, it includes all
adjustments (consisting of only normal recurring adjustments) necessary for a
fair presentation of results for such interim periods. The results of
operations for the periods ended June 30, 1996 and 1997 are not necessarily
indicative of the operating results for the full year.
The Selected Statutory Data for Terra Nova for the year ended December 31,
1996 has been derived from the audited annual return made to the DTI. The
data for the six months ended June 30, 1997 has been derived from the
unaudited return made to the DTI. The Selected Statutory Data for Terra Nova
(Bermuda) for the year ended December 31, 1996 has been derived from the
audited statutory financial statements of Terra Nova (Bermuda) and for the
six months ended June 30, 1997 has been derived from the unaudited financial
statements of Terra Nova (Bermuda). The respective statutory financial
information is prepared in accordance with the applicable statutory
accounting practices which differ from GAAP.
<TABLE>
<CAPTION>
Terra Nova Company
----------------------------------- ----------------------------------------------
Six Months
Year Ended December 31, Ending June 30,
---------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Gross premiums written...................... $ 318,999 $ 320,183 $ 359,362 $ 302,658 $ 361,010 $ 262,493 $ 331,759
Net premiums written........................ 225,561 262,019 282,503 246,985 311,166 225,184 278,320
Net premiums earned......................... 221,719 229,510 250,434 251,900 278,756 142,253 174,384
Net investment income....................... 49,052 46,888 51,575 74,478 78,130 38,826 41,063
Realized net capital gains on
sales of investments....................... 30,709 40,533 13,898 9,384 11,750 12,182 7,512
Total revenues.............................. 285,652 314,877 320,722 336,872 378,059 196,611 230,318
Income (loss) from continuing
operations before income
taxes and minority interests............... (49,599)(1) 81,869 50,737 62,433 82,668 45,256 43,700
Income tax expense (benefit)................ (11,411) 27,586 16,458 16,630 17,777 10,142 9,052
Minority interest in income
of consolidated subsidiaries............... -- -- -- 2,552 985 985 --
Income (loss) from continuing
operations................................. (38,188)(1) 54,283 34,279 43,251 63,906 34,129 34,648
Net income (loss)........................... (87,711)(1) 51,634 27,449 43,251 63,906 34,129 34,648
Dividends on the convertible
redeemable preferred shares................ -- -- -- 3,700 1,088 1,088 --
Net income (loss) to common
shareholders............................... (87,711)(1) 51,634 27,449 39,551 62,818 33,041 34,648
Balance Sheet Data (at end of period).......
Total investments and cash.................. $1,290,486 $1,290,364
Total assets................................ 1,867,347 2,001,040
Unpaid losses and loss adjustment expenses.. 1,078,108 1,042,855
Long-term debt.............................. 100,000 100,000
Total shareholders' equity.................. 398,759 422,345
(Continued on following page)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Terra Nova Company
----------------------------------- ----------------------------------------------
Six Months
Year Ended December 31, Ending June 30,
---------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
(Continued from previous page)
Selected Statutory Data (at end of period)(2)
Terra Nova--Capital and surplus.............. $236,206 $253,080
Terra Nova (Bermuda)--Capital and surplus.... 219,374 231,221
Other Data
EBITDA(3).................................... (48,749) 82,564 51,669 72,889 97,032 52,408 51,228
Adjusted EBITDA(4)........................... (79,458) 42,031 37,771 63,505 85,282 40,226 43,716
Loss and loss adjustment expense ratio(5).... 120.10% 71.24% 76.53% 71.10% 64.00% 66.60% 66.70%
Underwriting expense ratio(6)................ 31.07 29.15 30.25 32.71 33.20 31.60 32.70
------- ------ ------ ------ -------- ------ --------
Combined ratio(7)............................ 151.17% 100.39% 106.78% 103.81% 97.20% 98.20% 99.40%
======= ====== ====== ====== ======== ====== ========
Operating ratio(8)........................... 129.05% 79.96% 86.19% 74.24% 69.13% 70.90% 75.80%
======= ====== ====== ====== ======== ====== ========
</TABLE>
(1) The 1992 loss resulted primarily from (i) the unprecedented losses from
prior underwriting years in the LMX marine account, (ii) the frequency and
severity of catastrophe losses (primarily Hurricanes Andrew and Iniki)
experienced in that year, and (iii) large losses in the Company's aviation
account.
(2) Capital and surplus under U.K. and Bermuda law, respectively.
(3) EBITDA consists of earnings before interest, taxes, minority interest,
depreciation and amortization. EBITDA is presented here not as a measure of
operating results, but rather as a measure of the Company's cash flow and
debt service ability, and should not be considered as an alternative to net
earnings and cash flows determined in accordance with GAAP. Because the
Company's ability to obtain dividends from its insurance subsidiaries may be
subject to certain restrictions, EBITDA is not necessarily indicative of the
Company's ability to service its indebtedness.
(4) Adjusted EBITDA is comprised of EBITDA excluding realized gains or losses on
sales of investments.
(5) Loss and loss adjustment expense ratio represents the sum of losses and loss
adjustment expenses as a percentage of net premiums earned.
(6) Underwriting expense ratio represents underwriting expenses as a percentage
of net premiums earned.
(7) Combined ratio represents the sum of the loss and loss adjustment expense
ratio and underwriting expense ratio.
(8) Operating ratio represents the combined ratio less the ratio of net
investment income to net premiums earned.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
Bermuda Holdings and its consolidated subsidiaries for each of the last five
years.
<TABLE>
<CAPTION>
Terra Nova Company
-------------------- -----------------------------
Six Months
Year Ended December 31, Ending June 30,
---------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
NM NM NM 7.07 7.64 8.26 7.92
</TABLE>
In determining the ratio of earnings to fixed charges, earnings are defined
as earnings from continuing operations before income taxes and fixed charges.
Fixed charges consist of the total of interest on all indebtedness, amortization
of deferred debt issuance costs and one-third of operating lease rental expense
deemed representative of the interest factor. The ratio of earnings to fixed
charges has not been adjusted to reflect minority interests because the shares
of capital stock which comprise such minority interests are not entitled to
dividends until debt serviced payments on the Senior Notes have been made. Terra
Nova had no indebtedness through December 21, 1994, the date of its acquisition
by Bermuda Holdings.
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<PAGE>
USE OF PROCEEDS
Neither the Issuer nor Bermuda Holdings will receive any cash proceeds from
the issuance of the Exchange Notes offered hereby. The net proceeds received
from the issuance and sale of the Old Notes were used to increase the capital
and surplus of subsidiaries of the Issuer and for general corporate purposes,
including the acquisition of Corifrance.
CAPITALIZATION
The table below summarizes the capitalization of the Company as of June 30,
1997 and as adjusted for the offering of the Senior Notes.
<TABLE>
<CAPTION>
As of June 30, 1997
-----------------------
Actual As Adjusted
(dollars in millions)
<S> <C> <C>
Senior Notes......................................... $ 0.0 $ 75.0
1995 Senior Notes.................................... 100.0 100.0
Stockholders' Equity:
Common Stock........................................ 150.1 150.1
Stock Held in Trust................................. (9.8) (9.8)
Deferred equity compensation........................ 1.9 1.9
Additional paid-in capital.......................... 111.6 111.6
Net unrealized appreciation of equity investments
(net of tax)........................................ 34.8 34.8
Retained earnings.................................... 133.7 133.7
Cumulative translation adjustments................... 0.1 0.1
------ ------
Total Stockholders' Equity........................... 422.3 422.3
------ ------
Total Capitalization................................. $522.3 $597.3
====== ======
</TABLE>
19
<PAGE>
DESCRIPTION OF EXCHANGE NOTES
General
The Old Notes were and the Exchange Notes will be issued pursuant to an
Indenture (the "Indenture"), dated as of August 26, 1997, among the Issuer,
Bermuda Holdings and The Chase Manhattan Bank, as trustee (the "Trustee").
The Indenture has been filed as an exhibit to the registration statement (the
"Registration Statement") of which this Prospectus forms a part. The
Indenture will be qualified by the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") upon the effectiveness of the Registration
Statement. The terms of the Exchange Notes will include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Exchange Notes are subject to all such terms, and holders
of Exchange Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain
terms used below. The following description of the terms of the Exchange
Notes and the guarantee thereof by Bermuda Holdings pursuant to the Indenture
or pursuant to guarantees endorsed on the Exchange Notes (both forms of
guarantee are hereinafter referred to collectively as the "Guarantee") sets
forth certain terms and provisions of the Exchange Notes and the Guarantee.
The definitions of certain general terms used in the following summary are
set forth below under "--Certain Definitions."
The Exchange Notes will rank senior in right of payment to all subordinated
indebtedness of the Issuer and pari passu in right of payment with all
indebtedness of the Issuer not expressly subordinated or secured. The
Exchange Notes will be fully and unconditionally guaranteed on a senior basis
by Bermuda Holdings, and the obligations of Bermuda Holdings under the
Guarantee will rank senior in right of payment to all subordinated
indebtedness of Bermuda Holdings and pari passu in right of payment with all
indebtedness of Bermuda Holdings not expressly subordinated or secured.
The Exchange Notes and the Old Notes are sometimes referred to as,
collectively, the "Senior Notes" and, individually, a "Senior Note."
The Old Notes and the Exchange Notes will constitute a single series of
debt securities under the Indenture. If the Exchange Offer is consummated,
holders of Old Notes who do not exchange their Old Notes for Exchange Notes
will vote together with the holders of Exchange Notes for all relevant
purposes under the Indenture. In that regard, the Indenture requires that
certain actions by the holders thereunder (including acceleration following
an "Event of Default") must be taken, and certain rights must be exercised,
by specified minimum percentages of the aggregate principal amount of the
outstanding debt securities. In determining whether holders of the requisite
percentage and principal amount have given any notice, consent or waiver or
taken any other action permitted under the Indenture, any Old Notes which
remain outstanding after the Exchange Offer will be aggregated with the
Exchange Notes, and the holders of such Old Notes and Exchange Notes will
vote together as a single series for all such purposes. Accordingly, all
references herein to specified percentages in aggregate principal amount of
the outstanding Senior Notes shall be deemed to mean, at any time after the
Exchange Offer is consummated, such percentage in aggregate principal amount
of the Old Notes and Exchange Notes then outstanding.
The Old Notes were issued and the Exchange Notes will initially be issued
as one or more Global Notes, which Exchange Notes will be deposited with the
Custodian, as custodian thereof for the Depositary, pursuant to the Deposit
and Custody Agreement, dated as of August 26, 1997 (the "Depositary
Agreement"), among the Issuer, Bermuda Holdings, the Custodian and the
Depositary. For a description of the Depositary Agreement, see "Description
of Depositary Agreement." The Depositary will issue one or more Global
Receipts representing the Exchange Notes, each of which the Depositary will
deliver to and register in the name of DTC or its nominee. Unless and until
all of the beneficial interests in the Global Notes ("Book-Entry Interests")
are exchanged for Definitive Senior Notes (as defined herein), the depositary
interest to be held by DTC may not be transferred except as a whole by DTC to
a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or
by DTC or any such nominee to a successor of DTC or a nominee of such
successor.
The Issuer intends to list the Exchange Notes on the Luxembourg Stock
Exchange.
Guarantee
Bermuda Holdings will fully and unconditionally guarantee on a senior basis
to each holder of an Exchange Note the due and punctual payment of the
principal of and any premium and interest on such Exchange Note (and any
Additional Amounts (as defined herein) payable by the Issuer or Bermuda
Holdings in respect thereof) when and as the same shall
20
<PAGE>
become due and payable, whether at stated maturity, by declaration of
acceleration, call for redemption or otherwise, in accordance with the terms
of the Exchange Notes and the Indenture. Bermuda Holdings' obligations under
the Guarantee will be as if it were a principal debtor and not merely a
surety, and will be absolute and unconditional, irrespective of, and will be
unaffected by, any invalidity, irregularity or unenforceability of any
Exchange Note or the Indenture, any failure to enforce the provisions of any
Exchange Note or the Indenture, any waiver, modification or indulgence
granted to the Issuer with respect thereto, by the holder of any Exchange
Note or the Trustee, or any other circumstances which may otherwise
constitute a legal or equitable discharge of a surety or guarantor, provided,
however, that, notwithstanding the foregoing, no such waiver, modification or
indulgence shall, without the consent of Bermuda Holdings, increase the
principal amount of an Exchange Note or the interest rate thereon or increase
any premium payable upon redemption thereof.
Principal, Maturity and Interest
The Senior Notes are limited in an aggregate principal amount to $75.0
million. The Senior Notes will mature on August 15, 2007. Interest on the
Senior Notes accrues at the rate of 7.2% per annum and is payable semi-
annually in arrears in cash on each February 15 and August 15, commencing
February 15, 1998 (each, an "Interest Payment Date"), to holders of record on
the immediately preceding January 31 and July 31, respectively. Each Exchange
Note will bear interest from August 26, 1997, the issue date of the Old
Notes. Holders of the Old Notes whose Old Notes are accepted for exchange
will not receive any accrued interest on such Old Notes, and will be deemed
to have waived the right to receive any such accrued interest. Interest is to
be computed on the basis of a 360-day year of twelve 30-day months.
Optional Redemption
The Issuer shall have the right to redeem the Senior Notes, in whole or in
part, at any time and from time to time, subject to the receipt of any
consent required under the terms of any Indebtedness of the Issuer which may
be outstanding from time to time, upon not less than 30 nor more than 60 days
notice, at a redemption price equal to the sum of (i) the principal amount of
the Senior Notes being redeemed, plus accrued and unpaid interest thereon to
the redemption date, and (ii) the Make-Whole Amount, if any, with respect to
such Senior Notes.
"Make-Whole Amount" means, in connection with any optional redemption of
any Senior Notes, the excess, if any, of (i) the sum, as determined by a
Quotation Agent (as defined herein) of the present values of the principal
amount of such Senior Notes, together with scheduled payments of interest
from the redemption date to the Stated Maturity of the Senior Notes, in each
case 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 herein) over (ii) 100% of the principal amount of the Senior
Notes to be redeemed.
"Adjusted Treasury Rate" means, with respect to any redemption 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 redemption date, calculated on the
third Business Day preceding the redemption date, plus in each case .20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term from the redemption date to the Stated Maturity Date of the
Senior Notes 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
Senior Notes.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Issuer. "Reference Treasury Dealer" means: (i) Donaldson, Lufkin & Jenrette
Securities Corporation and its 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 Issuer shall
substitute therefor another Primary Treasury Dealer; and (ii) any other
Primary Treasury Dealer selected by the Indenture Trustee after consultation
with the Company.
"Comparable Treasury Price" means, with respect to any redemption 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 redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor
release) is not published or does not contain such prices on such Business
Day, (A) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference
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Treasury Dealer Quotations, or (B) if the Quotation Agent 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 redemption date, the average, as determined
by the Quotation Agent, 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 Indenture Trustee by such Quotation Agent at
5:00 p.m., New York City time, on the third Business Day preceding such
redemption date.
"Additional Amounts" means such additional amounts as may be necessary in
order that the amount of distributions then due and payable by the Issuer on
the outstanding Senior Notes shall not be reduced as a result of any
additional taxes, duties or other governmental charges to which the Issuer
has become subject as a result of an event described in "--Tax Redemption."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Senior Notes to be
redeemed at its registered address. Unless the Issuer defaults in payment of
the redemption price, on and after the redemption date interest ceases to
accrue on such Senior Notes called for redemption.
If the Issuer is required to pay any additional taxes, duties or other
governmental charges as a result of an event described in "--Tax Redemption,"
the Issuer will pay on the Senior Notes the Additional Amounts.
Tax Redemption
The Senior Notes may also be redeemed at the option of the Issuer, in whole
but not in part, upon not less than 30 nor more than 60 days' notice given as
provided in the Indenture, at any time at a redemption price equal to 100% of
the principal amount thereof, together with accrued and unpaid interest to
the date fixed for redemption if (a) the Issuer is required to issue
Definitive Senior Notes (other than upon the request of a holder of Book-
Entry Interests following an Event of Default) after using all reasonable
efforts to avoid having to issue such Definitive Senior Notes and the Issuer
is or would be so required in the absence of any applicable tax treaty on the
next succeeding Interest Payment Date to pay Additional Amounts with respect
to any of the Senior Notes as described under "--Payment of Additional
Amounts" or (b) the Issuer or Bermuda Holdings is or would be so required in
the absence of any applicable tax treaty on the next succeeding Interest
Payment Date to pay Additional Amounts with respect to the Senior Notes as
described under "--Payment of Additional Amounts," and, in either case, the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuer.
The Issuer or Bermuda Holdings will also pay, or make available for
payment, to holders of Senior Notes on the redemption date any Additional
Amounts (as described, but subject to the exceptions referred to, under "--
Payment of Additional Amounts") resulting from the payment of such redemption
price.
Selection and Notice
For information with respect to the redemption of Book-Entry Interests, see
"Description of Depositary Agreement--Redemption or Repurchase." With respect
to any outstanding Definitive Senior Notes, if less than all of the
definitive registered Senior Notes (the "Definitive Senior Notes") are to be
redeemed at any time, selection of Definitive Senior Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other
method as the Trustee deems fair and appropriate and in compliance with the
requirements of such principal national securities exchange, if any, on which
the Senior Notes are listed or, if the Senior Notes are not so listed, on a
pro rata basis, by lot or by such other method as the Trustee deems fair and
appropriate; provided that no Definitive Senior Notes with a principal amount
of $1,000 or less shall be redeemed in part. With respect to any Definitive
Senior Notes, notice of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each holder
of Definitive Senior Notes to be redeemed at its registered address. If any
Definitive Senior Note is to be redeemed in part only, the notice of
redemption that relates to such Definitive Senior Note shall state the
portion of the principal amount thereof to be redeemed. A new Definitive
Senior Note in principal amount equal to the unredeemed portion thereof will
be issued in the name of the holder thereof upon cancellation of the original
Definitive Senior Note. On and after the redemption date, interest will cease
to accrue on all Senior Notes or portions thereof called for redemption. The
Issuer or Bermuda Holdings will comply with the Exchange Act and the rules
and regulations of the Commission thereunder to the extent applicable to any
such redemption.
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Liens
The Indenture provides that Bermuda Holdings will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien securing Indebtedness (other than
Permitted Liens) on any property or asset now owned or hereafter acquired, or
on any income or profits therefrom or assign or convey any right to receive
income therefrom, unless all payments due under the Indenture and the Senior
Notes are secured on an equal and ratable basis with (or prior to) the
obligations so secured until such time as such obligations are no longer
secured by a Lien.
Reports
Whether or not required by the Exchange Act, so long as any Senior Notes
are outstanding, Bermuda Holdings will furnish to the holders of Senior Notes
all financial information that would be required to be contained in a filing
with the Commission on Form 10-K, 10-Q or 8-K if Bermuda Holdings were
required to file such form, including a "Management's Discussion and Analysis
of Results of Operations and Financial Condition," and, with respect to the
annual financial statements only, a report thereon by Bermuda Holdings'
independent public accountants. In addition, whether or not required by the
Exchange Act, Bermuda Holdings will file a copy of all such information and
reports with the Commission for public availability (unless the Commission
will not accept such a filing) and make such information available to
investors who request it in writing. See "Available Information."
Merger, Consolidation or Sale of Assets
The Indenture provides that after the Issue Date, Bermuda Holdings will
not, in any transaction, consolidate with or merge with or into any other
Person or, directly or indirectly, sell, or otherwise dispose of all or
substantially all of its assets in one or more related transactions to any
Person or group of affiliated Persons unless, at the time and after giving
effect thereto:
(i)(A) Bermuda Holdings shall be the continuing corporation, or (B) the
Person (if other than Bermuda Holdings) formed by such consolidation, or
into which Bermuda Holdings is merged, or the Person that acquires by sale
or other disposition the assets of Bermuda Holdings, substantially as an
entirety (the "Surviving Entity"), is a corporation duly organized and
validly existing under the laws of the United States, the United Kingdom,
Bermuda, the Republic of Ireland, Barbados, the Channel Islands, the Cayman
Islands or any other jurisdiction that is not materially adverse to the
holders of the Senior Notes and shall, in the case of clause (B), expressly
assume, by supplemental indenture, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, all the obligations of
Bermuda Holdings under the Guarantee and the Indenture;
(ii) immediately before and after such transaction, giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction on a pro forma
basis, the Consolidated Net Worth (after giving pro forma effect to such
transaction but not including the effect of any purchase accounting
adjustments or the accrual of deferred tax liabilities resulting from the
transaction) of Bermuda Holdings (or the Surviving Entity if Bermuda
Holdings is not the continuing obligor with respect to the Guarantee under
the Indenture) is at least equal to the Consolidated Net Worth of Bermuda
Holdings immediately before such transaction;
(iv) if any of the property or assets of Bermuda Holdings would
thereupon become subject to any Lien, the outstanding Senior Notes shall be
secured equally and ratably with (or prior to) the obligation or liability
secured by such Lien, unless Bermuda Holdings could create such Lien
without equally and ratably securing the Senior Notes; and
(v) Bermuda Holdings (or the Surviving Entity if Bermuda Holdings is not
the continuing obligor with respect to the Guarantee under the Indenture)
shall be entitled to all the benefits of the Tax Sharing Agreement.
In connection with any consolidation, merger, transfer or lease
contemplated hereby, Bermuda Holdings shall deliver to the Trustee an
officers' certificate and an opinion of counsel, each stating that such
consolidation, merger, transfer or lease and the supplemental indenture in
respect thereto comply with the provisions described herein and that all
conditions precedent provided for in the Indenture relating to such
transaction have been complied with.
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Upon any consolidation or merger or any sale, assignment, transfer, lease
or conveyance or other disposition of all or substantially all of the assets
of Bermuda Holdings in accordance with the provisions described in the second
preceding paragraph, the successor Person formed by such consolidation or
into which Bermuda Holdings is merged or to which such sale, assignment,
conveyance, transfer, lease or other disposition is made shall succeed to,
and be substituted for, and may exercise every right and power of Bermuda
Holdings under the Indenture with the same effect as if such successor Person
had been named as Bermuda Holdings therein. When a successor assumes all the
obligations of its predecessor under the Indenture and the Senior Notes, the
predecessor will be released from those obligations; provided that, in the
case of a transfer by lease, the predecessor corporation shall not be
released from the payment of principal and interest on the Senior Notes.
Payment of Additional Amounts
All payments on the Senior Notes, and all payments pursuant to any
Guarantee, will be made without deduction or withholding, for or on account
of any and all present and future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction or withholding of such taxes,
duties, assessments or governmental charges is then required by law. If any
deduction or withholding for or on account of any present or future taxes,
assessments or other governmental charges of the U.K., Bermuda or any
relevant jurisdiction or any political subdivision or taxing authority
thereof or therein (the "Relevant Jurisdiction") shall at any time be
required in respect of any amounts to be paid under the Senior Notes or under
the Guarantee, the Issuer or Bermuda Holdings, as applicable, will pay or
cause to be paid such additional amounts ("Additional Amounts") as may be
necessary in order that the net amounts received by a holder of a Senior Note
after such deduction or withholding shall be not less than the amounts
specified in such Senior Note to which such holder is entitled; provided,
however, that the Issuer or Bermuda Holdings, as applicable, shall not be
required to make any payment of Additional Amounts for or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, nominee, trust, partnership or
corporation), otherwise than merely by the holding of a Senior Note or the
receipt of amounts payable in respect of such Senior Notes, and any
Relevant Jurisdiction or such holder being subject to the jurisdiction of
any Relevant Jurisdiction, including, without limitation, such holder (or
such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having or having had a
permanent establishment therein or (ii) the presentation of the Senior Note
(where presentation is required) for payment on a date more than 30 days
after the date on which such payment became due and payable or the date on
which payment thereof is duly provided for, whichever occurs later, except
to the extent that the holder would have been entitled to Additional
Amounts had the Senior Notes been presented on the last day of such period
of 30 days;
(b) any tax, assessment, or other governmental charge that is imposed or
withheld by reason of the failure to comply by the holder of the Global
Note or, if different, the beneficial owner of the interest payable on the
Global Note, with a timely request of the Issuer addressed to such holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such holder or beneficial owner which is required or
imposed by a statute, treaty, regulation or administrative practice of the
taxing jurisdiction as a precondition to exemption from all or part of such
tax, assessment or governmental charge;
(c) payments in respect of Definitive Senior Notes issued at the request
of the holder (including on or after the occurrence of an Event of
Default); or
(d) any combination of items (a), (b) and (c) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any Senior Note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such
payment to the extent that a beneficiary or settlor with respect to such
fiduciary or member of such partnership or beneficial owner would not have
been entitled to any Additional Amounts had such beneficiary, settlor, member
or beneficial owner been the holder of such Senior Note.
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Events of Default and Remedies
The Indenture provides that each of the following constitutes an Event of
Default (whatever the reason for such Event of Default and whether or not it
shall be voluntary or involuntary or be effected by the operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) default in the payment of interest on any Senior Note when the same
becomes due and payable and the continuance of such default for a period of
30 days; or
(ii) default in the payment of the principal of (or premium, if any, on)
any Senior Note at its Maturity; or
(iii) default in the performance, or breach, of any covenant or
agreement of the Issuer or Bermuda Holdings under the Indenture (other than
the obligations specified in (i), (ii) and (viii)), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Issuer or Bermuda Holdings, as the
case may be, by the Trustee or to the Issuer or Bermuda Holdings, as the
case may be, and the Trustee by the holders of at least 25% in principal
amount of the outstanding Senior Notes a written notice specifying such
default or breach and stating that such notice is a "Notice of Default"; or
(iv)(A) an event of default shall have occurred under any mortgage,
bond, indenture, loan agreement or other document evidencing any issue of
Indebtedness of Bermuda Holdings or any Restricted Subsidiary for money
borrowed (or the payment of which is guaranteed by Bermuda Holdings or any
of its Restricted Subsidiaries), which issue has an aggregate outstanding
principal amount of not less than $10.0 million, and such default shall
have resulted in such Indebtedness becoming, whether by declaration or
otherwise, due and payable prior to the date on which it would otherwise
become due and payable, or (B) a default in any payment when due at final
Stated Maturity of any such Indebtedness outstanding in an aggregate
principal amount of not less than $10.0 million and, in each case, 10
Business Days shall have elapsed after such event during which period such
event shall not have been cured or rescinded or such Indebtedness shall not
have been satisfied; or
(v) final judgments or orders are rendered against Bermuda Holdings, the
Issuer or any Restricted Subsidiary by a court or regulatory agency of
competent jurisdiction which require the payment in money, either
individually or in an aggregate amount, that is more than $10.0 million
(other than any judgment to the extent a reputable non-affiliated insurance
company has accepted liability) and such judgment or order shall not be
discharged and either (A) any creditor shall have commenced an enforcement
proceeding upon such judgment or order, which enforcement proceeding shall
have remained unstayed for a period of 10 days, or (B) a period of 60 days
during which a stay of enforcement shall not be in effect shall have
elapsed following the date on which any period for appeal has expired; or
(vi) a decree or order is entered (A) for relief in respect of the
Issuer, Bermuda Holdings or any Principal Insurance Subsidiary in an
involuntary case or other bankruptcy proceeding under applicable law, or
(B) adjudging the Issuer, Bermuda Holdings or any Principal Insurance
Subsidiary a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of the Issuer, Bermuda Holdings
or any Principal Insurance Subsidiary under applicable law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Issuer, Bermuda Holdings or any Principal
Insurance Subsidiary or of any substantial part of any of their properties,
or ordering the winding up or liquidation of any of their affairs, and any
such decree or order remains unstayed and in effect for a period of 60
consecutive days; or
(vii) the Issuer, Bermuda Holdings or any Principal Insurance Subsidiary
institutes a voluntary case or proceeding under applicable bankruptcy,
insolvency, reorganization or similar law, or any other case or proceedings
to be adjudicated a bankrupt or insolvent, or the Issuer, Bermuda Holdings
or any Principal Insurance Subsidiary files a petition or answer or consent
seeking reorganization or relief under applicable bankruptcy, insolvency,
reorganization or similar law, or consents to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of any of the Issuer, Bermuda Holdings or any Principal Insurance
Subsidiary or of any substantial part of its property, or makes an
assignment for the benefit of creditors, or admits in writing its inability
to pay its debts generally as they become due or takes corporate action in
furtherance of any such action; or
(viii) default in the performance, or breach, of the provisions
described under "--Merger, Consolidation or Sale of Assets."
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If any Event of Default (other than an Event of Default described in (vi)
or (vii) above) occurs and is continuing, the Trustee or the holders of at
least 25% in principal amount of the outstanding Senior Notes, by written
notice to the Issuer (and to the Trustee, if such notice is given by the
holders), may, and the Trustee at the request of such holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on all the
Senior Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default described in (vi) or (vii)
above, all outstanding Senior Notes will become due and payable without
further action or notice. Holders of the Senior Notes may not enforce the
Indenture or the Senior Notes except as provided in the Indenture. Subject to
certain limitations, holders of a majority in principal amount of the then
outstanding Senior Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from holders of the Senior Notes notice of
any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers (as defined in the Indenture) of the Trustee determine
in good faith that withholding such notice is in the interest of the holders.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of at
least a majority in aggregate principal amount of the outstanding Senior
Notes, by written notice to the Issuer and the Trustee, may annul such
declaration if: (i) the Issuer or Bermuda Holdings has paid or deposited with
the Trustee a sum sufficient to pay (A) all sums paid or advanced by the
Trustee under the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, (B) all
overdue interest on all Senior Notes, (C) the principal of and premium, if
any, on any Senior Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the
Senior Notes and (D) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Senior Notes; and
(ii) all Events of Default, other than the non-payment of principal of the
Senior Notes which have become due solely by such declaration or
acceleration, have been waived as provided in the Indenture or cured. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
The holders of a majority in aggregate principal amount of the outstanding
Senior Notes by notice to the Trustee may on the behalf of the holders of all
of the Senior Notes waive any existing or past Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event
of Default in the payment of interest on, or the principal of, or premium, if
any, on the Senior Notes or in respect of covenants or provisions in the
Indenture which cannot be modified or amended without the consent of the
holders of a greater percentage of the principal amount of, or all of, the
outstanding Senior Notes.
The Issuer and Bermuda Holdings are required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Issuer
is required, upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of
Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee or stockholder of the Issuer, Bermuda
Holdings or any Subsidiary of Bermuda Holdings, as such, shall have any
liability for any obligations of the Issuer or Bermuda Holdings under the
Senior Notes, the Guarantee or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each holder
of the Senior Notes by accepting a Senior Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Senior Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
Defeasance or Covenant Defeasance
Under certain conditions, each of the Issuer or Bermuda Holdings may, at
its option and at any time, elect to have the obligations of the Issuer and
Bermuda Holdings discharged with respect to the outstanding Senior Notes and
the Guarantee ("defeasance"). Such defeasance means that the Issuer and
Bermuda Holdings shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Senior Notes and the Guarantee,
except for: (i) the rights of holders of outstanding Senior Notes to receive
payments in respect of the principal of, premium, if any, and interest on
such Senior Notes when such payments are due, or on the redemption date, as
the case may be; (ii) the Issuer's obligations with respect to the Senior
Notes concerning issuing temporary Senior Notes, registration of Senior
Notes, mutilated, destroyed, lost or stolen Senior Notes and the maintenance
of an office or agency for payment and money for security payments held in
trust;
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(iii) the rights, powers, trust, duties and immunities of the Trustee, and
the Issuer's and Bermuda Holdings' obligations in connection therewith; (iv)
the defeasance provisions of the Indenture; and (v) the obligations of the
Issuer and Bermuda Holdings to pay any Additional Amounts under the
Indenture. In addition, under certain conditions, the Issuer may, at its
option and at any time, elect to have the obligations of Bermuda Holdings and
its Subsidiaries released with respect to certain covenants that are
described in the Indenture ("covenant defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or an
Event of Default with respect to the Senior Notes. In the event covenant
defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "--Events
of Default and Remedies" will no longer constitute an Event of Default with
respect to the Senior Notes.
In order to exercise either defeasance or covenant defeasance: (i) the
Issuer or Bermuda Holdings must irrevocably deposit with the Trustee, in
trust, for the benefit of the holders of the Senior Notes, cash in U.S.
dollars, U.S. Government Obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if any,
and interest on the outstanding Senior Notes; (ii) in the case of defeasance,
the Issuer shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that: (a) the
Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling; or (b) since the date of the Indenture, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel shall confirm that,
the holders of the outstanding Senior Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance had not
occurred; (iii) in the case of covenant defeasance, the Issuer shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the holders of the
outstanding Senior Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had
not occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such defeasance or
covenant defeasance shall not result in a breach or violation of, or
constitute a default under the Indenture, or any other material agreement or
instrument to which Bermuda Holdings is a party or by which Bermuda Holdings
is bound, (vi) the Issuer shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Issuer shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by the Issuer or Bermuda
Holdings with the intent of preferring the holders of Senior Notes over the
other creditors of the Issuer or Bermuda Holdings or with the intent of
defeating, hindering, delaying or defrauding creditors of the Issuer or
Bermuda Holdings or others; and (viii) the Issuer shall have delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to either the defeasance or
the covenant defeasance, as the case may be, have been complied with.
Amendment, Supplement and Waiver
The Indenture provides that the consent of holders of a majority in
outstanding aggregate principal amount of Senior Notes will be required with
respect to amendments which do not affect the payment terms of the Senior
Notes or the amount of Senior Notes whose holders must consent to any
amendment or the relative ranking of the Senior Notes. The latter amendments
may only be made with the consent of each such Senior Note holder.
With the consent of the holders of not less than a majority in principal
amount of the outstanding Senior Notes (including consents obtained in
connection with a tender offer or exchange offer for the Senior Notes), the
Issuer and Bermuda Holdings, each when authorized by a board resolution, and
the Trustee may enter into one or more supplemental indentures for the
purpose of adding any provisions to or changing in any manner the rights of
the holders under the Indenture or of waiving or modifying in any manner the
rights of the holders under the Indenture; provided, however, that no such
supplemental indenture, amendment or waiver shall without the consent of the
holder of each outstanding Senior Note affected thereby: (a) change the
Stated Maturity or the principal of, or any installment of interest on, or
change the obligation of the Issuer or Bermuda Holdings to pay any Additional
Amount with respect to, any Senior Note or reduce the principal amount
thereof or the rate of interest thereon or any provisions relating to the
redemption price of the Senior Notes or the periods during which redemption
may be effected, or change the coin or currency in which the principal of any
Senior Note or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment after the
Stated
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Maturity thereof (or, in the case of redemption, on or after the redemption
date); or (b) reduce the percentage in principal amount of the outstanding
Senior Notes, the consent of whose holders is required for any such
supplemental indenture or the consent of whose holders is required for any
waiver (of compliance with certain provisions of the Indenture or certain
defaults and their consequences) provided for in the Indenture; or (c) modify
any of the provisions of the Indenture relating to amendments or waivers of
payment or covenant defaults, except to increase any such percentage or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the holder of each Senior Note affected
thereby.
Notwithstanding the foregoing, without the consent of any holder of Senior
Notes, the Issuer, Bermuda Holdings and the Trustee may amend or supplement
the Indenture or the Senior Notes: (i) to cure any ambiguity or to correct
any provision in the Indenture which may be defective or inconsistent with
any other provision therein; or (ii) to provide for Definitive Senior Notes
in addition to or in place of Book-Entry Interests; or (iii) to provide for
the assumption of Bermuda Holdings' obligations to holders of the Senior
Notes in the case of a merger or consolidation; or (iv) to secure the Senior
Notes pursuant to the requirements of the provisions described under "--
Merger, Consolidation or Sale of Assets" or "--Liens," or otherwise; or (v)
to comply with the requirements of the Commission in order to maintain the
qualification of the Indenture under the Trust Indenture Act, as contemplated
by the Indenture or otherwise; or (vi) to evidence and provide the acceptance
of the appointment of a successor Trustee thereunder; or (vii) to make any
other change that would provide any additional rights or benefits to the
holders or that does not adversely affect the legal rights of any holder
under the Indenture or the Senior Notes.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuer or Bermuda Holdings, to obtain
payment of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. The Trustee is
permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
The holders of a majority in principal amount of the outstanding Senior
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Senior Notes, unless such holder
shall have offered to the Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Affiliate" means, with respect to any specified Person: (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person (except in cases where
substantially all of the control that would ordinarily be exercisable by
virtue of ownership of stock, other than the election of directors, has been
eliminated by applicable regulatory authorities); or (ii) for the purposes of
the provisions of the Indenture restricting transactions with Affiliates
only, any other Person that owns, directly or indirectly, 10% or more of such
Person's Capital Stock or any officer or director of any Person or other
Person or with respect to any natural Person, any person having a
relationship with such Person by blood, marriage or adoption not more remote
than first cousin. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of Voting Stock, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing: (i) the sum of the products
of (A) the number of years (or portion thereof) from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness multiplied by (B) the amount of such principal payment by
(ii) the sum of all such principal payments.
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"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York or
London are authorized or obligated by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means any obligations of such
Person and its Subsidiaries on a consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been
recorded as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participation, or other equivalent (however designated) of such Person's
capital stock and any rights (other than debt securities convertible into or
exchangeable for capital stock), warrants or options to purchase the
foregoing whether now outstanding or issued after the date hereof.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person and its Restricted Subsidiaries as determined in
accordance with GAAP, consistently applied.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect such
Person or any of its Restricted Subsidiaries against fluctuations in currency
values.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, as
in effect from time to time.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement: (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness;
(ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling such other
Person to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss; (iii) to supply funds to, or in any other manner
invest in, such other Person (including any agreement to pay for property or
services to be acquired by such other Person irrespective of whether such
property is received or such services are rendered); (iv) to maintain working
capital or equity capital of such other Person, or otherwise to maintain the
net worth, solvency or other financial condition of the debtor, or (v)
otherwise to assure a creditor of such other Person against loss; provided
that the term "guarantee" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business, or any obligation
or liability of such other Person in respect of leasehold interests assigned
by such other Person to any other Person.
"Indebtedness" means, with respect to any Person, without duplication: (i)
all obligations of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and
other accrued current liabilities incurred in the ordinary course of
business, if, and to the extent, any of the foregoing would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP; (ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP; (iii) all obligations created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even if the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business; (iv) all Capital Lease
Obligations of such Person; (v) all obligations referred to in (but not
excluded from) clause (i), (ii), (iii) or (iv) above of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which
the holder of such obligations has an existing right, contingent or
otherwise, to be secured by) any Lien, upon or in property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
obligations; (vi) all Guaranteed Debt of such Person; (vii) all Redeemable
Capital Stock issued by such Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends;
(viii) all obligations under Currency Agreements or Interest Swap Obligations
of such Person; (ix) all obligations for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing insurance
obligations entered into in the ordinary course of business of
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such Person to the extent that such letters of credit are not drawn upon, or
if and to the extent drawn upon, such drawing is reimbursed not later than
the 30th Business Day following a demand for reimbursement following payment
on the letter of credit); and (x) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of the types
referred to in clauses (i) through (ix) above. Indebtedness shall not include
obligations under insurance, reinsurance or retrocession contracts entered
into in the ordinary course of business. For purposes hereof, the "maximum
fixed repurchase price" of any Redeemable Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of
such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such
Fair Market Value shall be determined in good faith by the board of directors
of the issuer of such Redeemable Capital Stock.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of
its subsidiaries against fluctuations in interest rates.
"Issue Date" means the date on which Senior Notes are originally issued
under the Indenture.
"Lien" means any mortgage, charge, pledge, lien, security interest or
encumbrance of any kind.
"Maturity" when used with respect to any Senior Note means the date on
which the principal of (and premium, if any) and interest on such Senior Note
becomes due and payable as therein provided, whether at Stated Maturity,
redemption date and whether by declaration of acceleration, call for
redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Non-Recourse Indebtedness" means Indebtedness: (i) as to which neither
Bermuda Holdings nor any of its Subsidiaries (other than the Person incurring
such Non-Recourse Indebtedness) (a) provides credit support (including any
undertaking, agreement or instrument that would constitute Indebtedness), (b)
is directly or indirectly liable or (c) constitutes the lender; and (ii) no
default with respect to which (including any rights that the holders thereof
may have to take enforcement action against such Person incurring such Non-
Recourse Indebtedness) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of Bermuda Holdings or any of its
Subsidiaries (other than the Person incurring such Non-Recourse Indebtedness)
to declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its Stated Maturity.
"Permitted Liens" means (a) Liens securing Indebtedness pursuant to any
credit agreement or credit facility that is permitted by the terms of the
Indenture to be outstanding; (b) Liens in favor of Bermuda Holdings or any
Restricted Subsidiary; (c) Liens on property of a Person existing at the time
such Person is merged into or consolidated with Bermuda Holdings or any
Restricted Subsidiary of Bermuda Holdings; provided that such Liens were not
incurred in connection with, or in contemplation of, such merger or
consolidation and such Liens do not extend to any assets of Bermuda Holdings
or any of its Restricted Subsidiaries other than the assets of the Person so
merged into or consolidated with Bermuda Holdings or such Restricted
Subsidiary; (d) Liens on property existing at the time of acquisition thereof
by Bermuda Holdings or any Restricted Subsidiary of Bermuda Holdings;
provided that such Liens were not incurred in connection with, or in
contemplation of, such acquisition and do not extend to any assets of Bermuda
Holdings or any of its Restricted Subsidiaries other than the property so
acquired; (e) Liens to secure the performance of statutory obligations,
surety or appeal bonds or performance bonds, or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's or other like Liens, in
any case incurred in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
process of law, if a reserve or other appropriate provision, if any, as is
required by GAAP shall have been made therefor; (f) Liens existing on the
date of the Indenture; (g) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor; (h) Liens
with respect to obligations under Currency Agreements or Interest Swap
Obligations and other similar agreements or arrangements designed to protect
Bermuda Holdings or any of its Restricted Subsidiaries against fluctuations
in the value of Investments of Bermuda Holdings and its Restricted
Subsidiaries, in each case to the extent permitted under the Indenture; (i)
Liens incurred in the ordinary course of business of Bermuda Holdings or any
Subsidiary of Bermuda Holdings with respect to obligations permitted under
the Indenture that do not exceed $10.0 million in principal amount in the
aggregate at any one time outstanding; and (j) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Indebtedness (to the
extent permitted under the Indenture) of Unrestricted Subsidiaries.
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"Person" means any individual, corporation, limited or general partnership,
limited liability company, joint venture, association, joint stock company,
trust, fund, unincorporated organization or government or any agency or
political subdivision thereof.
"Principal Insurance Subsidiary" means: (i) the Subsidiaries of Bermuda
Holdings in existence on the Issue Date; (ii) any other insurance company
Subsidiary of Bermuda Holdings that becomes a "significant subsidiary" as
defined in Regulation S-X, as promulgated by the Commission; and (iii) any
other Subsidiary of Bermuda Holdings that may succeed, by merger,
consolidation or otherwise, to all or substantially all of the business of
one or more of such Persons as specified in (i) and (ii) above.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Corporation and its successors.
"Stated Maturity" means, when used with respect to any Indebtedness or any
installment of principal or of interest thereon, the date specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of principal or of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness expressly subordinated in
right of payment to the Senior Notes.
"Subsidiary" means any Person, a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by
Bermuda Holdings or by one or more other Subsidiaries, or by Bermuda Holdings
and one or more other Subsidiaries.
"Tax Sharing Agreement" means the tax sharing agreement dated December 21,
1994 among the Issuer, Terra Nova, Terra Nova Asset Management Limited, Terra
Nova Pension Trustee Limited, Terra Nova Insurance Agency Limited and
Intercontinental Reinsurance Agency Limited.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the timely payment of which
its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued by
a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended), as custodian with respect to any such U.S. Government Obligation or
a specific payment of principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
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
principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) is designated an
Unrestricted Subsidiary prior to formation or creation; (b) has total assets
at the time of formation or creation with a fair market value not exceeding
$1,000; (c) has no Indebtedness other than Non-Recourse Indebtedness; (d) is
not party to any agreement, contract, arrangement or understanding with
Bermuda Holdings or any Restricted Subsidiary of Bermuda Holdings unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to Bermuda Holdings or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of
Bermuda Holdings; (e) is a Person with respect to which neither Bermuda
Holdings nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Capital Stock or (y) to maintain
or preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and (f) has not guaranteed
or otherwise directly or indirectly provided credit support for any
Indebtedness of Bermuda Holdings or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an officers' certificate certifying that such
designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Bermuda Holdings as of such date. The Board of Directors of Bermuda Holdings
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary
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of Bermuda Holdings of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if no Default or
Event of Default would be in existence following such designation.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly-Owned Restricted Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by such Person or by one or more Wholly-Owned Subsidiaries of such Person.
DESCRIPTION OF DEPOSITARY AGREEMENT
General
All Exchange Notes underlying the Book-Entry Interests will be represented
by one or more Global Notes, will be issued in a denomination equal to the
aggregate principal amount of the sum of outstanding Old Notes properly
tendered pursuant to the terms of the Exchange Offer, and will be deposited
with the Custodian pursuant to the terms of the Depositary Agreement.
With respect to such Global Notes issued, the Depositary will issue a
receipt representing a 100% interest in the underlying Global Note (the
"Exchange Global Receipt", and together with global receipts issued in
respect of Old Notes not exchanged pursuant to the Exchange Offer, the
"Global Receipts"), which will be delivered to and registered in the name of
DTC or its nominee.
Ownership of Book-Entry Interests is limited to Persons that have accounts
with DTC ("participants") or Persons that may hold interests through
participants.
Procedures with respect to the ownership of Book-Entry Interests are set
forth below. Unless and until the Book-Entry Interests representing the
Exchange Global Receipts are exchanged for Definitive Senior Notes, the
depositary interest held by DTC may not be transferred except as a whole by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC or by DTC or any such nominee to a successor of DTC or a nominee of such
successor.
So long as the Custodian, or its nominee, is the holder of the Global Notes
underlying Book-Entry Interests, the Custodian or such nominee, as the case
may be, will be considered the sole holder of such Exchange Global Note for
all purposes under the Indenture. Except as set forth below under "--Issuance
of Definitive Senior Notes," participants or Persons that may hold Book-Entry
Interests through participants will not be entitled to have Senior Notes
registered in their names, will not receive or be entitled to receive
physical delivery of Definitive Senior Notes and will not be considered the
owners or holders thereof under the Indenture. Accordingly, each Person
holding a Book-Entry Interest must rely on the procedures of the Custodian,
the Depositary and DTC and, in addition, if such Person is not a participant
in DTC, on the procedures of the participant through which such Person owns
its interest to exercise any rights and obligations of a holder under the
Indenture. See "--Action by Holders of Book-Entry Interests."
Payments on Global Note
Payment of any amounts in respect of the Global Notes, as long as it is
held by the Custodian, will be made to or by the order of the Custodian, as
the bearer thereof. The Custodian will distribute all such payments received
by it to the Depositary. The Depositary will distribute all such payments
received by it to DTC, or its nominee, which will distribute such payments to
its participants. All such payments will be distributed without deduction or
withholding for any taxes, assessments
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or other governmental charges of whatever nature except as may be required by
law. If any such deduction or withholding is required to be made under the
provisions of any applicable law or regulation, then, except as provided in
"Description of Exchange Notes--Payment of Additional Amounts," such
additional amounts will be paid by the Issuer and Bermuda Holdings to or for
the order of the Custodian as may be necessary in order that the net amounts
received by a holder of Book-Entry Interests after such deduction or
withholding shall be not less than the amounts which such holder would
otherwise have received in respect of such Book-Entry Interests absent such
withholding or deduction. DTC, upon receipt of any payment, will promptly
credit participants' accounts with payments in amounts proportionate to their
respective ownership of Book-Entry Interests, as shown on the records of DTC.
The Issuer expects that payments by participants to holders of Book-Entry
Interests held through such participants will be governed by standing
customer instructions and customary practices, as is now the case with the
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants. None of
the Issuer, Bermuda Holdings, the Trustee or any other agent of the Issuer,
Bermuda Holdings or the Trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account of a
participant's Book-Entry Interests or for maintaining, supervising or
reviewing any records relating to a participant's Book-Entry Interests.
DTC has advised the Issuer as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of its participants and to facilitate the clearance and settlement
of transactions among its participants in such securities through electronic
book-entry exchanges in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. DTC participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some
of whom (and/or their representatives) own DTC. Access to DTC book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of Book-Entry Interests among participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Issuer, Bermuda
Holdings nor the Trustee will have any responsibility for the performance by
DTC of obligations under the rules and procedure governing their operations.
Upon the issuance by the Depositary of the Exchange Global Receipts to DTC,
DTC will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective interest beneficially owned by
such participants. Ownership of Book-Entry Interests will be shown on, and
the transfer of such interests will be effected only through, records
maintained by DTC (with respect to interests of participants) and on the
records of participants (with respect to interests of Persons holding through
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, transfer or pledge Book-
Entry Interests.
The Issuer understands that under existing industry practices, if either
the Issuer or the Trustee requests any action of holders of Book-Entry
Interests or if a holder of a Book-Entry Interest desires to give or take any
action that a holder of Senior Notes is entitled to give or take under the
Indenture, DTC would authorize the participants holding the relevant Book-
Entry Interests to give or take such action, and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
holding through them.
Redemption or Repurchase
In the event the Global Notes (or portions thereof) are redeemed or
repurchased, the Custodian will deliver all amounts received by it in respect
of the redemption or repurchase to the Depositary. The Depositary will
deliver all amounts received by it in respect of the redemption or repurchase
of the Global Notes to DTC. The redemption or repurchase price paid in
connection with the redemption or repurchase of Book-Entry Interests will be
equal to the amount received by the Depositary in connection with the
redemption or repurchase of the Global Notes (or portions thereof). For any
redemptions of the Global Notes in part, selection of Book-Entry Interests to
be redeemed will be made by DTC on a pro rata basis, by lot or by such other
method as DTC deems fair and appropriate, and in compliance with the
requirements of the principal national securities exchange, if any, on which
the Senior Notes are listed, or, if the Senior Notes are not so listed, on a
pro rata basis, by lot
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or by such method as DTC shall deem fair and appropriate; provided that no
beneficial interests of $1,000 principal amount at maturity or less shall be
redeemed in part.
Transfers
All transfers of Book-Entry Interests will be recorded in accordance with
the book-entry system maintained by DTC, pursuant to customary procedures
established by DTC and its participants and will be settled in same-day
funds.
Issuance of Definitive Senior Notes
Holders of Book-Entry Interests will receive Definitive Senior Notes if (i)
DTC notifies the Issuer and the Depositary that it is unwilling or unable to
continue as holder of the Global Receipts or ceases to be a clearing agency
registered under the Exchange Act and, in either case, a successor to DTC
registered as a clearing agency under the Exchange Act is not appointed by
the Issuer within 90 days of such notification, (ii) either the Depositary or
the Custodian, as the case may be, notifies the Trustee and the Issuer that
it is unwilling or unable to continue as Depositary or Custodian,
respectively, and a successor Depositary or Custodian, as the case may be, is
not appointed by the Issuer within 90 days of such notification, or (iii) the
Issuer determines that Definitive Senior Notes shall be issued. Any
Definitive Senior Notes issued in exchange for Book-Entry Interests will be
registered in such name or names as the Custodian shall instruct the Trustee
based on the instructions of DTC. It is expected that such instructions will
be based upon directions received by DTC from participants with respect to
ownership of Book-Entry Interests.
In addition to the foregoing, holders of Book-Entry Interests will at any
time on or after the occurrence of an Event of Default be entitled to request
and receive Definitive Senior Notes. Such Definitive Senior Notes will be
issued to and registered in the name of, or as directed by, such holders only
upon the request in writing by the Depositary (based upon the instructions of
DTC).
HOLDERS OF BOOK-ENTRY INTERESTS SHOULD BE AWARE THAT, UNDER CURRENT U.K.
TAX LAW, UPON THE ISSUANCE OF DEFINITIVE SENIOR NOTES TO A HOLDER, SUCH
HOLDER WILL BECOME SUBJECT TO U.K. INCOME TAX (CURRENTLY 20%) TO BE WITHHELD
ON ANY PAYMENTS OF INTEREST ON THE SENIOR NOTES AS SET FORTH UNDER "CERTAIN
TAX CONSIDERATIONS--TAXATION OF U.S. HOLDERS OF THE SENIOR NOTES--UNITED
KINGDOM." IF SUCH DEFINITIVE SENIOR NOTES ARE ISSUED PURSUANT TO THE REQUEST
OF A HOLDER OF BOOK-ENTRY INTERESTS FOLLOWING AN EVENT OF DEFAULT, NEITHER
THE ISSUER NOR BERMUDA HOLDINGS WILL BE OBLIGATED TO PAY ANY ADDITIONAL
AMOUNTS WITH RESPECT TO SUCH SENIOR NOTES. However, U.S. holders of
Definitive Senior Notes may be entitled to receive a refund of withheld
amounts from the U.K. Inland Revenue in certain circumstances. See "Certain
Tax Considerations--Taxation of U.S. Holders of the Senior Notes--United
Kingdom." In addition, if a holder of Book-Entry Interests receives
Definitive Senior Notes other than pursuant to its request, such holder will
be entitled to receive Additional Amounts with respect to such Senior Notes.
See "Description of Exchange Notes--Payment of Additional Amounts."
Exchanges of Book-Entry Interests for Definitive Senior Notes shall be made
free of any fees of the Depositary to the holders of Book-Entry Interests;
provided that the Issuer may require the payment of a sum sufficient to pay
any tax, assessment, or other governmental charge.
Action by Holders of Book-Entry Interests
As soon as practicable after receipt by the Custodian of notice of any
solicitation of consents or request for a waiver or other action by the
holders of Book-Entry Interests, the Custodian shall direct the Depositary to
mail to DTC a notice containing (a) such information as is contained in such
notice, (b) a statement that at the close of business on a specified record
date DTC will be entitled to instruct the Depositary as to the consent,
waiver or other action, if any, pertaining to the Book-Entry Interests, and
(c) a statement as to the manner in which such instructions may be given.
Upon the written request of DTC, the Depositary shall endeavor insofar as
practicable to take such action regarding the requested consent, waiver or
other action in respect of the Book-Entry Interests in accordance with any
instructions set forth in such request. DTC is expected to follow the
procedures described under "--General" above with respect to soliciting
instructions from its participants. Neither the Depositary nor the Custodian
will exercise any discretion in the granting of consents or waivers or the
taking of any other action relating to the Depositary Agreement or the
Indenture.
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Reports
The Depositary will promptly send to DTC a copy of any notices, reports and
other communications received from the Issuer which are received by the
Custodian as holder of the Global Note.
The Depositary and Custodian
The Chase Manhattan Bank is the Depositary for the Global Note. The address
of the Depositary is 450 West 33rd Street, 15th Floor, New York, New York
10001. Chase Manhattan Bank Luxembourg S.A. will be the Custodian for the
Exchange Global Receipt. The address of the Custodian is 5 rue Plaetis L-
2338, Luxembourg.
Action by Depositary and Custodian
Upon the occurrence of a default with respect to the Global Note, or in
connection with any other right of the holder of the Global Note under the
Indenture or the Depositary Agreement, if requested in writing by DTC in
respect thereof, the Depositary and the Custodian will take any such action
as shall be requested in such notice; provided that the Depositary and the
Custodian have been offered reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by them in complying
with such request.
Neither the Depositary nor the Custodian will exercise any discretion in
the taking of any such action.
Charges of Depositary and Custodian
The Issuer and Bermuda Holdings have agreed to pay all charges of the
Depositary and the Custodian under the Depositary Agreement. The Issuer and
Bermuda Holdings have also agreed to indemnify the Depositary and the
Custodian against certain liabilities incurred by it under the Depositary
Agreement.
Amendment and Termination
The Depositary Agreement may be amended by agreement among the Issuer,
Bermuda Holdings, the Custodian and the Depositary. The consent of DTC shall
not be required in connection with any amendment to the Depositary Agreement:
(i) to cure any defect, omission, inconsistency or ambiguity in the
Depositary Agreement; (ii) to add to the covenants and agreements of the
Depositary or the Custodian, the Issuer and Bermuda Holdings; (iii) to
effectuate the assignment of the Depositary's or the Custodian's rights and
duties to a qualified successor; (iv) to comply with the Securities Act, the
Exchange Act or the U.S. Investment Company Act of 1940, as amended; or (v)
to modify, alter, amend or supplement the Depositary Agreement in any other
manner that, in the opinion of counsel acceptable to the Issuer and the
Depositary, is not adverse to DTC or the owners of Book-Entry Interests.
Except as set forth above, no amendment that adversely affects DTC may be
made to the Depositary Agreement or the Book-Entry Interests without the
consent of DTC.
The Depositary shall at any time at the direction of the Issuer or Bermuda
Holdings terminate the Depositary Agreement by mailing a notice of such
termination to DTC and requesting, on behalf of the Custodian in accordance
with the Indenture, the issuance of Definitive Senior Notes to the persons
and in the amounts as specified by DTC. Upon the issuance of Definitive
Senior Notes in an aggregate principal amount equal to the aggregate
principal amount of Senior Notes outstanding, the Depositary Agreement shall
terminate. The Depositary Agreement may also be terminated upon the
resignation of the Depositary or the Custodian if no successor depositary or
custodian, as the case may be, has been appointed by the Issuer within 90
days of the notification of such resignation as set forth under
"--Resignation or Removal of Depositary or Custodian" below.
Resignation or Removal of Depositary or Custodian
The Depositary or Custodian may at any time resign as Depositary or
Custodian by written notice delivered to each of the Issuer and the Trustee,
such resignation to take effect upon the appointment by the Issuer of a
successor depositary or custodian (approved, in the case of a successor
depositary, by the Trustee and DTC and, in the case of a successor custodian,
by the Depositary, none of which shall unreasonably withhold such approval)
and such successor's acceptance of such appointment. If at the end of 90 days
after delivery of such notice, no successor depositary or custodian has been
appointed and approved, and has accepted such appointment, the resigning
Depositary or Custodian may terminate the Depositary Agreement.
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Obligations of Depositary and Custodian
Except with respect to the payment of any amount received by it in respect
of the Global Notes, neither the Depositary nor the Custodian will assume any
obligation or be subject to any liability under the Depositary Agreement,
other than by reason of bad faith or negligence in the performance of its
respective duties under the Depositary Agreement.
DESCRIPTION OF OLD NOTES
The terms of the Exchange Notes are identical in all material respects to
the terms of the Old Notes, except that (i) the offer and sale of the
Exchange Notes have been registered under the Securities Act and therefore
the Exchange Notes are not subject to certain restrictions on transfer
applicable to the Old Notes, will not contain legends relating thereto and
will not be entitled to registration rights or other rights under the
Registration Rights Agreement, and (ii) the Exchange Notes will not provide
for any increase in the interest rate thereon, which rights and provision
will terminate as to all of the Senior Notes upon the consummation of the
Exchange Offer. In addition, the Old Notes and the Exchange Notes will
constitute a single series of debt securities under the Indenture. See
"Description of Exchange Notes--General."
THE EXCHANGE OFFER
The Issuer and Bermuda Holdings entered into the Registration Rights
Agreement dated as of August 20, 1997 (the "Registration Rights Agreement")
with Donaldson, Lufkin & Jenrette Securities Corporation, as Initial
Purchaser, pursuant to which the Issuer and Bermuda Holdings agreed, for the
benefit of the holders of the Old Notes, at the cost of the Issuer and
Bermuda Holdings, to use commercially reasonable efforts to file and cause to
become effective a registration statement with respect to an exchange offer
for exchange notes with terms identical in all material respects to the Old
Notes, except as described under "Description of Old Notes." In the event
that applicable interpretations of the Commission do not permit the Issuer
and Bermuda Holdings to effect the Exchange Offer, or under certain other
circumstances, the Issuer and Bermuda Holdings agreed, for the benefit of the
Holders of the Old Notes, at the cost of the Issuer and Bermuda Holdings, to
use commercially reasonable efforts to cause to become effective a shelf
registration statement (the "Shelf Registration Statement") with respect to
resales of the Senior Notes and to keep such registration statement effective
until August 26, 2000 or such earlier time when the Senior Notes have been
sold pursuant to such Shelf Registration Statement.
The Old Notes provide that, in the event the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective on or
prior to February 26, 1998, then the annual interest rate borne by the Old
Notes shall be increased to 7.45%. If the Exchange Offer is not consummated
or a Shelf Registration Statement is not declared effective by May 26, 1998,
then the annual interest rate borne by the Old Notes shall be increased to
7.7%. Upon consummation of the Exchange Offer or the effectiveness of such
Shelf Registration Statement, the interest rate borne by the Old Notes will
return to 7.2%.
The Exchange Offer is not being made to, nor will the Issuer or Bermuda
Holdings accept tenders for exchange from, holders of Old Notes 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.
Terms of the Exchange Offer; Period for Tendering Old Notes
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Issuer will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. For each $1,000 principal amount of Old Notes surrendered to
the Issuer pursuant to the Exchange Offer, the Holder of such Old Note will
receive an Exchange Note having a principal amount equal to that of the
surrendered Old Note. The Issuer will keep the Exchange Offer open for not
less than 20 business days (or longer if required by applicable law) after
the date notice of the Exchange Offer is mailed to the Holders of the Old
Notes. As used herein, the term "Expiration Date" means 5:00 p.m., New York
City time, on __________, 1997; provided, however, that if the Issuer and
Bermuda Holdings, in their sole discretion, have extended the period of time
for which the Exchange Offer is open, the term "Expiration Date" means the
latest time and date to which the Exchange Offer is extended.
As of the date of this Prospectus, $75.0 million in aggregate principal
amount of the Old Notes were outstanding. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered.
This Prospectus,
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together with the Letter of Transmittal, is first being sent on or about the
date set forth on the cover page to all holders of Old Notes at the addresses
set forth in the security register with respect to Old Notes maintained by
the Trustee. The Issuer's obligations to accept Old Notes for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
under "--Certain Conditions to the Exchange Offer."
The Issuer and Bermuda Holdings expressly reserve the right, at any time or
from time to time, to extend the period of time during which the Exchange
Offer is open, and thereby delay acceptance of any Old Notes, by giving oral
or written notice of such extension to the Exchange Agent and notice of such
extension to the holders of Old Notes as described below. During any such
extension, all Old Notes previously tendered will be retained by the Issuer
or Bermuda Holdings, subject to the rights of holders of Old Notes to
withdraw their tendered Old Notes as specified in "--Withdrawal Rights." Any
Old Notes not accepted for exchange for any reason will be returned without
expense to the tendering holder thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
The Issuer and Bermuda Holdings expressly reserve the right to amend or
terminate the Exchange Offer, and not to accept for exchange any Old Notes
not theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified below under "--Certain Conditions
to the Exchange Offer." The Issuer or Bermuda Holdings will give oral or
written notice of any extension, amendment, non-acceptance or termination to
the holders of the Old Notes as promptly as practicable, such notice in the
case of any extension to be issued by means of a press release or other
public announcement 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 Issuer or Bermuda Holdings may choose to make any
public announcement and subject to applicable law, neither the Issuer nor
Bermuda Holdings shall have any obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to
the Dow Jones News Service.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes which are not tendered for
exchange or are tendered but not accepted in connection with the Exchange
Offer will remain outstanding, will be entitled to the benefits of the
Indenture and continue to accrue interest, but will not be entitled to any
further registration rights under the Registration Rights Agreement. The
Issuer and Bermuda Holdings intend to conduct the Exchange Offer in
accordance to the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
Procedures for Tendering Old Notes
The tender to the Issuer of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Issuer will constitute a binding
agreement between the tendering holder and the Issuer upon the terms and
subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Any beneficial owner whose Old Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
nominee and who wishes to tender should contact such registered holder
promptly and instruct such registered holder to tender on his behalf. A
holder who wishes to tender Old Notes for exchange pursuant to the Exchange
Offer must transmit a properly completed and duly executed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to the Exchange Agent at the address set forth below under
"Exchange Agent" on or prior to the Expiration Date. In addition, (i) a
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Old Notes, if such procedure is available, into the Exchange Agent's
account at DTC pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date or
(ii) the holder must comply with the guaranteed delivery procedures described
below under "--Guaranteed Delivery Procedures." THE METHOD OF DELIVERY OF OLD
NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE TENDERING HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT TO THE ISSUER OR BERMUDA HOLDINGS. Delivery of all documents
must be made to the Exchange Agent at its address set forth below. Holders
may also request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect such tender for such Holders.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered for the account of an Eligible Institution (as
defined below). In the event that signatures on a Letter of Transmittal or a
notice of withdrawal, as the case may be, are required to be
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guaranteed, such guarantees must be by a firm which is a member of a
registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust
company having an office or correspondent in the United States (collectively,
"Eligible Institutions"). If a Book-Entry Confirmation indicates that
ownership of the Old Notes is in the name of a person other than the person
signing the Letter of Transmittal, the Exchange Agent must receive a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by the Issuer and Bermuda Holdings in their sole discretion, duly
executed by the owner as evidenced by the Book-Entry Confirmation with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Issuer and Bermuda Holdings in their sole discretion, which
determination shall be final and binding. The Issuer and Bermuda Holdings
reserve the absolute right to reject any and all tenders of any particular
Old Notes not properly tendered or to not accept any particular Old Notes
which acceptance might, in the judgment of the Issuer and Bermuda Holdings or
their counsel, be unlawful. The Issuer and Bermuda Holdings also reserve the
absolute right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of
the terms and conditions of the Exchange Offer as to any particular Old Notes
either before or after the Expiration Date (including the Letter of
Transmittal and the instructions thereto) by the Issuer and Bermuda Holdings
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with the tender of Old Notes for exchange must
be cured within such reasonable period of time as the Issuer or Bermuda
Holdings shall determine. Neither the Issuer, Bermuda Holdings, the Exchange
Agent nor any other person shall be under any duty to give notification of
any defect or irregularity with respect to any tender of Old Notes for
exchange, nor shall any of them incur any liability for failure to give such
notification.
If the Letter of Transmittal is signed by a person or persons other than
the owner as evidenced by the Book-Entry Confirmation, such Letter of
Transmittal must be accompanied by an endorsement or appropriate powers of
attorney, in either case signed exactly as the name or names of the owner as
evidenced by the Book-Entry Confirmation. Signatures on such powers of
attorney must be guaranteed by an Eligible Institution.
If the Letter of Transmittal or powers of attorney are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers or
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing and, unless waived by the Issuer or
Bermuda Holdings, proper evidence satisfactory to the Issuer and Bermuda
Holdings of its authority to so act must be submitted.
By executing, or otherwise becoming bound by, the Letter of Transmittal,
each holder of the Old Notes (other than certain specified holders) will
represent that (i) it is not an affiliate of the Issuer or Bermuda Holdings,
(ii) any Exchange Notes to be received by it were acquired in the ordinary
course of its business, and (iii) it has no arrangement or understanding with
any person to participate in a distribution (within the meaning of the
Securities Act) of the Exchange Notes. If the tendering holder is a broker-
dealer that will receive Exchange Notes for its own account in exchange for
Old Notes that were acquired as a result of market-making activities or other
trading activities, it will be required to acknowledge that it acquired the
Old Notes for its account as the result of market-making activities or other
trading activities and must agree that it will deliver a prospectus in
connection with any resale of such Exchange Notes. A broker-dealer that
acquired Old Notes in a transaction other than as part of its market-making
or other trading activities will not be able to participate in the Exchange
Offer. See "--Resales of the Exchange Notes."
Acceptance of Old Notes for Exchange
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Issuer will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the Exchange Notes promptly after acceptance
of the Old Notes. See "--Certain Conditions to the Exchange Offer." For
purposes of the Exchange Offer, the Issuer shall be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Issuer has given
oral or written notice thereof to the Exchange Agent.
In all cases, issuance of Exchange Notes for Old Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of a timely Book-Entry Confirmation of such Old
Notes into the Exchange Agent's account at DTC, a properly completed and duly
executed Letter of Transmittal and all other required documents. If any
tendered Old Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or Old Notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or non-
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exchanged Old Notes will be credited to an account maintained with DTC as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Interest on the Exchange Notes
Each Exchange Note will bear interest from August 26, 1997, the date of
issuance of the Old Notes. Holders of the Old Notes whose Old Notes are
accepted for exchange will not receive accrued interest on such Old Notes
from and after August 26, 1997.
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at DTC for purposes of the Exchange Offer promptly after the
date of this Prospectus. Any financial institution that is a participant in
DTC's systems may make book-entry delivery of Old Notes by causing DTC to
transfer such Old Notes into the Exchange Agent's account in accordance with
DTC's Automated Tender Offer Program ("ATOP") procedures for transfer.
However, the exchange for the Old Notes so tendered will only be made after
timely confirmation of such book-entry transfer of Old Notes into the
Exchange Agent's account, and timely receipt by the Exchange Agent of an
Agent's Message (as such term is defined in the next sentence) and any other
documents required by the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by DTC and received by the Exchange Agent and
forming a part of a Book-Entry Confirmation, which states that DTC has
received an express acknowledgment from a participant tendering Old Notes
that are the subject of such Book-Entry Confirmation that such participant
has received and agrees to be bound by the terms of the Letter of
Transmittal, and that the Issuer or Bermuda Holdings may enforce such
agreement against such participant. Although delivery of Old Notes 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" prior to the
Expiration Date, or the guaranteed delivery procedure set forth below must be
complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Guaranteed Delivery Procedures
If the procedure for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if (i) the tender is made by or through an
Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Issuer and
Bermuda Holdings (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the holder of Old Notes and
the amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed
Delivery, a Book-Entry Confirmation and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the Book-Entry Confirmation, and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within five NYSE trading days after the date of execution of the Notice
of Guaranteed Delivery.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent by the Exchange Date at one of the addresses
set forth below under "--Exchange Agent." Any such notice of withdrawal
(which notice may be by telegram, telex, facsimile transmission or letter)
must specify the name of the person having tendered the Old Notes to be
withdrawn, the number of the account at DTC from which the Old Notes were
tendered, the principal amount of the Old Notes to be withdrawn, and the name
and number of the account at DTC to be credited with the withdrawn Old Notes,
and otherwise comply with the procedures of such facility. All questions as
to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Issuer and Bermuda Holdings, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be credited to an
account maintained with DTC for the Old Notes as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be reentered by
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following one of the procedures described under "--Procedures for Tendering
Old Notes" at any time prior to the Expiration Date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, neither the
Issuer nor Bermuda Holdings shall be required to accept for exchange, or to
issue Exchange Notes in exchange for, any Old Notes and may terminate or
amend the Exchange Offer, if at any time before the acceptance of such Old
Notes for exchange or the exchange of the Exchange Notes for such Old Notes,
such acceptance or issuance would violate applicable law or any
interpretation of the Staff of the Commission. Neither the Issuer or Bermuda
Holdings has any obligation, and will not knowingly, permit acceptances of
tenders of Old Notes from Affiliates of the Issuer or Bermuda Holdings or
from any other holder or holders of Old Notes who are not eligible to
participate in the Exchange Offer under applicable law or interpretations
thereof by the Commission, or if the Exchange Notes to be received by such
holder or holders of Old Notes in the Exchange Offer, upon receipt, will not
be tradable by such holder without restriction under the Securities Act and
the Exchange Act and without material restrictions under the blue sky or
securities laws of substantially all of the states of the United States.
The foregoing conditions are for the sole benefit of the Issuer and Bermuda
Holdings and may be asserted by the Issuer and Bermuda Holdings regardless of
the circumstances giving rise to any such condition. The failure by the
Issuer and Bermuda Holdings at any time to exercise the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, neither the Issuer nor Bermuda Holdings will accept for
exchange any Old Notes tendered, and no Exchange Notes will be issued in
exchange for any such Old Notes, if at such time any stop order shall be
threatened or in effect with respect to the Registration Statement of which
this Prospectus constitutes a part or the qualification of the Indenture
under the Trust Indenture Act.
Exchange Agent
The Chase Manhattan Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or
of the Letter of Transmittal and requests for Notices of Guaranteed Delivery
should be directed to the Exchange Agent, addressed as follows:
Deliver To:
The Chase Manhattan Bank, Exchange Agent
By Mail or By Hand:
The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Attention: Corporate Trust Administration
By Facsimile:
(212) 946-8177
Confirm by Telephone:
(212) 946-3352
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE
A VALID DELIVERY.
Fees and Expenses
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Issuer, Bermuda Holdings and their affiliates. No
additional compensation will be paid to any such officers and employees who
engage in soliciting tenders. Neither the Issuer nor
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Bermuda Holdings will make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Issuer or Bermuda Holdings,
however, will pay the Exchange Agent reasonably customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Issuer and Bermuda Holdings and are estimated in
the aggregate to be $__________.
Transfer Taxes
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith.
Resales of the Exchange Notes
Under existing interpretations of the staff of the Division of Corporation
Finance of the Commission contained in several no-action letters to third
parties (including Exxon Capital Holdings Corporation (available May 13,
1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), K-III
Communications Corporation (available May 14, 1993) and Shearman & Sterling
(available July 2, 1993)), the Exchange Notes would in general be freely
transferable after the Exchange Offer without further registration under the
Securities Act. However, any purchaser of Old Notes who is an "affiliate" of
the Issuer or Bermuda Holdings or who intends to participate in the Exchange
Offer for the purpose of distributing the Exchange Notes or any broker-dealer
who purchased Old Notes from the Issuer or Bermuda Holdings to resell
pursuant to Rule 144A or any other available exception under the Securities
Act (i) will not be able to rely on the interpretation of the staff of the
Division of Corporation Finance of the Commission, (ii) will not be able to
tender its Old Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Old Notes unless such sale or
transfer is made pursuant to an exemption from such requirements.
By executing, or otherwise becoming bound by, the Letter of Transmittal
each holder of the Old Notes (other than certain specified holders) will
represent that (i) it is not an "affiliate" of the Issuer or Bermuda
Holdings, (ii) any Exchange Notes to be received by it were acquired in the
ordinary course of its business and (iii) it has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes. In addition, in
connection with any resales of Exchange Notes, any Participating Broker-
Dealer who acquired the Exchange Notes for its own account as a result of
market-making or other trading activities must acknowledge that it acquired
the Old Notes for its own account as the result of market-making activities
or other trading activities and must agree that it deliver a prospectus
meeting the requirements of the Securities Act. A broker-dealer that acquired
Existing Notes in a transaction other than as part of its market-making or
other trading activities will not be able to participate in the Exchange
Offer. 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 no-action letters referred to above, the Issuer believes
that Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to the Exchange Notes received upon exchange of
such Old Notes (other than Old Notes which represent an unsold allotment from
the original sale of the Old Notes) with a prospectus meeting the
requirements of the Securities Act, which may be a prospectus prepared for an
exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such Exchange Notes. Under the
Registration Rights Agreement, the Issuer and Bermuda Holdings is required to
allow Participating Broker-Dealers and other persons, if any, subject to
similar prospectus delivery requirements, to use this Prospectus as it may be
amended or supplemented from time to time, in connection with the resale of
such Exchange Notes.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Notes. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of Exchange Notes received in exchange for Old Notes where such
Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer and Bermuda Holdings have agreed that it will
make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in connection with any such resale and
Participating Broker-Dealers shall be authorized to deliver this Prospectus
for a period not exceeding 180 days after the Expiration Date. In addition,
until ____________, 1998 (180 days after the date of this Prospectus), all
dealers effecting transactions in the Exchange Notes may be required to
deliver a prospectus.
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Neither the Issuer nor Bermuda Holdings will receive any proceeds from any
sales of the Exchange Notes by Participating Broker-Dealers. Exchange Notes
received by Participating Brokers-Dealers for their own account pursuant to
the Exchange Offer may be sold from time to time, in one or more transactions
in the over-the-counter market, in negotiated transactions, through the
writing of options on the Exchange Notes 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
Participating Broker-Dealer that resells the Exchange Notes that were
received by it for its own account pursuant to the Exchange Offer. Any broker
or dealer that participates in a distribution of such Exchange Notes may be
deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any such resale of Exchange Notes and any omissions 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
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Issuer will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. See "The Exchange
Offer."
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CERTAIN TAX CONSIDERATIONS
Certain U.K., U.S. and Bermuda Tax Considerations
The following summary of certain U.S., U.K. and Bermuda tax consequences of
the acquisition, ownership and disposition of the Senior Notes by a "U.S.
Holder" (as defined below) is set forth with respect to U.S. federal income
tax matters based upon the opinion of Debevoise & Plimpton, U.S. tax counsel
to the Issuer, with respect to U.K. tax matters based upon the opinion of
Clifford Chance, U.K. tax counsel to the Issuer, and with respect to Bermuda
tax matters based upon the opinion of Conyers, Dill & Pearman, Bermuda tax
counsel to the Issuer. Such firms express no opinion as to, and have not
independently confirmed, any factual or accounting matters, determinations or
conclusions described below. The summary describes certain U.S. federal
income, U.K. and Bermuda tax consequences of the acquisition, ownership and
disposition of the Senior Notes as of the date of this Prospectus. The
Summary is for general information purposes only and does not purport to be a
complete analysis of all tax considerations that may be applicable to U.S.
Holders of Senior Notes. Except where noted, it deals only with Senior Notes
beneficially owned as capital assets by a purchaser that is, for U.S. federal
income tax purposes, (1) a citizen or resident of the United States, (2) a
corporation, partnership or other entity created or organized in, or under
the laws of, the United States or any political subdivision thereof or (3) an
estate or trust the income of which is subject to U.S. federal taxation
regardless of its source (a "U.S. Holder") and does not address the U.K. tax
consequences to a holder that is resident (or, in the case of an individual,
who is either resident or ordinarily resident or both) for U.K. tax purposes
in the U.K., that is domiciled under U.K. law in the U.K. or that carries on
business in the U.K. through a branch or agency. It does not deal with
special situations, such as those of securities dealers, banks, tax-exempt
organizations, life insurance companies, persons that hold the Senior Notes
as part of a hedging transaction or straddle or conversion transaction or
persons whose functional currency is not the U.S. dollar. It also does not
deal with state or local taxes, or U.S. federal taxes other than income
taxes.
The statements regarding U.S. federal income tax consequences set forth
below are based upon the provisions of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings and judicial
decisions thereunder as of the date of this Prospectus. The statements
regarding U.K. and Bermuda tax laws set forth below are based on those laws
as in force on the date of this Prospectus. Such authorities may be repealed,
revoked or modified, possibly with retroactive effect, in which case tax
consequences different from those discussed below could result. The
statements regarding U.S. federal income, U.K. and Bermuda tax consequences
set forth below assume that the Senior Notes were issued, and transfers
thereof and payments thereon have been and will continue to be made, in
accordance with the Indenture and the Depositary Agreement.
For purposes of the U.K. Treaty (as defined below) and the Code, U.S.
Holders of the Book-Entry Interests will be treated as owners of the Senior
Notes underlying such Book-Entry Interests and, except as noted below, the
tax consequences of owning the Book-Entry Interests will be the same as those
applicable to ownership of the Senior Notes.
PERSONS CONSIDERING THE ACQUISITION, OWNERSHIP OR DISPOSITION OF THE SENIOR
NOTES SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING THE U.S. FEDERAL
INCOME, U.K. AND BERMUDA TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR
SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTIONS.
Certain Tax Consequences of the Exchange Offer
United States. The exchange of Old Notes for Exchange Notes pursuant to the
Exchange Offer will not result in any federal income tax consequences to
holders. When a holder exchanges an Old Note for an Exchange Note pursuant to
the Exchange Offer, such holder will have the same adjusted basis and holding
period in the Exchange Note as in the Old Note immediately before the
Exchange.
United Kingdom. The exchange of Old Notes for Exchange Notes pursuant to the
Exchange Offer will not result in any liability to United Kingdom taxation
for holders of Old Notes who are neither resident nor, in the case of a
holder who is an individual, ordinarily resident in the United Kingdom for
the purposes of United Kingdom taxation, and further who do not carry on a
trade, profession or vocation in the United Kingdom through a branch or
agency in the United Kingdom to which the Old Notes or the Exchange Notes are
attributable.
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Bermuda. The exchange of Old Notes for Exchange Notes pursuant to the
Exchange Offer will not result in any Bermuda tax consequences.
Taxation of U.S. Holders of the Senior Notes
Bermuda
Payments under the Guarantee. Under Bermuda law, no withholding or
deduction will be required to be made on account of payments made by Bermuda
Holdings under the Guarantee.
United Kingdom
Payments on the Senior Notes. The rules relating to UK withholding tax
have been amended by legislation enacted by Finance Act 1996 supported by
regulations laid thereunder. However, as some further regulations have still
to be drafted, the rules set out below may be subject to amendment.
(a) The Senior Notes will constitute "quoted Eurobonds" provided they
continue to carry a right to interest and provided that they are and
continue to be in bearer form and quoted on a recognized stock exchange
(the Luxembourg Stock Exchange is a recognized stock exchange for this
purpose).
(b) Payments of interest on Senior Notes which are and continue to be
quoted Eurobonds and are in global form and are held in a "recognized
clearing system" (DTC is so recognized) may be made without withholding or
deduction for or on account of UK income tax, provided that:
(i) payment is made direct to the recognized clearing system; or
(ii) payment is made to, or at the direction of, a depositary for
the recognized clearing system and the paying agent has obtained a
valid declaration PA 3 from the depositary; or
(iii) the paying agent has obtained a notice from the Inland
Revenue instructing the paying agent to pay the interest with no tax
deducted.
(c) If the Senior Notes are issued in definitive form and are and
continue to be quoted Eurobonds, then payments of interest on the Senior
Notes may be made without such withholding or deduction where:
(i) the person by or through whom the payment is made is not in
the UK; or
(ii) the payment is made by or through a person who is in the UK
and
(aa) the interest is paid on a Senior Note held in a recognized
clearing system as defined for the relevant purpose and one of the
conditions set out in paragraph (b)(i), (ii) and (iii) above is satisfied;
or
(bb) a person who is not resident in the UK is beneficially entitled to
the interest and is the beneficial owner of the Senior Note on which the
interest is paid and either:
(1) the paying agent obtains a valid declaration PA1 from the said
person on the occasion of each payment; or
(2) the paying agent obtains on the occasion of each payment a
valid declaration PA2 from another person who holds the Senior Notes
for the non-resident person and who is entitled to arrange for the
interest to be paid with no UK tax deducted; or
(iii) the paying agent has obtained a notice from the Inland
Revenue instructing the paying agent to pay the interest with no tax
deducted.
In other cases, and in particular if either (A) payments on the Senior
Notes are made at a time they are not quoted on a recognized stock exchange
or (B) Definitive Senior Notes in registered form are issued, interest and
Additional Amounts, if any, will be paid after deduction of U.K. income tax
at the lower rate (currently 20%). A U.S. Holder of a Senior Note will
normally be eligible to recover in full any U.K. tax withheld from payments
of interest to which such U.S. Holder is beneficially entitled by making a
claim for refund under the U.S./U.K. Treaty on the appropriate form filed in
duplicate with
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the Internal Revenue Service Center Director with which such U.S. Holder's
last U.S. federal income tax return was filed. Alternatively, a claim may be
made by a U.S. Holder in advance of a payment of interest. If the claim is
accepted by the U.K. Inland Revenue, they will authorize subsequent payments
to that U.S. Holder to be made without the withholding of U.K. tax. Claims
for refund must be made within six years of the end of the U.K. year of
assessment (generally April 5th in each year) to which the interest related
and must be accompanied by the original statement provided by the Company (or
any nominee holding the Senior Notes on the U.S. Holder's behalf) when the
interest payment was made showing the amount of income tax deducted and when
the interest payment was made. Because a claim for refund is not considered
until the U.K. Inland Revenue receives the appropriate form from the IRS,
forms should be sent to the IRS well before the end of the applicable
limitation period,
In the case of Senior Notes which are quoted Eurobonds, a person in the UK
who in the course of a trade or profession:
(i) by means of coupons, warrants or bills of exchange, collects or
secures payment of or receives interest on Senior Notes for a Noteholder;
or
(ii) arranges to collect or secure payment of interest on Senior Notes
for a Noteholder; or
(iii) acts as a custodian of such Notes and receives interest on such
Senior Notes or directs that interest on such Senior Notes be paid to
another person or consents to such payment will be required to withhold UK
income tax at the lower rate (currently 20%), subject to certain
exceptions, including the following:
(a) the Senior Notes are held in a recognized clearing system and
either:
(i) the collecting agent pays or accounts for the interest
directly or indirectly to the recognized clearing system and where
such payment or account is made to, or at the direction of, a
depositary for the recognized clearing system, the collecting agent
holds a valid declaration CA3 from the depositary; or
(iii) the collecting agent is acting as depositary for the
recognized clearing system in respect of the Senior Notes; or
(b) the person beneficially entitled to the interest beneficially
owns the Senior Notes and is not resident in the UK and the collecting
agent either
(i) holds a valid declaration CA1 from the said person; or
(ii) holds a valid declaration CA2 from a person (other than
the beneficial owner of the Notes) to whom the interest is payable
or who is entitled to arrange for the interest to be collected
without deduction of UK tax and who is not a collecting agent in
the UK.
Holders of Senior Notes who request Definitive Senior Notes in registered
form will not be entitled to the payment of any Additional Amounts in respect
of the U.K. tax withheld. In certain other cases in which Senior Notes are
exchanged for Definitive Senior Notes, U.S. Holders of Definitive Senior
Notes will be entitled to the payment of Additional Amounts in respect of the
U.K. tax withheld. See "Description of Senior Notes--Payment of Additional
Amounts."
Under provisions of the U.K. Finance Act 1995, interest on the Senior Notes
received without deduction or withholding will not be subject to U.K. tax by
direct assessment in the hands of a holder of Senior Notes who is not
resident for tax purposes in the U.K. unless that holder carries on a trade,
profession or vocation within the U.K. through a U.K. branch or agency in
connection with which the interest is received or to which the Senior Notes
are attributable (in which case certain exemptions may be available).
Sale or Disposition (including Redemption). A U.S. Holder (not resident or
ordinarily resident in the U.K. and not engaging in business in the U.K.
through a branch or agency) will not be subject to U.K. tax (including
withholding tax) on the sale, redemption (other than redemption at a
premium), retirement or other disposition of a Senior Note. Similarly, such a
U.S. Holder will not be subject to U.K. tax where an interest in the Global
Note is exchanged for a Definitive Senior Note.
For U.K. tax purposes, a disposal of a Senior Note by an individual holder
resident or ordinarily resident for U.K. tax purposes in the U.K. or who
carries on a trade, profession or vocation in the U.K. through a branch or
agency to which the Senior Note is attributable may give rise to a chargeable
gain or allowable loss for the purposes of taxation of capital gains. It
should be noted that, to calculate any gain on a disposal of Senior Notes,
sterling values are compared at acquisition and
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disposal. Accordingly, a taxable gain can arise on maturity, for example,
even where the amount of foreign currency received is less than, or the same
as, the amount paid for the Senior Notes. A transfer of a Senior Note by an
individual holder resident or ordinarily resident for U.K. tax purposes in
the U.K. or who carries on a trade in the U.K. through a branch or agency to
which the Senior Note is attributable may give rise to a charge to tax on
income in respect of an amount representing interest on the Senior Note which
has accrued since the preceding interest payment date.
In relation to a holder which is a company that is subject to U.K.
corporation tax (other than a company established for charitable purposes
only, authorized unit trusts and approved investment trusts and certain other
categories of company which are not taxable on chargeable gains), the Senior
Notes will be treated on disposal as "qualifying corporate bonds" with the
result that on a disposal of the Senior Notes by such a company, neither
chargeable gains nor allowable losses will arise for the purposes of taxation
of chargeable gains. Holders of Senior Notes who are within the charge to
United Kingdom corporation tax will be charged to tax generally on all
profits and gains (including interest and other accruals or, as the case may
be, movements in value, gains made on disposals and profits attributable to
exchange rate fluctuations) arising from the Senior Notes broadly in
accordance with their statutory accounting treatment. Such profits and gains
will be charged to tax as income in respect of each accounting period to
which they are allocated for accounting purposes. Relief may be available for
related expenses and losses on a similar basis.
U.K. Stamp Duty and Stamp Duty Reserve Tax. No U.K. Stamp Duty or Stamp
Duty Reserve Tax is payable on the issue of the Global Note or on the issue
or, once the Senior Notes are listed on the Luxembourg Stock Exchange, the
transfer by delivery of a Senior Note or on its redemption except that stamp
duty reserve tax (currently at the rate of 0.5%) could be payable on an
agreement to transfer any Senior Note issued after 25 November 1996 unless,
inter alia, the Senior Note is listed on a recognized stock exchange, does
not carry a right of conversion into securities not so listed and the
agreement to transfer the Senior Note is not made in contemplation of, or as
part of an arrangement for, a takeover of the Company.
Although the Issuer intends to list the Exchange Notes on the Luxembourg
Stock Exchange, it is not expected that the Exchange Notes will be listed on
the date of issue. During the period prior to such listing of the Exchange
Notes and the Old Notes, any agreement to transfer the Global Note or Senior
Note or any interest therein may be subject to Stamp Duty Reserve Tax if made
before such Senior Notes are so listed, unless it can be shown that (i) the
amount of interest and Additional Amounts payable on the Senior Notes neither
exceeds a reasonable commercial return on the nominal amount of the capital
nor falls to be determined to any extent by reference to the results of, or
any part of, a business or to the value of any property; (ii) the Senior
Notes carry a right on repayment to an amount which does not exceed the
nominal value of the capital (or if it does, such amount is reasonably
comparable with what is generally repayable (in respect of a similar nominal
amount of capital) under the terms of issue of loan capital listed in the
Official List of The London Stock Exchange); and (iii) the Senior Notes do
not carry a right (exercisable then or later) of conversion into shares or
other securities, or to the acquisition of shares or other securities,
including loan capital of the same description.
U.K. Inheritance Tax. Senior Notes represented by the Global Note that are
not treated as situated in the U.K. and are beneficially owned by an
individual domiciled outside the U.K. will not be subject to U.K. inheritance
tax. If a Senior Note is subject to U.K. inheritance tax and U.S. federal
estate tax, the U.S./U.K. convention for the avoidance of double taxation
with respect to estate and gift taxes may entitle a U.S. Holder to credit or
relief in respect of the U.K. tax.
United States
Payments on the Senior Notes. For U.S. federal income tax purposes, a U.S.
Holder will include interest and Additional Amounts, if any, payable on the
Senior Notes in income when received or accrued in accordance with the U.S.
Holder's method of accounting. Such interest will constitute "foreign source
income" for foreign tax credit purposes.
Subject to certain limitations, a U.S. Holder would generally be required
to include the full amount of the interest payment (without reduction for the
U.K. withholding tax, if any) and Additional Amounts, if any, and would be
entitled to a credit against its U.S. federal income tax liability, or a
deduction in computing its U.S. federal taxable income, for U.K. taxes
withheld from payments of interest to which such U.S. Holder is beneficially
entitled. In the case of a U.S. Holder entitled to claim a refund of any U.K.
tax withheld, no U.S. foreign tax credit or deduction may be claimed for the
amount of U.K. tax eligible for a refund, whether or not such refund is
sought, to the extent that it is reasonably certain that such U.K. tax will
be refunded. If a U.S. Holder receives a refund of U.K. tax for which a
deduction or foreign tax credit was previously claimed, the U.S. Holder
generally must (i) in the case of a deduction, include the refund in gross
income or (ii), in the case of a foreign tax credit, notify the Service of
the receipt of the refund, according to the requirements of Section
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1.905-4T of the Treasury Regulations or any successor provisions, and the
Service will redetermine the U.S. Holder's U.S. federal income tax liability for
the taxable year in which the credit was originally claimed.
Sale or Disposition (including Redemption). For U.S. federal income tax
purposes, taxable gain or loss generally will be recognized by a U.S. Holder on
the sale, redemption, retirement or other disposition of the Senior Notes
measured by the difference between (1) the sum of (a) any cash and (b) the fair
market value of any property received (except in the case of a cash basis
taxpayer, to the extent the cash or property received is attributable to accrued
interest, which will be taxable as such) and (2) the U.S. Holder's tax basis in
the Senior Notes. Subject to the market discount rules discussed below, any gain
or loss recognized generally will be capital gain or loss. Any such gain
generally will constitute "U.S. source income" for foreign tax credit purposes.
Market Discount. A U.S. Holder (other than a U.S. Holder that makes the
election described below) that purchases a Senior Note at a market discount that
is not de minimis generally will be required to treat any gain realized upon the
disposition of such Senior Note as interest income to the extent of the market
discount accruing during the period such holder held such Senior Note. A U.S.
Holder may also be required to recognize as ordinary income any principal
payments with respect to a Senior Note to the extent such payments do not exceed
the accrued market discount on the Senior Note. For this purpose, market
discount generally equals the excess of the stated redemption price of the
Senior Note over the basis of the Senior Note in the hands of the holder
immediately after its acquisition. However, market discount is deemed not to
exist if the market discount is less than a statutorily defined de minimis
amount equal to 1/4 of 1 percent of the Senior Note's stated redemption price
multiplied by the number of complete years to the Senior Note's maturity after
the holder acquired the Senior Note.
The market discount rules also provide that a U.S. Holder of Senior Notes
that were acquired at a market discount may be required to defer the deduction,
until the Senior Notes are disposed of, of a portion of the interest on any
indebtedness incurred or maintained to acquire or carry the Senior Notes.
A U.S. Holder of a Senior Note acquired at a market discount may elect to
include market discount in income as the discount accrues. In such a case, the
foregoing rules with respect to the recognition of ordinary income on
dispositions and with respect to the deferral of interest deductions on
indebtedness related to such Senior Note would not apply. The current inclusion
election applies to all market discount obligations acquired on or after the
first day of the first taxable year to which the election applies, and may not
be revoked without the consent of the Service.
Amortizable Bond Premium. Generally, if the tax basis of an obligation
held as a capital asset exceeds the amount payable at maturity of the
obligation, such excess may constitute amortizable bond premium that the holder
of such obligation may elect to amortize under the constant interest rate method
and deduct over the period from the holder's acquisition date to the
obligation's maturity date. The amortizable bond premium deduction is treated as
a reduction of interest on the bond instead of as a deduction, except as
Treasury Regulations may otherwise provide. A holder that elects to amortize
bond premium must reduce its tax basis in the related obligation by the amount
of the aggregate deductions allowable for the amortizable bond premium. Any
election to amortize bond premium will apply to all bonds (other than bonds the
interest on which is excludible from gross income) held by the holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the holder. The election may not be revoked without the consent of
the Service.
In the case of an obligation, such as a Senior Note, that may be called at
a premium prior to maturity, an earlier call date is treated as its maturity
date, and the amount of bond premium is determined by treating the amount
payable on such call date as the amount payable at maturity if such a
calculation produces a smaller amortizable bond premium for the period ending on
such call date. If a U.S. Holder of a Senior Note is required to amortize and
deduct bond premium by reference to a call date, the Senior Note will be treated
for this purpose as maturing on such date for the amount payable, and, if not
redeemed on such date, as reissued on such date for the amount so payable. If a
Senior Note purchased at a premium is redeemed pursuant to a call prior to such
early call date or its maturity, a U.S. Holder that has elected to deduct bond
premium may deduct the excess of its adjusted basis in the Senior Note over the
amount received on redemption (or, if greater, the amount payable on maturity)
as an ordinary loss in the taxable year of redemption.
United States Information Reporting and Backup Withholding. In general,
U.S. information reporting requirements will apply to payments of principal,
premium and interest on a Senior Note and on the proceeds of the sale of a
Senior Note before maturity to a non-corporate U.S. Holder, and U.S. "backup
withholding" at a rate of 31% will apply to such payments if the U.S. Holder
fails to provide an accurate taxpayer identification number or to report all
interest and dividends required to be shown on its federal income tax returns.
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The amount of any backup withholding from a payment to a U.S. Holder will
be allowed as a credit against such U.S. Holder's U.S. federal income tax
liability and may entitle such U.S. Holder to a refund, provided that the
required information is furnished to the Service.
ERISA CONSIDERATIONS
The Company, the obligor with respect to the Senior Notes, and its
affiliates 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 Senior Notes with assets of any Plan should
consult with its counsel. The purchase and/or holding of Senior Notes 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 Issuer, Bermuda Holdings
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 Senior Notes are acquired
pursuant to and in accordance with an applicable exemption, such as Prohibited
Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 96-23
(an exemption for certain transactions determined by an in-house professional
asset manager).
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Issuer and Bermuda Holdings by Clifford Chance, United Kingdom counsel for
the Issuer and Bermuda Holdings, and by Conyers, Dill & Pearman, Bermuda counsel
for the Issuer and Bermuda Holdings.
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EXPERTS
The consolidated financial statements of Bermuda Holdings and its
subsidiaries as of December 31, 1995 and 1996 and for each of the two years in
the period ended December 31, 1996 and the consolidated financial statements of
Terra Nova Insurance Company Limited (the Predecessor) and subsidiaries for the
year ended December 31, 1994, incorporated by reference in this Prospectus, have
been incorporated herein in reliance upon the report of Coopers & Lybrand
(Hamilton, Bermuda), independent accountants, given on the authority of that
firm as experts in accounting and auditing.
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No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as having been authorized
by the Issuer or Bermuda Holdings. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any of the Senior Notes in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that the information contained herein is correct as of any time subsequent to
its date or that there has been no change in the affairs of the Issuer or
Bermuda Holdings since such date.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information...................................................... 1
Incorporation of Certain Documents by Reference............................ 1
Enforceability of Civil Liabilities........................................ 2
Currency................................................................... 2
Prospectus Summary......................................................... 3
Company Overview........................................................... 3
The Exchange Offer......................................................... 6
The Exchange Notes......................................................... 9
Certain Consequences of a Failure to Exchange Old Notes....................10
Risk Factors...............................................................12
Summary Consolidated Financial Data........................................17
Ratio of Earnings to Fixed Charges.........................................18
Use of Proceeds............................................................19
Capitalization.............................................................19
Description of Exchange Notes..............................................20
Description of Depositary Agreement........................................32
Description of Old Notes...................................................36
The Exchange Offer.........................................................36
Plan of Distribution.......................................................41
Certain Tax Considerations.................................................43
Erisa Considerations.......................................................48
Legal Matters..............................................................48
Experts....................................................................49
</TABLE>
================================================================================
================================================================================
Terra Nova Insurance (UK)
Holdings plc
Offer to Exchange 7.2% Senior Notes
due 2007, which will be fully and
unconditionally guaranteed on a senior
basis by Terra Nova (Bermuda) Holdings
Ltd. and which have been registered
under the Securities Act of 1993, as
amended, for any and all outstanding
7.2% Senior Notes due 2007
------------------
PROSPECTUS
------------------
____________, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
THE ISSUER
The Issuer is a public limited company organized under the laws of England
and Wales. Sections 310 and 727 of the Companies Act of 1985,as amended (the
"Companies Act"), and Article 17 of the Issuer's Articles of Association provide
for the indemnification or exemption from liability, under the circumstances set
forth below, of officers and auditors of the Issuer against certain liabilities
in respect of negligence, default, breach of duty or breach of trust in relation
to the Issuer, and for the purchase and maintenance of insurance by the Issuer
on behalf of officers, directors, and auditors of the Issuer against certain
liabilities asserted against, and incurred by, any such officer, director, or
auditor in such capacity. Set forth below is the text of Sections 310 and 727 of
the Companies Act and the text of Article 17 of the Issuer's Articles of
Association.
Section 310 of the Companies Act of 1985, as amended, provides as follows:
"SEC. 310. Provisions exempting officers and auditors from liability.
310(1) This section applies to any provision, whether contained in a
company's articles or in any contract with the company or otherwise, for
exempting any officer of the company or any person (whether an officer or
not) employed by the company as auditor from, or indemnifying him against,
any liability which by virtue of any rule of law would otherwise attach to
him in respect of any negligence, default, breach of duty or breach of
trust of which he may be guilty in relation to the company.
310(2) Except as provided by the following subsection, any such provision
is void.
310(3) This section does not prevent a company --
(a) from purchasing and maintaining for any such officer or auditor
insurance against any such liability, or
(b) from indemnifying any such officer or auditor against any
liability incurred by him --
(i) in defending any proceedings, (whether civil or criminal) in
which judgment is given in his favour or he is acquitted,
or
(ii) in connection with any application under section 144(3) or
(4) (acquisition of shares by innocent nominee) or section
727 (general power to grant relief in case of honest and
reasonable conduct) in which relief is granted to him by the
court."
Section 727 of the Companies Act 1985 provides:
"(1) If in any proceedings for negligence, default, breach of duty or
breach of trust against an officer of a company or a person employed by a
company as auditor (whether he is or is not an officer of the company) it
appears to the court hearing the case that that officer or person is or may be
liable in respect of the negligence, default, breach of duty or breach of trust,
but that he has acted honestly and reasonably, and that having regard to all the
circumstances of the case (including those connected with his appointment) he
ought fairly to be excused for the negligence, default, breach of duty or breach
of trust, that court may relieve him, either wholly or partly, from his
liability on such terms as it thinks fit.
(2) If any such officer or person as abovementioned has reason to apprehend
that any claim will or might be made against him in respect of any negligence,
default, breach of duty or breach of trust, he may apply to the court for
relief; and the court on the application has the same power to relieve him as
under this section it would have had if it had been a court before which
proceedings against that person for negligence, default, breach of duty or
breach of trust had been brought.
(3) Where a case to which subsection (1) applies is being tried by a judge
with a jury, the judge, after hearing the evidence, may, if he is satisfied that
the defendant or defender ought in pursuance of that subsection to be relieved
either
II-1
<PAGE>
in whole or in part from the liability sought to be enforced against him,
withdraw the case in whole or in part from the jury and forthwith direct
judgment to be entered for the defendant or defender on such terms as to costs
or otherwise as the judge may think proper."
Article 17 of the Issuer's Articles of Association provides as follows:
"17.(1) subject to the provisions of and to the extent permitted by the
Statutes, every director, other officer or auditor of the Company
shall be indemnified out of the assets of the Company against any
liability incurred by him in the actual or purported execution or
discharge of his duties or the exercise or purported exercise of
his powers or otherwise in relation to or in connection with his
duties, powers or office, but:
(a) this indemnity shall not apply to any liability to the extent that
it is recovered from any other person; and
(b) the indemnity is subject to such officer or auditor taking all
reasonable steps to effect such recovery, so that the indemnity
shall not apply to the extent that an alternative right of
recovery is capable of being enforced.
17.(2) Regulation 188 of Table A shall not apply."
As of June 30, 1997, Bermuda Holdings had purchased primary directors and
officers liability insurance from New Hampshire Insurance Company (Europe) in
the amount of (Pounds)12.5 million, with excess cover of (Pounds)7.5 million
provided by Executive Risk Insurance Company and further excess cover of
(Pounds)5 million provided by ACE Insurance Company, covering directors and
officers of Bermuda Holdings and its subsidiaries including those of the Issuer.
BERMUDA HOLDINGS
Bermuda Holdings is a company organized under the Laws of Bermuda. Sections
98 and 98A of the Companies Act of 1981 of Bermuda and Article 28 of the Bye-
Laws of Bermuda Holdings provide for the indemnification, except under
circumstances set forth below, of directors, officers or auditors of Bermuda
Holdings from losses or liabilities occurring in connection with their execution
of their duties or supposed duties in such capacities, and for the purchase and
maintenance of insurance by Bermuda Holdings on behalf of its directors and
officers against any liabilities asserted against such directors or officers by
virtue of a violation of their duties in such capacities. Set forth below is the
text of Sections 98 and 98A of the Companies Act of 1981 of Bermuda and the text
of Article 28 of the Bye-Laws of Bermuda Holdings.
Section 98 of the Companies Act of 1981 of Bermuda provides:
"(1) Subject to subsection (2), a company may in its bye-laws or in any
contract or arrangement between the company and any officer, or any person
employed by the company as auditor, exempt such officer or person from, or
indemnify him in respect of, any loss arising or liability attaching to him
by virtue of any rule of law in respect of any negligence, default, breach
of duty or breach of trust of which the officer or person may be guilty in
relation to the company or any subsidiary thereof.
(2) Any provision, whether contained in the bye-laws of a company or in
any contract or arrangement between the company and any officer, or any
person employed by the company as auditor, exempting such officer or person
from, or indemnifying him against any liability which by virtue of any rule
of law would otherwise attach to him in respect of any fraud or dishonesty
of which he may be guilty in relation to the company shall be void.
Provided that --
(a) nothing in this section shall operate to deprive any person of any
exemption or right to be indemnified in respect of anything done or
omitted to be done by him while any such provision was in force; and
(b) notwithstanding anything in this section, a company may, in
pursuance of any such provision as aforesaid indemnify any such officer
or auditor against any liability incurred by him in defending any
proceedings, whether civil or criminal in which judgment is given in
his favor or in which he is acquitted or when relief is granted to him
by the Court under section 281."
Section 98A of the Companies Act 1981 of Bermuda provides as follows:
II-2
<PAGE>
"98A A company may purchase and maintain insurance for the benefit of any
officer of the company against any liability incurred by him under
paragraph (b) of subsection (1) of Section 97 in his capacity as an officer
of the Company or indemnifying such an officer in respect of any loss
arising or liability attaching to him by virtue of any rule of law in
respect of any negligence, default, breach of duty or breach of trust of
which the officer may be guilty in relation to the company or any
subsidiary thereof and nothing in this Act shall make void or voidable any
such policy."
(Section 97(1)(b), referenced in Section 98A, provides that every officer of a
company in exercising his powers and discharging his duties shall "exercise the
care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.")
Article 28 of the Bye-Laws of Bermuda Holdings provides as follows:
"(a) The Directors, Secretary and other Officers for the time being of the
Company and the liquidator or trustees (if any) for the time being acting
in relation to any of the affairs of the Company and every one of them, and
their heirs, executors and administrators, shall be indemnified and secured
harmless out of the assets of the Company from and against all actions,
costs, charges, losses, damages and expenses which they or any of them,
their heirs, executors or administrators, shall or may incur or sustain by
or by reason of any act done, concurred in or omitted in or about the
execution of their duty, or supposed duty, or in their respective offices
or trusts, and none of them shall be answerable for the acts, receipts,
neglects or defaults of the others of them or for joining in any receipts
for the sake of conformity, or for the acts of or the solvency or honesty
of any bankers or other persons with whom any moneys or effects belonging
to the Company shall or may be lodged or deposited for safe custody, or for
insufficiency or deficiency of any security upon which any moneys of or
belonging to the Company shall be placed out on or invested, or for any
other loss, misfortune or damage which may happen in the execution of their
respective offices or trusts, or in relation thereto, PROVIDED THAT this
indemnity shall not extend to any matter in respect of any wilful
negligence, wilful default, fraud or dishonesty which may attach to any of
said persons.
(b) Every Director and Officer of the Company shall be indemnified out of
the funds of the Company against all liabilities incurred by him as such
Director or Officer of the Company in defending any proceedings, whether
civil or criminal, in which judgment is given in his favor, or in which he
is acquitted, or in connection with any application under the Companies
Acts in which relief from liability is granted to him by the court. Such
funds shall be advanced to such Director or Officer on his incurring
liability prior to judgment provided that should he be found guilty of a
criminal or other offense for which he cannot by law be indemnified he
shall reimburse the Company the funds advanced."
As of June 30, 1997, Bermuda Holdings had purchased primary directors and
officers liability insurance from New Hampshire Insurance Company (Europe) in
the amount of (Pounds)12.5 million, with excess cover of (Pounds)7.5 million
provided by Executive Risk Insurance Company and further excess cover of
(Pounds)5 million provided by ACE Insurance Company.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- - ------ -----------------------
<S> <C> <C>
*1.1 -- Registration Rights Agreement, dated August 20, 1997, among the
Issuer, Bermuda Holdings, and the Initial Purchaser.
3.1 -- Copy of Memorandum and Articles of Association of the Issuer
dated November 1, 1994 (Filed as Exhibit 3.1 to the Issuers'
Registration Statement on Form F-1, Registration No. 33-93358-
01, and incorporated herein by reference).
3.2 -- Certificate of Incorporation and Memorandum of Association of
Bermuda Holdings dated November 29, 1993 (Filed as Exhibit 3.2
to Bermuda Holding's Registration Statement on Form S-1,
Registration No. 33-93358, and incorporated herein by
reference).
3.3 -- Amended and Restated Bye-Laws of Bermuda Holdings dated March
25, 1996 (Filed as Exhibit 3.2 to Bermuda Holdings'
Registration Statement on Form S-1, Registration No. 333-1726,
and incorporated herein by reference).
*4.1 -- Indenture, dated August 26, 1997, among the Issuer, Bermuda
Holdings, and The Chase Manhattan Bank, as Trustee.
*4.2 -- Deposit and Custody Agreement, dated August 26, 1997, among the
Issuer, Bermuda Holdings, Chase Manhattan Bank Luxembourg, S.A.
as Custodian, and The Chase Manhattan Bank, as Depositary.
*4.3 -- Form of Global Note. Included as Exhibit A to the Indenture
filed herewith as Exhibit 4.1.
*4.4 -- Form of Global Receipt. Included as Exhibit C to the Deposit
and Custody Agreement filed herewith as Exhibit 4.2.
*5.1 -- Opinion of Clifford Chance as to the legality of the Exchange
Notes, dated October 16, 1997.
*5.2 -- Opinion of Conyers, Dill & Pearman as to the legality of the
Guarantee, dated October 16, 1997.
*5.3 -- Opinion of Milbank, Tweed, Hadley & McCloy as to the legality
of the Global Receipt, dated October 16, 1997.
*8.1 -- Opinion of Clifford Chance as to U.K. tax matters relative to
the Exchange Notes, dated October 16, 1997.
*8.2 -- Opinion of Conyers, Dill & Pearman as to Bermuda tax matters
relative to the Guarantee, dated October 16, 1997.
10.1 -- DTI Notice of Requirements (Filed as Exhibit 10.23 of the
Issuer's registration statement on Form S-1, Registration No.
33-93358, and incorporated by reference herewith).
11.1 -- Statement re computation of per share earnings. (Filed as
Exhibit 11.1 to Bermuda Holdings' quarterly report on Form 10-Q
for the quarter ended June 30, 1997, Commission File Number 1-
13832, and incorporated herein by reference).
*12.1 -- Statement re computation of ratios.
*21.1 -- Subsidiaries of the Issuer and Bermuda Holdings.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
*23.1 -- Consent of Clifford Chance (included in the Opinion of Clifford
Chance filed as Exhibit 5.1 herewith).
*23.2 -- Consent of Conyers, Dill & Pearman (included in the Opinion of
Conyers, Dill & Pearman filed as Exhibit 5.2 herewith).
*23.3 -- Consent of Coopers & Lybrand.
*23.4 -- Consent of Milbank, Tweed, Hadley & McCloy (included in the
Opinion of Milbank, Tweed, Hadley & McCloy filed as Exhibit 5.3
herewith).
*24.1 -- Power of Attorney of the Officers and Directors of the Issuer.
*24.2 -- Power of Attorney of the Officers and Directors of Bermuda
Holdings.
*25.1 -- Statement of Eligibility of Trustee on Form T-1.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
*99.3 -- Form of Letter to Record Holders.
*99.4 -- Form of Letter to Beneficial Holders.
*99.5 -- Form of Instruction from Owner.
+99.6 -- Form of Exchange Agent Agreement.
*99.7 -- Form of Paying Agency Agreement.
</TABLE>
- - ----------------------
* Filed herewith.
+ To be filed by Amendment.
(B) FINANCIAL STATEMENT SCHEDULES.
Financial statement schedules of the registrants for which provision is
made in the applicable accounting regulations of the Commission are not
required, are inapplicable or have been disclosed in the notes to the financial
statements and therefore have been omitted.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
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 the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the 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, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate
II-5
<PAGE>
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant hereby undertakes (i) to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b) or 11 of Form F-4 and Form S-4, within one business
day of receipt of such request, and to send the incorporated documents by first
class-mail or other equally prompt means; and (ii) to arrange or provide for a
facility in the U.S. for the purpose of responding to such requests. The
undertaking in subparagraph (i) above includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(e) The Depositary hereby undertakes to make available at the principal
office of the Depositary in the United States, for inspection by holders of the
Receipt, any reports and communications received from the issuer of the
deposited security which are both (1) received by the Depositary as the holder
of the deposited security, and (2) made generally available to the holders of
the underlying security by the Issuer.
(f) If the amounts of fees charged are not disclosed in the prospectus,
the Depositary undertakes to prepare a separate document stating the amount of
any fee charged and describing the service for which it is charged and to
deliver promptly a copy of such fee schedule without charge to anyone upon
request. The Depositary undertakes to notify each registered holder of a Receipt
thirty days before any change in the fee schedule.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this Registration Statement on Form S-4 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York, on the 16th day of October, 1997.
TERRA NOVA (BERMUDA)
HOLDINGS LTD.
By /s/ Jean M. Waggett
------------------------------------
Jean M. Waggett, as Attorney-in-Fact
October 16, 1997
Pursuant to the requirements of this 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 Title
- - --------- -----
<S> <C>
William O. Bailey* Chairman and Chief Executive Officer
(Principal Executive and Accounting Officer)
William J. Wedlake* Chief Financial Officer
(Principal Financial Officer)
John Riddick* Deputy Chairman and Director
John J. Dwyer* Deputy Chairman and Director
Nigel H.J. Rogers* Deputy Chairman and Director
David L. Jaffe* Director
Philip F. Petronis* Director
Allan W. Fulkerson* Director
Hugh P. Lowenstein* Director
Robert S. Fleischer* Director
</TABLE>
II-7
<PAGE>
<TABLE>
<S> <C>
Mark J. Byrne* Director
Steven J. Gilbert* Director
</TABLE>
* By power of attorney authorizing Jean M. Waggett to execute the Registration
Statement and amendments and/or post-effective amendments and supplements
thereto on behalf of Terra Nova (Bermuda) Holdings Ltd. and its directors and
officers.
II-8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this Registration Statement on Form F-4 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York, on the 16th day of October, 1997.
TERRA NOVA INSURANCE (UK)
HOLDINGS PLC
By /s/ Jean M. Waggett
--------------------------------------
Jean M. Waggett, as Attorney-in-Fact
October 16, 1997
Pursuant to the requirements of this 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 Title
- - --------- -----
<S> <C>
John Riddick* Chairman and Managing Director
(Principal Executive Officer)
William J. Wedlake* Director and Chief Financial Officer
(Principal Financial Officer and Accounting Officer)
William O. Bailey* Director
John J. Dwyer* Director
Nigel H. J. Rogers* Director
Anthony F. Aldridge* Director
</TABLE>
* By power of attorney authorizing Jean M. Waggett to execute the Registration
Statement and amendments and/or post-effective amendments and supplements
thereto on behalf of Terra Nova Insurance (UK) Holdings plc and its directors
and officers.
II-9
<PAGE>
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement on Forms S-4 and F-4 has been signed below by the
undersigned as the duly authorized representative of the Issuer and Bermuda
Holdings in the United States.
By: /s/ Jean M. Waggett
-------------------------
Jean M. Waggett
New York, New York
October 16, 1997
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this Registration Statement to be signed
solely with respect to the disclosure and undertakings made in response to the
requirements of Parts I and II to the Form F-6 on its behalf by the undersigned,
thereto duly authorized, in the City of New York, State of New York on October
16, 1997.
Legal entity created by the agreement for the
issuance of a Global Receipt representing Senior
Notes of Terra Nova Insurance (UK) Holdings plc
By: The Chase Manhattan Bank, as Depositary
By: /s/ David G. Safer
------------------------------
Name: David G. Safer
Title: Senior Trust Officer
II-11
<PAGE>
Index to Exhibits
-----------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- - ------ -----------------------
<S> <C> <C>
*1.1 -- Registration Rights Agreement, dated August 20, 1997, among the
Issuer, Bermuda Holdings, and the Initial Purchaser.
3.1 -- Copy of Memorandum and Articles of Association of the Issuer
dated November 1, 1994 (Filed as Exhibit 3.1 to the Issuers'
Registration Statement on Form F-1, Registration No. 33-93358-
01, and incorporated herein by reference).
3.2 -- Certificate of Incorporation and Memorandum of Association of
Bermuda Holdings dated November 29, 1993 (Filed as Exhibit 3.2
to Bermuda Holding's Registration Statement on Form S-1,
Registration No. 33-93358, and incorporated herein by
reference).
3.3 -- Amended and Restated Bye-Laws of Bermuda Holdings dated March
25, 1996 (Filed as Exhibit 3.2 to Bermuda Holdings'
Registration Statement on Form S-1, Registration No. 333-1726,
and incorporated herein by reference).
*4.1 -- Indenture, dated August 26, 1997, among the Issuer, Bermuda
Holdings, and The Chase Manhattan Bank, as Trustee.
*4.2 -- Deposit and Custody Agreement, dated August 26, 1997, among the
Issuer, Bermuda Holdings, Chase Manhattan Bank Luxembourg, S.A.
as Custodian, and The Chase Manhattan Bank, as Depositary.
*4.3 -- Form of Global Note. Included as Exhibit A to the Indenture
filed herewith as Exhibit 4.1.
*4.4 -- Form of Global Receipt. Included as Exhibit C to the Deposit
and Custody Agreement filed herewith as Exhibit 4.2.
*5.1 -- Opinion of Clifford Chance as to the legality of the Exchange
Notes, dated October 16, 1997.
*5.2 -- Opinion of Conyers, Dill & Pearman as to the legality of the
Guarantee, dated October 16, 1997.
*5.3 -- Opinion of Milbank, Tweed, Hadley & McCloy as to the legality
of the Global Receipt, dated October 16, 1997.
*8.1 -- Opinion of Clifford Chance as to U.K. tax matters relative to
the Exchange Notes, dated October 16, 1997.
*8.2 -- Opinion of Conyers, Dill & Pearman as to Bermuda tax matters
relative to the Guarantee, dated October 16, 1997.
10.1 -- DTI Notice of Requirements (Filed as Exhibit 10.23 of the
Issuer's registration statement on Form S-1, Registration No.
33-93358, and incorporated by reference herewith).
11.1 -- Statement re computation of per share earnings. (Filed as
Exhibit 11.1 to Bermuda Holdings' quarterly report on Form 10-Q
for the quarter ended June 30, 1997, Commission File Number 1-
13832, and incorporated herein by reference).
*12.1 -- Statement re computation of ratios.
*21.1 -- Subsidiaries of the Issuer and Bermuda Holdings.
*23.1 -- Consent of Clifford Chance (included in the Opinion of Clifford
Chance filed as Exhibit 5.1 herewith).
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C>
*23.2 -- Consent of Conyers, Dill & Pearman (included in the Opinion of
Conyers, Dill & Pearman filed as Exhibit 5.2 herewith).
*23.3 -- Consent of Coopers & Lybrand.
*23.4 -- Consent of Milbank, Tweed, Hadley & McCloy (included in the
Opinion of Milbank, Tweed, Hadley & McCloy filed as Exhibit 5.3
herewith).
*24.1 -- Power of Attorney of the Officers and Directors of the Issuer.
*24.2 -- Power of Attorney of the Officers and Directors of Bermuda
Holdings.
*25.1 -- Statement of Eligibility of Trustee on Form T-1.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
*99.3 -- Form of Letter to Record Holders.
*99.4 -- Form of Letter to Beneficial Holders.
*99.5 -- Form of Instruction from Owner.
+99.6 -- Form of Exchange Agent Agreement.
*99.7 -- Form of Paying Agency Agreement.
</TABLE>
- - ---------------------
* Filed herewith.
+ To be filed by Amendment.
2
<PAGE>
Exhibit 1.1
REGISTRATION RIGHTS AGREEMENT
Dated as of August 20, 1997
by and among
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
and
TERRA NOVA (BERMUDA) HOLDINGS LTD.
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
---------------------------------
7.2% Senior Notes Due 2007
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of August 20, 1997, by and among Terra Nova Insurance (UK) Holdings PLC,
a company organized under the laws of England and Wales (the "Company"), Terra
Nova (Bermuda) Holdings Ltd., a company organized under the laws of Bermuda (the
"Guarantor"), Donaldson, Lufkin & Jenrette Securities Corporation (the
"Purchaser").
This Agreement is made pursuant to the Purchase Agreement dated August 20,
1997 (the "Purchase Agreement") between the Company, the Guarantor and the
Purchaser which provides for the sale by the Company to the Purchaser of
$75,000,000 aggregate principal amount of the Company's 7.2% Senior Notes Due
2007 (the "Notes"), which are guaranteed by the Guarantor. In order to induce
the Purchaser to enter into the Purchase Agreement and purchase the Notes, the
Company and the Guarantor have agreed to provide the registration rights and
perform the obligations set forth in this Agreement. The execution of this
Agreement is a condition to the purchase of the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Agreement" has the meaning set forth in the first paragraph of this
---------
Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
------------
that is not a day on which banking institutions in The City of New York or
Hamilton, Bermuda or London, England are authorized or obligated by law,
regulation or executive order to close.
"Commission" means the Securities and Exchange Commission.
----------
"Company" has the meaning set forth in the first paragraph of this
-------
Agreement and also includes the Company's successors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the Commission promulgated thereunder.
<PAGE>
"Exchange Notes" means 7.2% Senior Notes Due 2007 issued by the Company
--------------
under the Indenture and guaranteed by the Guarantor on the same terms as the
Notes, and containing terms identical to the Notes (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the Notes
or, if no such interest has been paid, from August 26, 1997, (ii) the Exchange
Notes will not contain restrictions on transfer, and (iii) the Exchange Notes
will not contain provisions relating to an increase in their interest rate under
certain circumstances) to be offered to Holders of Notes pursuant to the
Exchange Offer.
"Exchange Offer" means the exchange offer by the Company of Exchange Notes
--------------
for Registrable Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" means a registration under the Securities Act
---------------------------
effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" means an exchange offer
-------------------------------------
registration statement on Form F-4 (or, if applicable, on another appropriate
form) pursuant to the provisions of Section 2(a) of this Agreement which covers
all of the Exchange Notes 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 or deemed to be incorporated by reference
therein.
"Guarantor" has the meaning set forth in the first paragraph of this
---------
Agreement and also includes the Guarantor's successors.
"Holder" means the Purchaser, for so long as it owns any Registrable Notes,
------
and its successors, assigns and direct and indirect transferees who become
registered owners of Registrable Notes under the Indenture; provided that for
--------
purposes of Sections 4 and 6 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers as defined in Section 4(a).
"Indenture" means the Indenture relating to the Notes dated as of August
---------
26, 1997 among the Company, the Guarantor and The Chase Manhattan Bank, N.A., as
Trustee, as amended or supplemented from time to time in accordance with the
terms thereof.
"Notes" has the meaning set forth in the second paragraph of this
-----
Agreement.
<PAGE>
"Person" means an individual, partnership, corporation, limited liability
------
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Purchase Agreement" has the meaning set forth in the first paragraph of
------------------
this Agreement.
"Prospectus" means the prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or supplement thereto, with respect to
the offering of any portion of the Registrable Notes covered by such
Registration Statement or of the Exchange Notes, as the case may be, and all
other amendments and supplements to the Prospectus, including post-effective
amendments and all material incorporated by reference or deemed to be
incorporated by reference therein.
"Purchaser" has the meaning set forth in the first paragraph of this
---------
Agreement.
"Registrable Notes" means the Notes; provided that any Note shall cease to
----------------- --------
be a Registrable Note upon the earlier to occur of (i) when a Registration
Statement with respect to such Note has been declared effective under the
Securities Act and such Note has been disposed of pursuant to such Registration
Statement, (ii) when such Note has become eligible for resale pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A) under the
Securities Act, (iii) except with respect to any Note held by a Holder described
in clause (iii) of Section 2(b) hereof, an Exchange Offer has been consummated,
or (iv) such Notes shall cease to be outstanding.
"Registration Expenses" has the meaning set forth in Section 5 hereof.
---------------------
"Registration Statement" means any registration statement that covers any
----------------------
of the Exchange Notes or Registrable Notes 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 or deemed to be incorporated by reference therein.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the Commission thereunder.
<PAGE>
"Shelf Registration" means a registration under the Securities Act effected
------------------
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" means a "shelf" registration statement on
----------------------------
Form S-3 (or, if applicable, on another appropriate form) pursuant to the
provisions of Section 2(b) of this Agreement which covers all of the Registrable
Notes (except Registrable Notes that the Holders have elected not to include in
such Shelf Registration Statement) under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission, 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 or deemed to be incorporated by
reference therein.
"Special Counsel" means Davis Polk & Wardwell, special counsel to the
---------------
Purchaser or such other special counsel as may be designated by the Holders of a
majority in aggregate principal amount of Registrable Notes outstanding.
"Trustee" means the trustee with respect to the Notes under the Indenture.
-------
2. Registration under the Securities Act
-------------------------------------
(a) Exchange Offer Registration. To the extent not prohibited by any
---------------------------
applicable law or applicable interpretation of the Staff of the Commission, each
of the Company and the Guarantor agree to use its commercially reasonable
efforts to cause to be filed after the Closing Date an Exchange Offer
Registration Statement covering an offer by the Company to the Holders to
exchange all of the Registrable Notes (except Registrable Notes held by the
Purchaser and acquired directly from the Company if the Purchaser is not
permitted, pursuant to applicable law or any applicable interpretation of the
Staff of the Commission, to participate in the Exchange Offer) for Exchange
Notes and to have such Registration Statement remain effective until the closing
of the Exchange Offer. The Company shall commence the Exchange Offer promptly
after the Exchange Offer Registration Statement has been declared effective by
the Commission and use its commercially reasonable efforts to have the Exchange
Offer consummated not later than February 26, 1998. The Company shall commence
the Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures required by applicable law or the Indenture:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Registrable Notes validly tendered will be accepted for
exchange;
<PAGE>
(ii) the dates of acceptance for exchange (which shall be a period of
not less than 20 Business Days from the date such notice is first mailed)
(the "Exchange Dates");
(iii) that any Registrable Note entitled to be exchanged in the
Exchange Offer not tendered or tendered and validly withdrawn will remain
outstanding and continue to accrue interest (but not at any increased rate
provided for under certain circumstances in such Notes), but will not
retain any rights under this Agreement;
(iv) that each Holder electing to have a Registrable Note exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Note, together with letters of transmittal, to the institution
and at the address (located in the Borough of Manhattan, The City of New
York) specified in the notice prior to the close of business on the last
Exchange Date; and
(v) that each Holder will be entitled to withdraw its election not
later than the close of business on the last Exchange Date, by sending to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Notes delivered for exchange and a statement that
such Holder is withdrawing its election to have such Registrable Notes
exchanged.
As soon as practicable after the last Exchange Date, the Company shall:
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, Exchange Notes equal in principal
amount to the principal amount of the Registrable Notes surrendered by such
Holder.
The Company shall use its commercially reasonable 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
and regulations in connection with the Exchange Offer. The Exchange Offer shall
not be subject to any
<PAGE>
conditions, other than that the Exchange Offer does not violate applicable law
or any applicable interpretation of the Staff of the Commission.
(b) Shelf Registrations. In the event that (i) the Company determines
-------------------
that the Exchange Offer Registration provided in Section 2(a) above is not
available or may not be consummated as soon as practicable after the last
Exchange Date, (ii) the Exchange Offer is not for any other reason consummated
by February 26, 1998 or (iii) the Exchange Offer has been completed, and within
60 days following the consummation of the Exchange Offer, a Holder notifies the
Company that in the opinion of Special Counsel a Registration Statement must be
filed and a Prospectus must be delivered by it because (x) such Registrable
Notes represent an unsold allotment of the Registrable Notes purchased by the
Purchaser from the Company, (y) such Holder is a Participating Broker-Dealer, or
(z) such Holder was otherwise not permitted to participate in the Exchange
Offer, unless the Company has previously done so, the Company shall use its
commercially reasonable efforts to cause to be filed as soon as practicable
after such determination, date or notice of such Special Counsel's opinion is
given to the Company, as the case may be, a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Notes and to
have such Shelf Registration Statement declared effective by the Commission. The
Company shall use its commercially reasonable efforts to keep the Shelf
Registration Statement continuously effective for a period of three years from
the Closing Date or such shorter period which will terminate when all the
Registrable Notes covered by the Shelf Registration have been sold pursuant to
the Shelf Registration Statement. The Company shall also supplement or amend
such Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company or if
required by the Securities Act or by any other rules and regulations thereunder
for shelf registration or if reasonably requested by a Holder with respect to
information relating to such Holder, and to use its commercially reasonable
efforts to cause any such amendment to become effective and such Shelf
Registration Statement to become usable as soon as thereafter practicable. The
Company agrees to furnish to the Holders of Registrable Notes copies of any such
supplement or amendment promptly after its being used or filed with the
Commission.
(c) 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 Commission; provided that, if, after it has been declared effective, the
--------
offering of Registrable Notes pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental agency or court, such Registration
Statement will be deemed not to have become effective during the period of such
interference until the offering of Registrable Notes pursuant to such
Registration
<PAGE>
Statement may legally resume. In the event that either the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective on or
prior to February 26, 1998, then the annual interest rate borne by the Notes
shall be increased by 0.25% beginning at such time. If either such Exchange
Offer is not consummated or such Shelf Registration Statement is not declared
effective on or prior to May 26, 1998, then the annual interest rate borne by
the Notes shall be increased by an additional 0.25% beginning at such time. Upon
consummation of such Exchange Offer or the effectiveness of such Shelf
Registration Statement, the interest borne by the Notes will revert to the
original rate.
(d) Without limiting the remedies available to the Purchaser and the
Holders, the Company acknowledges that any failure by the Company to comply with
its obligations under Section 2(a) and Section 2(b) hereof may result in
material irreparable injury to the Purchaser or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the
Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Sections 2(a) and 2(b)
hereof.
(e) The Guarantor hereby agrees to cause the Company to perform all of its
obligations under this Section 2.
3. Registration Procedures
-----------------------
(a) In connection with the obligations of the Company and the Guarantor
pursuant to Sections 2(a), 2(b) and 2(d) hereof, the Company shall, and the
Guarantor shall take all action necessary to enable the Company and shall cause
the Company to:
(i) prepare and file with the Commission, within the applicable time
period specified in Section 2(a) and Section 2(b), a Registration Statement
or Registration Statements on the appropriate form under the Securities
Act, which form (A) shall be selected by the Company and (B) shall, in the
case of a Shelf Registration Statement, be available for the sale of the
Registrable Notes in accordance with the intended method or methods of
distribution as the Company is so advised of by the selling Holders thereof
and (C) shall comply as to form in all material respects with the
requirements of the applicable form and include (including through
incorporation by reference) all financial statements required by the
Commission to be filed therewith, and the Company shall use its
commercially reasonable efforts to cause each such Registration Statement
to become effective and remain effective in accordance with Section 2
hereof;
<PAGE>
(ii) prepare and file with the Commission such amendments and post-
effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period and cause each Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented, to be filed pursuant to Rule
424 (or any similar provisions then in force) under the Securities Act; and
to keep each Prospectus current during the period described under Section
4(3) and Rule 174 under the Securities Act that is applicable to
transactions by brokers or dealers with respect to the Registrable Notes or
Exchange Notes;
(iii) a reasonable time prior to the filing of any Registration
Statement or Prospectus or any amendments or supplements thereto or any
document which is to be incorporated or deemed to be incorporated therein
by reference and amendments to such documents, provide copies of such
document to the Holders and the Special Counsel and shall not at any time
file or make any amendment to the Registration Statement, any Prospectus or
any amendment of or supplement to a Registration Statement or a Prospectus
or any document which is to be incorporated by reference into a
Registration Statement or a Prospectus, of which the Holders and the
Special Counsel shall not have previously been advised and furnished a copy
or to which the Holders or the Special Counsel shall reasonably object;
(iv) use its commercially reasonable efforts to register or qualify
the Exchange Notes or Registrable Notes for the exchange or offer and sale,
as the case may be, under all applicable state securities or "blue sky"
laws of such jurisdictions as any Holder covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the Commission, keep each
such registration or qualification effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts and things which may be necessary or advisable to enable such
Holder to consummate the disposition in each such jurisdiction of such
Registrable Notes or Exchange Notes owned by such Holder; provided that the
--------
Company will not be required to (A) 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(a)(iii), (B) take any action
which would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) take any action which
would subject it to taxation in any such jurisdiction where it is not then
so subject;
<PAGE>
(v) use its commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a Registration
Statement and provide prompt notice to each Holder and the Special Counsel
of the withdrawal of any such order;
(vi) use its commercially reasonable efforts to obtain the consent
or approval of each United States governmental agency or authority, whether
federal, state or local, required to be obtained by the Company as may be
necessary to enable the Holders thereof to consummate the disposition of
such Registrable Notes or Exchange Notes and cooperate with each seller of
Registrable Notes in connection with any filings required to be made by
such seller with the National Association of Securities Dealers, Inc.;
(vii) provide a trustee for the Registrable Notes or Exchange Notes,
as the case may be, and cause the Indenture (or the indenture governing the
Exchange Notes, if any) to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA") not later than the effective date of any
registration; and in connection therewith, cooperate with the Trustee and
the Holders to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the TIA
and execute, and use its commercially reasonable efforts to cause the
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
Commission to enable such indenture to be so qualified in a timely manner;
(viii) comply with all applicable rules and regulations of the
Commission and, in the case of a Shelf Registration, make generally
available to its security holders an earning statement 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), commencing on the first
day of the first fiscal quarter of the Company commencing after the
effective date of a Registration Statement, which statement shall cover
said 12-month period;
(ix) obtain a CUSIP number for all Exchange Notes or Registrable
Notes, as the case may be, not later than the effective date of a
Registration Statement; and
<PAGE>
(x) use its commercially reasonable efforts to cause the Exchange
Notes or Registrable Notes, as the case may be, to be rated by a nationally
recognized statistical rating organization (as such term is defined in Rule
436(g)(2) under the Securities Act) unless such Notes are already so rated.
(b) In addition to the obligations set forth above in Section 3(a), in the
case of a Shelf Registration pursuant to Section 2(b) hereof, as expeditiously
as possible, the Company and the Guarantor shall:
(i) notify each Holder of Registrable Notes and the Special Counsel
promptly, and (if requested by any such Person) confirm such notice in
writing, (A) when a Prospectus, any Prospectus supplement, a Registration
Statement or post-effective amendment related to such Registrable Notes has
been filed, and, with respect to a Registration Statement or any post-
effective amendment related to such Registrable Notes, when the same has
become effective, (B) of any request by the Commission or any federal or
state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information,
(C) of the issuance by the Commission or any federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for that
purpose, (D) if, between the effective date of a Registration Statement and
the closing of any sale of Registrable Notes covered thereby, the
representations and warranties of the Company or the Guarantor contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and correct in
all material respects, (E) of the receipt by the Company or the Guarantor
of any notification with respect to the suspension of the qualification of
any of the Registrable Notes for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose, (F) of the existence of
any fact or happening of any event during the period a Shelf Registration
Statement is effective which makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or
which requires the making of any changes in a Registration Statement or
related Prospectus in order that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and that, in the case of the
Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (G) of the
<PAGE>
Company's or the Guarantor's determination that a post-effective amendment
to a Registration Statement would be appropriate;
(ii) if reasonably requested by any Holder of Registrable Notes
covered by a Registration Statement, (A) incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement such
information as such Holder reasonably requests to be included therein, (B)
make all required filings of such Prospectus supplement or such post-
effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such filings and (C)
supplement or make amendments to any Registration Statement if reasonably
requested by any Holder of Registrable Notes covered by such Registration
Statement;
(iii) furnish to each Holder of Registrable Notes and the Special
Counsel and to each underwriter of an underwritten offering of Registrable
Notes, if any, without charge, at least one conformed copy of each
Registration Statement or Statements and any amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference or deemed incorporated therein by reference and all exhibits
(including those previously furnished or incorporated by reference), as
soon as practicable after the filing of such documents with the Commission;
(iv) furnish to each Holder of Registrable Notes, the Special Counsel
and to each underwriter of an underwritten offering of Registrable Notes,
if any, without charge, as many copies of each Prospectus or Prospectuses
(including each preliminary Prospectus) and any amendment or supplement
thereto and such other documents as such Persons may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Notes; and each of the Company and the Guarantor hereby consents to the use
of such Prospectus or any amendment or supplement thereto in accordance
with applicable law by each of the selling Holders of Registrable Notes and
any such underwriter in connection with the offering and sale of the
Registrable Notes covered by and in the manner described in such Prospectus
or any amendment or supplement thereto in accordance with applicable law;
(v) cooperate with the selling Holders of Registrable Notes to
facilitate the timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any
restrictive legends; and enable such Registrable Notes to be in such
denominations and registered in such names, in all cases consistent with
the requirements set forth in the Indenture, as the
<PAGE>
Holders may request at least two Business Days prior to the closing of any
sale of Registrable Notes;
(vi) a reasonable time prior to the filing of any Registration
Statement or Prospectus or any amendments or supplements thereto or any
document which is to be incorporated or deemed to be incorporated therein
by reference and amendments to such documents, make such of the
representatives of the Company and the Guarantor as shall be reasonably
requested by the Holders or the Special Counsel available for discussion of
such document;
(vii) upon becoming aware of the occurrence of any event contemplated
by paragraph 3(b)(i)(F) or 3(b)(i)(G) above, use its commercially
reasonable efforts to, as promptly as practicable thereafter, prepare and
file with the Commission a post-effective amendment to the applicable
Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required
document that would be incorporated by reference into the Registration
Statement so that the Registration Statement shall not contain any untrue
statement or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and so that the
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, as thereafter delivered to the purchasers of the
Registrable Notes being sold thereunder, and, in the case of a post-
effective amendment to a Registration Statement, use its commercially
reasonable efforts to cause it to become effective as promptly as is
practicable. Each of the Company and the Guarantor agrees to notify the
Holders and the Special Counsel to suspend use of the Prospectus as
promptly as practicable after becoming aware of the occurrence of such an
event, and the Holders hereby agree to suspend use of the Prospectus upon
receipt of such notice until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission;
(viii) enter into such customary agreements and take all such other
customary actions in connection therewith (including those reasonably
requested by the Holders of a majority of the Registrable Notes being sold)
as are reasonably required to expedite or facilitate the disposition of
such Registrable Notes including, but not limited to, an underwritten
offering and in connection therewith, (A) to the extent practicable, make
such representations and warranties to the Holders and any underwriters of
such Registrable Notes with respect to the business of the Guarantor and
its subsidiaries, the Registration Statement,
<PAGE>
Prospectus and documents incorporated by reference or deemed incorporated
by reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings and
confirm the same if and when requested, (B) obtain opinions of counsel to
the Company and the Guarantor satisfactory to the selling Holders and any
underwriters of such Registrable Notes and updates thereof addressed to
each selling Holder and underwriter of Registrable Notes, covering the
matters customarily covered in opinions requested in underwritten
offerings, (C) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company and the Guarantor
(and, if necessary, any other certified public accountant of any subsidiary
of the Guarantor, or of any business acquired or to be acquired by the
Company or the Guarantor for which financial statements and financial data
is or is required to be included in the Registration Statement) addressed
to each selling Holder and underwriter of Registrable Notes, 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 (D) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in principal amount of the
Registrable Notes being sold and the Special Counsel to evidence the
continued validity of the representations and warranties of the Company and
the Guarantor made pursuant to clause (A) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company or the Guarantor. The above
shall be done at each closing under such underwriting or similar agreement
as and to the extent required thereunder;
(ix) upon reasonable notice, make available for inspection by a
representative of the Holders of Registrable Notes, Special Counsel, any
underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and any attorney and accountant designated by such
selling Holders or underwriters, at reasonable times and in a reasonable
manner, all financial and other records, pertinent documents and properties
of the Guarantor and its subsidiaries and cause the officers, directors and
employees of the Guarantor and its subsidiaries to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such disposition, in each case that would
customarily be reviewed or examined in connection with a "due diligence"
review of the Company and the Guarantor; and
(x) use its commercially reasonable efforts to cause all Registrable
Notes to be listed on any securities exchange or any automated quotation
system on which similar securities issued by the Company are then listed if
requested by
<PAGE>
the Holders of a majority in aggregate principal amount, to the extent such
Registrable Notes satisfy applicable listing requirements.
In the case of a Shelf Registration Statement, the Company may require each
Holder of Registrable Notes to furnish to the Company such information regarding
the Holder and the distribution of such Registrable Notes by such Holder as the
Company may from time to time reasonably request in writing. Each Holder of
Registrable Notes as to which any registration is being effected will be
required to notify the Company as promptly as practicable of any inaccuracy or
change in information previously furnished by such Holder to the Company
pursuant to Section 2 or of the happening of any event, in either case as a
result of which any Prospectus relating to such registration contains an untrue
statement of a material fact regarding such Holder or the distribution of such
Registrable Notes required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and to furnish to the Company promptly any additional
information required to correct and update any previously furnished information
or required such that such Prospectus shall not contain, with respect to such
Holder or the distribution of such Registrable Notes, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any (i) notice from the Company or the Guarantor of the
happening of any event of the kind described in Section 3(b)(i)(F) or 3(b)(i)(G)
hereof, (ii) notice from the Company or the Guarantor that it is in possession
of material information that has not been disclosed to the public and the
Company or the Guarantor reasonably deems it to be advisable not to disclose
such information in a registration statement or (iii) notice from the Company or
the Guarantor that it is in the process of a registered offering of securities
and the Company or the Guarantor reasonably deems it to be advisable to
temporarily discontinue disposition of Registrable Notes pursuant to the Shelf
Registration Statement (in each case, such notice being hereinafter referred to
as a "Suspension Notice"), such Holder will forthwith discontinue disposition of
Registrable Notes pursuant to any Shelf Registration Statement and shall not be
entitled to the benefits provided under Section 6 hereof with respect to any
sales made by it in contravention of this paragraph, until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
3(b)(vii) hereof or a notice that any order suspending the effectiveness of the
Shelf Registration Statement has been withdrawn, or, in the case of (ii) or
(iii) above, until further notice from the Company and the Guarantor that
disposition of Registrable Notes may resume, provided that such further notice
will be given within 90 days of the Suspension Notice in the case
<PAGE>
of (ii) above and within 120 days of the Suspension Notice in the case of (iii)
above, and provided further that in the case of (ii) and (iii) above that any
Suspension Notice must be based upon a good faith determination of the Board of
Directors of the Company or the Guarantor that such Suspension Notice is
necessary; and, if so directed by the Company or the Guarantor, such Holder will
deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Notes current at the time of receipt
of such notice. If the Company or the Guarantor shall give any Suspension Notice
relating to the disposition of Registrable Notes pursuant to any Shelf
Registration Statement, the Company shall extend the period during which such
Shelf Registration Statement shall be maintained effective pursuant to this
Agreement 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 the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions or received such Notice that any order suspending dispositions
of the Notes has been withdrawn. Notwithstanding the foregoing, in the case of
clauses (ii) or (iii) above, neither the Company nor the Guarantor may deliver a
Suspension Notice if a period of 90 days in the case of (ii) above and 120 days
in the case of (iii) above has not elapsed since the termination of any prior
period during which a Suspension Notice was in effect.
4. Participation of Broker-Dealers in Exchange Offer
-------------------------------------------------
(a) The Staff of the Commission has taken the position that any broker-
dealer that receives Exchange Notes for its own account in the Exchange Offer in
exchange for Notes that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an "underwriter" within the meaning of the Securities Act and
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes.
Each of Company and the Guarantor understands that it is the Staff's
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Notes, without naming the Participating Broker-Dealers or specifying
the amount of Exchange Notes owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the Securities Act in connection with resales of Exchange Notes for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.
<PAGE>
(b) In the light of the above, notwithstanding the other provisions of
this Agreement, each of the Company and the Guarantor agrees that the provisions
of this Agreement as they relate to a Shelf Registration shall also apply to an
Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Purchaser or by one
or more Participating Broker-Dealers, in each case as provided in clause (ii)
below, in order to expedite or facilitate the disposition of any Exchange Notes
by Participating Broker-Dealers consistent with the positions of the Staff of
the Commission recited in Section 4(a) above; provided that:
--------
(i) neither the Company nor the Guarantor shall be required to amend
or supplement the Prospectus contained in the Exchange Offer Registration
Statement, as would otherwise be contemplated by Section 3(b)(vii), for a
period exceeding 180 days after the last Exchange Date (as such period may
be extended pursuant to the last paragraph of Section 3 of this Agreement)
and Participating Broker-Dealers shall not be authorized by the Company or
the Guarantor to deliver and shall not deliver such Prospectus after such
period in connection with resales contemplated by this Section 4; and
(ii) in connection with such application of the Shelf Registration
procedures set forth in Section 3 to an Exchange Offer Registration, the
Company and the Guarantor shall be obligated (A) to deal only with one
entity representing the Participating Broker-Dealers, which shall be
Donaldson, Lufkin & Jenrette Securities Corporation unless it elects not to
act as such representative, (B) to pay the fees and expense of only one
counsel representing the Participating Broker-Dealers, which shall be the
Special Counsel unless such counsel elects not to so act and (C) to cause
to be delivered only one, if any, "cold comfort" letter or set of letters,
as the case may be, with respect to the Prospectus in the form existing on
the last Exchange Date and with respect to each subsequent amendment or
supplement, if any, effected during the period specified in clause (i)
above.
5. Registration Expenses
---------------------
The Company shall pay all fees and expenses incident to the performance of
or compliance with this Agreement by the Company including, without limitation,
(i) all Commission, stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred
in connection with compliance with state securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualification of any of the Exchange Notes or Registrable Notes), (iii) all
expenses of any Persons acting on behalf of the Company and the Guarantor in
preparing or assisting in preparing, word
<PAGE>
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, 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) all fees
and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the reasonable fees and disbursements of the
Trustee (including the reasonable fees and disbursements of its counsel), (vii)
the fees and disbursements of counsel for the Company and the Guarantor, the
Special Counsel and of the independent public accountants of the Company and the
Guarantor, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, but
excluding fees of counsel to the underwriters or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Notes by a Holder. In the event the Company shall
fail to pay any amounts owed pursuant to this Section 5, the Guarantor shall pay
such amounts.
6. Indemnification and Contribution
--------------------------------
(a) Each of the Company and the Guarantor jointly and severally agrees to
indemnify and hold harmless (i) the Purchaser, (ii) each Holder, (iii) each
person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) the Purchaser or any Holder (such person
referred to in this clause (ii) as a "controlling person"), and (iii) the
respective officers, directors, partners, employees, representatives and agents
of the Purchaser, any Holder or any controlling person (any person referred to
in clause (i), (ii) or (iii) may be referred to as an "Indemnified Person"), to
the fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including, without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Person) directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, or any amendment or supplement thereto,
any preliminary prospectus or the Prospectus (as amended and supplemented if the
Company or the Guarantor shall have furnished any amendments or supplements
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages, liabilities, judgments, actions
or expenses are caused by any such untrue statement or omission or alleged
untrue statement or omission that is made in reliance upon and in conformity
with information relating to the
<PAGE>
Purchaser or any Holder, as requested in writing to be included by any Holder
pursuant to Section 2, furnished in writing to the Company by the Purchaser or
any Holder expressly for use therein. The Company and the Guarantor also agree,
jointly and severally, to indemnify any underwriters of the Registrable Notes,
their officers and directors and each Person who controls such underwriters on
substantially the same basis as that of the indemnification of the Purchaser and
the Holders provided in this Section 6. The Company and the Guarantor shall
notify the Purchaser promptly of the institution, threat or assertion of any
claim, proceeding (including any governmental investigation) or litigation
relating to the offering of the Senior Notes or this Agreement which involves
the Company or the Guarantor or any Indemnified Person.
(b) In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Indemnified Person based
upon any Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended and supplemented if the Company or the
Guarantor shall have furnished any amendments or supplements thereto), and with
respect to which indemnity may be sought against either the Company or the
Guarantor (each, an "Indemnifying Party"), such Indemnified Person shall
promptly notify the Indemnifying Party in writing (provided, that the failure to
give such notice shall not relieve the Indemnifying Party of its obligations
pursuant to this Agreement unless the Indemnifying Party is materially
prejudiced thereby and had no knowledge of such action or proceeding) and such
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person and payment of all
fees and expenses. Such Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party shall have failed to assume the defense and employ counsel or
(iii) the named parties to any such action (including any impleaded parties)
include both such Indemnified Person and the Indemnifying Party and such
Indemnified Person shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party or to another Indemnified Party (in
which case the Indemnifying Party shall not have the right to assume the defense
of such action on behalf of such Indemnified Person, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than (i) one separate firm of attorneys
(in addition to any local counsel) for the Purchaser and all controlling
persons, which firm shall be designated in writing by Donaldson, Lufkin &
Jenrette Securities
<PAGE>
Corporation, and (ii) one separate firm of attorneys (in addition to any local
counsel) for all such Holders and controlling persons, which firm shall be
designated by Holders of a majority in aggregate principal amount of Registrable
Notes, and that all such fees and expenses shall be reimbursed as they are
incurred). Such Indemnifying Party shall be liable for any settlement of any
such action effected with such Indemnifying Party's prior written consent, which
consent shall not be unreasonably withheld, and such Indemnifying Party agrees
to indemnify and hold harmless any Indemnified Person from and against any loss,
claim, damage, liability or expense by reason of any settlement of any action
effected with the written consent of such Indemnifying Party. Notwithstanding
the immediately preceding sentence, if in any case where the fees and expenses
of counsel are at the expense of such Indemnifying Party and the Indemnified
Person shall have requested such Indemnifying Party to reimburse the Indemnified
Person for such fees and expenses of counsel as incurred, such Indemnifying
Party agrees that it shall be liable for any settlement of any action effected
without its written consent if (i) such settlement is entered into more than 30
business days after the receipt by such Indemnifying Party of the aforesaid
request, and (ii) such Indemnifying Party shall have failed to reimburse the
Indemnified Person in accordance with such request for reimbursement prior to
the date of such settlement. Such Indemnifying Party shall not, without the
prior written consent of each Indemnified Person, settle or compromise or
consent to the entry of judgment in or otherwise seek to terminate any pending
or threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Person is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Person from all liability arising out of such action, claim, litigation or
proceeding.
(c) In connection with any Shelf Registration in which a Holder is
participating, the Holders agree severally and not jointly, to indemnify and
hold harmless the Purchaser and each person, if any, who controls the Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and the respective officers, directors, partners, employees,
representatives and agents of the Purchaser and each of the Company and the
Guarantor, its directors, officers and any person controlling such person within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, to the same extent as the foregoing indemnity from the Company and the
Guarantor to the Purchaser and each Holder set forth in Section 6(a) above, but
only with reference to information relating to such Holder furnished in writing
by or on behalf of such Holder, expressly for use in any Registration Statement
or any amendment thereof, any preliminary prospectus or the Prospectus (as
amended and supplemented if the Company or the Guarantor shall have furnished
any amendments or supplements thereto). In case any action shall be brought
against any of the Company, the Guarantor,
<PAGE>
any of their directors, any such officers or any person controlling such person
or the Purchaser, any of its directors or any person controlling the Purchaser
based on any Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended and supplemented if the Company or the
Guarantor shall have furnished any amendments or supplements thereto), and in
respect of which indemnity may be sought against any Holder, such Holder shall
have the rights and duties given to the Company and the Guarantor (except that
if the Company, the Guarantor or the Purchaser shall have assumed the defense
thereof, such Holder shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof but the fees and expenses
of such counsel shall be at such Holder's expense), and each of the Company, the
Guarantor and the Purchaser, their directors, any such officers and any person
controlling such persons shall have the rights and duties given to the Purchaser
and the Holders, by Section 6(b) hereof.
(d) The Purchaser agrees to indemnify and hold harmless each of the Company
and the Guarantor and any person, if any, controlling (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company
or the Guarantor, and the officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Company and the Guarantor to each of the
Indemnified Persons, but only with respect to claims and actions based on
information relating to the Purchaser furnished in writing by the Purchaser
expressly for use in any Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended and supplemented if the
Company or the Guarantor shall have furnished any amendments or supplements
thereto). In case any action shall be brought against the Company or the
Guarantor, or any of their directors, officers or persons controlling the
Company or the Guarantor, based on any Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended and
supplemented if the Company or the Guarantor shall have furnished any amendments
or supplements thereto), and in respect of which indemnity may be sought against
the Purchaser, the Purchaser shall have the rights and duties given to the
Company and the Guarantor (except that if the Company or the Guarantor shall
have assumed the defense thereof, the Purchaser shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof,
the fees and expenses of such counsel shall be at the expense of the Purchaser),
and the Company and the Guarantor, their directors, officers and any persons
controlling any such persons shall have the rights and duties given to the
Purchaser, by Section 6(b) hereof.
(e) If the indemnification provided for in this Section 6 is unavailable to
any Indemnified Person in respect of any losses, claims, damages, liabilities,
judgments or expenses referred to herein, then each Indemnifying Party, in lieu
of indemnifying such
<PAGE>
any Indemnified Person, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities,
judgments and expenses in such proportion as is appropriate to reflect the
relative fault of the Company and the Guarantor, on the one hand, and the
Purchaser, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative fault of the
Company and the Guarantor, on the one hand, and the Purchaser, 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 to state a
material fact relates to information supplied by the Company and the Guarantor
or by the Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 6(d) were determined
by pro rata allocation (even if the Purchaser and the Holders were treated as
one entity) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 6, neither the
Purchaser nor any Holder shall be required to contribute any amount in excess of
the amount by which the total price of the Registrable Notes sold by the
Purchaser or such Holder exceeds the amount of any damages which the Purchaser
or such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' respective
obligations to contribute pursuant to this Section 6 are several in proportion
to the respective amount of Registrable Notes of such Holder that were
registered pursuant to a Registration Statement and not joint. The remedies
provided for in this Section 6 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(g) The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Purchaser or any person
<PAGE>
controlling the Purchaser, any Holder or any person controlling the Holder, or
the Company, the Guarantor, their officers or directors or any person
controlling any such person, and (iii) the sale or transfer of any Registrable
Notes by any Holder.
7. Selection of Underwriters
-------------------------
The Holders of Registrable Notes covered by the Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an underwritten
offering. In any such underwritten offering, the investment banker or
investment bankers and manager or managers (the "underwriters") that will
administer the offering will be selected by the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes included in such
offering.
8. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or the Guarantor of
--------
any of their obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
Each of the Company and the Guarantor agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, they shall
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor the Guarantor has,
--------------------------
as of the date hereof, and shall not, on or after the date of this Agreement,
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders in this Agreement. Each of the Company
and the Guarantor represents and warrants that the rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of
the Company's or the Guarantor's securities under any other 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 Guarantor have obtained the written consent of
Holders of a majority of the then outstanding aggregate principal amount of
Registrable Notes affected by such amendment, modification, supplement, waiver
or departure; provided, however, no amendment, modification or supplement,
-------- -------
waiver or consent with respect to the provisions of Section 6 hereof shall be
effective as against any Holder of Registrable Notes unless
<PAGE>
consented to in writing by such Holder. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter which
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and which does not directly or indirectly
affect the rights of other Holders may be given by Holders of at least a
majority in aggregate principal amount of the Registrable Notes being sold by
such Holders; provided, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(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, in accordance with the notice provisions set
forth in the Indenture, with a copy to the Purchaser, initially at their
respective addresses as follows:
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Jonathan D. Kelly
and thereafter at such other address, notice of which is given in accordance
with this Section 8(d); and
(ii) if to the Company, initially at its address as follows:
Terra Nova Insurance (UK) Holdings plc
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP, Great Britain
Attention: John Riddick
and thereafter at such other address, notice of which is given in accordance
with this Section 8(d); and
(iii) if to the Guarantor, initially at its address as follows:
Terra Nova (Bermuda) Holdings Ltd.
Richmond House
<PAGE>
2nd Floor
12 Par-La-Ville Road
Hamilton HM 08, Bermuda
Attention: William O. Bailey
and thereafter at such other address, notice of which is given in accordance
with this Section 8(d); and
(iv) if to Special Counsel, initially at its address as follows:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Richard J. Sandler
and thereafter at such other address, notice of which is given in accordance
with this Section 8(d).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; two business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
if timely delivered to an air courier guaranteeing overnight delivery; when
answered back, if telexed; and when receipt acknowledged, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns: Third Party Beneficiaries. This Agreement
-------------------------------------------------
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties, including without limitation and without the need for an
express assignment, subsequent Holders of Registrable Notes. The Holders shall
be third party beneficiaries to the agreements made hereunder between the
Company and/or the Guarantor, on the one hand, and the Purchaser, on the other
hand, and shall have the right to enforce such agreements directly to the extent
they deem such enforcement necessary or advisable to protect their rights
hereunder.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so
<PAGE>
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of New York.
(i) Jurisdiction. Each of the Company and the Guarantor has designated and
------------
appointed CT Corporation System, 1633 Broadway, New York, New York 10019, as its
authorized agent (the "Authorized Agent") upon which process may be served in
any legal suit, action or proceeding (a "Proceeding") based on or arising under
this Agreement, which may be instituted in any state or federal court sitting in
the City of New York by any Holder, and each of the Company and the Guarantor
expressly accepts and irrevocably submits to the jurisdiction of any such court
in respect of any such Proceeding. Such appointment shall be irrevocable unless
and until a successor authorized agent in the City or State of New York
reasonably acceptable to the Holders shall have been appointed by the Company or
the Guarantor, as applicable, such successor shall have accepted such
appointment and written notice thereof shall have been given to the Holders.
Each of the Company and the Guarantor represents and warrants that the
Authorized Agent has agreed to act as said agent for service of process and
agrees to take any and all action, including the filing of any and all documents
and instruments, that may be necessary to continue such appointment in full
force and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to such party (mailed or delivered to such party
at such party's address set forth above) shall be deemed, in every respect,
valid and effective personal service of process upon such party in any such
Proceeding and each of the Company and the Guarantor irrevocably waives all
claim of error by reason of any such service. Each of the Company and the
Guarantor irrevocably waives any objection which it may now or hereafter have to
the laying of venue in any federal or state court sitting in the City of New
York of any Proceeding based on or arising under this Agreement and irrevocably
waives any claim that any such Proceeding in any such court has been brought in
an inconvenient forum. Each of the Company and the Guarantor agrees that a final
judgment in any such Proceeding brought in any such court shall be conclusive
and binding upon it and may be enforced in any court having jurisdiction over
the Company or the Guarantor, as applicable, by a suit upon such judgment.
(j) Payment Currency. Any obligation of the parties to make payments
----------------
hereunder is in U.S. dollars (the "Obligation Currency") and such obligation
shall not be
<PAGE>
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in any currency other than the Obligation Currency or any other
realization in such other currency, whether as proceeds of set-off, security,
guarantee, distributions, or otherwise, except to the extent to which such
tender, recovery or realization shall result in the receipt by the party which
is to receive such payment of the full amount of the Obligation Currency
expressed to be payable hereunder. The party liable to make such payment agrees
to indemnify the party which is to receive such payment for the amount (if any)
by which such receipt shall fall short of the full amount of the Obligation
Currency expressed to be payable hereunder and the party which is to receive
such payment agrees to pay to the party liable to make such payment the amount
(if any) by which such receipt shall exceed the full amount of the Obligation
Currency, and, in each case, such obligation shall not be affected by judgment
being obtained for any other sums due under this Agreement. The parties agree
that the rate of exchange which shall be used to determine if such tender,
recovery or realization shall result in the receipt by the party which is to
receive such payment of the full amount of the Obligation Currency expressed to
be payable hereunder shall be the noon buying rate in New York City for cable
transfers in such foreign currency as certified for customs purposes by the
Federal Reserve Bank of New York for the business day preceding that on which
the judgment becomes a final judgment or, if such noon buying rate is not
available, the rate of exchange shall be the rate at which in accordance with
normal banking procedures Donaldson, Lufkin & Jenrette Securities Corporation
could purchase United States dollars with such foreign currency on the business
day preceding that on which the judgment becomes a final judgment.
(k) Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
thereby, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
(l) Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. Except as provided in the Purchase
Agreement, there are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to
<PAGE>
herein, with respect to the registration rights granted by the Company with
respect to the securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
By:
-----------------------------------
Name:
Title:
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By:
-----------------------------------
Name:
Title:
DONALDSON LUFKIN & JENRETTE SECURITIES
CORPORATION
By:
-----------------------------------
Name:
Title:
<PAGE>
Exhibit 4.1
EXECUTION COPY
--------------
TERRA NOVA INSURANCE
(UK) HOLDINGS PLC,
as Issuer
TERRA NOVA (BERMUDA) HOLDINGS LTD.,
as Guarantor
and
THE CHASE MANHATTAN BANK,
as Trustee
___________________
INDENTURE
Dated as of August 26, 1997
___________________
7.2% Senior Notes
due 2007
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
RECITALS
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions........................................................................................... 2
Section 1.2 Other Definitions..................................................................................... 18
Section 1.3 Compliance Certificates and Opinions.................................................................. 18
Section 1.4 Form of Documents Delivered to Trustee................................................................ 19
Section 1.5 Acts of Holders....................................................................................... 20
Section 1.6 Notices, etc., to Trustee, the Issuer and Bermuda Holdings............................................ 21
Section 1.7 Notice to Holders; Waiver............................................................................. 22
Section 1.8 Conflict of Any Provision of Indenture with Trust Indenture Act....................................... 22
Section 1.9 Effect of Headings and Table of Contents.............................................................. 23
Section 1.10 Successor and Assigns................................................................................. 23
Section 1.11 Separability Clause................................................................................... 23
Section 1.12 Benefits of Indenture................................................................................. 23
Section 1.13 Governing Law......................................................................................... 23
Section 1.14 Legal Holidays........................................................................................ 23
Section 1.15 No Recourse Against Others............................................................................ 24
Section 1.16 Submission to Jurisdiction; Appointment of Agent for Service of Process............................... 24
ARTICLE 2
THE SENIOR NOTES
Section 2.1 Form and Dating....................................................................................... 25
Section 2.2 Execution and Authentication.......................................................................... 27
Section 2.3 Senior Note Registrar and Paying Agent................................................................ 28
Section 2.4 Paying Agent To Hold Money in Trust................................................................... 29
Section 2.5 Senior Note Holder Lists.............................................................................. 31
Section 2.6 Transfer and Exchange................................................................................. 31
Section 2.7 Replacement Securities................................................................................ 34
Section 2.8 Outstanding Securities................................................................................ 34
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 2.9 Temporary Senior Notes................................................................................ 34
Section 2.10 Cancellation.......................................................................................... 35
Section 2.11 Interest; Defaulted Interest.......................................................................... 35
Section 2.12 Special Transfer Provisions........................................................................... 35
Section 2.13 CUSIP and CINS Numbers................................................................................ 39
ARTICLE 3
SATISFACTION AND DISCHARGE
Section 3.1 Satisfaction and Discharge of Indenture............................................................... 40
Section 3.2 Application of Trust Money............................................................................ 41
ARTICLE 4
DEFAULTS AND REMEDIES
Section 4.1 Events of Default..................................................................................... 42
Section 4.2 Acceleration of Maturity; Rescission.................................................................. 44
Section 4.3 Collection of Indebtedness and Suits for Enforcement by Trustee....................................... 45
Section 4.4 Trustee May File Proofs of Claim...................................................................... 46
Section 4.5 Trustee May Enforce Claims Without Possession of Senior Notes......................................... 47
Section 4.6 Application of Money Collected........................................................................ 47
Section 4.7 Limitation on Suits................................................................................... 47
Section 4.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest.............................................................................................. 48
Section 4.9 Restoration of Rights and Remedies.................................................................... 48
Section 4.10 Rights and Remedies Cumulative........................................................................ 49
Section 4.11 Delay or Omission Not Waiver.......................................................................... 49
Section 4.12 Control by Holders.................................................................................... 49
Section 4.13 Waiver of Defaults.................................................................................... 49
Section 4.14 Undertaking for Costs................................................................................. 50
ARTICLE 5
THE TRUSTEE
Section 5.1 Notice of Events of Default........................................................................... 51
Section 5.2 Certain Rights of Trustee............................................................................. 51
Section 5.3 Not Responsible for Recitals or Issuance of Senior Notes.............................................. 53
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 5.4 Trustee and Agents May Hold Senior Notes; Collections; etc............................................ 54
Section 5.5 Money Held in Trust................................................................................... 54
Section 5.6 Compensation and Reimbursement........................................................................ 54
Section 5.7 Conflicting Interests................................................................................. 55
Section 5.8 Corporate Trustee Required; Eligibility............................................................... 55
Section 5.9 Resignation and Removal; Appointment of Successor..................................................... 56
Section 5.10 Acceptance of Appointment by Successor................................................................ 57
Section 5.11 Merger, Conversion, Consolidation or Succession to Business........................................... 58
Section 5.12 Preferential Collection of Claims Against the Issuer or Bermuda
Holdings.............................................................................................. 58
ARTICLE 6
HOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 6.1 Disclosure of Names and Addresses of Holders.......................................................... 59
Section 6.2 Reports by Trustee.................................................................................... 59
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE
TRANSFER OR LEASE
Section 7.1 Bermuda Holdings May Consolidate, etc., Only on Certain Terms......................................... 59
Section 7.2 Successor Substituted................................................................................. 61
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of Holders.................................................... 61
Section 8.2 Supplemental Indentures with Consent of Holders....................................................... 62
Section 8.3 Execution of Supplemental Indentures.................................................................. 63
Section 8.4 Effect of Supplemental Indentures..................................................................... 63
Section 8.5 Conformity with Trust Indenture Act................................................................... 63
Section 8.6 Reference in Senior Notes to Supplemental Indentures.................................................. 63
</TABLE>
iii
<PAGE>
ARTICLE 9
COVENANTS
<TABLE>
<S> <C>
Section 9.1 Payment of Principal, Premium and Interest............................................................ 64
Section 9.2 Corporate Existence................................................................................... 64
Section 9.3 Payment of Taxes and Other Claims..................................................................... 64
Section 9.4 Maintenance of Properties; Insurance; Books and Records; Compliance
with Law.............................................................................................. 65
Section 9.5 [Intentionally Omitted]............................................................................... 66
Section 9.6 [Intentionally Omitted]............................................................................... 66
Section 9.7 [Intentionally Omitted]............................................................................... 66
Section 9.8 Liens................................................................................................. 66
Section 9.9 [Intentionally Omitted]............................................................................... 66
Section 9.10 [Intentionally Omitted]............................................................................... 66
Section 9.11 [Intentionally Omitted]............................................................................... 66
Section 9.12 [Intentionally Omitted]............................................................................... 66
Section 9.13 [Intentionally Omitted]............................................................................... 66
Section 9.14 [Intentionally Omitted]............................................................................... 66
Section 9.15 [Intentionally Omitted]............................................................................... 66
Section 9.16 [Intentionally Omitted]............................................................................... 66
Section 9.17 Additional Amounts.................................................................................... 66
Section 9.18 Statement as to Compliance; Notice of Default; Provision of Financial
Statements............................................................................................ 68
Section 9.19 Waiver of Stay; Extension of Usury Laws............................................................... 69
Section 9.20 Waiver of Certain Covenants........................................................................... 69
ARTICLE 10
REDEMPTION OF SENIOR NOTES
Section 10.1 Right of Redemption................................................................................... 69
Section 10.2 Applicability of Article.............................................................................. 70
Section 10.3 Election to Redeem; Notice to Trustee................................................................. 70
Section 10.4 Selection by Trustee of Senior Notes to Be Redeemed................................................... 70
Section 10.5 Notice of Redemption.................................................................................. 70
Section 10.6 Deposit of Redemption Price........................................................................... 72
Section 10.7 Senior Notes Payable on Redemption Date............................................................... 72
Section 10.8 Senior Notes Redeemed in Part......................................................................... 72
Section 10.9 Optional Redemption................................................................................... 73
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 10.10 Tax Redemption........................................................................................ 73
ARTICLE 11
DEFEASANCE AND COVENANT DEFEASANCE
Section 11.1 Option to Effect Defeasance or Covenant Defeasance.................................................... 74
Section 11.2 Defeasance and Discharge.............................................................................. 74
Section 11.3 Covenant Defeasance................................................................................... 75
Section 11.4 Conditions to Defeasance or Covenant Defeasance....................................................... 75
Section 11.5 Deposited Money and U.S. Government Obligations to be Held in Trust;
Other Miscellaneous Provisions........................................................................ 78
Section 11.6 Reinstatement......................................................................................... 78
ARTICLE 12
GUARANTEE OF SENIOR NOTES
Section 12.1 Guarantee............................................................................................. 79
Section 12.2 Execution of Guarantee................................................................................ 80
Section 12.3 Other Obligations of Bermuda Holdings................................................................. 81
</TABLE>
EXHIBITS
Exhibit A Form of Global Note
Exhibit B Form of Regulation S Global Note
Exhibit C Form of Definitive Senior Note
Exhibit D Form of Notation of Guarantee
Exhibit E Form of Regulation S Transfer Certificate
v
<PAGE>
EXHIBIT 4.1
INDENTURE, dated as of August 26, 1997, between Terra Nova Insurance
(UK) Holdings plc, a public limited company organized under the laws of England
and Wales (hereinafter called the "Issuer"), Terra Nova (Bermuda) Holdings Ltd.,
a company organized under the laws of Bermuda (hereinafter called "Bermuda
Holdings"), and The Chase Manhattan Bank, a New York banking corporation, as
trustee (hereinafter called the "Trustee").
RECITALS
WHEREAS, the Issuer has duly authorized the issue of its 7.2% Senior
Notes due 2007 (hereinafter called the "Senior Notes") in an aggregate principal
amount not to exceed $75,000,000 and, to provide the terms and conditions upon
which the Senior Notes are to be authenticated, issued and delivered, the Issuer
has duly authorized the execution and delivery of this Indenture;
WHEREAS, Bermuda Holdings has duly authorized the provision of its
full and unconditional guarantee of the Senior Notes (hereinafter called the
"Guarantee ") and, to provide the terms and conditions upon which the Guarantee
is to be provided, Bermuda Holdings has duly authorized the execution and
delivery of this Indenture;
WHEREAS, upon the effectiveness of the Exchange Registration Statement
(as defined herein) filed with respect to the Senior Notes, this Indenture will
be subject to, and shall be governed by, the provisions of the Trust Indenture
Act that are required to be part of and govern indentures qualified under the
Trust Indenture Act;
WHEREAS, all acts and things necessary have been done to make the
Senior Notes, when executed by the Issuer and authenticated and delivered
hereunder and duly issued by the Issuer, the valid, binding and legal
obligations of the Issuer, and to make this Indenture a valid agreement of the
Issuer in accordance with its terms;
WHEREAS, all acts and things necessary have been done to make the
Guarantee, when the notation of the Guarantee has been endorsed on the Senior
Notes by Bermuda Holdings and delivered hereunder, the valid, binding and legal
obligation of Bermuda Holdings, and to make this Indenture a valid agreement of
Bermuda Holdings in accordance with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
<PAGE>
For and in consideration of the premises and the purchase of the
Senior Notes by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Senior Notes, as
follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions. For all purposes of this Indenture, except
-----------
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article 1 have the meanings assigned to
them in this Article 1 and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) 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;
(e) all references to "$" or "dollars" shall refer to the lawful
currency of the United States of America;
(f) the words "include," "included" and "including" as used herein
shall be deemed in each case to be followed by the phrase "without
limitation", if not expressly followed by such phrase or the phrase "but
not limited to";
(g) any reference to a Section or Article refers to such Section or
Article of this Indenture unless otherwise indicated.
Certain terms used principally in Articles 2, 9, and 11 are defined in
those Articles.
2
<PAGE>
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of distributions then due and payable by the Issuer on the
outstanding Senior Notes shall not be reduced as a result of any additional
taxes, duties or other governmental charges to which the Issuer has become
subject as a result of an event described in Section 10.10.
"Adjusted Treasury Rate" means, with respect to any Redemption 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 redemption date, calculated on the third
Business Day preceding the Redemption Date, plus in each case .20%.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person (except in cases where
substantially all of the control that would ordinarily be exercisable by virtue
of ownership of stock, other than the election of directors, has been eliminated
by applicable regulatory authorities). For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Bermuda Holdings" means the Person named as "Bermuda Holdings" in the
first paragraph of this instrument, until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Bermuda Holdings" shall mean such successor Person. To the extent necessary to
comply with the requirements of the provisions of Sections 310 through 317 of
the Trust Indenture Act as they are applicable to Bermuda Holdings, the term
"Bermuda Holdings" shall include any other obligor with respect to the Guarantee
for the purposes of complying with such provisions.
"Board of Directors" means the board of directors of the Issuer or
Bermuda Holdings, as the case may be, or any duly authorized committee of such
board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuer or Bermuda Holdings, as the
case may be, to have been duly adopted by the Board of Directors of the Issuer
or Bermuda
3
<PAGE>
Holdings, as the case may be, and to be in full force and effect on the date of
such certification and delivered to the Trustee.
"Book-Entry Interests" means any beneficial interest in a Global Note.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York,
or London, England, are authorized or obligated by law, regulation or executive
order to close.
"Capital Lease Obligation" means, as to any Person, any obligations of
such Person and its Subsidiaries on a consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been recorded
as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of such Person's capital
stock and any rights (other than debt securities convertible into or
exchangeable for capital stock), warrants or options to purchase the foregoing
whether now outstanding or issued after the date hereof.
"Cedel" means Cedel Bank, societe anonyme.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term from the Redemption Date to the Stated Maturity Date of the Senior Notes
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 Senior Notes.
"Comparable Treasury Price" means, with respect to any Redemption
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 Redemption Date, as set forth in the daily
statistical release (or any
4
<PAGE>
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 Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
-
Quotation Agent obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 450 West 33rd Street, 15th Floor, New York, New York 10001.
"Corporation" includes corporations, associations, partnerships,
companies and business trusts.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
such Person or any of its Restricted Subsidiaries against fluctuations in
currency values.
"Custodian" means Chase Manhattan Bank Luxembourg S.A., as Custodian
under the Deposit and Custody Agreement.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Definitive Senior Note" means any Senior Note substantially in the
form of Exhibit C to this Indenture issued in accordance with this Indenture.
"Deposit and Custody Agreement" means the Deposit and Custody
Agreement, dated as of August 26, 1997, among the Issuer, Bermuda Holdings,
Chase Manhattan Bank Luxembourg S.A., as Custodian, The Chase Manhattan Bank, as
Trustee, and The Chase Manhattan Bank, as Depositary.
"Depositary" means The Chase Manhattan Bank, as Depositary under the
Deposit and Custody Agreement.
"DTC" means The Depository Trust Company.
"DTI" means the U.K. Department of Trade and Industry.
5
<PAGE>
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Event of Default" has the meaning specified in Article 4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means an issue of senior notes of the Issuer with
terms identical to the Senior Notes (except that the Exchange Notes will not
bear the Private Placement Legend or any other legends restricting the transfer
thereof, will contain the alternative paragraph 1(b) appearing on the reverse of
the Senior Notes in the form appearing as Exhibit A hereto and except that
interest thereon shall accrue from the last date on which interest was paid on
the Senior Notes or, if no such interest has been paid, from the date of
issuance of the Senior Notes) to be exchanged for the Senior Notes pursuant to
the Exchange Offer.
"Exchange Offer" means the registered offer by the Issuer to exchange
the Senior Notes for the Exchange Notes pursuant to the Registration Rights
Agreement.
"Exchange Registration" means a registration of the Senior Notes by
the Issuer under the Securities Act pursuant to and in accordance with the terms
of the Registration Rights Agreement.
"Exchange Registration Statement" means the registration statement
relating to an Exchange Offer on an appropriate form and all amendments and
supplement to such registration statement, in each case including the prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of
6
<PAGE>
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession,
consistently applied, as in effect from time to time.
"Global Notes" means, collectively, the Restricted Global Note and the
Regulation S Global Note substantially in the forms of Exhibit A and Exhibit B
to this Indenture.
"Global Receipts" means, collectively, the Restricted Global Receipt
and the Regulation S Global Receipt.
"Guarantee" means the full and unconditional guarantee by Bermuda
Holdings of the Senior Notes, the notation of which is endorsed on the Senior
Notes, substantially in the form of Exhibit D to this Indenture.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (1) to pay or purchase such Indebtedness or to advance or
-
supply funds for the payment or purchase of such Indebtedness, (2) to purchase,
-
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling such other Person to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (3) to
-
supply funds to, or in any other manner invest in, such other Person (including
any agreement to pay for property or services to be acquired by such other
Person irrespective of whether such property is received or such services are
rendered), (4) to maintain working capital or equity capital of such other
-
Person, or otherwise to maintain the net worth, solvency or other financial
condition of the debtor, or (5) otherwise to assure a creditor of such other
-
Person against loss; provided that the term "guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course of
business, or any obligation or liability of such other Person in respect of
leasehold interests assigned by such other Person to any other Person.
"Holder" means (a) in the case of any Definitive Senior Note, the
-
Person in whose name such Definitive Senior Note is registered in the Senior
Note Register and (b) in the case of a Global Note, the Custodian, or its
-
nominee, or any successor custodian to whom the Global Note is transferred.
7
<PAGE>
"Indebtedness" means, with respect to any Person, without duplication,
(1) all obligations of such Person for borrowed money or for the deferred
-
purchase price of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of business, if, and
to the extent, any of the foregoing would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, (2) all obligations of
-
such Person evidenced by bonds, notes, debentures or other similar instruments,
if, and to the extent, any of the foregoing would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, (3) all
-
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business, (4)
-
all Capital Lease Obligations of such Person, (5) all obligations referred to in
-
(but not excluded from) clause (1), (2), (3) or (4) above of other Persons and
all dividends of other Persons, the payment of which is secured by (or for which
the holder of such obligations has an existing right, contingent or otherwise,
to be secured by) any Lien, upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such obligation, (6) all
-
Guaranteed Debt of such Person, (7) all Redeemable Capital Stock issued by such
-
Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends, (8) all obligations under
-
Currency Agreements or Interest Swap Obligations of such Person, (9) all
-
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing insurance obligations entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon, or if and to the extent drawn upon, such drawing is
reimbursed not later than the 30th Business Day following a demand for
reimbursement following payment on the letter of credit), and (10) any
--
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (1) through (9) above.
Indebtedness shall not include obligations under insurance, reinsurance or
retrocession contracts entered into in the ordinary course of business. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair
Market Value shall be determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock.
8
<PAGE>
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Insurance Business" means any business consisting principally of the
ownership or issuance of or entry into insurance policies or reinsurance or
retrocession contracts that have not expired or the ownership or operation of
any other similar assets of an insurer or reinsurer, or any interest therein,
which is related to the general business of Bermuda Holdings and its
Subsidiaries, and would be reflected on the balance sheet of Bermuda Holdings
prepared in accordance with GAAP. Without limiting the foregoing, the term
"Insurance Business" shall include a direct or indirect ownership interest in a
Person which issues insurance policies, reinsurance or retrocession contracts or
similar products or performs investment, management, administrative or similar
services related or adaptable to the business of Bermuda Holdings or one or more
of its Subsidiaries, so long as such ownership interest would be reflected on
the balance sheet of Bermuda Holdings prepared in accordance with GAAP.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Senior Notes.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its subsidiaries against fluctuations in interest rates.
"Issue Date" means the date on which Senior Notes are originally
issued under this Indenture.
"Issuer" means the Person named as the "Issuer" in the first paragraph
of this instrument, until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Issuer" shall mean
such successor Person. To the extent necessary to comply with the requirements
of the provisions of Sections 310 through 317 of the Trust Indenture Act as they
are applicable to the Issuer, the term "Issuer" shall include any other obligor
with respect to the Senior Notes for the purposes of complying with such
provisions.
"Lien" means any mortgage, charge, pledge, lien, security interest or
other encumbrance of any kind.
9
<PAGE>
"Make-Whole Amount" means, in connection with any optional redemption
of any Senior Notes, the excess, if any, of (i) the sum, as determined
-
by a Quotation Agent of the present values of the principal amount of such
Senior Notes, together with scheduled payments of interest from the redemption
date to the Stated Maturity of the Senior Notes, in each case 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, over (ii) 100% of the
--
principal amount of the Senior Notes to be redeemed.
"Maturity" when used with respect to any Senior Note means the date on
which the principal of (and premium, if any) and interest on such Senior Note
becomes due and payable as therein provided, whether at Stated Maturity or
redemption date and whether by declaration of acceleration call for redemption
or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Non-Recourse Indebtedness" means Indebtedness (a) as to which neither
-
Bermuda Holdings nor any of its Subsidiaries (other than the Person incurring
such Non-Recourse Indebtedness) (i) provides credit support (including any under
-
taking, agreement or instrument that would constitute Indebtedness), (ii) is
--
directly or indirectly liable, or (iii) constitutes the lender; and (b) no
--- -
default with respect to which (including any rights that the holders thereof may
have to take enforcement action against such Person incurring such Non-Recourse
Indebtedness) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of Bermuda Holdings or any of its Subsidiaries (other
than the Person incurring such Non-Recourse Indebtedness) to declare a default
on such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.
"Officers' Certificate" means a certificate signed by (1) the
-
Chairman, a Vice Chairman, the President, a Vice President, the Treasurer or a
director (or equivalent officers) of Bermuda Holdings or the Issuer, as the case
may be, and (2) the Secretary or an Assistant Secretary of Bermuda Holdings or
-
the Issuer, as the case may be, and delivered to the Trustee; provided, however,
that such certificate may be signed by two of the officers or directors listed
in clause (1) above in lieu of being signed by one of such officers or directors
listed in such clause (1) and one of the officers listed in clause (2) above.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for Bermuda Holdings or the Issuer, as the case may be. Each such
opinion
10
<PAGE>
shall include the statements provided for in Section 314(e) of the Trust
Indenture Act to the extent applicable.
"Order" means a written order signed in the name of the Issuer or
Bermuda Holdings, as the case may be (1) by its Chairman, a Vice Chairman, its
-
President, a Vice President, its Treasurer or a director (or equivalent
officers), and (2) by its Treasurer, an Assistant Treasurer, its Secretary or an
-
Assistant Secretary and delivered to the Trustee; provided, however, that such
written request or order may be signed by any two of the officers or directors
listed in clause (1) above in lieu of being signed by one of such officers or
directors listed in such clause (1) and one of the officers listed in clause (2)
above.
"Outstanding" when used with respect to the Senior Notes means, as of
the date of determination, all Senior Notes theretofore authenticated and
delivered under this Indenture, except:
(1) Senior Notes theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(2) Senior Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Issuer or Bermuda
Holdings) in trust or set aside and segregated in trust by the Issuer or
Bermuda Holdings (if the Issuer or Bermuda Holdings shall act as its own
Paying Agent) for the Holders of such Senior Notes; provided that, if such
Senior Notes are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(3) Senior Notes, except to the extent provided in Section 11.2 and
Section 11.3, with respect to which Bermuda Holdings has effected
defeasance or covenant defeasance as provided in Article 11; and
(4) Senior Notes in exchange for or in lieu of which other Senior
Notes have been authenticated and delivered pursuant to this Indenture,
other than any such Senior Notes in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Senior Notes
are held by a bona fide purchaser in whose hands the Senior Notes are valid
obligations of the Issuer and Bermuda Holdings;
11
<PAGE>
provided, however, that, in determining whether the Holders of the requisite
principal amount of Outstanding Senior Notes have given any request, demand,
authorization, notice, direction, consent or waiver hereunder, Senior Notes
owned by the Issuer, Bermuda Holdings, any other obligor upon the Senior Notes
or any Affiliate of the Issuer, Bermuda Holdings or such other obligor shall be
disregarded and deemed not to be Outstanding solely for purposes of such
determination, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, notice,
direction, consent or waiver, only Senior Notes which the Trustee knows to be so
owned shall be so disregarded. Senior Notes so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Senior Notes and that the pledgee is not the Issuer or Bermuda Holdings or any
other obligor upon the Senior Notes or any Affiliate of Bermuda Holdings or such
other obligor.
"Permitted Liens" means (1) Liens securing Indebtedness pursuant to
-
any credit agreement or credit facility that is permitted by the terms of the
Indenture to be outstanding; (2) Liens in favor of Bermuda Holdings or any
-
Restricted Subsidiary; (3) Liens on property of a Person existing at the time
-
such Person is merged into or consolidated with Bermuda Holdings or any
Restricted Subsidiary of Bermuda Holdings, provided that such Liens were not
incurred in connection with, or in contemplation of, such merger or
consolidation and such Liens do not extend to any assets of Bermuda Holdings or
any of its Restricted Subsidiaries other than the assets of the Person so merged
into or consolidated with Bermuda Holdings or such Restricted Subsidiary; (4)
-
Liens on property existing at the time of acquisition thereof by Bermuda
Holdings or any Restricted Subsidiary of Bermuda Holdings; provided that such
Liens were not incurred in connection with, or in contemplation of, such
acquisition and do not extend to any assets of Bermuda Holdings or any of its
Restricted Subsidiaries other than the property so acquired; (5) Liens to secure
-
the performance of statutory obligations, surety or appeal bonds or performance
bonds, or landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's or other like Liens, in any case incurred in the ordinary course
of business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate process of law, if a reserve or other appropriate
provision, if any, as is required by GAAP shall have been made therefor; (6)
-
Liens existing on the date of the Indenture; (7) Liens for taxes, assessments or
-
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (8)
-
Liens with respect to obligations under Currency Agreements or Interest Swap
Obligations and other similar
12
<PAGE>
agreements or arrangements designed to protect Bermuda Holdings or any of its
Restricted Subsidiaries against fluctuations in the value of Investments of
Bermuda Holdings and its Restricted Subsidiaries, in each case to the extent
permitted hereunder; (9) Liens incurred in the ordinary course of business of
-
Bermuda Holdings or any Subsidiary of Bermuda Holdings with respect to
obligations permitted under the Indenture that do not exceed $10,000,000 in
principal amount in the aggregate at any one time outstanding; and (10) Liens on
--
assets of Unrestricted Subsidiaries that secure Non-Recourse Indebtedness (to
the extent permitted under the Indenture) of Unrestricted Subsidiaries.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, fund, unincorporated organization or government or any agency or
political subdivision thereof.
"Principal Insurance Subsidiary" means: (i) the Subsidiaries of
-
Bermuda Holdings in existence on the Issue Date; (ii) any other insurance
--
company Subsidiary of Bermuda Holdings that becomes a "significant subsidiary"
as defined in Regulation S-X, as promulgated by the Commission; and (iii) any
---
other Subsidiary of Bermuda Holdings that may succeed, by merger, consolidation
or otherwise, to all or substantially all of the business of one or more of such
persons as specified in (i) and (ii) above.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Issuer.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or otherwise, is, or upon the happening of an event or passage of time would be
required to be, redeemed on or prior to the final Stated Maturity of the Senior
Notes or is redeemable at the option of the holder thereof at any time prior to
such final Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to such final Stated Maturity.
"Redemption Date", when used with respect to any Senior Notes to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
13
<PAGE>
"Redemption Price", when used with respect to any Senior Notes to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Reference Treasury Dealer" means, at any time, (i) Donaldson, Lufkin
-
& Jenrette Securities Corporation and its respective successors ("DLJ") and two
additional Primary Treasury Dealers (as defined below) selected by DLJ;
provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), DLJ
will substitute therefor another Primary Treasury Dealer unless DLJ has ceased
to be a Primary Treasury Dealer in which case the Issuer shall substitute
therefor another Primary Treasury Dealer; and (ii) any other Primary Treasury
--
Dealer selected by the Indenture Trustee after consultation with the Company, it
being understood that the Trustee shall under no circumstances have any duty or
responsibility to select any such other Primary Treasury Dealer, and should it
select such Primary Treasury Dealer, shall have no liability for any such
selection, except for its gross negligence or bad faith, in selecting such
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the arithmetic average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) furnished in writing to the Indenture Trustee by such
Quotation Agent at 5:00 p.m., New York City time, on the third Business Day
preceding such redemption date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 20, 1997, between the Issuer, Bermuda Holdings and
Donaldson, Lufkin & Jenrette Securities Corporation and certain permitted
assigns specified therein.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 31 or July 31 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S Definitive Senior Note" means a Definitive Senior Note
issued in exchange for an interest in the Regulation S Global Note.
"Regulation S Global Note" means the Regulation S Global Note
substantially in the form of Exhibit B to this Indenture.
14
<PAGE>
"Request" means a written request signed in the name of the Issuer or
Bermuda Holdings, as the case may be, (1) by its Chairman, a Vice Chairman, its
-
President, a Vice President, its Treasurer or a director (or equivalent
officers) and (2) by its Treasurer, an Assistant Treasurer, its Secretary or an
-
Assistant Secretary and delivered to the Trustee; provided, however, that such
written request or order may be signed by any two of the officers or directors
listed in clause (1) above in lieu of being signed by one of such officers or
directors listed in such clause (1) and one of the officers listed in clause (2)
above.
"Responsible Officer" when used with respect to the Trustee, means any
officer assigned to the Corporate Trust Administration of the Trustee or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers or assigned by the Trustee to
administer corporate trust matters at its Corporate Trust Office 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 Definitive Senior Note" means a Definitive Senior Note
issued in exchange for an interest in the Restricted Global Note.
"Restricted Global Note" means the Restricted Global Note
substantially in the form of Exhibit A to this Indenture.
"Restricted Subsidiary" of a Person means any Subsidiary that is not
an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Corporation and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Notes" means (a) the Global Notes, substantially in the form
-
of Exhibit A to this Indenture, (b) Definitive Senior Notes, substantially in
-
the form of Exhibit B to this Indenture, issued in accordance with this
Indenture or (c) of any Exchange Notes to be issued and exchanged for (a) or (b)
-
above pursuant to the Registration Rights Agreement and this Indenture. For
purposes of this Indenture, all Senior Notes and Exchange Notes shall vote as
one series of Senior Notes under this Indenture.
"Special Record Date" means a date fixed by the Trustee for the
payment of any Defaulted Interest.
15
<PAGE>
"Stated Maturity" means, when used with respect to any Indebtedness or
any installment of principal or of interest thereon, the date specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of principal or of interest is due and payable.
"Subsidiary" means any Person, a majority of the equity ownership or
the Voting Stock of which is at the time owned, directly or indirectly, by
Bermuda Holdings or by one or more other Subsidiaries, or by Bermuda Holdings
and one or more other Subsidiaries.
"Tax Sharing Agreement" means the tax sharing agreement dated December
21, 1994 among the Issuer, Terra Nova, Terra Nova Asset Management Limited,
Terra Nova Pension Trustee Limited, Terra Nova Insurance Agency Limited and
Intercontinental Reinsurance Agency Limited.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and as in force at the date as of which this instrument was executed,
except as provided in Section 8.5.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"U.S. Government Obligations" means securities that are (i) direct
-
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
--
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such 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 principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
16
<PAGE>
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) is designated an
-
Unrestricted Subsidiary prior to formation or creation; (b) has total assets at
-
the time of formation or creation with a Fair Market Value not exceeding $1,000;
(c) has no Indebtedness other than Non-Recourse Indebtedness; (d) is not party
- -
to any agreement, contract, arrangement or understanding with Bermuda Holdings
or any Restricted Subsidiary of Bermuda Holdings unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
Bermuda Holdings or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of Bermuda Holdings; (e) is a
-
Person with respect to which neither Bermuda Holdings nor any of its Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
-
additional Capital Stock or (y) to maintain or preserve such Person's financial
-
condition or to cause such Person to achieve any specified levels of operating
results; and (f) has not guaranteed or otherwise directly or indirectly provided
-
credit support for any Indebtedness of Bermuda Holdings or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Bermuda Holdings as of such date. The Board of Directors of Bermuda Holdings
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of Bermuda Holdings of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if no Default or Event of Default would be in existence
following such designation.
"Voting Stock" means stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
-
outstanding principal amount of such Indebtedness into (b) the total of the
-
product obtained by multiplying (i) the amount of each then remaining
-
installment, sinking
17
<PAGE>
fund, serial maturity or other required payments of principal, including payment
at final maturity, in respect thereof, by (ii) the number of years (calculated
--
to the nearest one-twelfth) that will elapse between such date and the making of
such payment.
"Wholly-Owned Restricted Subsidiary" of any Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly-Owned Subsidiaries of such Person.
Section 1.2 Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- -----------
<S> <C>
"Act"............................................................. 1.5
"Additional Amounts".............................................. 9.17
"Agent Members"................................................... 2.05
"Covenant Defeasance"............................................. 11.2
"Defaulted Interest".............................................. 2.11
"Defeasance"...................................................... 11.2
"Incorporated Provision".......................................... 1.8
"Notice of Default"............................................... 4.1
"Regulation S Global Receipt"..................................... 2.1
"Restricted Global Receipt"....................................... 2.1
"Senior Note Register"............................................ 2.5
"Senior Note Registrar"........................................... 2.3
"Surviving Entity"................................................ 7.1
</TABLE>
Section 1.3 Compliance Certificates and Opinions. Upon any
------------------------------------
application or request by the Issuer or Bermuda Holdings to the Trustee to take
any action under any provision of this Indenture, the Issuer or Bermuda Holdings
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture (including any
covenant compliance with which constitutes a condition precedent) 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, if any, have
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically
18
<PAGE>
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion (other than the certificates required by
Section 9.18(a)) with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such individual, 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
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.4 Form of Documents Delivered to Trustee. In any case
--------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer or Bermuda
Holdings may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows that the certificate or opinion or representations with respect to the
matters upon which the certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Issuer
19
<PAGE>
or Bermuda Holdings stating that the information with respect to such factual
matters is in the possession of the Issuer or Bermuda Holdings, unless such
counsel knows that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.5 Acts of Holders. (a) Any request, demand,
---------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such request, demand, authorization, direction, notice,
consent, waiver or other action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Issuer and Bermuda Holdings. Such instrument or instruments
(and the request, demand, authorization, direction, notice, consent, waiver or
other action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee, the
Issuer and Bermuda Holdings, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(c) The ownership of Definitive Senior Notes shall be proved by the
Senior Note Register.
(d) If the Issuer or Bermuda Holdings shall solicit from the Holders
of Senior Notes any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Issuer or Bermuda Holdings, as the case may be, may, at
its option, by or pursuant to a Board Resolution, fix in advance a record date
for the determination of such Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Issuer
or Bermuda Holdings, as the case may be, shall have no obligation to do so.
Notwithstanding Section 316(c) of the Trust Indenture Act, any such record date
shall be the record date specified in or pursuant to such Board Resolution,
which shall be a date not more than 30 days prior to the first
20
<PAGE>
solicitation of Holders generally in connection therewith and no later than the
date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record of Senior Notes at the close of
business on such record date shall be deemed to be Holders of Senior Notes for
the purposes of determining whether Holders of the requisite proportion of
Senior Notes then outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for this purpose the Senior Notes then outstanding shall be computed as of
such record date; provided that no such request, demand, authorization,
direction, notice, consent, waiver or other Act by the Holders on such 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.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Senior Notes shall bind every future
Holder of the same Senior Notes or the Holder of every Senior Note issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done, suffered or omitted to be done by the Trustee, any
Paying Agent or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Senior Notes.
Section 1.6 Notices, etc., to Trustee, the Issuer and Bermuda
-------------------------------------------------
Holdings. Any request, demand, authorization, direction, notice, consent, waiver
- - --------
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holders, any representative or the Issuer or
Bermuda Holdings shall be sufficient for every purpose hereunder if made,
given, furnished or delivered in writing or mailed, first-class postage
prepaid, or by facsimile, to or with the Trustee at its Corporate Trust
Office at 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Corporate Trust Administration, facsimile number (212) 946-
8177; or
(b) the Issuer by the Trustee, any representative or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or delivered in writing or
mailed, first-class postage prepaid, or by facsimile, to the Issuer at
Terra Nova House,
21
<PAGE>
41-43 Mincing Lane, London EC3R 7SP, Great Britain, Attention: Company
Secretary, facsimile number (011-44-171) 283-1749, or at any other address
or facsimile number furnished in writing to the Trustee by the Issuer; or
(c) Bermuda Holdings by the Trustee, any representative or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or delivered in
writing or mailed, first-class postage prepaid, or by facsimile, to Bermuda
Holdings at Richmond House, 2nd Floor, 12 Par-La-Ville Road, Hamilton HM
08, Bermuda, Attention: Company Secretary, facsimile number (809) 292-7572,
or at any other address or facsimile number furnished in writing to the
Trustee by Bermuda Holdings.
Section 1.7 Notice to Holders; Waiver. Where this Indenture provides
-------------------------
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-
class postage prepaid, to each Holder of Definitive Senior Notes affected by
such event at his address as it appears in the Senior Note Register or at the
address provided by such Holder in writing to the Trustee not later than the
latest date and not earlier than the earliest date prescribed for the giving of
such notice (or, in the case of the Holder of a Global Note, to the Custodian at
Chase Manhattan Bank Luxembourg S.A., 5 rue Plaetis, L-2338, Luxembourg,
Attention: Corporate Trust Department). In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Any notice when mailed to a Holder in the
aforesaid manner shall be conclusively deemed to have been received by such
Holder whether or not actually received by such Holder. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provisions of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.8 Conflict of Any Provision of Indenture with Trust
-------------------------------------------------
Indenture Act. If and to the extent that any provision of this Indenture
- - -------------
limits, qualifies or
22
<PAGE>
conflicts with the duties imposed by Sections 310 to 318 of the Trust Indenture
Act, inclusive, or conflicts with any provision (an "incorporated provision")
required by or deemed to be included in this Indenture by operation of such
Trust Indenture Act Sections, such imposed duties or incorporation provision of
the Trust Indenture Act shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, such provision of the Trust Indenture Act shall be deemed
to apply to this Indenture as so modified or excluded, as the case may be, if
this Indenture shall then be qualified under the Trust Indenture Act.
Section 1.9 Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 1.10 Successor and Assigns. All covenants and agreements in
---------------------
this Indenture by the Issuer, Bermuda Holdings and the Trustee shall bind its
respective successors and assigns, whether so expressed or not.
Section 1.11 Separability Clause. In case any provision in this
-------------------
Indenture or in the Senior Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.12 Benefits of Indenture. Nothing in this Indenture or in
---------------------
the Senior Notes, express or implied, shall give to any Person (other than the
parties hereto and their successors hereunder, any Paying Agent and the Holders)
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 1.13 Governing Law. This Indenture and the Senior Notes shall
-------------
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to the conflicts of laws principles thereof.
Section 1.14 Legal Holidays. In any case where any Interest Payment
--------------
Date, any date established for payment of Defaulted Interest pursuant to Section
2.11, or any Maturity with respect to any Senior Note shall not be a Business
Day, then (notwithstanding any other provisions of this Indenture or of the
Senior Notes) payment of the principal of, or any premium and interest on the
Senior Notes (and any Additional Amounts payable in respect thereof, need not be
made on such date but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date or date
established for payment of Defaulted Interest
23
<PAGE>
pursuant to Section 2.11 or Maturity, and no interest shall accrue with respect
to such payment for the period from and after such Interest Payment Date or date
established for payment of Defaulted Interest pursuant to Section 2.11 or
Maturity, as the case may be, to the next succeeding Business Day.
Section 1.15 No Recourse Against Others. A director, officer,
--------------------------
employee or stockholder, as such, of the Issuer, Bermuda Holdings or any
subsidiary of Bermuda Holdings shall not have any liability for any payment of
the principal of, or premium, if any, or interest on, any of the Senior Notes,
or any other obligations of the Issuer or Bermuda Holdings under the Senior
Notes, the Guarantee or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by accepting any
of the Senior Notes waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Notes.
Section 1.16 Submission to Jurisdiction; Appointment of Agent for
----------------------------------------------------
Service of Process. Each of the Issuer and Bermuda Holdings hereby appoints CT
- - ------------------
Corporation System acting through its office at 1633 Broadway, New York, New
York as its authorized agent (the "Authorized Agent") upon which process may be
served in any legal action or proceeding against it with respect to its
obligations under this Indenture, the Senior Notes or any Guarantee, as the case
may be, instituted in any federal or state court in the Borough of Manhattan,
The City of New York, by the Holder of any Senior Notes and agrees that service
of process upon such authorized agent, together with written notice of said
service to the Issuer and Bermuda Holdings by the person serving the same
addressed as provided in Section 1.6, shall be deemed in every respect effective
service of process upon the Issuer or Bermuda Holdings, as the case may be, in
any such legal action or proceeding, and each of the Issuer and Bermuda Holdings
hereby irrevocably submits to the non-exclusive jurisdiction of any such court
in respect of any such legal action or proceeding. Such appointment shall be
irrevocable until this Indenture has been satisfied and discharged in accordance
with Article 3 hereof. Notwithstanding the foregoing, the Issuer and Bermuda
Holdings reserve the right to appoint another person located or with an office
in the Borough of Manhattan, The City of New York, selected in its discretion,
as a successor Authorized Agent, and upon acceptance of such appointment by such
a successor the appointment of the prior Authorized Agent shall terminate. If
for any reason CT Corporation System ceases to be able to act as the Authorized
Agent or to have an address in the Borough of Manhattan, The City of New York,
the Issuer and Bermuda Holdings will appoint a successor Authorized Agent in
accordance with the preceding sentence. Each of the Issuer and Bermuda Holdings
further agrees to take any and all action, including the filing of any and all
documents and instruments as may be necessary to continue
24
<PAGE>
such designation and appointment of such agent in full force and effect until
this Indenture has been satisfied and discharged in accordance with Article 3
hereof. Service of process upon the Authorized Agent addressed to it at the
address set forth above, as such address may be changed within the Borough of
Manhattan, The City of New York by notice given by the Authorized Agent to the
Trustee, together with written notice of such service mailed or delivered to the
Issuer and Bermuda Holdings shall be deemed, in every respect, effective service
of process on the Issuer and Bermuda Holdings, respectively.
ARTICLE 2
THE SENIOR NOTES
Section 2.1 Form and Dating. (a)(1) The Global Notes shall be
--------------- -
substantially in the form of Exhibit A and Exhibit B, and the Trustee's
certificate of authentication shall be substantially in the form set forth in
such exhibits, which are hereby incorporated in and expressly made a part of
this Indenture and (2) the Definitive Senior Notes and the Trustee's
-
certificate of authentication shall be substantially in the form of Exhibit C,
which is hereby incorporated in and expressly made a part of this Indenture;
provided that with respect to clauses (1) and (2) above, Exchange Notes (i)
-
shall contain the alternative Paragraph 1(b) appearing on the reverse thereof,
and (ii) shall not contain the Private Placement Legend. The notation of
--
Guarantee endorsed on the Senior Notes shall be substantially in the form of
Exhibit D, which is hereby incorporated in and expressly made a part of this
Indenture. The Global Notes and the Definitive Senior Notes may have notations,
legends or endorsements required by law, governmental rule or regulation, stock
or other securities exchange rule, depositary rule or usage agreements to which
the Issuer or Bermuda Holdings is subject, if any, or usage (provided that any
such notation, legend or endorsement is approved by the Issuer or Bermuda
Holdings). The Issuer or Bermuda Holdings shall furnish any such legend not
contained in Exhibit A, Exhibit B or Exhibit C to the Trustee in writing. The
Global Notes and each Definitive Senior Note shall be dated the date of its
authentication. The terms of the Global Notes and of the Definitive Senior
Notes set forth in Exhibit A, Exhibit B and Exhibit C, respectively, are part of
the terms of this Indenture.
The Senior Notes are being offered and sold by the Issuer pursuant to
the Purchase Agreement. The Senior Notes will be initially issued as one or
more global notes without coupons in bearer form. Transfer of the Global Notes
shall be by physical delivery. The Global Notes authenticated under this
Indenture shall be
25
<PAGE>
deposited with Chase Manhattan Bank Luxembourg S.A., as custodian thereof (the
"Custodian"), for the benefit of The Chase Manhattan Bank, as depositary (the
"Depositary") pursuant to the terms of the Deposit and Custody Agreement. The
aggregate principal amount of the Global Notes may from time to time be
increased or decreased by adjustments made in the records of the Trustee.
With respect to the Senior Notes being issued or sold in reliance on
Regulation S of the Securities Act, the Depositary will issue one or more global
receipts representing a 100% interest in the underlying Regulation S Global Note
(the "Regulation S Global Receipts"), which will be delivered and registered in
the name of DTC or its nominee pursuant to the terms of the Deposit and Custody
Agreement for the accounts of Cedel and Euroclear.
With respect to the Senior Notes being issued or sold to "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act ("Rule
144A"), the Depositary will issue one or more global receipts representing a
100% interest in the underlying Restricted Global Note (the "Restricted Global
Receipts", and together with the Regulation S Global Receipts, the "Global
Receipts"), which will be delivered and registered in the name of DTC or its
nominee pursuant to the terms of the Deposit and Custody Agreement.
(b) Restrictive Legends. Unless and until a Senior Note is exchanged
-------------------
for an Exchange Note in connection with an effective Exchange Registration
pursuant to the Registration Rights Agreement and except as provided in Section
2.8, the Restricted Global Note and each Restricted Definitive Senior Note shall
bear the following legend (the "Private Placement Legend") on the face thereof:
THIS SENIOR NOTE HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DE-
FINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SENIOR NOTE IN AN OFFSHORE
26
<PAGE>
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS SENIOR NOTE
EXCEPT, (A) TO BERMUDA HOLDINGS OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SENIOR NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. [WITH RESPECT TO ANY
RESTRICTED DEFINITIVE SENIOR NOTE: IN CONNECTION
WITH ANY TRANSFER OF THIS SENIOR NOTE WITHIN THE
TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THE CERTIFICATE TO THE TRUSTEE ON THE
REVERSE HEREOF.] AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SENIOR NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
Section 2.2 Execution and Authentication. Two directors, or a
----------------------------
director and the Secretary, shall sign the Senior Notes for the Issuer by manual
or facsimile signature. Two directors, or a director and the Secretary, shall
sign the notation of Guarantee, to be endorsed on the Senior Notes by Bermuda
Holdings, for Bermuda Holdings by manual or facsimile signature. The signatures
required hereby may in
27
<PAGE>
each case be the manual signature of any person duly delegated by a director or
the Secretary, as the case may be.
If an officer (including a director, Secretary or Assistant Secretary)
whose signature is on a Senior Note no longer holds that office at the time the
Trustee authenticates the Senior Note, the Senior Note shall be valid
nevertheless.
A Senior Note shall not be valid until an authorized officer of the
Trustee manually signs the certificate of authentication on the Senior Note.
The signature shall be conclusive evidence that the Senior Note has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver the (a) Global Notes for
-
original issue in an aggregate principal amount at maturity not in excess of
$75,000,000, and (b) Exchange Notes for issue only in an Exchange Offer pursuant
to the Registration Rights Agreement, for a like principal amount of Global
Notes exchanged pursuant thereto, in each case upon a written order signed by a
director or Secretary of the Issuer and a director or Assistant Secretary of
Bermuda Holdings. Such order shall specify the principal amount of the Global
Notes to be authenticated and the date on which the original issue of the Global
Notes are to be authenticated and shall further provide instructions concerning
delivery of the Global Notes. The aggregate principal amount of Senior Notes
outstanding at any time may not exceed that amount, except as provided in
Section 2.7 hereof. Each Global Note shall be dated the date of its
authentication, shall bear interest from the applicable date and shall be
payable on the dates specified on the face of the form of Global Notes set forth
as Exhibit A and Exhibit B hereto. Each Definitive Senior Note shall be dated
the date of its authentication, shall bear interest from the applicable date and
shall be payable on the dates specified on the face of the form of Definitive
Senior Note set forth in Exhibit C hereto.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuer and Bermuda Holdings to authenticate the Senior Notes. Unless
limited by the terms of such appointment, an authenticating agent may
authenticate Senior Notes whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any Senior Note Registrar
or Paying Agent.
Section 2.3 Senior Note Registrar and Paying Agent. The Issuer will
--------------------------------------
maintain in the City of New York, an office or agency where Senior Notes may be
presented or surrendered for payment (the "Paying Agent"), where Senior Notes
may
28
<PAGE>
be surrendered for registration of transfer or exchange (the "Senior Note
Registrar") and where notices and demands to or upon the Issuer in respect of
the Senior Notes and this Indenture may be served. Until otherwise designated
by the Issuer, such office or agency in The City of New York shall be the office
maintained by the Trustee for such purpose. The Issuer will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Issuer shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Issuer may from time to time designate one or more other offices
or agencies (in or outside The City of New York) where the Senior Notes may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in The City of New York for such purposes. The Issuer will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such office or agency.
The Issuer shall enter into an appropriate agency agreement with any
Senior Note Registrar, Paying Agent or co-registrar not a party to this
Indenture, which shall incorporate the terms of the Trust Indenture Act. The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Issuer shall notify the Trustee of the name and address of any such
agent. The Issuer may change any Paying Agent, Senior Note Registrar, co-
registrar or transfer agent without prior notice to any holder of Senior Notes.
If the Issuer fails to maintain a Senior Note Registrar or Paying Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 5.6.
The Issuer initially appoints the Trustee as Senior Note Registrar and
Paying Agent in connection with the Senior Notes.
Section 2.4 Paying Agent To Hold Money in Trust. If the Issuer shall
-----------------------------------
at any time act as its own Paying Agent, it will, by 10:00 a.m. (New York City
time) on or before each due date of the principal of and any premium and
interest on the Senior Notes (and any Additional Amounts payable by the Issuer
or Bermuda Holdings in respect thereof), segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
and any premium and interest on the Senior Notes (and any Additional Amounts
payable by the Issuer or Bermuda Holdings in
29
<PAGE>
respect thereof) so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents for the
Senior Notes, it will, at least one Business Day before such due date of the
principal of and any premium and interest on the Senior Notes (and any
Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof), deposit with a Paying Agent a sum in same day funds (or New York
Clearing House funds if such deposit is made prior to the date on which such
deposit is required to be made) sufficient to pay the principal and any premium
and interest to become due on the Senior Notes (and any Additional Amounts
payable by the Issuer or Bermuda Holdings in respect thereof), such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest on the Senior Notes and (unless such Paying Agent is the Trustee)
the Issuer will promptly notify the Trustee of such action or any failure so to
act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of and
any premium and interest on the Senior Notes (and any Additional Amounts
payable by the Issuer or Bermuda Holdings in respect thereof) in trust for
the benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Issuer or Bermuda
Holdings (or any other obligor upon the Senior Notes) in the making of any
payment of principal and any premium and interest on the Senior Notes (and
any Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof);
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and obligations
of such Paying Agent.
30
<PAGE>
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by an order of the Issuer direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Issuer or such Paying Agent, such sums to be held by
the Trustee upon the same terms as those upon which such sums were held by the
Issuer or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuer, in trust for the payment of the principal of and any premium and
interest on the Senior Notes (and any Additional Amounts payable by the Issuer
or Bermuda Holdings in respect thereof) and remaining unclaimed for two years
after such principal and any premium and interest on the Senior Notes (and any
Additional Amounts payable by the Issuer or Bermuda Holdings in respect thereof)
has become due and payable shall be paid to the Issuer or Bermuda Holdings upon
Request by the Issuer or Bermuda Holdings, as the case may be; and the Holder of
such Senior Note shall thereafter, as an unsecured general creditor, look only
to the Issuer or Bermuda Holdings for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Issuer as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Issuer cause to be published once, in The
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Issuer or
Bermuda Holdings.
Section 2.5 Senior Note Holder Lists. The Trustee, or such other
------------------------
person designated by the Issuer, shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders of Definitive Senior Notes, if any (the "Senior Note
Register"). If the Trustee is not the Senior Note Registrar, the Issuer or
Bermuda Holdings shall furnish to the Trustee, in writing on or before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders of Definitive Senior Notes, if
any.
Section 2.6 Transfer and Exchange. The Global Notes shall be
---------------------
exchanged by the Issuer (with authentication by the Trustee) for one or more
Definitive Senior Notes, if (i) the Custodian notifies the Issuer, Bermuda
-
Holdings and the
31
<PAGE>
Trustee that it is unwilling or unable to continue as Custodian and no successor
Custodian has been appointed by the Issuer within 90 days of such notification,
(ii) the Depositary notifies the Issuer, Bermuda Holdings and the Trustee that
--
it is unwilling or unable to continue as Depositary and no successor Depositary
has been appointed by the Issuer or Bermuda Holdings within 90 days of such
notification, (iii) DTC notifies the Issuer, Bermuda Holdings and the Depositary
---
that it is unwilling or unable to continue as holder with respect to the Global
Receipts or if at any time it ceases to be a clearing agency under the Exchange
Act and, in either case, a successor to DTC registered as a clearing agency
under the Exchange Act is not appointed by the Issuer or Bermuda Holdings within
90 days of such notification, (iv) the Issuer or Bermuda Holdings determines
--
that Definitive Senior Notes shall be issued, or (v) the Holder requests the
-
issuance of Definitive Senior Notes after the occurrence of an Event of Default;
provided, however, that no Regulation S Definitive Senior Note may be issued
prior to October 6, 1997.
Members of, or participants in, the DTC ("Agent Members") shall have
no rights under this Indenture with respect to any Global Receipt held on their
behalf by the Depositary, or the Trustee as its custodian, or under the Global
Receipt, and the Depositary may be treated by the Issuer, Bermuda Holdings, the
Trustee and any agent of the Issuer, Bermuda Holdings, or the Trustee as the
absolute owner of such Global Receipt for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, Bermuda
Holdings, the Trustee or any agent of the Issuer, Bermuda Holdings or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Senior Note.
Whenever all of a Global Note is exchanged for one or more Definitive
Senior Notes, such Global Note shall be surrendered by the Holder thereof to the
Trustee for cancellation. Whenever a part of the Global Notes is exchanged for
one or more Definitive Senior Notes (which shall be in denominations of $1,000
or integral multiples thereof), the Global Note shall be surrendered by the
Holder thereof to the Trustee who shall cause an adjustment to be made to such
Global Note such that the principal amount of such Global Notes will be equal to
the portion of such Global Notes not exchanged and shall thereafter return such
Global Notes to such Holder. Definitive Senior Notes issued in exchange for the
Global Notes or any portion thereof shall be registered in such names as the
Depositary shall instruct the Trustee based on the instructions of DTC, as
requested by the Issuer. The Global Notes may not be exchanged other than as
provided in this Section 2.6.
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Definitive Senior Notes shall be transferable only upon the surrender
of a Definitive Senior Note for registration of transfer. When a Definitive
Senior Note is presented to the Senior Note Registrar or a co-registrar with a
request to register a transfer, the Senior Note Registrar shall register the
transfer as requested if its re quirements for such transfers are met. When
Definitive Senior Notes are presented to the Senior Note Registrar or a co-
registrar with a request to exchange them for an equal principal amount of
Definitive Senior Notes of other denominations, the Senior Note Registrar shall
make the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Definitive Senior Notes at the Senior Note
Registrar's or co-registrar's request.
The Holder of the Global Note may increase the principal amount of the
Global Note held by it by surrendering any Definitive Senior Note registered in
its name to the Senior Note Registrar for cancellation, provided that no
Definitive Senior Note shall be so surrendered during the period beginning on
the Record Date and ending on the corresponding Interest Payment Date. Upon
surrender of such Definitive Senior Note, the Senior Note Registrar shall
forward such Definitive Senior Note to the Trustee for cancellation and the
Trustee shall cause an adjustment to be made to such Global Note to increase the
principal amount at maturity of such Global Note by an amount equal to the
principal amount at maturity of the Definitive Senior Note surrendered for
cancellation.
The Issuer shall not be required to make and the Senior Note Registrar
need not register transfers or exchanges of Definitive Senior Notes selected for
redemption (except, in the case of Definitive Senior Notes to be redeemed in
part, the portion thereof not to be redeemed) or any Definitive Senior Notes for
a period of 15 days before a selection of Definitive Senior Notes to be
redeemed.
Prior to the due presentation for registration of transfer of any
Definitive Senior Note, the Issuer, the Trustee, the Paying Agent, the Senior
Note Registrar or any co-registrar shall deem and treat the person in whose name
a Definitive Senior Note is registered as the absolute owner of such Definitive
Senior Note for the purpose of receiving payment of principal of and interest on
such Definitive Senior Note and for all other purposes whatsoever, whether or
not such Definitive Senior Note is overdue, and none of the Issuer, the Trustee,
the Paying Agent, the Senior Note Registrar or any co-registrar shall be
affected by notice to the contrary.
33
<PAGE>
The Issuer may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section 2.6.
All Senior Notes issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Senior Notes surrendered upon such
transfer or exchange.
Section 2.7 Replacement Securities. If a mutilated Definitive Senior
----------------------
Note is surrendered to the Senior Note Registrar, if a mutilated Global Note is
surrendered to the Issuer, or if the Holder of a Senior Note claims that the
Senior Note has been lost, destroyed or wrongfully taken, the Issuer shall
issue, and the Trustee shall authenticate, a replacement Senior Note in such
form as the Senior Note mutilated, lost, destroyed or wrongfully taken, if the
Holder satisfies any reasonable requirements of the Trustee, the Senior Note
Registrar or the Issuer. If required by the Trustee, the Senior Note Registrar
or the Issuer, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Issuer, the Senior Note Registrar and the Trustee to protect the
Issuer, Bermuda Holdings, the Trustee, the Paying Agent, the Senior Note
Registrar and any co-registrar from any loss which any of them may suffer if a
Security is replaced. The Issuer, the Senior Note Registrar and the Trustee may
charge the Holder for their expenses in replacing a Senior Note.
Every replacement Senior Note is an additional obligation of the
Issuer.
Section 2.8 Outstanding Securities. If a Senior Note is replaced
----------------------
pursuant to Section 2.7 hereof, it ceases to be Outstanding unless the Trustee
and the Issuer receive proof satisfactory to them that the replaced Senior Note
is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date, money sufficient to pay
all principal and interest payable on that date with respect to the Senior Notes
(or portions thereof) to be redeemed or maturing, as the case may be, then on
and after that date such Senior Notes (or portions thereof) cease to be
outstanding and interest on them ceases to accrue, as the case may be.
Section 2.9 Temporary Senior Notes. Until Definitive Senior Notes
----------------------
are ready for delivery, the Issuer and Bermuda Holdings may prepare and the
Trustee shall authenticate temporary Senior Notes. Temporary Senior Notes shall
be substantially in
34
<PAGE>
the form of Definitive Senior Notes but may have variations that the Issuer and
Bermuda Holdings consider appropriate for temporary Senior Notes. Without
unreasonable delay, the Issuer and Bermuda Holdings shall prepare and the
Trustee shall authenticate Definitive Senior Notes and deliver them in exchange
for temporary Senior Notes.
Section 2.10 Cancellation. The Issuer at any time may deliver Senior
------------
Notes to the Trustee for cancellation. The Senior Notes Registrar and the
Paying Agent shall forward to the Trustee any Senior Notes surrendered to them
for registration of transfer, exchange, purchase or payment. The Trustee (and
no one else) shall cancel all Senior Notes surrendered for registration of
transfer, exchange, purchase, payment or cancellation and shall dispose of
cancelled Senior Notes as the Issuer directs. The Issuer may not issue new
Senior Notes to replace Senior Notes it has redeemed, paid or delivered to the
Trustee for cancellation. The Trustee shall not authenticate Senior Notes in
place of cancelled Senior Notes other than pursuant to the terms of this
Indenture.
Section 2.11 Interest; Defaulted Interest. Interest on the Senior
----------------------------
Notes shall accrue from August 26, 1997 at the rate set forth in Exhibit A,
Exhibit B and Exhibit C. If the Issuer defaults in a payment of interest on the
Senior Notes, the Issuer shall pay defaulted interest (plus interest on such
defaulted interest to the extent lawful) in any lawful manner. The Issuer may
pay the defaulted interest in the case of a Global Note, to the Trustee, which
shall, in accordance with Section 3.01 of the Deposit and Custody Agreement,
distribute such payments, on behalf of the Custodian and the Depositary to DTC
or its nominee, and in the case of any Definitive Senior Note, to the Holder of
such Definitive Senior Note on a subsequent Special Record Date. The Issuer
shall fix or cause to be fixed any such Special Record Date and payment date and
shall promptly mail to each holder of Senior Notes and the Trustee a notice that
states the special record date, if any, the payment date and the amount of
defaulted interest to be paid.
The Issuer may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Senior Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the Issuer
to the Trustee of the proposed payment pursuant to this paragraph, such manner
of payment shall be deemed practicable by the Trustee.
Section 2.12 Special Transfer Provisions. Unless and until a Senior
---------------------------
Note is exchanged for an Exchange Note in connection with an effective Exchange
35
<PAGE>
Registration pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Restricted Definitive
Senior Note or an interest in a Restricted Global Note to a QIB (excluding Non-
U.S. Persons):
(i) If the Senior Note to be transferred consists of (x) a Restricted
-
Definitive Senior Note, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Senior Note stating, or has otherwise advised
the Issuer and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed
the certification provided for on the form of Senior Note stating, or has
otherwise advised the Issuer and the Registrar in writing, that it is
purchasing the Senior Note for its own account or an account with respect
to which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Issuer and Bermuda Holdings as
it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A or (y) an interest in a Restricted
-
Global Note, the transfer of such interest may be effected only through the
book entry system maintained by the DTC.
(ii) If the proposed transferee is an Agent Member, and the Senior
Note to be transferred consists of Restricted Definitive Senior Notes, upon
receipt by the Registrar of the documents referred to in clause (i) and
instructions given in accordance with DTC's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Restricted Global Note in an amount
equal to the principal amount of the Restricted Definitive Senior Note to
be transferred and the Trustee shall cancel the Restricted Definitive
Senior Note so transferred.
(b) Transfers of Interests in the Regulation S Global Note prior to
October 6, 1997. The following provisions shall apply with respect to
registration of any proposed transfer of interests in the Regulation S Global
Note prior to October 6, 1997:
36
<PAGE>
(i) The Registrar shall register the transfer of any interest in the
Regulation S Global Note prior to October 6, 1997 (x) if the proposed
-
transferee is a Non-U.S. Person and the proposed transferor has delivered
to the Issuer a certificate substantially in the form of Exhibit E hereto
or (y) if the proposed transferee is a QIB and the proposed transferor has
-
advised the Issuer and the Registrar in writing, that the sale has been
made in compliance with the provisions of Rule 144A to a transferee who has
advised the Issuer and the Registrar in writing, that it is purchasing the
Senior Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance of Rule 144A and acknowledges that it has received
such information regarding the Issuer and Bermuda Holdings as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A. The Registrar shall not be responsible for
transfers within a Global Note in connection with which the principal
amount of such Global Note is not being increased or decreased.
(ii) If the proposed transferee is an Agent Member, upon receipt by
the Registrar of the documents referred to in clause (i)(y) above and
instructions given in accordance with DTC's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Restricted Global Note, in an
amount equal to the principal amount of the Regulation S Global Note to be
transferred, and the Trustee shall decrease the amount of the Regulation S
Global Note in a like amount.
(c) Transfers of Interests in the Regulation S Global Note or
Regulation S Definitive Senior Notes to U.S. Persons after October 6, 1997. The
following provision shall apply with respect to any transfer of interests in the
Regulation S Global Note or Regulation S Definitive Senior Notes to U.S. Persons
after October 6, 1997: The Registrar shall register the transfer of any such
Senior Note without requiring any additional certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of Senior Notes to a Non-
U.S. Person:
(i) Prior to October 6, 1997, the Registrar shall register any
proposed transfer of a Senior Note to a Non-U.S. Person upon receipt of a
cer-
37
<PAGE>
tificate substantially in the form of Exhibit E hereto from the proposed
transferor.
(ii) On and after October 6, 1997, the Registrar shall register any
proposed transfer to any Non-U.S. Person (x) if the Senior Note to be
-
transferred is a Restricted Definitive Senior Note or an interest in the
Restricted Global Note, upon receipt of a certificate substantially in the
form of Exhibit E from the proposed transferor or (y) if the Senior Note to
-
be transferred is a Regulation S Definitive Senior Note or an interest in
the Regulation S Global Note, without requiring any additional
certification. The Registrar shall not be responsible for any transfers
within a Global Note in connection with which the principal amount of such
Global Note is not being increased or decreased.
(iii) (a) If the proposed transferor is an Agent Member holding a
-
beneficial interest in the Restricted Global Note, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (ii) and (y)
- -
instructions in accordance with DTC's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and a decrease in
the principal amount of the Restricted Global Note in an amount equal to
the principal amount of the beneficial interest in the Restricted Global
Note to be transferred and (b) if the proposed transferee is an Agent
-
Member, upon receipt by the Registrar of instructions given in accordance
with DTC's and the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the Regulation S Global Note in an amount equal to the principal amount of
the Restricted Definitive Senior Note or the Restricted Global Note, as the
case may be, to be transferred, and the Trustee shall cancel the Definitive
Senior Note, if any, so transferred or decrease the amount of the
Restricted Global Note, as the case may be,
(e) Private Placement Legend. Upon the transfer, exchange or
replacement of Senior Notes not bearing the Private Placement Legend, the
Registrar shall deliver Senior Notes that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Senior Notes bearing the
Private Placement Legend, other than in connection with the exchange of Exchange
Notes for Senior Notes, the Registrar shall deliver only Senior Notes that bear
the Private Placement Legend unless either (i) the circumstances contemplated by
-
paragraph (d)(ii) of this Section 2.12 exists or (ii) there is delivered to the
--
Registrar an Opinion of Counsel reasonably satisfactory to the Issuer and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
38
<PAGE>
(f) General. By its acceptance of any Senior Note bearing the Private
Placement Legend, each Holder of such a Senior Note acknowledges the
restrictions on transfer of such Senior Note set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Senior Note,
only as provided in this Indenture. The Registrar shall not register a transfer
of any Senior Note unless such transfer complies with the restrictions on
transfer of such Senior Note set forth in this Indenture. In connection with
any transfer of Senior Notes, each Holder agrees by its acceptance of the Senior
Notes to furnish the Registrar or the Issuer such certifications, legal opinions
or other information as the Issuer may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
the Registrar shall not be required to determine (but may rely on a
determination made by the Issuer with respect to) the sufficiency of any such
certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.6 or this Section 2.12 in
accordance with its customary procedures. The Issuer shall have the right to
inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable notice to
the Registrar.
In connection with any transfer of Senior Notes, the Trustee, the
Registrar and the Issuer or Bermuda Holdings shall be entitled to receive, shall
be under no duty to inquire into, may conclusively presume the correctness of,
and shall be fully protected in relying upon the certificate, opinions and other
information referred to herein (or in the forms provided herein, attached hereto
or to the Senior Notes, or otherwise) received from any Holder and any
transferee of any Senior Notes regarding the validity, legality and due
authorization of any such transfer, the eligibility of the transferee to receive
such Senior Notes and any other facts and circumstances related to such
transfer.
Section 2.13 CUSIP and CINS Numbers. The Issuer in issuing the
----------------------
Senior Notes may use "CUSIP" and "CINS" numbers (if then generally in use), and
the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in
notices of redemption or exchange as a convenience to holders; provided that any
such notice shall state that no representation is made as the correctness of
such numbers either as printed on the Senior Notes or as contained in any notice
of redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Senior Notes.
39
<PAGE>
ARTICLE 3
SATISFACTION AND DISCHARGE
Section 3.1 Satisfaction and Discharge of Indenture. This Indenture
---------------------------------------
shall, upon request of the Issuer and Bermuda Holdings, cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Senior Notes herein expressly provided for) and the Trustee, on demand of and at
the expense of the Issuer and Bermuda Holdings, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when:
(a) either:
(1) all Senior Notes theretofore authenticated and delivered
(other than (A) Senior Notes which have been destroyed, lost or stolen
-
and which have been replaced or paid as provided in Section 2.7 and
(B) Senior Notes for whose payment money has theretofore been
-
deposited in trust or segregated and held in trust by the Issuer or
Bermuda Holdings and thereafter repaid to the Issuer or Bermuda
Holdings or discharged from such trust, as provided in Section 2.4)
have been delivered to the Trustee for cancellation; or
(2) all such Senior Notes not theretofore delivered to the
Trustee for cancellation,
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and the Issuer or Bermuda Holdings, in the case of Section 3.1(a)(2)(A),
Section 3.1(a)(2)(B) or Section 3.1(a)(2)(C) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose an amount of money or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on such Senior
Notes not theretofore delivered
40
<PAGE>
to the Trustee for cancellation, for principal and any premium and interest
(and any Additional Amounts payable by the Issuer or Bermuda Holdings in
respect thereof) to the date of such deposit (in the case of Senior Notes
which have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(b) the Issuer and Bermuda Holdings have paid or caused to be paid
all other sums payable hereunder by the Issuer and Bermuda Holdings;
(c) such satisfaction and discharge shall not result in a breach or
violation of, or constitute a default under, this Indenture or any other
material agreement or instrument to which the Issuer or Bermuda Holdings is
a party or by which the Issuer or Bermuda Holdings is bound; and
(d) the Issuer and Bermuda Holdings have each delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel stating that (1)
-
all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with and (2) such
-
satisfaction and discharge will not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement
or instrument to which the Issuer or Bermuda Holdings, as the case may be,
is a party or by which the Issuer or Bermuda Holdings, as the case may be,
is bound.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 5.6 and, if money shall
have been deposited with the Trustee pursuant to this Section 3.1, the
obligations of the Trustee under Sections 2.4 and 3.2 shall survive.
Section 3.2 Application of Trust Money. Subject to the provisions of
--------------------------
Section 2.4, all money deposited with the Trustee pursuant to Section 3.1 shall
be held in trust and applied by it, in accordance with the provisions of the
Senior Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal of and any premium
and interest on the Senior Notes (and any Additional Amounts payable by the
Issuer or Bermuda Holdings in respect thereof) for whose payment such money has
been deposited with the Trustee.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 3.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
41
<PAGE>
authority enjoining, restraining or otherwise prohibiting such application, the
Issuer's and Bermuda Holdings' obligations under this Indenture and the Senior
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 3.1; provided that if the Issuer or Bermuda Holdings has made any
payment of principal of, and any premium and interest on, any Senior Notes (and
any Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof) because of the reinstatement of its obligations, the Issuer or Bermuda
Holdings shall be subrogated to the rights of the Holders of such Senior Notes
to receive such payment for the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 4
DEFAULTS AND REMEDIES
Section 4.1 Events of Default. "Event of Default," wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether or not it shall be voluntary or involuntary or be
effected by the operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation or any administrative or governmental
body):
(a) default in the payment of interest on any Senior Note when the
same becomes due and payable and the continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of and any premium on any
Senior Note at its Maturity, upon acceleration, optional redemption,
required purchase or otherwise; or
(c) default in the performance, or breach, of any covenant or
agreement of the Issuer or Bermuda Holdings hereunder (other than a default
in the performance, or breach, of a covenant or agreement that is
specifically dealt with in clauses (a), (b) and (h) in this Section 4.1),
and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Issuer or
Bermuda Holdings, as the case may be, by the Trustee or to the Issuer or
Bermuda Holdings, as the case may be, and the Trustee by the holders of at
least 25% in principal amount of the Outstanding Senior Notes, a written
notice specifying such default or breach and stating that such notice is a
"Notice of Default" hereunder; or
42
<PAGE>
(d) (1) an event of default shall have occurred under any mortgage,
-
bond, indenture, loan agreement or other document evidencing any issue of
Indebtedness of Bermuda Holdings or any Restricted Subsidiary for money
borrowed (or the payment of which is guaranteed by Bermuda Holdings or any
of its Restricted Subsidiaries), which issue has an aggregate outstanding
principal amount of not less than $10,000,000, and such default shall have
resulted in such Indebtedness becoming, whether by declaration or
otherwise, due and payable prior to the date on which it would otherwise
become due and payable or (2) a default in any payment when due at final
-
Stated Maturity of any such Indebtedness outstanding in an aggregate
principal amount of not less than $10,000,000 and, in each case, 10
Business Days shall have elapsed after such event during which period such
event shall not have been cured or rescinded or such Indebtedness shall not
have been satisfied; or
(e) final judgments or orders are rendered against Bermuda Holdings,
the Issuer or any Restricted Subsidiary by a court or regulatory agency of
competent jurisdiction which require the payment in money, either
individually or in an aggregate amount, that is more than $10,000,000
(other than any judgment to the extent a reputable non-affiliated insurance
company has accepted liability) and such judgment or order shall not be
discharged and either (1) any creditor shall have commenced an enforcement
-
proceeding upon such judgment or order, which enforcement proceeding shall
have remained unstayed for a period of 10 days, or (2) a period of 60 days
-
during which a stay of enforcement shall not be in effect shall have
elapsed following the date on which any period for appeal has expired; or
(f) a decree or order is entered by a court having jurisdiction (1)
-
for relief in respect of the Issuer, Bermuda Holdings or any Principal
Insurance Subsidiary in an involuntary case or proceeding under the Federal
Bankruptcy Code or any other federal or state bankruptcy, insolvency,
reorganization or similar law or (2) adjudging the Issuer, Bermuda Holdings
-
or any Principal Insurance Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Issuer, Bermuda Holdings or any Principal Insurance Subsidiary under
the Federal Bankruptcy Code or any other applicable federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Issuer, Bermuda Holdings or
any Principal Insurance Subsidiary or of any substantial part of any of
their properties, or ordering the winding up or liquidation of any of their
affairs, and any such decree or order remains unstayed and in effect for a
period of 60 consecutive days; or
43
<PAGE>
(g) the Issuer, Bermuda Holdings or any Principal Insurance
Subsidiary institutes a voluntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law or any other
case or proceedings to be adjudicated bankrupt or insolvent, or the Issuer,
Bermuda Holdings or any Principal Insurance Subsidiary consents to the
entry of a decree or order for relief in respect of the Issuer, Bermuda
Holdings or any Principal Insurance Subsidiary in any involuntary case or
proceeding under the Federal Bankruptcy Code or any other applicable
federal or state law or to the institution of bankruptcy or insolvency
proceedings against the Issuer, Bermuda Holdings or any Principal Insurance
Subsidiary, or the Issuer, Bermuda Holdings or any Principal Insurance
Subsidiary files a petition or answer or consent seeking reorganization or
relief under the Federal Bankruptcy Code or any other applicable federal or
state law, or consents to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of any of the
Issuer, Bermuda Holdings or any Principal Insurance Subsidiary or of any
substantial part of its property, or makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts generally as
they become due or takes corporate action in furtherance of any such
action; or
(h) default in the performance or breach of the provisions of Article
7.
Section 4.2 Acceleration of Maturity; Rescission. If an Event of
------------------------------------
Default (other than an Event of Default specified in Section 4.1(f) or Section
4.1(g) occurs and is continuing, the Trustee or the Holders of at least 25% of
the principal amount of the Outstanding Senior Notes, by written notice to the
Issuer (and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare all unpaid principal of,
and any premium and accrued interest on, all the Senior Notes (and any
Additional Amounts payable in respect thereof) to be due and payable
immediately. Notwithstanding the foregoing, in the event of an Event of Default
specified in Section 4.1(f) or Section 4.1(g), the amounts described above shall
by such fact itself become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree
for payment of the money due has been obtained by the Trustee, the Holders of at
least a majority in aggregate principal amount of the Outstanding Senior Notes,
by written notice to the Issuer and the Trustee, may annul such declaration if
(a) the Issuer or Bermuda Holdings has paid or deposited with the Trustee a sum
-
sufficient to pay (1) all
-
44
<PAGE>
sums paid or advanced by the Trustee under this Indenture and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, (2) all overdue interest on all Senior Notes, (3) the principal of
- -
and premium, if any, on any Senior Notes which have become due and otherwise
than by such declaration of acceleration and interest thereon at the rate borne
by the Senior Notes, and (4) to the extent that payment of such interest is
-
lawful, interest upon overdue interest at the rate borne by the Senior Notes;
and (b) all Events of Default, other than the non-payment of principal of the
-
Senior Notes which have become due solely by such declaration of acceleration,
have been waived as provided in Section 4.13 or cured. No such recision shall
affect any subsequent default or impair any right consequent thereon.
Section 4.3 Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. Each of the Issuer and Bermuda Holdings covenants that if:
- - -------
(a) default is made in the payment of any interest on any Senior Note
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(b) default is made in the payment of the principal of and any
premium on any Senior Note at the Maturity thereof,
the Issuer or Bermuda Holdings will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Senior Notes, the whole amount then due and
payable on such Senior Notes for principal and interest (and any Additional
Amounts payable by the Issuer or Bermuda Holdings in respect thereof) and, to
the extent that payment of such interest shall be legally enforceable, interest
on overdue installments of interest at the rate borne by the Senior Notes; and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Issuer or Bermuda Holdings fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the sums so due
and unpaid and may prosecute such proceeding to judgment or final decree, and
may enforce the same against the Issuer, Bermuda Holdings or any other obligor
upon the Senior Notes or the Guarantee and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the property of the
Issuer, Bermuda Holdings or any other obligor upon the Senior Notes or the
Guarantee, wherever situated.
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<PAGE>
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture by such appropriate private or judicial proceedings
as the Trustee shall deem most effectual to protect and enforce such rights.
Section 4.4 Trustee May File Proofs of Claim. In case of the
--------------------------------
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Issuer, Bermuda Holdings or any other obligor upon
the Senior Notes or the Guarantee or the property of the Issuer, Bermuda
Holdings or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Senior Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Issuer or Bermuda Holdings for the
payment of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal and
any premium and interest (and any Additional Amounts payable by the Issuer
or Bermuda Holdings in respect thereof) owing and unpaid in respect of the
Senior Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder 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 Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 5.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any proposal,
plan of reorganization, arrangement, adjustment or composition or other similar
arrangement affecting the Senior Notes or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
46
<PAGE>
Section 4.5 Trustee May Enforce Claims Without Possession of Senior
-------------------------------------------------------
Notes. All rights of action and claims under this Indenture or the Senior Notes
- - -----
may be prosecuted and enforced by the Trustee without the possession of any of
the Senior Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Senior Notes in respect of which such
judgment has been recovered.
Section 4.6 Application of Money Collected. Any money, securities or
------------------------------
other property collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
and interest (and any Additional Amounts payable by the Issuer or Bermuda
Holdings in respect thereof), upon presentation of the Senior Notes and the
notation thereon of 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
5.6;
SECOND: To the payment of the amounts then due and unpaid upon the
Senior Notes for principal or any premium and interest (and any Additional
Amounts payable by the Issuer or Bermuda Holdings in respect thereof), in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Senior Notes for principal or any premium
and interest (and any Additional Amounts payable by the Issuer or Bermuda
Holdings in respect thereof); and
THIRD: The balance, if any, to the Issuer or Bermuda Holdings.
Section 4.7 Limitation on Suits.
-------------------
No Holder of any Senior Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture or the Senior
Notes, or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
47
<PAGE>
(b) the Holders of not less than 25% in principal amount of the
Outstanding Senior Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in the Trustee's
own name;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Senior Notes;
it being understood and intended that no one or more Holders 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 Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture except in the manner provided in
this Indenture and for the equal and ratable benefit of all the Holders.
Section 4.8 Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest. Notwithstanding any other provision in this Indenture or
- - --------------------
any provision of the Senior Notes, the Holder of any Senior Note shall have the
right, which is absolute and unconditional, to receive payment of the principal
of and any premium and (subject to Section 2.11) interest on such Senior Note
(and any Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof) on the respective due dates expressed in such Senior Note (or, in the
case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired or
affected without the consent of such Holder.
Section 4.9 Restoration of Rights and Remedies. If the Trustee or
----------------------------------
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case the Issuer, Bermuda Holdings, the Trustee and the Holders
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former
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positions hereunder, and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
Section 4.10 Rights and Remedies Cumulative. Except as provided in
------------------------------
Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 4.11 Delay or Omission Not Waiver. No delay or omission of
----------------------------
the Trustee or of any Holder of any Senior Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article 4 or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 4.12 Control by Holders. The Holders of not less than a
------------------
majority in principal amount of the Outstanding Senior Notes 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 that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or expose the Trustee to personal liability, and
(b) subject to the provisions of Section 315 of the Trust Indenture
Act, the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 4.13 Waiver of Defaults. The Holders of not less than a
------------------
majority in aggregate principal amount of the Outstanding Senior Notes by notice
to the Trustee may on behalf of the Holders of all the Senior Notes waive any
existing or past Default or Event of Default hereunder and its consequences,
except a Default or Event of Default:
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(a) in the payment of the principal of and any premium or interest on
any Senior Note,
(b) in respect of a covenant or provision hereof which under Article
8 cannot be modified or amended without the consent of the Holder of each
Outstanding Senior Note affected, or
(c) in respect of a covenant or provision hereof which under Article
8 cannot be modified or amended without the consent of the Holders of a
greater percentage in principal amount of, or all of, the Outstanding
Senior Notes.
The Holders of not less than the percentage in principal amount of Outstanding
Senior Notes specified in Article 8 may on behalf of the Holders of all the
Senior Notes waive any past Default or Event of Default hereunder and its
consequences arising under a covenant or provision specified in Section 4.13(c).
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 4.14 Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Senior Note by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant, in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, 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 4.14 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Senior Notes, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of or any premium or
interest on any Senior Note on or after the respective Stated Maturities
expressed in such Senior Note (or, in the case of redemption, on or after the
Redemption Date).
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ARTICLE 5
THE TRUSTEE
Section 5.1 Notice of Events of Default. Within 60 days after the
---------------------------
occurrence of any Event of Default, the Trustee shall transmit by mail to (a)
-
all Holders of Definitive Senior Notes, as their names and addresses appear in
the Senior Note Register or at the addresses provided by Holders in writing to
the Trustee, and (b) the Holder of the Global Note(s), at Chase Manhattan Bank
-
Luxembourg S.A., 5 rue Plaetis, L-2338, Luxembourg, Attention: Corporate Trust
Department, notice of such Event of Default hereunder known to the Trustee,
unless such Event of Default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of or any
premium and interest on any Senior Note (and any Additional Amounts payable by
the Issuer or Bermuda Holdings in respect thereof), 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 interest of the Holders.
Section 5.2 Certain Rights of Trustee. (a) If an Event of Default
-------------------------
has occurred and is continuing, 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 person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the period when an Event of Default is continuing:
(1) the Trustee is required to perform only those duties as are
specifically set forth in this Indenture and no covenants or obligations
shall be implied in this Indenture that are adverse to the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; provided
that the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this Section 5.2(c) does not limit the effect of Section 5.2(b);
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 4.12; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of
its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section 5.2.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense, including such reasonable advances as may be requested by
the Trustee.
(f) Subject to the foregoing Sections 5.2(a), 5.2(b), 5.2(c), 5.2(d)
and 5.2(e):
(1) The Trustee may rely and shall be protected in acting or in
refraining from acting upon any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need
not investigate any fact or matter stated in the document. Any request or
direction of the Issuer or Bermuda Holdings mentioned herein shall be
sufficiently evidenced by a Request or Order of the Issuer or Bermuda
Holdings and any resolution by the Board of Directors of the Issuer or
Bermuda Holdings may be sufficiently evidenced by a Board Resolution.
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(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. In addition,
in determining the compliance of the Issuer or Bermuda Holdings with the
financial covenants set forth herein, the Trustee may rely on the
certificate delivered to the Trustee pursuant to Section 9.18(a).
(3) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers.
(5) The Trustee may consult with counsel, accountants or other
experts and any advice of such counsel, accountants or other experts shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it hereunder in good faith and in
accordance with such advice.
(6) The Trustee shall not be deemed to have notice of any Default
hereunder, except for Events of Default described in Paragraphs (a), (b) or
(c) of Section 4.1 (only to the extent that the Trustee acts as the Paying
Agent), unless the Trustee shall be specifically notified by a writing
delivered to it of such Default by the Issuer, Bermuda Holdings, the Paying
Agent (to the extent the Trustee is not acting as the Paying Agent) or by
the Holders of at least 25% in aggregate principal amount of the
Outstanding Senior Notes, and in the absence of such notice so delivered,
the Trustee may conclusively assume that there is no Default except as
aforesaid.
Section 5.3 Not Responsible for Recitals or Issuance of Senior Notes.
--------------------------------------------------------
The recitals contained herein and in the Senior Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Issuer
and Bermuda Holdings, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or the Senior Notes. The Trustee shall not be
accountable for the use or application by the Issuer or Bermuda Holdings of
Senior Notes or the proceeds thereof, except that the Trustee represents that it
is duly authorized to execute and deliver this Indenture, authenticate the
Senior Notes and perform its obligations hereunder. The Trustee agrees that at
the
53
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time of the filing of a Statement of Eligibility and Qualification on Form T-1
("Form T-1"), the Trustee shall deliver an officer's certificate stating that
the information supplied to the Issuer and Bermuda Holdings in connection with
the filing of the Exchange Registration Statement is true and accurate, subject
to the qualifications to be set forth therein.
Section 5.4 Trustee and Agents May Hold Senior Notes; Collections;
------------------------------------------------------
etc. The Trustee and any Paying Agent, Senior Note Registrar or other agent of
- - ---
the Issuer or Bermuda Holdings, in its individual or any other capacity, may
become the owner or pledgee of Senior Notes with the same rights it would have
if it were not the Trustee, Paying Agent, Senior Note Registrar or such other
agent and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may
otherwise deal with the Issuer or Bermuda Holdings and receive, collect, hold
and retain collections from the Issuer or Bermuda Holdings with the same rights
it would have if it were not Trustee, Paying Agent, Senior Note Registrar or
such other agent.
Section 5.5 Money Held in Trust. All moneys received by the Trustee
-------------------
shall, until used or applied as herein provided, be held in trust hereunder for
the purposes for which they were received and need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Issuer or Bermuda Holdings.
Section 5.6 Compensation and Reimbursement. The Issuer and Bermuda
------------------------------
Holdings covenant and agree:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee and each of its officers, directors,
employees, agents and counsel for, and to hold them harmless against, any
loss,
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liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance or administration
of this Indenture or the trusts hereunder, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligation of the Issuer and Bermuda Holdings under this Section
5.6 to compensate the Trustee and to pay and reimburse the Trustee for such
expenses, disbursements and advances shall constitute additional Indebtedness
hereunder and shall survive the satisfaction and discharge of this Indenture.
As security for the performance of the obligation of the Issuer and
Bermuda Holdings under this Section 5.6, the Trustee shall have a claim prior to
the Senior Notes upon all money, securities or other property held or collected
by the Trustee as such and the Senior Notes are hereby subordinated to such
claim.
If the Trustee incurs expenses or renders services after an Event of
Default specified in Section 4.1(f) or Section 4.1(g) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under the Federal Bankruptcy Code and any other applicable
federal or state bankruptcy law.
Section 5.7 Conflicting Interests. The Trustee shall comply with the
---------------------
provisions of Section 310(b) of the Trust Indenture Act.
Section 5.8 Corporate Trustee Required; Eligibility. There shall at
---------------------------------------
all times be a Trustee hereunder which shall be eligible to act as Trustee under
Section 310(a)(1) of the Trust Indenture Act and which shall have a combined
capital and surplus of at least $50,000,000 and have its Corporate Trust Office
located in The City of New York (or if its Corporate Trust Office shall not be
located in The City of New York, the Issuer shall, pursuant to Section 2.3,
maintain an office or agency in The City of New York where the Senior Notes may
be presented or surrendered and notices and demands hereunder may be made or
served) to the extent there is such an institution eligible and willing to
serve. If such corporation publishes reports of condition at least annually
pursuant to law or to the requirements of federal, state, territorial or
District of Columbia supervising or examining authority, then, for the purposes
of this Section, 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 the Trustee shall cease to be
eligible in
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accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article 5.
Section 5.9 Resignation and Removal; Appointment of Successor. (a)
-------------------------------------------------
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article 5 shall become effective until the acceptance
of appointment by the successor Trustee under Section 5.10, at which time the
retiring Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer. Upon receiving such notice of resignation, the Issuer
shall promptly appoint a successor Trustee by written instrument executed by
authority of the Board of Directors of the Issuer, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor Trustee. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may, or any Holder who has been a bona fide Holder of a Senior
Note for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper, appoint a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Senior Notes, delivered to
the Trustee and the Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Section
310(b) of the Trust Indenture Act after written request therefor by the
Issuer or by any Holder who has been a bona fide Holder of a Senior Note
for at least six months, or
(2) the Trustee shall cease to be eligible under Section 5.8 and
shall fail to resign after written request therefor by the Issuer or by any
Holder who has been a bona fide Holder of a Senior Note for at least six
months, 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
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its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any case, (i) the Issuer by a Board Resolution may remove the Trustee,
-
or (ii) subject to Section 4.14, the Holder of any Senior Note who has been a
--
bona fide Holder of a Senior Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Issuer, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Senior Notes
delivered to the Issuer and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with Section 5.10, become the successor Trustee and supersede the successor
Trustee appointed by the Issuer. If no successor Trustee shall have been so
appointed by the Issuer or the Holders of the Senior Notes and so accepted
appointment, the Holder of any Senior Note who has been a bona fide Holder for
at least six months may on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Issuer shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first class mail, postage prepaid, (i) to the Holders of
Definitive Senior Notes as their names and addresses appear in the Senior Note
Register, or (ii) to the Holder of the Global Note at Chase Manhattan Bank
Luxembourg S.A., 5 rue Plaetis, L-2338, Luxembourg, Attention: Corporate Trust
Department. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Section 5.10 Acceptance of Appointment by Successor. Every successor
--------------------------------------
Trustee appointed hereunder shall execute, acknowledge and deliver to the Issuer
and to the retiring Trustee an instrument accepting such appointment, 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, trusts and duties
of the retiring Trustee; provided, however, that the retiring Trustee shall
continue to be entitled to the benefit of Section 5.6(c); but, on request of the
Issuer or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign,
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transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article 5.
Upon acceptance of appointment by any successor Trustee as provided in
this Section 5.10, the Issuer shall give notice thereof to the Holders of the
Senior Notes, by mailing such notice to the Holders of Definitive Senior Notes
as their names and addresses appear on the Senior Note Register, or (b) the
Holder of the Global Note at Chase Manhattan Bank Luxembourg S.A., 5 rue
Plaetis, L-2338, Luxembourg, Attention: Corporate Trust Department. If the
acceptance of appointment is substantially contemporaneous with the resignation,
then the notice called for by the preceding sentence may be combined with the
notice called for by Section 5.9. If the Issuer fails to give such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be given at the expense of the
Issuer.
Section 5.11 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business. 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,
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. In case any Senior Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Senior Notes so authenticated with the same
effect as if such successor Trustee had itself authenticated such Senior Notes.
Section 5.12 Preferential Collection of Claims Against the Issuer or
-------------------------------------------------------
Bermuda Holdings. If and when the Trustee shall be or become a creditor of the
- - ----------------
Issuer or Bermuda Holdings (or any other obligor under the Senior Notes or the
Guarantee), the Trustee shall be subject to the provisions of Section 311(b) of
the Trust Indenture Act regarding the collection of claims against the Issuer or
Bermuda Holdings (or any such other obligor).
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ARTICLE 6
HOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 6.1 Disclosure of Names and Addresses of Holders. Every
--------------------------------------------
Holder of Senior Notes, by receiving and holding the same, agrees with the
Issuer, Bermuda Holdings and the Trustee that neither the Issuer, Bermuda
Holdings nor the Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of any information as to the names and
addresses of the Holders in accordance with Section 312 of the Trust Indenture
Act, 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 Section 312 of the Trust Indenture Act.
Section 6.2 Reports by Trustee. Within 60 days after May 15 of each
------------------
year commencing with the first May 15 after the first issuance of Senior Notes,
the Trustee shall transmit by mail to all Holders of Definitive Senior Notes, as
their names and addresses appear in the Senior Note Register, or (b) the Holder
of the Global Note, at Chase Manhattan Bank Luxembourg S.A., 5 rue Plaetis, L-
2338, Luxembourg, Attention: Corporate Trust Department, as provided in Trust
Indenture Act Section 313(c), a brief report dated as of such May 15 if required
by Trust Indenture Act Section 313(a).
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 7.1 Bermuda Holdings May Consolidate, etc., Only on Certain
-------------------------------------------------------
Terms. After the Issue Date, Bermuda Holdings shall not consolidate with or
- - -----
merge with or into any other Person, or, directly or indirectly, sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
assets in one or more related transactions to any Person or group of affiliated
Persons unless, at the time and after giving effect thereto:
(a) (1) Bermuda Holdings shall be the continuing corporation, or
-
(2) the Person (if other than Bermuda Holdings) formed by such
-
consolidation, or into which Bermuda Holdings is merged or the Person that
acquires by sale,
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assignment, transfer, lease, conveyance or other disposition the assets of
Bermuda Holdings, substantially as an entirety (the "Surviving Entity"), is
a corporation duly organized and validly existing under the laws of the
United States of America, the United Kingdom, Bermuda, the Republic of
Ireland, Barbados, the Channel Islands, the Cayman Islands or any other
jurisdiction that is not materially adverse to the holders of the Senior
Notes and shall, in the case of clause (2), expressly assume, by
supplemental indenture hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of Bermuda
Holdings under the Guarantee and this Indenture;
(b) immediately before and after such transaction, giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing;
(c) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth (after giving pro forma effect to
such transaction but not including the effect of any purchase accounting
adjustments or the accrual of deferred tax liabilities resulting from the
transaction) of Bermuda Holdings (or the Surviving Entity if Bermuda
Holdings is not the continuing obligor with respect to the Guarantee under
this Indenture) is at least equal to the Consolidated Net Worth of Bermuda
Holdings immediately before such transaction;
(d) if any of the property or assets of Bermuda Holdings would
thereupon become subject to any Lien, the outstanding Senior Notes shall be
secured equally and ratably with (or prior to) the obligation or liability
secured by such Lien, unless Bermuda Holdings could create such Lien
hereunder without equally and ratably securing the Senior Notes;
(e) Bermuda Holdings (or the Surviving Entity if Bermuda Holdings is
not the continuing obligor with respect to the Guarantee under this
Indenture) shall be entitled to all the benefits of the Tax Sharing
Agreement; and
(f) Bermuda Holdings has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or lease and such supplemental indenture,
if one is required by this Section 7.1, comply with this Section 7.1 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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Section 7.2 Successor Substituted. Upon any consolidation or merger
---------------------
or any sale, assignment, transfer, lease or conveyance or other disposition of
all or substantially all of the assets of Bermuda Holdings in accordance with
Section 7.1, the successor Person formed by such consolidation or into which
Bermuda Holdings is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of, Bermuda Holdings under this
Indenture with the same effect as if such successor Person had been named as
Bermuda Holdings herein. When a successor assumes all the obligations of its
predecessor under this Indenture and the Senior Notes, the predecessor will be
released from those obligations, provided that in the case of a transfer by
lease, the predecessor corporation shall not be released from the payment of
principal and interest on the Senior Notes.
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Issuer and Bermuda Holdings, each when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto in form
satisfactory to the Trustee, for any of the following purposes:
(a) to cure any ambiguity or to correct any provision herein which
may be defective or inconsistent with any other provision herein;
(b) to provide for the assumption of Bermuda Holding's obligations to
Holders of the Senior Notes in the case of a merger or consolidation;
(c) to secure the Senior Notes pursuant to the requirements of
Section 7.1;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 8.5 or otherwise;
(e) to evidence and provide the acceptance of the appointment of a
successor Trustee hereunder; or
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(f) to make any other change that would provide any additional rights
or benefits to the Holders or that does not adversely affect the legal
rights of any Holder under this Indenture or the Senior Notes.
Section 8.2 Supplemental Indentures with Consent of Holders. With
-----------------------------------------------
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Senior Notes (including consents obtained in connection with a
tender offer or exchange offer for the Senior Notes), by Act of such Holders
delivered to the Issuer and the Trustee, the Issuer and Bermuda Holdings, each
when authorized by a Board Resolution, and the Trustee may enter into one or
more indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Indenture
or of waiving or modifying in any manner the rights of the holders under this
Indenture; provided, however, that no such supplemental indenture, amendment or
waiver shall without the consent of the Holder of each Outstanding Senior Note
affected thereby:
(1) change the Stated Maturity or the principal of, or any
installment of interest on, or change the obligation of the Issuer or
Bermuda Holdings to pay any Additional Amount with respect to, any Senior
Note or reduce the principal amount thereof or the rate of interest thereon
or any provision relating to redemption price of Senior Notes or the
periods during which redemption may be effected, or change the coin or
currency in which the principal of any Senior Note or any premium or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date); or
(2) reduce the percentage in principal amount of the Outstanding
Senior Notes, the consent of whose Holders is required for any such supple-
mental indenture or the consent of whose Holders is required for any waiver
(of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this
Indenture; or
(3) modify any of the provisions of this Section 8.2, Section 4.13 or
Section 9.20, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Senior Note affected thereby.
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It shall not be necessary for any Act of Holders under this Section
8.2 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Section 8.3 Execution of Supplemental Indentures. In executing, or
------------------------------------
accepting the additional trusts created by, any supplemental indenture permitted
by this Article 8 or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
315(a) through 315(d) of the Trust Indenture Act and Section 5.2 hereof) shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which adversely affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.
Section 8.4 Effect of Supplemental Indentures. Upon the execution of
---------------------------------
any supplemental indenture under this Article 8, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Senior Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
Section 8.5 Conformity with Trust Indenture Act. Every supplemental
-----------------------------------
indenture executed pursuant to this Article 8 shall conform to the requirements
of the Trust Indenture Act as then in effect.
Section 8.6 Reference in Senior Notes to Supplemental Indentures.
----------------------------------------------------
Senior Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article 8 may, and shall if required by the Issuer
and Bermuda Holdings, bear a notation in form approved by the Issuer and Bermuda
Holdings as to any matter provided for in such supplemental indenture. If the
Issuer and Bermuda Holdings shall so determine, new Senior Notes so modified as
to conform, in the opinion of the Issuer and Bermuda Holdings, to any such
supplemental indenture may be prepared and executed by the Issuer and shall be
authenticated and delivered by the Trustee in exchange for Outstanding Senior
Notes.
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ARTICLE 9
COVENANTS
Section 9.1 Payment of Principal, Premium and Interest. The Issuer
------------------------------------------
will duly and punctually pay the principal of and any premium and interest on
the Senior Notes (and any Additional Amounts payable in respect thereof) in
accordance with the terms of the Senior Notes and this Indenture. Principal and
interest (and any Additional Amounts payable in respect thereof) shall be
considered paid on the date due if the Paying Agent (other than the Issuer)
holds on that date money sufficient to pay all principal and interest (and any
Additional Amounts payable in respect thereof) then due.
The Issuer shall pay interest on overdue principal and, to the extent
lawful, interest on overdue installments of interest, at the rate per annum set
forth in the Senior Notes.
Section 9.2 Corporate Existence. Subject to Article 7, each of the
-------------------
Issuer and Bermuda Holdings shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and that of
each Subsidiary of the Issuer and Bermuda Holdings and the corporate rights
(charter and statutory), corporate licenses and corporate franchises of the
Issuer and Bermuda Holdings and its Subsidiaries, except where a failure to do
so, singly or in the aggregate, would not have a material adverse effect upon
the business, prospects, assets, conditions (financial or otherwise) or results
of operations of Bermuda Holdings and its Subsidiaries taken as a whole
determined on a consolidated basis in accordance with GAAP; provided that
neither the Issuer nor Bermuda Holdings shall be required to preserve any such
existence (except of Bermuda Holdings), right, license, or franchise if the
Board of Directors of the Issuer, Bermuda Holdings, or of the Subsidiary
concerned, shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Issuer, Bermuda Holdings or such
Subsidiary and that the loss thereof is not disadvantageous in any material
respect to the Holders.
Section 9.3 Payment of Taxes and Other Claims. Bermuda Holdings will
---------------------------------
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
-
or imposed upon it or any Subsidiary or upon the income, profits or property of
Bermuda Holdings or any of its Subsidiaries and (b) all material lawful claims
-
for labor, materials and supplies, which, if unpaid, might by law become a Lien
upon the property of Bermuda Holdings or any of its Subsidiaries that could
produce a material
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adverse effect on the consolidated financial condition of Bermuda Holdings (in
the good faith judgment of management of Bermuda Holdings); provided, however,
that Bermuda Holdings shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and in respect of which appropriate reserves (in the good faith
judgment of management of Bermuda Holdings) are being maintained in accordance
with GAAP.
Section 9.4 Maintenance of Properties; Insurance; Books and Records;
--------------------------------------------------------
Compliance with Law. (a) Bermuda Holdings shall cause all properties owned by
- - -------------------
or leased to it or any Subsidiary of Bermuda Holdings and used or useful in the
conduct of its business or the business of such Subsidiary to be maintained and
kept in normal condition, repair and working order, ordinary wear and tear
excepted; provided that nothing in this Section 9.4 shall prevent Bermuda
Holdings or any Subsidiary of Bermuda Holdings from discontinuing the use,
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is, in the judgment of the Board of Directors
of Bermuda Holdings or the Subsidiary concerned, or of any officer (or other
agent employed by Bermuda Holdings or any Subsidiary of Bermuda Holdings) of
Bermuda Holdings or such Subsidiary having managerial responsibility for any
such property, desirable in the conduct of the business of Bermuda Holdings or
any Subsidiary of Bermuda Holdings and if such discontinuance or disposal is not
adverse in any material respect to the Holders of the Senior Notes.
(b) Bermuda Holdings shall provide or cause to be provided, for
itself and any Subsidiaries of Bermuda Holdings, insurance (including
appropriate self-insurance) against loss or damage of the kinds customarily
insured against by corporations similarly situated and owning like properties in
the same general areas in which Bermuda Holdings or such Subsidiaries operate.
(c) Bermuda Holdings shall and shall cause each of its Subsidiaries
to keep proper and true books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and business
of Bermuda Holdings and each Subsidiary of Bermuda Holdings, and reflect on its
financial statements adequate accruals and appropriations to reserves, all in
accordance with GAAP consistently applied to Bermuda Holdings and its
Subsidiaries taken as a whole.
(d) Bermuda Holdings shall and shall cause each of its Subsidiaries
to comply with all statutes, laws, ordinances or government rules and
regulations to which it is subject, except where a failure to do so, singly or
in the aggregate, is not likely to have a materially adverse effect upon the
business, prospects, assets or condition
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(financial or otherwise) or results of operations of Bermuda Holdings and its
subsidiaries taken as a whole.
Section 9.5 [Intentionally Omitted].
Section 9.6 [Intentionally Omitted].
Section 9.7 [Intentionally Omitted].
Section 9.8 Liens. Bermuda Holdings will not, and will not permit
-----
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien securing Indebtedness (other than Permitted
Liens) on any property or asset now owned or hereafter acquired, or on any
income or profits therefrom or assign or convey any right to receive income
therefrom, unless all payments due under the Senior Notes and hereunder are
secured on an equal and ratable basis with (or prior to) the obligations so
secured until such time as such obligations are no longer secured by a Lien.
Section 9.9 [Intentionally Omitted].
Section 9.10 [Intentionally Omitted].
Section 9.11 [Intentionally Omitted].
Section 9.12 [Intentionally Omitted].
Section 9.13 [Intentionally Omitted].
Section 9.14 [Intentionally Omitted].
Section 9.15 [Intentionally Omitted].
Section 9.16 [Intentionally Omitted].
Section 9.17 Additional Amounts. All payments made by the Issuer
------------------
under the Senior Notes, and all payments made by Bermuda Holdings pursuant to
the Guarantee, will be made without deduction or withholding, for or on account
of, any and all present and future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction or withholding of such taxes,
duties, assessments or governmental charges is then required by law. If any
deduction or withholding for
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or on account of any present or future taxes, assessments or other governmental
charges of the United Kingdom, Bermuda or any relevant jurisdiction or any
political sub division or taxing authority thereof or therein (the "Relevant
Jurisdiction") shall at any time be required in respect of any amounts to be
paid by the Issuer under the Senior Notes or Bermuda Holdings pursuant to the
Guarantee, the Issuer or Bermuda Holdings, as the case may be, will pay such
additional amounts ("Additional Amounts") as may be necessary in order that the
net amounts received by a Holder of Senior Notes after such deduction or
withholding shall be not less than the amounts specified in the Senior Notes to
which the Holder of the Senior Notes is entitled; provided, however, that the
Issuer or Bermuda Holdings shall not be required to make any payment of
Additional Amounts for or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
-
connection between such Holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Holder, if such holder is an estate, nominee, trust, partnership or
corporation) otherwise than merely by the holding of the Senior Notes or
the receipt of amounts payable in respect of the Senior Notes, and any
Relevant Jurisdiction or such holder being subject to the jurisdiction of
any Relevant Jurisdiction, including, without limitation, such holder (or
such fiduciary, settlor, beneficiary, member, share holder or possessor)
being or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having had a permanent
establishment therein or (ii) the presentation of the Senior Notes (where
--
presentation is required) for payment on a date more than 30 days after the
date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts had
the Senior Notes been presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of the Senior
Notes or, if different, the beneficial owner of the interest payable on the
Senior Notes with a timely request of the Issuer addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, treaty, regulation or administrative practice of the
taxing jurisdiction as a precondition to exemption from all or part of such
tax, assessment or governmental charge;
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(c) payments in respect of Definitive Senior Notes issued at the
request of the Holder (including on or after the occurrence of an Event of
Default); or
(d) any combination of items (a), (b) and (c) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, the Senior Notes to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor with respect to such fiduciary or
member of such partnership or beneficial owner would not have been entitled to
any Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of the Senior Notes.
Section 9.18 Statement as to Compliance; Notice of Default; Provision
--------------------------------------------------------
of Financial Statements. (a) Each of the Issuer and Bermuda Holdings will
- - -----------------------
deliver to the Trustee, within 120 days after the end of each fiscal year ending
after the date hereof, a certificate of its principal executive officer,
principal financial officer or principal accounting officer stating whether, to
such officer's knowledge, each of the Issuer and Bermuda Holdings, respectively,
is in compliance with all covenants and conditions to be complied with by it
under this Indenture. For purposes of this Section 9.18, such compliance shall
be determined without regard to any period of grace or requirement of notice
under this Indenture.
(b) If a default has occurred and is continuing, or if the Trustee,
any Holder or the trustee for or the holder of any other evidence of
Indebtedness of the Issuer and Bermuda Holdings (other than Indebtedness in the
aggregate principal amount of less than $5,000,000) gives any notice or takes
any other action with respect to a claimed default, the Issuer shall deliver to
the Trustee an Officers' Certificate specifying such Default, notice or other
action within five Business Days of its occurrence.
(c) Bermuda Holdings shall supply without cost to each holder of the
Senior Notes, and file with the Trustee within 15 days after Bermuda Holdings is
required to file the same with the Commission, copies of the annual reports and
quarterly reports and of the information, documents and other reports which
Bermuda Holdings may be required to file with the Commission pursuant to
Sections 13(a), 13(c) or 15(d) of the Exchange Act; and
(d) Whether or not Bermuda Holdings is required to file with the
Commission such reports and other information referred to in Section 9.18(c),
Bermuda
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Holdings shall file with the Commission and the Trustee such reports and
information and furnish without cost to each Holder of Senior Notes all
financial information that would be required to be contained in a filing
referred to in Section 9.18(c). Bermuda Holdings shall also make such reports
available to prospective purchasers of the Senior Notes, securities analysts and
broker-dealers upon their written request. Bermuda Holdings shall also file with
the Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such additional information,
documents and reports with respect to compliance by Bermuda Holdings with the
conditions and covenants of this Indenture as may be required from time to time
by such rules and regulations.
Section 9.19 Waiver of Stay; Extension of Usury Laws. Each of the
---------------------------------------
Issuer and Bermuda Holdings covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and each of the Issuer and
Bermuda Holdings (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 9.20 Waiver of Certain Covenants. Bermuda Holdings or the
---------------------------
Issuer may omit in any particular instance to comply with any covenant or
condition set forth in Sections 9.8 and 9.18 if, before or after the time for
such compliance, the Holders of not less than a majority in aggregate principal
amount of the Senior Notes at the time Outstanding shall, by Act of such
Holders, waive such compliance in such instance with such covenant or condition.
No such waiver shall extend to or affect such covenant or condition except to
the extent so expressly waived, and, until such waiver shall become effective,
the obligations of Bermuda Holdings and the Issuer and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE 10
REDEMPTION OF SENIOR NOTES
Section 10.1 Right of Redemption. The Issuer shall have the right to
-------------------
redeem the Senior Notes, in whole or in part, at any time and from time to time,
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subject to the receipt of any consent required under the terms of any
Indebtedness of the Issuer which may be outstanding from time to time.
Section 10.2 Applicability of Article. Redemption of Senior Notes at
------------------------
the election of the Issuer or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article 10.
Section 10.3 Election to Redeem; Notice to Trustee. The election of
-------------------------------------
the Issuer to redeem any Senior Notes pursuant to Section 10.1 shall be
evidenced by a Board Resolution. In case of such redemption, the Issuer shall,
at least 60 days prior to the Redemption Date fixed by it (unless a shorter
notice period shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Senior Notes to be redeemed.
Section 10.4 Selection by Trustee of Senior Notes to Be Redeemed. If
---------------------------------------------------
less than all of the Senior Notes are to be redeemed, the particular Senior
Notes or portions thereof to be redeemed shall be selected not more than 60 days
and not less than 30 days prior to the Redemption Date by the Trustee, from the
Outstanding Senior Notes not previously called for redemption on a pro rata
basis, by lot or by any other method the Trustee shall deem fair and appropriate
and in compliance with the requirements of such principal national securities
exchange, if any, on which the Senior Notes are listed or, if the Senior Notes
are not so listed, on a pro rata basis, by lot or by any other method the
Trustee shall deem fair and appropriate, provided that the amounts to be
redeemed shall be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Issuer, the Custodian and the
Senior Note Registrar in writing of the Senior Notes selected for redemption
and, in the case of any Senior Notes selected for partial redemption, the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Senior Notes shall relate, in
the case of any Senior Note redeemed or to be redeemed only in part, to the
portion of the principal amount of such Senior Note which has been or is to be
redeemed.
Section 10.5 Notice of Redemption. Notice of redemption shall be
--------------------
given by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Senior Notes to be
redeemed at the Redemption Prices specified in Section 10.9.
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All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price including, in connection with an optional
redemption pursuant to Section 10.9, the estimated Make-Whole Amount due in
connection with such redemption (calculated as if the date of such notice
were the date of the prepayment) and setting forth the details of such
calculation of Make-Whole Amount;
(c) if less than all Outstanding Senior Notes are to be redeemed, the
identification (and, if the case of a Senior Note to be redeemed in part,
the principal amount) of the particular Senior Notes to be redeemed;
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Senior Note or portion thereof, and that (unless
the Issuer shall default in payment of the Redemption Price) interest
thereon shall cease to accrue on and after said date;
(e) the place or places where such Senior Notes are to be surrendered
for payment of the Redemption Price;
(f) that Senior Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;
(g) the CUSIP number or numbers, if any, relating to such Senior
Notes, but that no representation is made as to the correctness or accuracy
of the CUSIP number listed in such notice or printed on the Senior Notes
and that reliance may be placed only on the other identification numbers
printed on the Senior Notes;
(h) in the case of a Definitive Senior Note to be redeemed in part,
the principal amount of such Senior Note to be redeemed and that after the
Redemption Date upon surrender of such Definitive Senior Note, a new
Definitive Senior Note or Definitive Senior Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
and
(i) in the case of a Global Note to be redeemed in part, the
principal amount of such Global Note to be redeemed and that after the
Redemption Date upon surrender of such Global Note a new Global Note in
principal amount
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equal to the unredeemed portion will be issued or an adjustment will be
made to the existing Global Note such that the aggregate principal amount
of the Global Note will equal the unredeemed portion of the Global Note;
Notice of redemption of Senior Notes to be redeemed at the election of
the Issuer shall be given by the Issuer or, at its request, by the Trustee in
the name and at the expense of the Issuer. Failure to give notice or any defect
in the notice to any Holder shall not affect the validity of the notice to any
other Holder.
Section 10.6 Deposit of Redemption Price. On or prior to any Re-
---------------------------
demption Date, the Issuer shall deposit with the Trustee or with a Paying Agent
(or, if the Issuer is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 2.4) an amount of money in same-day funds (or New
York Clearing House funds if such deposit is made prior to the applicable
Redemption Date) sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Senior Notes or portions thereof which are to be redeemed on that date.
Section 10.7 Senior Notes Payable on Redemption Date. Notice of
---------------------------------------
redemption having been given as aforesaid, the Senior Notes to be redeemed
shall, subject to the provisions of Section 10.3, on the Redemption Date, become
due and payable at the Redemption Price therein specified and from and after
such date (unless the Issuer shall default in the payment of the Redemption
Price and accrued interest) such Senior Notes shall cease to bear interest.
Upon surrender of any such Senior Note for redemption in accordance with said
notice, such Senior Note shall be paid by the Issuer at the Redemption Price
together with accrued interest to the Redemption Date; provided, however, that
installments of interest on any Definitive Senior Notes whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Definitive Senior Notes, or one or more predecessor Definitive Senior Notes,
registered as such on the relevant Regular Record Dates according to the terms
and the provisions of Section 2.5.
If any Senior Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal thereof (and premium, if any,
thereon) shall, until paid, bear interest from the Redemption Date at the rate
borne by such Senior Note.
Section 10.8 Senior Notes Redeemed in Part. Any Senior Note which is
-----------------------------
to be redeemed only in part shall be surrendered at the office or agency of the
Issuer maintained for such purpose pursuant to Section 2.3 (with, if the Issuer,
the Senior
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Note Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Issuer, the Senior Note
Registrar or the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing). Upon surrender of a Definitive Senior Note that is
redeemed in part, the Issuer shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Definitive Senior Note without service charge,
a new Definitive Senior Note or Definitive Senior Notes, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Definitive
Senior Note so surrendered. Upon surrender of a Global Note that is redeemed in
part, the Paying Agent shall forward the Global Note to the Trustee who shall
reduce the principal amount of such Global Note to an amount equal to the
unredeemed portion of the Global Note surrendered.
Section 10.9 Optional Redemption. (a) The Senior Notes are subject
-------------------
to redemption at a Redemption Price equal to 100% of the principal amount,
together with accrued and unpaid interest to the Redemption Date (subject to the
right of Holders of record on relevant Regular Record Dates to receive interest
due on an Interest Payment Date) as provided in the Indenture, plus the Make-
Whole Amount, if any, with respect to such Senior Notes.
Three Business Days prior to such prepayment, the Issuer or Bermuda
Holdings shall give notice to the Quotation Agent requesting the Quotation Agent
to provide a quote of the Comparable Treasury Price and the Quotation Agent
shall provide such quotation to the Issuer on or before one Business Day prior
to such prepayment.
One Business Day prior to such prepayment, the Quotation Agent, the
Issuer or Bermuda Holdings shall give notice to the Indenture Trustee specifying
the calculation of the Make-Whole Amount as of the Redemption Date.
(b) The Senior Notes are not subject to redemption through operation
of a sinking fund.
Section 10.10 Tax Redemption. The Senior Notes may be redeemed at
--------------
the option of the Issuer, in whole but not in part, upon not less than 30 nor
more than 60 days' notice, at any time at a redemption price equal to 100% of
the principal amount thereof, plus accrued and unpaid interest to the date fixed
for redemption if (a) the Issuer is required to issue Definitive Senior Notes
-
(other than upon the request of a holder of Book-Entry Interests following an
Event of Default) after using all reasonable efforts to avoid having to issue
such Definitive Senior Notes and the Issuer is or would
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be so required in the absence of any applicable tax treaty on the next
succeeding Interest Payment Date to pay Additional Amounts with respect to any
of the Senior Notes, or (b) the Issuer or Bermuda Holdings is or would be so
-
required in the absence of any applicable tax treaty on the next succeeding
Interest Payment Date to pay Additional Amounts with respect to the Senior Notes
and, in either case, the payment of such Additional Amounts cannot be avoided by
the use of any reasonable measures available to the Issuer.
The Issuer or Bermuda Holdings will also pay, or make available for
payment, to holders of Senior Notes on the redemption date any Additional
Amounts (as described, but subject to the exceptions referred to, in Section
9.17) resulting from the payment of such Redemption Price.
ARTICLE 11
DEFEASANCE AND COVENANT DEFEASANCE
Section 11.1 Option to Effect Defeasance or Covenant Defeasance.
--------------------------------------------------
Each of the Issuer and Bermuda Holdings may, at its option by Board Resolution,
at any time, elect to have either Section 11.2 or Section 11.3 be applied to all
Outstanding Senior Notes upon compliance with the conditions set forth below in
this Article 11.
Section 11.2 Defeasance and Discharge. Upon the Issuer's or Bermuda
------------------------
Holdings' exercise under Section 11.1 of the option applicable to this Section
11.2, each of the Issuer and Bermuda Holdings shall be deemed to have been
discharged from its obligations with respect to all Outstanding Senior Notes and
the Guarantee on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Issuer and Bermuda Holdings shall be deemed to have paid and discharged the
entire indebtedness represented by the Outstanding Senior Notes and the
Guarantee, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 11.5 and the other sections of this Indenture referred to in
Section 11.2(a) and Section 11.2(b) below, and the Guarantee, and to have
satisfied all other obligations under such Senior Notes, the Guarantee and this
Indenture (and the Trustee, on demand of and at the expense of the Issuer and
Bermuda Holdings, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Outstanding Senior Notes to
-
receive solely from the trust fund described in Section 11.5 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Senior
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Notes (and any Additional Amounts payable in respect thereof) when such payments
are due, or on the Redemption Date, as the case may be, (b) the Issuer's
-
obligations with respect to such Senior Notes under Section 2.3, Section 2.4,
Section 2.6, Section 2.7, Section 2.12 and Section 2.13, (c) the rights, powers,
-
trusts, duties and immunities of the Trustee hereunder and the Issuer's and
Bermuda Holdings' obligations in connection therewith, (d) this Article 11, and
-
(e) the obligations of the Issuer and Bermuda Holdings to pay any Additional
-
Amounts. Subject to compliance with this Article 11, each of the Issuer and
Bermuda Holdings may exercise its option under this Section 11.2 notwithstanding
the prior exercise of its option under Section 11.3 with respect to the Senior
Notes.
Section 11.3 Covenant Defeasance. Upon the Issuer's or Bermuda
-------------------
Holdings' exercise under Section 11.1 of the option applicable to this Section
11.3, each of the Issuer and Bermuda Holdings, and, if applicable, the Trustee
and each Holder of Senior Notes, shall be released from its obligations under
the covenants contained in Article 7, Sections 9.2 through 9.4, Section 9.8 and
Section 9.18 inclusive, with respect to the Outstanding Senior Notes on and
after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Senior Notes shall thereafter be deemed to be
not "Outstanding" for the purposes of any request, demand, authorization,
direction, notice, consent, waiver or other Act of Holders (and the consequences
of any thereof) in connection with such covenants, but shall continue to be
deemed "Outstanding" for all other purposes hereunder (it being understood that
such Senior Notes shall not be deemed Outstanding for financial accounting
purposes). For this purpose, such covenant defeasance means that, with respect
to the Outstanding Senior Notes, the Issuer and Bermuda Holdings may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a default or an Event
of Default under Section 4.1(c) or 4.1(h), but, except as specified above, the
remainder of this Indenture and such Senior Notes shall be unaffected thereby.
Section 11.4 Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of either Section 11.2 or
Section 11.3 to the Outstanding Senior Notes:
(a) The Issuer or Bermuda Holdings shall irrevocably have deposited
or caused to be deposited with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and
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<PAGE>
dedicated solely to, the benefit of the Holders of such Senior Notes, (1)
-
cash in U.S. Dollars in an amount, or (2) U.S. Government Obligations which
-
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before
the due date of any payment, cash in U.S. Dollars in an amount, or (3) a
-
combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge the principal of (and premium, if any) and
interest on the Outstanding Senior Notes on the Stated Maturity or on the
applicable Optional Redemption Date, as the case may be, of such principal
or installment of principal of and any premium and interest on the Senior
Notes; provided that the Trustee shall have been irrevocably instructed by
the Issuer or Bermuda Holdings in writing to apply such money or the
proceeds of such U.S. Government Obligations to said payments with respect
to the Senior Notes. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of America
-
for the timely payment of which its full faith and credit is pledged or (y)
-
obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such
U.S. Government Obligation held by such custodian for the account of the
holder of such 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 principal of or interest on the U.S. Government
Obligation evidenced by such depository receipt;
(b) In the case of an election under Section 11.2, the Issuer shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to the Trustee confirming that (1) the Issuer has
-
received from, or there has been published by, the Internal Revenue Service
a ruling or (2) since the date hereof, there has been a change in the
-
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the
Outstanding Senior Notes will not recog-
76
<PAGE>
nize income, gain or loss for federal income tax purposes as a result of
such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such defeasance had not occurred;
(c) In the case of an election under Section 11.3, the Issuer shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to the Trustee confirming that the Holders of the
Outstanding Senior Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred;
(d) No Default or Event of Default with respect to the Senior Notes
shall have occurred and be continuing on the date of such deposit or,
insofar as Section 4.1(f) or Section 4.1(g) is concerned, at any time in
the period ending on the 91st day after the date of such deposit;
(e) Such election under Section 11.2 or Section 11.3 shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which Bermuda
Holdings is a party or by which Bermuda Holdings is bound;
(f) In the case of an election under either Section 11.2 or Section
11.3, the Issuer shall have delivered to the Trustee an Opinion of Counsel
to the effect that after the 91st day following deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) In the case of an election under either Section 11.2 or Section
11.3, the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Issuer or Bermuda Holdings
pursuant to its election under Section 11.2 or Section 11.3 was not made by
the Issuer or Bermuda Holdings with the intent of preferring the Holders
over other creditors of the Issuer or Bermuda Holdings or with the intent
of defeating, hindering, delaying or defrauding creditors of the Issuer or
Bermuda Holdings or others; and
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<PAGE>
(h) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating
that all conditions precedent provided for relating to either the
defeasance under Section 11.2 or the covenant defeasance under Section 11.3
(as the case may be) have been complied with as contemplated by this
Section 11.4.
Section 11.5 Deposited Money and U.S. Government Obligations to be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of
- - ---------------------------------------------
Section 2.4, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 11.5, the "Trustee") pursuant to Section 11.4 in
respect of the Outstanding Senior Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Senior Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Senior Notes of all sums due and to become due
thereon in respect of principal and any premium and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Issuer or Bermuda Holdings shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
U.S. Government Obligations deposited pursuant to Section 11.4 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 the Outstanding Senior
Notes.
Anything in this Article 11 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer or Bermuda Holdings from time to time
upon Issuer Request any money or U.S. Government Obligations held by it as
provided in Section 11.4 which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
11.4(a)) are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
Section 11.6 Reinstatement. If the Trustee or Paying Agent is unable
-------------
to apply any United States dollars or U.S. Government Obligations in accordance
with Section 11.2 or Section 11.3, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Issuer's and Bermuda Holdings'
obligations under this Indenture and the Senior Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 11.2 or Section
11.3, as the case may be, until such time
78
<PAGE>
as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 11.2 or Section 11.3, as the case may be; provided,
however, that, if the Issuer makes any payment of principal of or any premium
and interest on any Senior Note following the reinstatement of its obligations,
the Issuer and Bermuda Holdings shall be subrogated to the rights of the Holders
of such Senior Notes to receive such payment from the money held by the Trustee
or Paying Agent.
ARTICLE 12
GUARANTEE OF SENIOR NOTES
Section 12.1 Guarantee. Bermuda Holdings hereby irrevocably and
---------
fully and unconditionally guarantees to each Holder of a Senior Note
authenticated and delivered by the Trustee the due and punctual payment of the
principal of and any premium and interest on such Senior Note (and any
Additional Amounts payable in respect thereof), when and as the same shall
become due and payable, whether at the Stated Maturity, by declaration of
acceleration, call for redemption or otherwise, in accordance with the terms of
such Senior Note and of this Indenture. Bermuda Holdings hereby agrees that its
obligations hereunder shall be as if it were a principal debtor and not merely a
surety, and shall be absolute and unconditional, irrespective of, and shall be
unaffected by, any invalidity, irregularity or unenforceability of any Senior
Note or this Indenture, any failure to enforce the provisions of any Senior Note
or this Indenture, any waiver, modification or indulgence granted to the Issuer
with respect thereto, by the Holder of any Senior Note or the Trustee, any
merger or consolidation by the Issuer or any sale, lease or other disposition of
all or substantially all of the assets of the Issuer, or any other circumstances
which may otherwise constitute a legal or equitable discharge of a surety or
guarantor; provided, however, that, notwithstanding the foregoing, no such
waiver, modification or indulgence shall, without the consent of Bermuda
Holdings, increase the principal amount of a Senior Note or the interest rate
thereon or increase any premium payable upon redemption thereof. Bermuda
Holdings hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, the benefit of
discussion, protest or notice with respect to any Senior Note or the
indebtedness evidenced thereby and all demands whatsoever, and covenants that
this Guarantee will not be discharged with respect to any Senior Note except by
payment in full of the principal thereof and any premium and interest thereon
(and any Additional Amounts payable in respect thereof) or as provided in
Article 11. Bermuda Holdings further agrees that, as between Bermuda Holdings,
on the one hand, and the Holders and the Trustee, on the other hand, the
79
<PAGE>
Maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 4 hereof for the purposes of this Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby.
Bermuda Holdings shall be subrogated to all rights of each Holder of
Senior Notes against the Issuer in respect of any amounts paid to such Holder by
Bermuda Holdings pursuant to the provisions of this Guarantee; provided,
however, that Bermuda Holdings shall not be entitled to enforce, or to receive
any payments arising out of or based upon, such right of subrogation until the
principal of and any premium and interest on (and any Additional Amounts payable
in respect thereof) shall have been paid in full.
No past, present or future stockholder, officer, director, employee or
incorporator of Bermuda Holdings shall have any personal liability under the
Guarantee set forth in this Section 12.1 by reason of his or its status as such
stockholder, officer, director, employee or incorporator.
The Guarantee set forth in this Section 12.1 shall not be valid or
become obligatory for any purpose with respect to a Senior Note until the
certificate of authentication on such Senior Note shall have been signed by or
on behalf of the Trustee.
Section 12.2 Execution of Guarantee. To evidence its guarantee to
----------------------
the Holders specified in Section 12.1, Bermuda Holdings hereby agrees to execute
the notation of the Guarantee in substantially the form set forth in Exhibit D
to be endorsed on each Senior Note authenticated and delivered by the Trustee.
Bermuda Holdings hereby agrees that its Guarantee set forth in Section 12.1
shall remain in full force and effect notwithstanding any failure to endorse on
each Senior Note a notation of such Guarantee. Each such notation of the
Guarantee shall be signed on behalf of Bermuda Holdings, by any two duly
authorized officers, prior to the authentication of the Senior Note on which it
is endorsed, and the delivery of such Senior Note by the Trustee, after the due
authentication thereof by the Trustee hereunder, shall constitute due delivery
of the Guarantee on behalf of Bermuda Holdings. Such signatures upon the
notation of the Guarantee may be manual or facsimile signatures of any present,
past or future duly authorized officers and may be imprinted or otherwise
reproduced below the notation of the Guarantee, and in case any such authorized
officer who shall have signed the notation of the Guarantee shall cease to be
such duly authorized officer before the Senior Note on which such notation is
endorsed shall have been authenticated and delivered by the Trustee or disposed
of by the Issuer, such Senior Note
80
<PAGE>
nevertheless may be authenticated and delivered or disposed of as though the
person who signed the notation of the Guarantee had not ceased to be such duly
authorized officer of Bermuda Holdings.
Section 12.3 Other Obligations of Bermuda Holdings. The obligations
-------------------------------------
of Bermuda Holdings pursuant to this Section 12 shall be in addition to, and not
exclusive of, the other obligations of Bermuda Holdings set forth elsewhere in
this Indenture. For purposes of the Guarantee, such other obligations shall be
deemed to be included in this Section 12.
81
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested, all as of the date first above written.
TERRA NOVA INSURANCE (UK)
HOLDINGS PLC
By:________________________
Attest:______________________
Name:
Title:
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By:_________________________
Attest:______________________
Name:
Title:
82
<PAGE>
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________
Attest:______________________
Name:
Title:
83
<PAGE>
EXHIBIT A
---------
[FORM OF FACE OF RESTRICTED GLOBAL NOTE]
THIS NOTE IS A RESTRICTED GLOBAL NOTE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO.
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% Senior Notes due 2007
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
Terra Nova Insurance (UK) Holdings plc, a public limited company
organized under the laws of England and Wales, promises to pay to the bearer
upon surrender hereof the principal sum of U.S. $75,000,000 (less the principal
amount, if any, of any outstanding Regulation S Global Note and any outstanding
Definitive Senior Notes evidencing such Notes, as reflected in the records of
the Trustee hereinafter referred to), on August 15, 2007.
Interest Payment Dates: February 15, and August 15, commencing
February 15, 1998.
This Global Note is fully and unconditionally guaranteed as to the
payment of principal and any premium and interest (and any Additional Amounts
payable in respect thereof), when and as the same shall become due and payable,
in accordance with the terms of this Global Note and of the Indenture, by Terra
Nova (Bermuda) Holdings Ltd., a company organized under the laws of Bermuda.
<PAGE>
Additional provisions of this Restricted Global Note are set forth on
the other side of this Global Note.
Dated: August 26, 1997
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
By: _______________________
By: _______________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Chase Manhattan Bank
as Trustee, certifies
that this is the Restricted Global Note
referred to in the Indenture.
_____________________________
Authorized Officer
2
<PAGE>
[REVERSE SIDE OF RESTRICTED GLOBAL NOTE]
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% Senior Notes due 2007
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
1. Interest
--------
(a) Terra Nova Insurance (UK) Holdings plc, a public limited company
organized under the laws of England and Wales (such company, and its successors
and assigns under the Indenture hereinafter referred to, being herein called the
"Issuer"), promises to pay interest on the principal amount of this Note to the
bearer at the rate per annum shown above. Terra Nova (Bermuda) Holdings Ltd., a
company organized under the laws of Bermuda (such company, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
"Bermuda Holdings"), irrevocably and fully and unconditionally guarantees this
Note as to the payment of principal, and any premium and interest (and any
Additional Amounts payable in respect thereof), when and as the same shall
become due and payable.
[(b) The principal of this Note shall mature on August 15, 2007.
Interest on this Note shall accrue at the rate of 7.2% per annum and is payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
on February 15, 1998. In the event that the Exchange Offer (as defined in the
Indenture) has not been consummated or a Shelf Registration Statement (as
defined in the Indenture) has not been declared effective on or prior to
February 26, 1998, then additional interest shall accrue at a rate of 0.25% per
annum from February 26, 1998, and shall be payable in cash semiannually in
arrears on February 15 and August 15 of each year, commencing on August 15,
1998. If such Exchange Offer has not been consummated or such Shelf
Registration Statement has not been declared effective on or prior to May 26,
1998, the rate per annum at which such additional interest shall accrue shall
increase from 0.25% to 0.50% per annum from May 26, 1998, and shall be payable
in cash semi-annually in arrears on February 15 and August 15 of each year,
commencing August 15, 1998. The accrual of additional interest shall cease upon
the
<PAGE>
consummation of such Exchange Offer or the effectiveness of such Shelf
Registration Statement.]/1/
[(b) Interest on this Note shall accrue from the most recent date to
which interest has been paid on the Note for which this Note was exchanged or,
if no interest has been paid on such Note, from August 26, 1997, at the rate of
7.2% per annum and shall be payable in cash semi-annually in arrears on February
15 and August 15 of each year, commencing on February 15, 1998. There shall
also be payable in respect of this Note all additional interest that may have
accrued on the Note for which this Note was exchanged (as calculated in
accordance with the terms of such Note) pursuant to the Exchange Offer or
otherwise pursuant to a Registration of such Note, such additional interest to
be payable at the same time and in the same manner as the periodic interest on
this Note.]/2/
(c) Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Issuer shall pay interest at the applicable interest
rate on the Notes on overdue principal, interest (to the extent lawful) or
premium, if any, on demand.
2. Additional Amounts
------------------
All payments made by the Issuer on this Note, and all payments made by
Bermuda Holdings pursuant to the Guarantee, shall be made without deduction or
withholding, for or on account of, any and all present and future taxes, duties,
assessments, or governmental charges of whatever nature unless the deduction or
withholding of such taxes, duties, assessments or governmental charges is then
required by law. If any deduction or withholding for or on account of any
present or future taxes, assessments or other governmental charges of the United
Kingdom, Bermuda or any relevant jurisdiction or any political subdivision or
taxing authority thereof or therein (the "Relevant Jurisdiction") shall at any
time be required in respect of any amounts to be paid by the Issuer under this
Note or Bermuda Holdings under the Guarantee, the Issuer or Bermuda Holdings, as
the case may be, shall pay or cause to be paid such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts
received by a holder of this Note after such deduction or withholding shall be
not less than the amounts specified in this Note to which the holder of this
Note is
_________________________
1. To be included in Senior Notes which are not Exchange Notes.
2. To be included in Exchange Notes.
2
<PAGE>
entitled; provided, however, that the Issuer or Bermuda Holdings, as
applicable, shall not be required to make any payment of Additional Amounts for
or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
-
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, nominee, trust, partnership or
corporation), otherwise than merely by the holding of this Note or the
receipt of amounts payable in respect of this Note, and any Relevant
Jurisdiction or such holder being subject to the jurisdiction of any
Relevant Jurisdiction, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being or
having been a citizen or resident thereof or being or having been present
or engaged in trade or business therein or having had a permanent
establishment therein or (ii) the presentation of this Note (where
--
presentation is required) for payment on a date more than 30 days after the
date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts had
this Note been presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the holder of this Note
or, if different, the beneficial owner of the interest payable on this Note
with a timely request of the Issuer addressed to such holder or beneficial
owner to provide information, documents or other evidence concerning the
nationality, residence, identity or connection with the taxing jurisdiction
of such holder or beneficial owner which is required or imposed by a
statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) payments in respect of Definitive Senior Notes issued at the
request of the holder (including on or after the occurrence of an Event of
Default); or
(d) any combination of items (a), (b) and (c) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Note to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such payment to the
extent that a beneficiary or settlor
3
<PAGE>
with respect to such fiduciary or member of such partnership or beneficial owner
would not have been entitled to any Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the holder of this Note.
3. Method of Payment
-----------------
The Issuer through the Paying Agent shall pay interest on this Note to
the bearer of this Note or as instructed in writing by the bearer of this Note.
The bearer of this Note must surrender this Note to the Paying Agent to collect
principal payments. The Issuer shall pay principal and interest in money of the
United States of America that at the time of payment is legal tender for payment
of public and private debts.
4. Paying Agent and Registrar
--------------------------
Initially, The Chase Manhattan Bank, a New York banking corporation
(the "Trustee"), will act as Paying Agent and Senior Note Registrar. The Issuer
may appoint and change any Paying Agent, Senior Note Registrar, co-registrar or
transfer agent without prior notice. The Issuer may act as Paying Agent, Senior
Note Registrar, co-registrar or transfer agent to the bearer of this Note.
5. Indenture
---------
The Issuer issued this Note under an Indenture, dated as of August 26,
1997 (the "Indenture"), between the Issuer, Bermuda Holdings and the Trustee.
The terms of this Note include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S)77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. This Note is subject to all such terms, and the bearer
of this Note is referred to the Indenture and the Act for a statement of those
terms.
This Note is a senior unsecured obligation of the Issuer limited to
$75,000,000 aggregate principal amount at maturity (subject to Section 2.7 of
the Indenture).
4
<PAGE>
6. Optional Redemption
-------------------
(a) This Note is subject to redemption in whole or in part, of any
time and from time to time, upon not less than 30 nor more than 60 days' notice,
in an amount of $1,000 or an integral multiple of $1,000, at a Redemption Price
equal to 100% of the principal amount, together with accrued and unpaid interest
to the Redemption Date, as provided in the Indenture, plus the Make-Whole
amount, if any.
(b) This Note is not subject to redemption through operation of a
sinking fund.
7. Tax Redemption
--------------
This Note may be redeemed at the option of the Issuer, in whole but
not in part, upon not less than 30 nor more than 60 days' notice, at any time at
a redemption price equal to the principal amount thereof plus accrued and unpaid
interest to the date fixed for redemption if (a) the Issuer is required to issue
-
Definitive Senior Notes (other than upon the request of a holder of Book-Entry
Interests following an Event of Default) after using all reasonable efforts to
avoid having to issue such Definitive Senior Notes and the Issuer is or would be
so required in the absence of any applicable tax treaty on the next succeeding
Interest Payment Date to pay Additional Amounts with respect to any of the
Senior Notes, or (b) the Issuer or Bermuda Holdings is or would be so required
-
in the absence of any applicable tax treaty on the next succeeding Interest
Payment Date to pay Additional Amounts with respect to the Senior Notes and, in
either case, the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to the Issuer.
The Issuer or Bermuda Holdings shall also pay, or make available for
payment, to the bearer of this Note on the redemption date any Additional
Amounts resulting from the payment of such redemption price.
5
<PAGE>
8. Notice of Redemption
--------------------
Notice of redemption shall be mailed not less than 30 nor more than 60
days prior to the Redemption Date to the bearer of this Note at Chase Manhattan
Bank Luxembourg S.A., 5 rue Plaetis, L-2338, Luxembourg, or at any other address
provided to the Trustee in writing by the bearer of this Note.
9. Denominations; Transfer; Exchange
---------------------------------
This Note is in bearer form without coupons. This Note is in an
aggregate principal amount of $75,000,000 (less the principal amount, if any, of
any outstanding Regulation S Global Notes and any outstanding Definitive Senior
Notes evidencing such Notes, as reflected in the records of the Trustee)
(subject to adjustment as provided in the Indenture). The bearer of this Note
may only transfer or exchange this Note in accordance with the Indenture.
10. Persons Deemed Owners
---------------------
The bearer of this Note will be treated as the owner of it for all
purposes.
11. Defeasance and Covenant Defeasance.
----------------------------------
The Indenture contains provisions for defeasance at any time, upon
compliance by the Issuer and Bermuda Holdings with certain conditions set forth
in the Indenture, of (a) the entire indebtedness of the Issuer and Bermuda
-
Holdings with respect to this Note and (b) certain restrictive covenants and the
-
related defaults and Events of Default.
12. Amendment, Waiver
-----------------
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer, Bermuda Holdings and the Trustee with the consent of the holders of a
majority in aggregate principal amount of the Senior Notes outstanding at the
time of amendment
6
<PAGE>
or modification. The Indenture also contains provisions permitting the holders
of specified percentages in aggregate principal amount of the Senior Notes at
any time outstanding, on behalf of the holders of all the Senior Notes, to waive
compliance by the Issuer and Bermuda Holdings with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders of this Note
and of any Senior Note issued in exchange herefor or in lieu hereof whether or
not notation of such consent or waiver is made upon this Note.
13. Defaults and Remedies
---------------------
This Note has the Events of Default as set forth in Section 4.1 of the
Indenture. If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the Senior Notes, subject to
certain limitations, may declare all the Senior Notes to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
and shall result in the Senior Notes being due and payable immediately upon the
occurrence of such Events of Default.
Holders of Senior Notes may not enforce the Indenture or the Senior
Notes except as provided in the Indenture. The Trustee may refuse to enforce
the Indenture or the Senior Notes unless it receives reasonable indemnity or
security. Subject to certain limitations, holders of a majority in principal
amount of the Senior Notes may direct the Trustee in its exercise of any trust
or power. The holders of a majority in principal amount of the Senior Notes
then outstanding by written notice to the Trustee may rescind a declaration of
acceleration if the rescission is prior to a judgment or decree for payment and
if all Events of Default have been cured or waived except nonpayment of
principal and interest that has been due solely because of the acceleration.
The Trustee may withhold from holders of Senior Notes notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in the interest of the holders. The above
description of Events of Default and remedies is qualified by reference, and
subject in its entirety, to the more complete description thereof contained in
the Indenture.
14. Trustee Dealings with the Issuer or Bermuda Holdings
----------------------------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of
7
<PAGE>
this Note and may otherwise deal with and collect obligations owed to it by the
Issuer or Bermuda Holdings or their Affiliates and may otherwise deal with the
Issuer or Bermuda Holdings or their Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Senior Note Registrar or such
other agent may do the same with like rights.
15. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Issuer,
Bermuda Holdings or any Subsidiary of Bermuda Holdings shall not have any
liability for any payment of the principal of, or premium, if any, or interest
on, any of the Notes or any other obligations of the Issuer or Bermuda Holdings
under this Note, the Guarantee or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting
this Note, the bearer of this Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of this Note.
16. Authentication
--------------
This Note shall not be valid until an authorized officer of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Note.
17. Governing Law
-------------
The internal laws of the State of New York shall govern the Indenture
and this Note without regard to conflict of law provisions thereof.
The Issuer will furnish to the bearer of this Note upon written
request and without charge to the holder a copy of the Indenture which has in it
the text of this Global Note in larger type. Requests may be made to:
Terra Nova Insurance (UK) Holdings plc
Attention: Company Secretary
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP
Great Britain
8
<PAGE>
EXHIBIT B
---------
[FORM OF FACE OF REGULATION S GLOBAL NOTE]
THIS NOTE IS A REGULATION S GLOBAL NOTE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO.
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% Senior Notes due 2007
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
Terra Nova Insurance (UK) Holdings plc, a public limited company
organized under the laws of England and Wales, promises to pay to the bearer
upon surrender hereof the principal sum of U.S. $0 (or such other amount as
reflected in the records of Trustee), on August 15, 2007.
Interest Payment Dates: February 15, and August 15, commencing
February 15, 1998.
This Global Note is fully and unconditionally guaranteed as to the
payment of principal and any premium and interest (and any Additional Amounts
payable in respect thereof), when and as the same shall become due and payable,
in accordance with the terms of this Global Note and of the Indenture, by Terra
Nova (Bermuda) Holdings Ltd., a company organized under the laws of Bermuda.
<PAGE>
Additional provisions of this Regulation S Global Note are set forth
on the other side of this Global Note.
Dated: _______________________
TERRA NOVA INSURANCE (UK)
HOLDINGS PLC
By:____________________________
By:____________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Chase Manhattan Bank,
as Trustee, certifies
that this is the Regulation S Global Note
referred to in the Indenture.
_____________________________
Authorized Officer
2
<PAGE>
[REVERSE SIDE OF REGULATION S GLOBAL NOTE]
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% Senior Notes due 2007
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
1. Interest
--------
(a) Terra Nova Insurance (UK) Holdings plc, a public limited company
organized under the laws of England and Wales (such company, and its successors
and assigns under the Indenture hereinafter referred to, being herein called the
"Issuer"), promises to pay interest on the principal amount of this Note to the
bearer at the rate per annum shown above. Terra Nova (Bermuda) Holdings Ltd., a
company organized under the laws of Bermuda (such company, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
"Bermuda Holdings"), irrevocably and fully and unconditionally guarantees this
Note as to the payment of principal, and any premium and interest (and any
Additional Amounts payable in respect thereof), when and as the same shall
become due and payable.
[(b) The principal of this Note shall mature on August 15, 2007.
Interest on this Note shall accrue at the rate of 7.2% per annum and is payable
semiannually on February 15 and August 15 of each year, commencing on February
15, 1998. In the event that the Exchange Offer (as defined in the Indenture)
has not been consummated or a Shelf Registration Statement (as defined in the
Indenture) has not been declared effective on or prior to February 26, 1998,
then additional interest shall accrue at a rate of 0.25% per annum from February
26, 1998, and shall be payable in cash semiannually in arrears on February 15
and August 15 of each year, commencing on August 15, 1998. If such Exchange
Offer has not been consummated or such Shelf Registration Statement has not been
declared effective on or prior to May 26, 1998, the rate per annum at which such
additional interest shall accrue shall increase from 0.25% to 0.50% per annum
from May 26, 1998, and shall be payable in cash semi-annually in arrears on
February 15 and August 15 of each year, commencing August 15, 1998. The
<PAGE>
accrual of additional interest shall cease upon the consummation of such
Exchange Offer or the effectiveness of such Shelf Registration Statement.]/3/
[(b) Interest on this Note shall accrue from the most recent date to
which interest has been paid on the Note for which this Note was exchanged or,
if no interest has been paid on such Note, from August 26, 1997, at the rate of
7.2% per annum and shall be payable in cash semiannually in arrears on February
15 and August 15 of each year, commencing on February 15, 1998. There shall
also be payable in respect of this Note all additional interest that may have
accrued on the Note for which this Note was exchanged (as calculated in
accordance with the terms of such Note) pursuant to the Exchange Offer or
otherwise pursuant to a Registration of such Note, such additional interest to
be payable at the same time and in the same manner as the periodic interest on
this Note.]/4/
(c) Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Issuer shall pay interest at the applicable interest
rate on the Notes on overdue principal, interest (to the extent lawful) or
premium, if any, on demand.
2. Additional Amounts
------------------
All payments made by the Issuer on this Note, and all payments made by
Bermuda Holdings pursuant to the Guarantee, shall be made without deduction or
withholding, for or on account of, any and all present and future taxes, duties,
assessments, or governmental charges of whatever nature unless the deduction or
withholding of such taxes, duties, assessments or governmental charges is then
required by law. If any deduction or withholding for or on account of any
present or future taxes, assessments or other governmental charges of the United
Kingdom, Bermuda or any relevant jurisdiction or any political subdivision or
taxing authority thereof or therein (the "Relevant Jurisdiction") shall at any
time be required in respect of any amounts to be paid by the Issuer under this
Note or Bermuda Holdings under the Guarantee, the Issuer or Bermuda Holdings, as
the case may be, shall pay or cause to be paid such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts
received by a holder of this Note after such deduction or withholding shall be
not less than the amounts specified in this Note to which the holder of this
Note is
_________________
3. To be included in Senior Notes which are not Exchange Notes.
4. To be included in Exchange Notes.
2
<PAGE>
entitled; provided, however, that the Issuer or Bermuda Holdings, as applicable,
shall not be required to make any payment of Additional Amounts for or on
account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
-
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, nominee, trust, partnership or
corporation), otherwise than merely by the holding of this Note or the
receipt of amounts payable in respect of this Note, and any Relevant
Jurisdiction or such holder being subject to the jurisdiction of any
Relevant Jurisdiction, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being or
having been a citizen or resident thereof or being or having been present
or engaged in trade or business therein or having had a permanent
establishment therein or (ii) the presentation of this Note (where
--
presentation is required) for payment on a date more than 30 days after the
date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts had
this Note been presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the holder of this Note
or, if different, the beneficial owner of the interest payable on this Note
with a timely request of the Issuer addressed to such holder or beneficial
owner to provide information, documents or other evidence concerning the
nationality, residence, identity or connection with the taxing jurisdiction
of such holder or beneficial owner which is required or imposed by a
statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) payments in respect of Definitive Senior Notes issued at the
request of the holder (including on or after the occurrence of an Event of
Default); or
(d) any combination of items (a), (b) and (c) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Note to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such payment to the
extent that a beneficiary or settlor
3
<PAGE>
with respect to such fiduciary or member of such partnership or beneficial owner
would not have been entitled to any Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the holder of this Note.
3. Method of Payment
-----------------
The Issuer through the Paying Agent shall pay interest on this Note to
the bearer of this Note or as instructed in writing by the bearer of this Note.
The bearer of this Note must surrender this Note to the Paying Agent to collect
principal payments. The Issuer shall pay principal and interest in money of the
United States of America that at the time of payment is legal tender for payment
of public and private debts.
4. Paying Agent and Registrar
--------------------------
Initially, The Chase Manhattan Bank, a New York banking corporation
(the "Trustee"), will act as Paying Agent and Senior Note Registrar. The Issuer
may appoint and change any Paying Agent, Senior Note Registrar, co-registrar or
transfer agent without prior notice. The Issuer may act as Paying Agent, Senior
Note Registrar, co-registrar or transfer agent to the bearer of this Note.
5. Indenture
---------
The Issuer issued this Note under an Indenture, dated as of August 26,
1997 (the "Indenture"), between the Issuer, Bermuda Holdings and the Trustee.
The terms of this Note include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. This Note is subject to all such terms, and the bearer
of this Note is referred to the Indenture and the Act for a statement of those
terms.
This Note is a senior unsecured obligation of the Issuer limited to
$75,000,000 aggregate principal amount at maturity (subject to Section 2.7 of
the Indenture).
4
<PAGE>
6. Optional Redemption
-------------------
(a) This Note is subject to redemption in whole or in part, of any
time and from time to time, upon not less than 30 nor more than 60 days' notice,
in an amount of $1,000 or an integral multiple of $1,000, at a Redemption Price
equal to 100% of the principal amount, together with accrued and unpaid interest
to the Redemption Date, as provided in the Indenture, plus the Make-Whole
amount, if any.
(b) This Note is not subject to redemption through operation of a
sinking fund.
7. Tax Redemption
--------------
This Note may be redeemed at the option of the Issuer, in whole but
not in part, upon not less than 30 nor more than 60 days' notice, at any time at
a redemption price equal to the principal amount thereof plus accrued and unpaid
interest to the date fixed for redemption if (a) the Issuer is required to issue
-
Definitive Senior Notes (other than upon the request of a holder of Book-Entry
Interests following an Event of Default) after using all reasonable efforts to
avoid having to issue such Definitive Senior Notes and the Issuer is or would be
so required in the absence of any applicable tax treaty on the next succeeding
Interest Payment Date to pay Additional Amounts with respect to any of the
Senior Notes, or (b) the Issuer or Bermuda Holdings is or would be so required
-
in the absence of any applicable tax treaty on the next succeeding Interest
Payment Date to pay Additional Amounts with respect to the Senior Notes and, in
either case, the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to the Issuer.
The Issuer or Bermuda Holdings shall also pay, or make available for
payment, to the bearer of this Note on the redemption date any Additional
Amounts resulting from the payment of such redemption price.
5
<PAGE>
8. Notice of Redemption
--------------------
Notice of redemption shall be mailed not less than 30 nor more than 60
days prior to the Redemption Date to the bearer of this Note at Chase Manhattan
Bank Luxembourg S.A., 5 rue Plaetis, L-2338, Luxembourg, or at any other address
provided to the Trustee in writing by the bearer of this Note.
9. Denominations; Transfer; Exchange
---------------------------------
This Note is in bearer form without coupons. This Note is in an
aggregate principal amount of $0 (or such other amount as reflected in the
records of the Trustee) (subject to adjustment as provided in the Indenture).
The bearer of this Note may only transfer or exchange this Note in accordance
with the Indenture.
10. Persons Deemed Owners
---------------------
The bearer of this Note will be treated as the owner of it for all
purposes.
11. Defeasance and Covenant Defeasance.
----------------------------------
The Indenture contains provisions for defeasance at any time, upon
compliance by the Issuer and Bermuda Holdings with certain conditions set forth
in the Indenture, of (a) the entire indebtedness of the Issuer and Bermuda
-
Holdings with respect to this Note and (b) certain restrictive covenants and the
-
related defaults and Events of Default.
12. Amendment, Waiver
-----------------
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer, Bermuda Holdings and the Trustee with the consent of the holders of a
majority in aggregate principal amount of the Senior Notes outstanding at the
time of amendment or modification. The Indenture also contains provisions
permitting the holders of specified percentages in aggregate principal amount of
the Senior Notes at any time
6
<PAGE>
outstanding, on behalf of the holders of all the Senior Notes, to waive
compliance by the Issuer and Bermuda Holdings with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders of this Note
and of any Senior Note issued in exchange herefor or in lieu hereof whether or
not notation of such consent or waiver is made upon this Note.
13. Defaults and Remedies
---------------------
This Note has the Events of Default as set forth in Section 4.1 of the
Indenture. If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the Senior Notes, subject to
certain limitations, may declare all the Senior Notes to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
and shall result in the Senior Notes being due and payable immediately upon the
occurrence of such Events of Default.
Holders of Senior Notes may not enforce the Indenture or the Senior
Notes except as provided in the Indenture. The Trustee may refuse to enforce
the Indenture or the Senior Notes unless it receives reasonable indemnity or
security. Subject to certain limitations, holders of a majority in principal
amount of the Senior Notes may direct the Trustee in its exercise of any trust
or power. The holders of a majority in principal amount of the Senior Notes
then outstanding by written notice to the Trustee may rescind a declaration of
acceleration if the rescission is prior to a judgment or decree for payment and
if all Events of Default have been cured or waived except nonpayment of
principal and interest that has been due solely because of the acceleration.
The Trustee may withhold from holders of Senior Notes notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in the interest of the holders. The above
description of Events of Default and remedies is qualified by reference, and
subject in its entirety, to the more complete description thereof contained in
the Indenture.
14. Trustee Dealings with the Issuer or Bermuda Holdings
----------------------------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of this Note and may otherwise deal with and collect obligations owed to
it by the Issuer or Bermuda Holdings or their Affiliates and may otherwise deal
with the Issuer or
7
<PAGE>
Bermuda Holdings or their Affiliates with the same rights it would have if it
were not Trustee. Any Paying Agent, Senior Note Registrar or such other agent
may do the same with like rights.
15. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Issuer,
Bermuda Holdings or any Subsidiary of Bermuda Holdings shall not have any
liability for any payment of the principal of, or premium, if any, or interest
on, any of the Notes or any other obligations of the Issuer or Bermuda Holdings
under this Note, the Guarantee or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting
this Note, the bearer of this Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of this
Note.
16. Authentication
--------------
This Note shall not be valid until an authorized officer of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Note.
17. Governing Law
-------------
The internal laws of the State of New York shall govern the Indenture
and this Note without regard to conflict of law provisions thereof.
The Issuer will furnish to the bearer of this Note upon written
request and without charge to the holder a copy of the Indenture which has in it
the text of this Global Note in larger type. Requests may be made to:
Terra Nova Insurance (UK) Holdings plc
Attention: Company Secretary
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP
Great Britain
8
<PAGE>
EXHIBIT C
---------
[FORM OF FACE OF DEFINITIVE SENIOR NOTE]
THIS SENIOR NOTE IS A SENIOR NOTE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO.
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% Senior Notes due 2007
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
Terra Nova Insurance (UK) Holdings plc, a public limited company
organized under the laws of England and Wales, promises to pay to _________,
or registered assigns, the principal sum of U.S. ______________, on August
15, 2007.
Interest Payment Dates: February 15, and August 15, commencing
February 15, 1998.
This Global Note is fully and unconditionally guaranteed as to the
payment of principal and any premium and interest (and any Additional Amounts
payable in respect thereof), when and as the same shall become due and payable,
in accordance with the terms of this Senior Note and of the Indenture by Terra
Nova (Bermuda) Holdings Ltd., a company organized under the laws of Bermuda.
<PAGE>
Additional provisions of this Definitive Senior Note are set forth
on the other side of this Definitive Senior Note.
Dated: __________,_______
TERRA NOVA INSURANCE (UK)
HOLDINGS PLC
By: _______________________
By: _______________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Chase Manhattan Bank,
as Trustee, certifies
that this is one of the Senior Notes
referred to in the Indenture.
_____________________________
Authorized Officer
2
<PAGE>
[FORM OF REVERSE SIDE OF DEFINITIVE SENIOR NOTE]
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% Senior Notes due 2007
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
1. Interest
--------
(a) Terra Nova Insurance (UK) Holdings plc, a public limited company
organized under the laws of England and Wales (such company, and its successors
and assigns under the Indenture hereinafter referred to, being herein called the
"Issuer"), promises to pay interest on the principal amount of this Note to the
bearer at the rate per annum shown above. Terra Nova (Bermuda) Holdings Ltd., a
company organized under the laws of Bermuda (such company, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
"Bermuda Holdings"), irrevocably and fully and unconditionally guarantees this
Senior Note as to the payment of principal, and any premium and interest (and
any Additional Amounts payable in respect thereof), when and as the same shall
become due and payable.
[(b) The principal of this Senior Note shall mature on August 15,
2007. Interest on this Senior Note shall accrue at the rate of 7.2% per annum
and is payable semiannually on February 15 and August 15 of each year,
commencing on Feb ruary 15, 1998. In the event that the Exchange Offer (as
defined in the Indenture) has not been consummated or a Shelf Registration
Statement (as defined in the Indenture) has not been declared effective on or
prior to February 26, 1998, then additional interest shall accrue at a rate of
0.25% per annum from February 26, 1998, and shall be payable in cash
semiannually in arrears on February 15 and August 15 of each year, commencing on
August 15, 1998. If such Exchange Offer has not been consummated or such Shelf
Registration Statement has not been declared effective on or prior to May 26,
1998, the rate per annum at which such additional interest shall accrue shall
increase from 0.25% to 0.50% per annum from May 26, 1998, and shall be payable
in cash semiannually in arrears on February 15 and August 15 of each year,
commencing August 15, 1998. The accrual
<PAGE>
of additional interest shall cease upon the consummation of such Exchange Offer
or the effectiveness of such Shelf Registration Statement.]/5/
[(b) Interest on this Senior Note shall accrue from the most recent
date to which interest has been paid on the Senior Note for which this Senior
Note was exchanged or, if no interest has been paid on such Senior Note, from
August 26, 1997, at the rate of 7.2% per annum and shall be payable in cash
semiannually in arrears on February 15 and August 15 of each year, commencing on
February 15, 1998. There shall also be payable in respect of this Senior Note
all additional interest that may have accrued on the Senior Note for which this
Senior Note was exchanged (as calculated in accordance with the terms of such
Senior Note) pursuant to the Exchange Offer or otherwise pursuant to a
Registration of such Senior Note, such additional interest to be payable at the
same time and in the same manner as the periodic interest on this Senior
Note.]/6/
(c) Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Issuer shall pay interest at the applicable interest
rate on the Senior Notes, on overdue principal, interest (to the extent lawful)
or premium, if any, on demand.
2. Additional Amounts
------------------
All payments made by the Issuer on this Senior Note, and all payments
made by Bermuda Holdings pursuant to the Guarantee, shall be made without
deduction or withholding, for or on account of, any and all present and future
taxes, duties, assessments, or governmental charges of whatever nature unless
the deduction or withholding of such taxes, duties, assessments or governmental
charges is then required by law. If any deduction or withholding for or on
account of any present or future taxes, assessments or other governmental
charges of the United Kingdom, Bermuda or any relevant jurisdiction or any
political subdivision or taxing authority thereof or therein (the "Relevant
Jurisdiction") shall at any time be required in respect of any amounts to be
paid by the Issuer under this Senior Note or Bermuda Holdings under the
Guarantee, the Issuer or Bermuda Holdings, as the case may be, shall pay or
cause to be paid such additional amounts ("Additional Amounts") as may be
necessary in order that the net amounts received by a holder of this Note after
such deduction or
_________________
5. To be included in Senior Notes which are not Exchange Notes.
6. To be included in Exchange Notes.
2
<PAGE>
withholding shall be not less than the amounts specified in this Senior Note to
which the holder of this Senior Note is entitled; provided, however, that the
Issuer or Bermuda Holdings, as applicable, shall not be required to make any
payment of Additional Amounts for or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
-
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, nominee, trust, partnership or
corporation), otherwise than merely by the holding of this Senior Note or
the receipt of amounts payable in respect of this Senior Note, and any
Relevant Jurisdiction or such holder being subject to the jurisdiction of
any Relevant Jurisdiction, including, without limitation, such holder (or
such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having had a permanent
establishment therein or (ii) the presentation of this Senior Note (where
--
presentation is required) for payment on a date more than 30 days after the
date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts had
this Senior Note been presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note with a timely request of the Issuer addressed to such holder or
beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such holder or beneficial owner which is required or
imposed by a statute, treaty, regulation or administrative practice of the
taxing jurisdiction as a precondition to exemption from all or part of such
tax, assessment or governmental charge;
(c) payments in respect of Definitive Senior Notes issued at the
request of the holder (including on or after the occurrence of an Event of
Default); or
(d) any combination of items (a), (b) and (c) above;
3
<PAGE>
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor with respect to such fiduciary or
member of such partnership or beneficial owner would not have been entitled to
any Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of this Senior Note.
3. Method of Payment
-----------------
The Issuer through the Paying Agent shall pay interest on this Senior
Note to the registered holder of this Senior Note or as instructed in writing by
such holder of this Senior Note. The holder of this Senior Note must surrender
this Senior Note to the Paying Agent to collect principal payments. The Issuer
shall pay principal and interest in money of the United States of America that
at the time of payment is legal tender for payment of public and private debts.
4. Paying Agent and Registrar
--------------------------
Initially, The Chase Manhattan Bank, a New York banking corporation
(the "Trustee"), will act as Paying Agent and Senior Note Registrar. The Issuer
may appoint and change any Paying Agent, Senior Note Registrar, co-registrar or
transfer agent without prior notice. The Issuer may act as Paying Agent, Senior
Note Registrar, co-registrar or transfer agent to the holder of this Note.
5. Indenture
---------
The Issuer issued this Senior Note under an Indenture, dated as of
August 26, 1997 (the "Indenture"), between the Issuer, Bermuda Holdings and the
Trustee. The terms of this Senior Note include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the
------
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. This Senior Note is subject to all such
terms, and holders of the Senior Notes are referred to the Indenture and the Act
for a statement of those terms.
4
<PAGE>
The Senior Notes are senior unsecured obligations of the Issuer
limited to $75,000,000 aggregate principal amount at maturity (subject to
Section 2.7 of the Indenture).
6. Optional Redemption
-------------------
(a) This Senior Note is subject to redemption in whole or in part, of
any time and from time to time, upon not less than 30 nor more than 60 days'
notice, in an amount of $1,000 or an integral multiple of $1,000, at a
Redemption Price equal to 100% of the principal amount, together with accrued
and unpaid interest to the Redemption Date, as provided in the Indenture, plus
the Make-Whole amount, if any.
(b) This Senior Note is not subject to redemption through operation of
a sinking fund.
7. Tax Redemption
--------------
This Senior Note may be redeemed at the option of the Issuer, in whole
but not in part, upon not less than 30 nor more than 60 days' notice, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid interest to the date fixed for redemption if the Issuer or Bermuda
Holdings is or would be so required in the absence of any applicable tax treaty
on the next succeeding Interest Payment Date to pay Additional Amounts with
respect to the Senior Notes and, in either case, the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Issuer.
The Issuer or Bermuda Holdings shall also pay, or make available for
payment, to the holders of the Senior Notes on the redemption date any
Additional Amounts resulting from the payment of such redemption price.
8. Notice of Redemption
--------------------
Notice of redemption shall be mailed not less than 30 nor more than 60
days prior to the Redemption Date to the each holder of the Senior Notes at the
addresses provided to the Trustee in writing by the holders of such Senior Notes
on the date of issuance of such Senior Notes or on the dates of any subsequent
transfer of such Senior Notes or at any address provided to the Trustee in
writing by such holders. Senior
5
<PAGE>
Notes in denominations larger than $1,000 of principal amount at maturity may be
redeemed in part but only in whole multiples of $1,000 at maturity. In the
event of a redemption of less than all of the Senior Notes, the Senior Notes for
redemption will be chosen by the Trustee in accordance with the Indenture. If
any Senior Note is redeemed subsequent to a record date with respect to any
interest payment date specified above and/or prior to such interest payment
date, then any accrued interest will be paid to the holder of the Senior Note at
the close of business on such record date. If money sufficient to pay the
redemption price of and accrued interest on all Senior Notes (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Senior Notes
(or such portions thereof) called for redemption.
9. Denominations; Transfer; Exchange
---------------------------------
This Senior Note is in registered form without coupons. The holder of
this Senior Note may only transfer or exchange this Senior Note in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Senior Notes selected for redemption
(except, in the case of a Senior Note to be redeemed in part, the portion of the
Senior Note need not be redeemed) or any Senior Notes for a period of 15 days
before a selection of Senior Notes to be redeemed.
10. Persons Deemed Owners
---------------------
The registered holder of this Senior Note will be treated as the owner
of it for all purposes.
11. Defeasance and Covenant Defeasance.
----------------------------------
The Indenture contains provisions for defeasance at any time, upon
compliance by the Issuer and Bermuda Holdings with certain conditions set forth
in the Indenture, of (a) the entire indebtedness of the Issuer and Bermuda
-
Holdings with respect to this Senior Note and (b) certain restrictive covenants
-
and the related defaults and Events of Default.
6
<PAGE>
12. Amendment, Waiver
-----------------
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer, Bermuda Holdings and the Trustee with the consent of the holders of a
majority in aggregate principal amount of the Senior Notes outstanding at the
time of amendment or modification. The Indenture also contains provisions
permitting the holders of specified percentages in aggregate principal amount of
the Senior Notes at any time outstanding, on behalf of the holders of all the
Senior Notes, to waive compliance by the Issuer and Bermuda Holdings with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by or on behalf of
the holder of this Senior Note shall be conclusive and binding upon such holder
and upon all future holders of this Senior Note and of any Senior Note issued in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Senior Note.
13. Defaults and Remedies
---------------------
This Senior Note has the Events of Default as set forth in Section 4.1
of the Indenture. If an Event of Default occurs and is continuing, the Trustee
or the holders of at least 25% in principal amount of the Senior Notes, subject
to certain limitations, may declare all the Senior Notes to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
and shall result in the Senior Notes being due and payable immediately upon the
occurrence of such Events of Default.
Holders of Senior Notes may not enforce the Indenture or the Senior
Notes except as provided in the Indenture. The Trustee may refuse to enforce
the Indenture or the Senior Notes unless it receives reasonable indemnity or
security. Subject to certain limitations, holders of a majority in principal
amount of the Senior Notes may direct the Trustee in its exercise of any trust
or power. The holders of a majority in principal amount of the Senior Notes
then outstanding by written notice to the Trustee may rescind a declaration of
acceleration if the rescission is prior to a judgment or decree for payment and
if all Events of Default have been cured or waived except nonpayment of
principal and interest that has been due solely because of the acceleration.
The Trustee may withhold from holders of Senior Notes notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in the interest of the holders. The above
description of
7
<PAGE>
Events of Default and remedies is qualified by reference, and
subject in its entirety, to the more complete description thereof contained in
the Indenture.
14. Trustee Dealings with the Issuer or Bermuda Holdings
----------------------------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of this Senior Note and may otherwise deal with and collect obligations
owed to it by the Issuer or Bermuda Holdings or their Affiliates and may
otherwise deal with the Issuer or Bermuda Holdings or their Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Senior Note
Registrar or such other agent may do the same with like rights.
15. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Issuer,
Bermuda Holdings or any Subsidiary of Bermuda Holdings shall not have any
liability for any payment of the principal of, or premium, if any, or interest
on, any of the Senior Notes or any other obligations of the Issuer or Bermuda
Holdings under this Senior Note, the Guarantee or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting this Senior Note, the bearer of this Senior Note waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of this Senior Note.
16. Authentication
--------------
This Senior Note shall not be valid until an authorized officer of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Senior Note.
17. Governing Law
-------------
The internal laws of the State of New York shall govern the Indenture
and this Senior Note without regard to conflict of law provisions thereof.
8
<PAGE>
The Issuer will furnish to the holder of this Note upon written
request and without charge to the holder a copy of the Indenture which has in it
the text of this Global Note in larger type. Requests may be made to:
Terra Nova Insurance (UK) Holdings plc
Attention: Company Secretary
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP
Great Britain
9
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Senior Note and all rights thereunder, hereby irrevocably
constituting and appointing _____________________ attorney to transfer said
Senior Note on the books of the Issuer with full power of substitution in the
premises.
[THE FOLLOWING PROVISIONS TO BE INCLUDED
ON ALL RESTRICTED DEFINITIVE SENIOR NOTES]
In connection with any transfer of this Senior Note occurring prior to
the date of an effective Registration, the undersigned confirms that without
utilizing any general solicitation or general advertising that:
[Check One]
[ ](a) This Senior Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) This Senior Note is being transferred in an offshore transaction
in compliance with Rule 904 of the Securities Act of 1933, as
amended.
or
[ ](c) This Senior Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Senior Note
and the Indenture.
10
<PAGE>
If none of the foregoing boxes is checked the Trustee or other Registrar shall
not be obligated to register this Security in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer or
registration set forth herein and in Section 2.12 of the Indenture shall have
been satisfied.
Date: ______________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Senior Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "QUALIFIED
INSTITUTIONAL BUYER" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance an
Rule 144A and acknowledges that it has received such information regarding the
Issuer and Bermuda Holdings as the undersigned has requested pursuant to Rule
144A or has determined not to request such information and that it is aware that
the transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
Dated: _____________ _____________________________________________
NOTICE: To be executed by an executive
officer
11
<PAGE>
EXHIBIT D
---------
[FORM OF NOTATION OF GUARANTEE]
TERRA NOVA (BERMUDA) HOLDINGS LTD., a company duly organized and
existing under the laws of Bermuda (herein called "Bermuda Holdings," which term
includes any successor Person under the Indenture (the "Indenture") referred to
in the Global Note on which this notation is endorsed), has irrevocably, fully
and unconditionally guaranteed, pursuant to the terms of the Guarantee contained
in Article 12 of the Indenture, the due and punctual payment of the principal of
and any premium and interest on this Global Note (and any Additional Amounts
payable in respect thereof), when and as the same shall become due and payable,
whether at the Stated Maturity, by declaration of acceleration, call for
redemption or otherwise, in accordance with the terms of this Global Note and
the Indenture.
All payments pursuant to this Guarantee shall be made without with-
holding or deduction for, or on account of, any present and future taxes,
duties, assessments or governmental charges of whatever nature unless the
deduction or withholding of such taxes, duties, assessments or governmental
charges is then required by law. If any such taxes, duties, assessments or
governmental charges are required by the U.K., Bermuda or any Relevant
Jurisdiction or any political subdivision or taxing authority thereof or therein
to be withheld or deducted, Bermuda Holdings will pay such Additional Amounts
(as defined in the Indenture) as will result (after deduction of such taxes,
duties, assessments or governmental charges and any additional taxes, duties,
assessments or governmental charges payable in respect of such) in the payment
to each holder of a Senior Note of the amounts which would have been payable in
respect of the Guarantee thereof had no such withholding or deduction been
required, subject to certain exceptions as set forth in Section 9.17 of the
Indenture.
The obligations of Bermuda Holdings to the holders of the Senior Notes
and to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth in Article 12 of the Indenture, and reference is hereby made to such
Article and Indenture for the precise terms of the Guarantee.
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Global Note upon which this notation of
the Guarantee is endorsed shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
<PAGE>
Capitalized terms used but not defined herein are used herein as
defined in the Indenture.
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By: _______________________________
By: _______________________________
2
<PAGE>
[Name of Transferor]
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
___________, ____
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Corporate Trust Administration
Re: Terra Nova Insurance (UK) Holdings plc
7.2% Senior Notes due 2007 (the "Senior Notes")
-----------------------------------------------
Dear Sirs:
In connection with our proposed sale of U.S.$_________ aggregate
principal amount of the Senior Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Senior Notes was not made to a person in
the United States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting an our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
<PAGE>
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
2
<PAGE>
================================================================================
Exhibit 4.2
Terra Nova Insurance (UK) Holdings plc
7.2% Senior Notes Due 2007
Guaranteed by
Terra Nova (Bermuda) Holdings Ltd.
__________________________
DEPOSIT AND CUSTODY AGREEMENT
Dated as of August 26, 1997
__________________________
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Definitions
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Other Terms.............................................. 2
ARTICLE II Form of Receipt, Deposit of Global Notes, Execution
and Delivery, Transfer and Exchange for Definitive Notes
SECTION 2.01. Deposit of Global Notes.................................. 3
SECTION 2.02. Execution and Delivery of Global Receipt................. 3
SECTION 2.03. Book-entry System........................................ 6
SECTION 2.04. Transfer of Global Receipts.............................. 6
SECTION 2.05. Issuance of Definitive Notes In Respect of
the Senior Notes......................................... 7
SECTION 2.06. Transfer of Global Note.................................. 8
SECTION 2.07. Replacement of Global Receipts; Mutilated,
Destroyed, Lost or Stolen Global Receipt................. 9
ARTICLE III The Global Notes
SECTION 3.01. Payments in Respect of the Global Note................... 9
SECTION 3.02. Redemption or Repurchase................................. 10
SECTION 3.03. Record Date.............................................. 10
SECTION 3.04. Action in Respect of Global Note......................... 11
SECTION 3.05. Changes Affecting Global Note............................ 11
SECTION 3.06. Surrender of Global Receipt.............................. 11
SECTION 3.07. Reports.................................................. 11
ARTICLE IV The Custodian and the Depositary
SECTION 4.01. Prevention or Delay in Performance by the
Custodian and the Depositary............................. 12
SECTION 4.02. Compliance with Letter of Representations................ 12
SECTION 4.03. Event of Default or Default.............................. 12
SECTION 4.04. Charges of Custodian and Depositary...................... 13
SECTION 4.05. Duties and Liabilities of Custodian and Depositary....... 13
SECTION 4.06. Resignation or Removal of Depositary or Custodian........ 13
SECTION 4.07. Obligations of the Depositary and the Custodian.......... 14
SECTION 4.08. Taxes.................................................... 16
SECTION 4.09. Indemnification.......................................... 16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V Amendment and Termination
SECTION 5.01. Amendment................................................ 18
SECTION 5.02. Termination.............................................. 18
ARTICLE VI Miscellaneous
SECTION 6.01. Governing Laws........................................... 19
SECTION 6.02. Assignment............................................... 19
SECTION 6.03. Counterparts............................................. 19
SECTION 6.04. Severability............................................. 19
SECTION 6.05. Notices.................................................. 19
SECTION 6.06. Section Headings......................................... 21
SECTION 6.07. Third Party Beneficiaries................................ 21
</TABLE>
Exhibit A - Form of Restricted Global Receipt
Exhibit B - Form of Regulation S Global Receipt
Exhibit C - Form of Exchange Note Global Receipt
ii
<PAGE>
EXHIBIT 4.2
DEPOSIT AND CUSTODY AGREEMENT
Deposit and Custody Agreement, dated as of August 26, 1997, among The
Chase Manhattan Bank, as depositary (the "Depositary"), Chase Manhattan Bank
Luxembourg S.A., as custodian (the "Custodian"), The Chase Manhattan Bank, as
trustee (the "Trustee"), Terra Nova Insurance (UK) Holdings plc (the "Issuer")
and Terra Nova (Bermuda) Holdings Ltd. ("Bermuda Holdings").
ARTICLE I
Definitions
SECTION 1.0 Definitions. For all purposes of this Agreement, except
-----------
as otherwise provided herein, the following terms have the following meanings:
"Beneficial Owner" shall mean any person holding any Book-Entry
Interest other than the Holder; it being understood that the term "Beneficial
Owner" shall not include any agent or financial intermediary holding an interest
in a Global Note solely to the extent such interest is held for or on behalf of
any Beneficial Owner.
"Book-Entry Interest" shall mean any beneficial interest in a Global
Note.
"Corporate Trust Office" shall mean the principal office of the
Depositary at which at any particular time its corporate trust business shall be
administered, which office at the date of original execution of this Deposit and
Custody Agreement is located at 450 West 33rd Street, 15th Floor, New York, New
York 10001.
"Definitive Senior Notes" shall mean any Senior Notes issued under the
Indenture, substantially in the form of Exhibit C to the Indenture.
"Deposit and Custody Agreement" shall mean this Agreement, as the same
may be amended from time to time in accordance with the provisions hereof.
"DTC" shall mean The Depository Trust Company.
<PAGE>
"Exchange Act" shall mean the United States Securities and Exchange
Act of 1934, as from time to time amended.
"Exchange Note Global Receipt" means the global receipt representing
beneficial ownership of 100% of the principal amount of the Exchange Notes
substantially in the form of Exhibit C to the Agreement.
"Global Notes" shall mean, collectively, the Regulation S Global Note
and the Restricted Global Note (as defined in the Indenture), each in bearer
form, substantially in the form of Exhibits A and B to the Indenture and the
global note in bearer form representing the Exchange Notes (as defined in the
Indenture).
"Global Receipts" shall mean, collectively, the Restricted Global
Receipt, the Regulation S Global Receipt (each as defined in the Indenture), and
the Exchange Note Global Receipt.
"Holder" shall mean the person in whose name a Global Receipt is
registered on the Register and shall initially be Cede & Co. as the nominee of
DTC or such other nominee as DTC shall designate.
"Indenture" shall mean the Indenture, dated as of August 26, 1997,
among the Issuer, Bermuda Holdings, as Guarantor of the Senior Notes, and the
Trustee, as trustee.
"Letter of Representations" shall mean the Letter of Representations
to DTC dated August 26, 1997 from the Issuer and the Depositary.
"Register" shall mean the Register maintained by the Depositary
hereunder in which any permitted transfer of a Global Receipt shall be
registered.
"Securities Act" shall mean the United States Securities Act of 1933,
as from time to time amended.
"Senior Notes" shall mean the 7.2% Senior Notes due 2007 of the
Issuer, issued under the Indenture.
SECTION 1.02. Other Terms. Terms which are not otherwise defined
-----------
herein have the meanings given to them in the Indenture.
2
<PAGE>
ARTICLE II
Form of Receipt, Deposit of Global Notes,
Execution and Delivery, Transfer and
Exchange for Definitive Notes
SECTION 2.01. Deposit of Global Notes. The Custodian hereby agrees
-----------------------
to accept custody of the Global Notes from the Trustee as instructed by the
Issuer and to act as custodian thereof on behalf of the Depositary in accordance
with the terms of this Deposit and Custody Agreement. The Custodian agrees to
hold the Global Notes at such place or places as the Depositary shall determine
with the consent of the Issuer.
SECTION 2.02. Execution and Delivery of Global Receipt. (a) Upon
-------------------------------- -------
deposit of each Global Note with the Custodian, the Depositary shall execute and
deliver to DTC a Global Receipt registered in the name of DTC's nominee, Cede &
Co. Such Global Receipt shall represent beneficial ownership of 100% of the
principal amount from time to time of the underlying Global Note. No person
shall be required to account to the Depositary or the Custodian for the proceeds
of the sale of interests in a Global Receipt representing a Global Note.
(b) Upon deposit of the global note representing the Exchange Notes
(as defined in the Indenture), the Depository shall execute and deliver to DTC
the Exchange Note Global Receipt upon surrender by DTC to the Depository of the
Restricted Global Receipt and the Regulation S Global Receipt for cancellation
(if the underlying Global Notes have all been exchanged for Exchange Notes) or
appropriate adjustment to reflect the remaining principal amount of the
underlying Global Notes (if less than all of the underlying Global Notes have
been so exchanged).
(c) Each Global Receipt shall bear the following legend:
UNLESS THIS GLOBAL RECEIPT IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION, TO THE DEPOSITARY
UNDER THE DEPOSIT AND CUSTODY AGREEMENT DATED AS OF
AUGUST 26, 1997 AMONG THE CHASE MANHATTAN BANK, AS
DEPOSITARY, CHASE MANHATTAN BANK LUXEMBOURG S.A.,
3
<PAGE>
AS CUSTODIAN, THE CHASE MANHATTAN BANK, AS TRUSTEE,
TERRA NOVA INSURANCE (UK) HOLDINGS PLC, AND TERRA NOVA
(BERMUDA) HOLDINGS LTD FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY GLOBAL RECEIPT ISSUED IS
REGISTERED IN THE NAME CEDE & CO., OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN
AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
(d) The Restricted Global Receipt shall bear the following legend:
THIS GLOBAL RECEIPT HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING ITS INTEREST IN THIS GLOBAL RECEIPT IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER ITS INTEREST IN THIS
GLOBAL RECEIPT EXCEPT, (A) TO BERMUDA HOLDINGS OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN
4
<PAGE>
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM ITS INTEREST IN THIS
GLOBAL RECEIPT IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF ITS INTEREST IN THIS GLOBAL RECEIPT WITHIN
THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH IN THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THE CERTIFICATE ON THE REVERSE THEREOF TO THE
TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF AN INTEREST IN THIS GLOBAL RECEIPT IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
(e) Each Global Receipt may be endorsed with or have incorporated in
the text thereof such other legends or recitals or changes not inconsistent with
the provisions of this Deposit and Custody Agreement and the Indenture as may be
required by the Depositary or DTC or required to comply with any applicable law
or regulations or with the rules and regulations of any securities exchange upon
which the Senior Notes or interests in such Global Receipt may be listed or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which such Global Receipt is subject by reason of
the date or manner of issuance of the underlying Global Note or otherwise.
(f) Neither the Holder nor any Beneficial Owner shall be entitled to
any benefits under this Deposit and Custody Agreement nor shall any Global
Receipt be valid or obligatory for any purpose, unless such Global Receipt shall
have been executed by the Depositary by the manual or facsimile signature of a
duly authorized signatory of the Depositary. If the Global Receipt bears the
facsimile signature of a
5
<PAGE>
duly authorized signatory of the Depositary who was at any time a proper
signatory of the Depositary, it shall bind the Depositary, notwithstanding that
such signatory has ceased to hold such office prior to the execution and
delivery of such Global Receipt by the Depositary.
(g) It shall be a condition of Global Receipts, and every successive
Holder or Beneficial Owner by holding or beneficially owning a Global Receipt
shall be deemed to have consented and agreed, that title to such Global Receipt,
when properly endorsed or accompanied by proper instruments of transfer, is
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that the Depositary, notwithstanding any notice
to the contrary, may treat the Holder as the absolute owner thereof for the
purpose of determining the person entitled to payments on such Global Receipt
under the Deposit and Custody Agreement or to any notices provided for in the
Deposit and Custody Agreement and for all other purposes.
SECTION 2.03. Book-entry System. (a) DTC has accepted the Global
-----------------
Receipts for entry into its book-entry settlement system. Each Beneficial Owner
must rely upon the procedures of DTC and institutions having accounts with DTC
to exercise or be entitled to any rights of a Holder. So long as the Global
Receipts are traded through DTC's book-entry system, ownership of Book-Entry
Interests shall be shown in, and the transfer of such ownership shall be
effected only through, records maintained by (i) DTC or its nominees or (ii)
institutions that have accounts with DTC.
(b) The Global Receipts shall be issuable to DTC or its nominee. No
Beneficial Owner shall be entitled to receive a Global Receipt, and such
Beneficial Owner's interest in such Global Note shall be shown only in
accordance with the procedures of DTC as set forth above.
SECTION 2.04. Transfer of Global Receipts. The Depositary shall
---------------------------
maintain the Register in which any permitted transfer of a Global Receipt shall
be registered. The person in whose name a Global Receipt is registered on the
Register shall be the "Holder" of such Global Receipt for the purposes of this
Deposit and Custody Agreement. So long as a Global Receipt is registered in the
name of DTC or its nominee, the Depositary shall treat DTC as the absolute owner
thereof for all purposes whatsoever and shall not be bound or affected by any
notice to the contrary, other than an order of a court having jurisdiction over
the Depositary. The Depositary shall not recognize any transfer, exchange or
payment in respect of a Global Receipt except in accordance with this Section
2.04 and the legend set forth in Section 2.01 hereof. The Depositary shall not
recognize any transfers of a Global Receipt except to
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a successor of DTC which is (i) a clearing agency registered under the Exchange
Act and (ii) approved by the Issuer, or to another nominee of DTC.
Transfers of a Global Receipt may be registered on the books of the
Depositary by the Holder in person or its duly authorized attorney upon
surrender of such Global Receipt to the Depositary at its Corporate Trust Office
accompanied by proper instruments of transfer and duly stamped as may be
required by applicable law, provided that such Global Receipt may only be
transferred in accordance with the terms hereof.
Transfers of interest between the Restricted Global Receipt and the
Regulation S Global Receipt may only take place under circumstances where the
Trustee would be entitled to register transfers between the Restricted Global
Note and the Regulation S Global Note as set forth in Section 2.12 of the
Indenture.
SECTION 2.05. Issuance of Definitive Notes In Respect of the Senior
-----------------------------------------------------
Notes. (a) If an Event of Default (as defined in the Indenture) has occurred
- - -----
and is continuing, upon receipt by the Depositary at its Corporate Trust Office
of written instructions from the Holder requesting the issuance of Definitive
Senior Notes in respect of a portion of a Global Note, the Depositary shall, on
behalf of the Custodian, request in accordance with Section 2.6 of the Indenture
that the Issuer issue, and the Trustee authenticate, Definitive Senior Notes in
the amounts and registered in the names specified in the request.
(b) The Depositary and the Custodian acknowledge that if at any time
(i) DTC notifies the Issuer and the Depositary that it is unwilling or unable to
continue as Holder or if at any time it ceases to be a clearing agency
registered under the Exchange Act, and in either case a successor Holder
registered as a clearing agency under the Exchange Act is not appointed by the
Issuer within 90 days of such notification, or (ii) the Custodian or the
Depositary, as the case may be, notifies the Trustee and the Issuer in
accordance with Section 4.06 hereof that it is unwilling or unable to continue
as Custodian or Depositary, as the case may be, and no successor Custodian or
Depositary, as the case may be, is appointed by the Issuer within 90 days of
such notification or (iii) the Issuer determines Definitive Senior Notes shall
be issued, then the Issuer shall issue, and the Trustee shall authenticate,
Definitive Senior Notes registered in the name or names of such person or
persons as the Depositary shall instruct the Trustee on behalf of the Custodian.
The Depositary agrees to promptly provide such information to the Trustee as is
provided to the Depositary by the Holder.
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(c) The Depositary agrees to promptly notify the Custodian and the
Trustee of any request by the Holder for the issuance of Definitive Senior
Notes. The Custodian agrees that in connection with any request for the
issuance of Definitive Senior Notes as contemplated by this Section 2.05, upon
notice by the Depositary, it will promptly surrender the Global Note underlying
such Holder's Global Receipt to the Trustee who shall cause an adjustment to be
made to such Global Note such that the aggregate principal amount of such Global
Note shall be reduced by the principal amount of the Definitive Senior Notes
issued pursuant to such request and shall thereafter return such Global Note (as
so adjusted) to the Custodian. Upon the issuance of Definitive Senior Notes as
set forth above, such Global Receipt shall automatically represent beneficial
ownership of 100% of the underlying Global Note, as adjusted to reflect the
reduction in aggregate principal amount; provided, however, that DTC, in its
discretion (a) may request that the Depository issue a new Global Receipt or (b)
may make an appropriate notation on such Global Receipt indicating the date and
amount of such reduction in principal. The Depositary and the Custodian
acknowledge and agree that in the event that Definitive Senior Notes are issued
in respect of 100% of the outstanding principal amount of the Senior Notes,
underlying Global Note and Global Receipt shall be automatically cancelled and
the Custodian agrees to surrender such Global Note to the Trustee.
(d) Exchanges of Book-Entry Interests for Definitive Senior Notes
pursuant to this Section 2.05 shall be made free of any fees of the Depositary
to the Holder.
SECTION 2.06. Transfer of Global Note. The Custodian agrees to hold
-----------------------
the Global Notes in custody for the benefit of the Depositary, the Holder and
the Beneficial Owners. The Custodian agrees that it will not transfer or lend a
Global Note or any interest therein except that the Custodian may transfer a
Global Note to a successor custodian which is a branch of a United States bank
located outside of the United States and outside of the United Kingdom which has
been approved by the Issuer and the Depositary. The Custodian shall surrender a
Global Note to the Trustee (i) if it notifies the Trustee and the Issuer under
Section 4.06 hereof that it desires to resign as Custodian and no successor
custodian has been appointed by the Issuer (which appointment is subject to the
approval of the Depositary, which shall not unreasonably withhold such approval)
within 90 days of such notification or (ii) if the Depositary notifies the
Trustee and the Issuer under Section 4.06 hereof that it desires to resign as
Depositary and no successor depositary has been appointed by the Issuer (which
appointment is subject to the approval of the Trustee, which shall not
unreasonably withhold such approval) within 90 days of such notification. In
the case of clauses (i) and (ii) of the preceding sentence, the Depositary
agrees that after either of such 90 day
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periods it will, on behalf of the Custodian, promptly notify the Trustee and
request the Issuer to issue, and the Trustee to authenticate, Definitive Senior
Notes in the names and denominations as the Holder shall specify in accordance
with Section 2.6 of the Indenture, and the Custodian agrees that in such event
it will promptly surrender the Global Notes to the Trustee in connection with
such exchange and that such Global Notes will be cancelled upon issuance of such
Definitive Senior Notes.
SECTION 2.07. Replacement of Global Receipts; Mutilated, Destroyed,
-----------------------------------------------------
Lost or Stolen Global Receipt. In case a Global Receipt shall be mutilated,
- - -----------------------------
destroyed, lost or stolen, the Depositary shall execute and deliver a new Global
Receipt of like tenor, in exchange and substitution for such mutilated Global
Receipt upon cancellation thereof, or in lieu of and in substitution for the
destroyed or lost or stolen Global Receipt, upon the Holder thereof filing with
the Depositary (a) a request for such execution and delivery before the
Depositary has notice that such Global Receipt has been acquired by a bona fide
---- ----
purchaser and (b) a sufficient indemnity bond, and satisfying any other
reasonable requirements imposed by the Depositary.
All expenses and charges associated with procuring such indemnity and
with the preparation, execution and delivery of a new Global Receipt shall be
borne by the Holder.
ARTICLE III
The Global Notes
SECTION 3.01. Payments in Respect of the Global Note. (a) For so
--------------------------------------
long as the Custodian shall hold the Global Notes, the Custodian will direct the
Issuer to make all payments in respect of the Global Notes to the Trustee, on
behalf of the Custodian. The Custodian and the Depositary hereby direct that,
for so long as the Custodian shall hold the Global Notes, whenever the Trustee
(or paying agent under the Indenture) shall receive any payment of principal,
premium or interest in respect of such Global Notes (including any Additional
Amounts, as defined in the Indenture), whether in connection with any
redemption, repurchase, declaration of acceleration or otherwise, the Trustee or
paying agent shall, on behalf of the Custodian and the Depositary, promptly make
such payments directly to the Holder on or before the payment date for such
Global Receipt. The payment date for the Global Receipt for the payment of
principal of and any premium and interest shall be the same date as the payment
date for the underlying Global Note. So long as DTC or its nominee is the
Holder, such payments shall be made in accordance with the Letter of
Representations.
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(b) If at any time the Custodian or the Depositary shall receive any
payment of principal, premium or interest in respect of a Global Note (including
any Additional Amounts), the Custodian or the Depositary shall promptly make
such payments to the Holder of the Global Receipt representing such Global Note.
(c) The Depositary or the Custodian will forward to the Issuer or its
agent such information from its records as the Issuer may reasonably request to
enable the Issuer or its agent to file necessary reports with governmental
agencies, and either the Depositary or the Custodian or its agent may (but shall
not be required to) file any such reports necessary to obtain benefits under any
applicable tax treaties for the Holder or the Beneficial Owners.
SECTION 3.02. Redemption or Repurchase. In the event that the Issuer
------------------------
exercises any right of redemption with respect to, or the Issuer or Bermuda
Holdings exercises any right to repurchase, a Global Note in whole or in part,
as the case may be, the Custodian, upon notice by the Depositary, will promptly
surrender such Global Note to the Trustee who shall cause an adjustment to be
made to such Global Note such that the aggregate principal amount of such Global
Note shall be reduced by the amount of such redemption or repurchase, as the
case may be, and shall thereafter return such Global Note (as so adjusted) to
the Custodian and thenceforth the Global Receipt representing such Global Note
shall automatically represent beneficial ownership of 100% of the Global Note,
as adjusted to reflect the reduction in aggregate principal amount; provided,
however, that DTC, in its discretion, (a) may request that the Depository issue
a new Global Receipt or (b) may make an appropriate notation on such Global
Receipt indicating the date and amount of such reduction in principal.
SECTION 3.03. Record Date. Whenever any payment is to be made in
-----------
respect of a Global Note, or the Custodian shall receive notice of any action to
be taken by the holder of a Global Note or whenever the Depositary otherwise
deems it appropriate in respect of any other matter, the Depositary shall fix a
record date for the determination of the Holder who shall be entitled to receive
such payment or to take such action or to act in respect of any such matter;
provided, however, that the Custodian agrees to forward promptly to the
Depositary any such payments or notices, as the case may be, received by it.
Subject to the provisions of this Deposit and Custody Agreement, only the Holder
who is registered on the Register at the close of business on such record date
shall be entitled to receive any such payment, to give instructions as to such
action or to act in respect of any such matter. The Depositary, to the extent
practicable, shall, not less than 15 days prior to such record date, provide the
Holder with written notice of such record date.
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SECTION 3.04. Action in Respect of Global Note. As soon as
--------------------------------
practicable after receipt by the Custodian of notice of any solicitation of
consents or request for a waiver or other action by the holder of a Global Note
pursuant to the Indenture, the Custodian shall direct the Depositary to mail to
the Holder a notice containing (a) such information as is contained in such
notice, (b) a statement that the Holder at the close of business on a specified
record date (established in accordance with Section 3.03 hereof) will be
entitled to instruct the Depositary as to the consent, waiver or other action,
if any, pertaining to such Global Note and (c) a statement as to the manner in
which such instructions may be given. Upon the written request of the Holder,
received on or before the date established by the Depositary for such purpose,
the Depositary shall cause the Custodian to endeavor insofar as practicable and
permitted under the provisions of or governing such Global Note to take such
action regarding the requested consent, waiver or other action in respect of
such Global Note in accordance with any instructions set forth in such request.
Neither the Depositary nor the Custodian shall itself exercise any discretion in
the granting of consents, waivers or taking other such action in respect of a
Global Note.
SECTION 3.05. Changes Affecting Global Note. Upon any
-----------------------------
recapitalization, reorganization, merger or consolidation or sale of assets
affecting Bermuda Holdings or the Issuer or to which Bermuda Holdings or the
Issuer is a party, any securities which shall be received by the Custodian in
exchange for or in conversion of or in respect of a Global Note shall be treated
as a new Global Note under this Deposit and Custody Agreement and the Global
Receipt representing such Global Note shall thenceforth represent beneficial
ownership of 100% of the principal amount of such new Global Note so received;
provided, however, that DTC, in its discretion, (a) may request the Depositary
to issue and authenticate a new Global Receipt or (b) may make an appropriate
notation on such Global Receipt indicating the date and amount of such reduction
in principal.
SECTION 3.06. Surrender of Global Receipt. In the event of the
---------------------------
redemption or repurchase in full of all the Senior Notes represented by a Global
Note, or the exchange of all the Senior Notes so represented for Definitive
Senior Notes, in each case as referred to in this Deposit and Custody Agreement,
then the Global Receipt representing such Global Note shall become void and the
Holder shall surrender such Global Receipt to the Depositary for cancellation.
SECTION 3.07. Reports. The Depositary shall make available for
-------
inspection by the Holder at the Depositary's Corporate Trust Office any notices,
reports and other communications received from the Issuer which are received by
the Custodian as holder of the Global Notes. The Depositary shall send promptly
to the
11
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Holder copies of such notices, reports and other communications furnished by the
Issuer and received by the Custodian, as holder of the Global Notes.
ARTICLE IV
The Custodian and the Depositary
SECTION 4.01. Prevention or Delay in Performance by the Custodian
---------------------------------------------------
and the Depositary. Neither the Custodian nor the Depositary shall incur any
- - ------------------
liability to any Holder, any Beneficial Owner or any other person hereunder or
in connection herewith if (i) by reason of any provision of any present or
future law or regulation, of any governmental or regulatory authority or
securities exchange, or by any reason of any act of God or war or other
circumstance beyond the control of the Custodian or the Depositary, the
Custodian or the Depositary shall be prevented or forbidden from doing or
performing any act or thing which the terms of this Deposit and Custody
Agreement provide shall be done or performed, (ii) by reason of any non-
performance or delay, caused as aforesaid, in the performance of any act or
thing which the terms of this Deposit and Custody Agreement provide shall or may
be done or performed, and (iii) by reason of any exercise of or failure to
exercise, in good faith any discretion provided for in this Deposit and Custody
Agreement. Should the Custodian or the Depositary receive any payment in
respect of a Global Note and be unable pursuant to the foregoing to distribute
such payment to the Holder due to any reason described in this Section 4.01, the
Depositary or the Custodian, as the case may be, shall, if practicable, promptly
return such payment to the Issuer, and provide written notice of the reason for
the inability to distribute such payment.
SECTION 4.02 Compliance with Letter of Representations. The
-----------------------------------------
Depositary agrees to use its best efforts to comply with all of the provisions
pertaining to it set forth in the Letter of Representations so long as DTC or
its nominee is the Holder.
SECTION 4.03. Event of Default or Default. Upon the occurrence of an
---------------------------
Event of Default or a Default (as defined in the Indenture) in respect of a
Global Note, or in connection with any other right of the Holder under the
Indenture or this Agreement, if requested in writing by the Holder, the
Custodian and the Depositary shall take such action as shall be requested in
such notice in respect of such Global Note, provided the Custodian and the
Depositary shall not be required to take any such action unless the Holder shall
have offered to the Custodian and the Depositary reasonable security or
indemnity against the costs, expenses and liabilities which might
12
<PAGE>
be incurred by it in compliance with such request. Neither the Depositary nor
the Custodian shall itself exercise any discretion in the taking of action in
respect of a Global Note.
SECTION 4.04 Charges of Custodian and Depositary. The Issuer and
-----------------------------------
Bermuda Holdings agree to promptly pay to the Custodian and the Depositary such
compensation as shall be agreed upon from time to time by the Issuer and Bermuda
Holdings, on the one hand, and the Custodian and Depositary, respectively, on
the other hand, for all services rendered by the Custodian and the Depositary,
respectively, and to reimburse the Custodian and the Depositary for reasonable
out of pocket expenses incurred in connection with the preparation and delivery
of this Deposit and Custody Agreement and the performance of their respective
duties hereunder (including the reasonable fees and expenses of their respective
counsel). The obligations of the Issuer and Bermuda Holdings under this Section
4.04 shall survive the termination of this Deposit and Custody Agreement.
Neither the Depositary nor the Custodian shall be responsible for: (1) taxes and
other government charges and (2) such registration fees as may from time to time
be in effect, in each case for the registration of transfers of interest in a
Global Receipt.
SECTION 4.05 Duties and Liabilities of Custodian and Depositary.
--------------------------------------------------
Neither the Custodian nor the Depositary shall be liable under this Deposit and
Custody Agreement, other than by reason of bad faith or negligence in the
performance of such duties as are set forth in or arise pursuant to this Deposit
and Custody Agreement. Neither the Custodian nor the Depositary shall be liable
for any damages resulting from the transfer or delivery of a Global Note in
accordance with the terms of this Deposit and Custody Agreement. Neither the
Custodian nor the Depositary shall be liable for any action or inaction by it
done in good faith in reliance upon the advice of its accountants or legal
counsel. The Custodian and the Depositary may request and rely and shall be
protected in acting in reliance upon any written notice, request, direction or
other document believed by it to be genuine and to have been signed or presented
by the proper party or parties.
SECTION 4.06. Resignation or Removal of Depositary or Custodian. (a)
-------------------------------------------------
The Depositary may at any time resign as Depositary hereunder by written notice
of its election so to do delivered to the Trustee and the Issuer, such
resignation to take effect upon the appointment by the Issuer of a successor
depositary (which appointment is subject to the approval of the Trustee, which
shall not unreasonably withhold such approval) and its acceptance of such
appointment as hereinafter provided. If at the end of 90 days after delivery of
such notice, no successor depositary has been appointed or accepted such
appointment, the Depositary may terminate this Deposit and Custody
13
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Agreement provided that such termination shall not be effective unless and until
Definitive Senior Notes shall have been issued in accordance with Section 2.05.
(b) The Custodian may at any time resign as Custodian hereunder by
written notice of its election so to do delivered to the Depositary, the Trustee
and the Issuer, such resignation to take effect upon the appointment by the
issuer of a successor custodian (which appointment is subject to approval by the
Depositary) and its acceptance of such appointment as hereinafter provided and
the transfer of each Global Note as set forth in Section 2.06. If at the end of
90 days after delivery of such notice, no successor custodian has been appointed
or accepted such appointment, the Custodian may request in accordance with
Section 2.05 that Definitive Senior Notes be issued and upon the issuance of
such Definitive Senior Notes, may terminate this Deposit and Custody Agreement.
(c) In the event that the Issuer determines that it would become
obligated to pay any amount in respect of any deduction or withholding for any
taxes or other governmental charges under Section 4.08, the Depositary or the
Custodian may be removed by the Issuer by written notice of such removal
effective upon the appointment of a successor depositary or successor custodian,
as the case may be, and its acceptance of such appointment as herein provided.
(d) Every successor depositary or successor custodian shall execute
and deliver to its predecessor, the Issuer and, in the case of a successor
custodian, the Depositary, and in the case of a successor depositary, the
Custodian, an instrument in writing accepting its appointment hereunder, and
thereupon such successor depositary or successor custodian, without any further
act or deed, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor.
(e) Any corporation into or with which the Depositary or the
Custodian, as the case may be, may be merged or consolidated shall be the
successor of the Depositary or the Custodian, as the case may be, without the
execution or filing of any document or of any further act.
SECTION 4.07. Obligations of the Depositary and the Custodian.
-----------------------------------------------
Neither the Depositary nor the Custodian makes any representation or warranty
and neither shall at any time have any responsibility for, or liability or
obligation in respect of, the legality, validity, binding effect, adequacy or
enforceability of the Global Notes, the performance and observance by the Issuer
or Bermuda Holdings of its obligations under the Global Notes or the
recoverability of any sum of interest, arrears
14
<PAGE>
of interest, premium or principal due or to become due from the Issuer or
Bermuda Holdings in respect of the Global Notes.
Neither the Depositary nor the Custodian shall at any time have any
responsibility for, or obligation or liability in respect of, the financial
condition, creditworthiness, affairs, status or nature of the Issuer or
Bermuda Holdings.
Neither the Depositary nor the Custodian shall at any time be liable
for any act, default or omission of the Issuer or Bermuda Holdings under or in
respect of the Global Notes.
Payments in respect of the Global Receipts will only be made to the
extent of any amounts actually received by or on behalf of the Depositary in
respect of the underlying Global Note.
Neither the Depositary nor the Custodian shall be required to give
notice to the Issuer or Bermuda Holdings or the Holder that a Global Note is
repayable or that any Default or Event of Default in relation to the Global
Notes has occurred pursuant to Article 4 of the Indenture or take any
proceedings to enforce payment under the Indenture, except as expressly provided
otherwise in this Deposit and Custody Agreement.
Neither the Depositary nor the Custodian shall be under any obligation
to exercise in favor of the Holder any rights of set-off or of bankers' lien or
of counterclaims that may arise out of any other transaction between the Issuer,
Bermuda Holdings, the Depositary or the Custodian.
Neither the Depositary nor the Custodian shall be under any obligation
to appear in, prosecute or defend any action, suit or other proceeding in
respect of either a Global Note or in respect of a Global Receipt, or take any
other action or omit to take any action under this Deposit and Custody
Agreement, which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
Neither the Depositary nor the Custodian shall be liable for any acts
or omissions made by a successor depositary or a successor custodian, as the
case may be, whether in connection with a previous act or omission of the
Depositary or the Custodian, as the case may be, or in connection with a matter
arising wholly after the removal or resignation of the Depositary or the
Custodian, as the case may be,
15
<PAGE>
provided that the Depositary or the Custodian, as the case may be, exercised its
good faith and reasonable care while it acted as Depositary or Custodian.
Neither the Depositary nor the Custodian shall have any liability for
the calculation, timing or appropriateness of any interest, arrears of interest,
principal, premium, if any, or other payment or distribution to be made in
connection with the Global Notes, and the Issuer shall have sole liability
therefor, provided that the Depositary and the Custodian shall each be liable
for its own negligence or bad faith in connection with the foregoing.
Neither the Depositary nor the Custodian shall be under any liability
for interest on, or any obligation to invest or segregate, any monies at any
time received by each of them pursuant to the terms and conditions of this
Deposit and Custody Agreement.
Each of the Depositary and the Custodian may own and deal in any class
of securities of the Issuer and its affiliates and in interests in the Global
Receipts.
Each of the Depositary and the Custodian may enter into other dealings
with the Issuer and its affiliates of any nature whatsoever.
Subject to the approval of the Issuer, the Custodian may appoint a
sub-custodian to hold any or all of the Global Notes on its behalf.
SECTION 4.08. Taxes. If any tax or other governmental charge shall
-----
be required to be deducted or withheld from the distribution in respect of a
Global Receipt by the Custodian to the Depositary or the Depositary to the
Holder of any payments of principal of and any premium and interest on the
underlying Global Note, each of the Issuer and Bermuda Holdings agrees that it
shall pay or cause to be paid such additional amounts as may be necessary in
order that the net amounts distributed to the Holder, after such deduction or
withholding, shall equal the amounts which were paid on such Global Note. The
Issuer shall promptly notify in writing the Depositary and the Custodian should
any deduction or withholding be required on behalf of the Issuer from the
distribution in respect of the Global Receipt representing such Global Note.
Neither the Depositary nor the Custodian shall be deemed to have any notice of
any required deduction or withholding prior to the receipt of such notice.
SECTION 4.09. Indemnification. (a) The Issuer and Bermuda Holdings
---------------
shall indemnify the Custodian and the Depositary, and any of their respective
agents, officers, directors or employees for, and hold them harmless against any
16
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Liability (as defined below) incurred (including the reasonable fees, expenses
and disbursements of its counsel), other than liability or expense resulting
from its or their own negligence or bad faith, arising out of or in connection
with the acceptance, administration and performance of their respective powers
and duties hereunder. Without limiting the generality of the foregoing, except
as provided herein, neither the Custodian nor the Depositary shall have any duty
or responsibility for and shall not be deemed to have been negligent with
respect to, and the Issuer shall indemnify and hold harmless the Custodian and
the Depositary against, any claim (i) that a Global Note is not genuine or (ii)
that disclosure with respect to applicable laws was not made in connection with
the offering of the Senior Notes. Notwithstanding any provisions of this
Deposit and Custody Agreement to the contrary, the obligations of the Issuer to
indemnify the Custodian and the Depositary under this Section 4.09 shall survive
the termination of this Deposit and Custody Agreement.
(b) In case any claim shall be made or action brought against the
Custodian or the Depositary for any reason for which indemnity may be sought
against the Issuer or Bermuda Holdings as provided above, the Custodian or the
Depositary shall promptly notify the Issuer and Bermuda Holdings in writing
setting forth the particulars of such claim or action and the Issuer or Bermuda
Holdings may assume the defense thereof. In the event that the Issuer or
Bermuda Holdings assumes the defense, the Custodian and the Depositary shall
have the right to retain separate counsel in any such action but shall bear the
fees and expenses of such counsel unless (i) the Issuer or Bermuda Holdings
shall have specifically authorized the retaining of such counsel at its expense
or (ii) the parties to such suit include the Custodian or the Depositary and the
Issuer or Bermuda Holdings, and the Custodian or the Depositary, as the case may
be, has been advised in writing by such counsel that one or more legal defenses
may be available to it which may not be available to the Issuer or Bermuda
Holdings. Each of the Custodian and the Depositary agrees to give all
assistance reasonably required in connection with the conduct of any such claim
or action, including permitting proceedings to be brought in its name. The
Custodian and the Depositary shall not compromise or settle any claim or action
hereunder or in connection with the Global Notes or the Global Receipts without
the prior written consent of the Issuer.
(c) As used in this Section 4.09, the term "Liability" shall include
any losses, claims, damages, expenses (including without limitation the
Custodian's or the Depositary's respective reasonable costs and expenses in
defending itself against any losses, claims or investigations of any nature
whatsoever) or other liabilities, joint or several, arising for any reason under
this Deposit and Custody Agreement.
17
<PAGE>
(d) The obligations of the Issuer and Bermuda Holdings under this
Section 4.09 shall be in addition to any liability which either may otherwise
have and shall extend, upon the same terms and conditions, to each officer,
director, employee and agent of the Custodian or the Depositary and to each
person, if any, who controls the Custodian or the Depositary.
(e) The obligations set forth in Section 4.04 and this Section 4.09
shall survive the termination of this Deposit and Custody Agreement.
ARTICLE V
Amendment and Termination
SECTION 5.01. Amendment. (a) Subject to the provisions of this
---------
Section 5.01, this Deposit and Custody Agreement and the form of Global Receipt
may be amended with the written approval of the parties hereto in writing.
(b) The consent of the Holder shall not be required in connection
with any amendment (i) to cure any formal defect, omission, inconsistency or
ambiguity in this Deposit and Custody Agreement, (ii) to add to the covenants
and agreements of the Custodian, the Depositary, the Issuer or Bermuda Holdings,
(iii) to effectuate the assignment of the Custodian's or the Depositary's rights
and duties hereunder to a qualified successor as provided herein, (iv) to comply
with the Securities Act, the Exchange Act or the U.S. Investment Company Act of
1940, as from time to time amended, or (v) to modify, alter, amend or supplement
this Deposit and Custody Agreement in any other respect not inconsistent
herewith which, in the opinion of counsel acceptable to the Issuer and the
Depositary, is not adverse to the Holder. Except for the amendments made
pursuant to clauses (i) through (v) above, no amendment which adversely affects
the Holder may be made to this Deposit and Custody Agreement or the form of
Global Receipt without the consent of the Holder.
SECTION 5.02. Termination. The Depositary shall at any time at the
-----------
direction of the Issuer or Bermuda Holdings terminate this Deposit and Custody
Agreement by mailing a notice of such termination to the Holder and requesting,
on behalf of the Custodian in accordance with Section 2.6 of the Indenture, that
the Issuer issue, and the Trustee authenticate, Definitive Senior Notes to the
persons and in the amounts as specified by the Holder. Upon the issuance of
such Definitive Senior Notes, in an aggregate principal amount equal to the
aggregate principal amount of Senior Notes outstanding, this Deposit and Custody
Agreement shall terminate.
18
<PAGE>
ARTICLE VI
Miscellaneous
SECTION 6.01. Governing Laws. This Deposit and Custody Agreement
--------------
and the Global Receipts shall be governed by the laws of the State of New York,
without regard to the conflict of laws provisions therein.
SECTION 6.02. Assignment. The rights and obligations of the parties
----------
to this Deposit and Custody Agreement may not be assigned except that the
Depositary or the Custodian shall assign its rights and procure assumption of
its obligations hereunder to and by a successor depositary or successor
custodian, as the case may be, appointed in accordance with the terms hereof.
SECTION 6.03. Counterparts. This Deposit and Custody Agreement may
------------
be executed in any number of counterparts by the parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 6.04. Severability. In case any one or more of the
------------
provisions contained in this Deposit and Custody Agreement or in a Global
Receipt should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 6.05. Notices. Notices hereunder shall be mailed or
-------
delivered as follows:
To the Depositary:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust Administration
Telephone No.: 212-946-3352
Telecopy No.: 212-946-8177
19
<PAGE>
To the Custodian:
Chase Manhattan Bank Luxembourg S.A.
5 rue Plaetis
L-2338, Luxembourg
Attention: Corporate Trust Department
Telephone No.: 011-352-46-268-5223
Telecopy No.: 011-352-46-268-5380
To the Issuer:
Terra Nova Insurance (UK) Holdings plc
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP Great Britain
Attention: Company Secretary
Telephone No.: 011-44-171-283-3000
Telecopy No.: 011-44-171-283-1749
To Bermuda Holdings:
Terra Nova (Bermuda) Holdings Ltd.
Richmond House, 2nd Floor
12 Par-La-Ville Road
Hamilton HM 08, Bermuda
Attention: Secretary
Telephone No.: 809-292-7731
Telecopy No.: 809-292-7572
20
<PAGE>
To the Trustee:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust Administration
Telephone No.: 212-946-3352
Telecopy No.: 212-946-8177
or as to each party at such other address as shall be designated by such party
in a written notice to the other parties. Any communication so addressed and
mailed or delivered to the Depositary, the Custodian, the Trustee, Bermuda
Holdings or the Issuer shall be deemed to be given when received.
SECTION 6.06. Section Headings. The section headings in this Deposit
----------------
and Custody Agreement are for convenience of reference only and shall not be
deemed to alter or affect any provision hereof.
SECTION 6.07. Third Party Beneficiaries. This Deposit and Custody
-------------------------
Agreement is for the exclusive benefit of the parties hereto and shall not be
deemed to give any legal or equitable right, remedy or claim whatsoever to any
other person; provided, however, that the Holder and any Beneficial Owner shall
be intended third party beneficiaries of this Deposit and Custody Agreement.
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
THE CHASE MANHATTAN BANK,
as Depositary
By:_______________________________________________
CHASE MANHATTAN BANK LUXEMBOURG S.A.,
as Custodian
By:_______________________________________________
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
By:_______________________________________________
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By:_______________________________________________
22
<PAGE>
THE CHASE MANHATTAN BANK,
as Trustee
By:_______________________________________________
23
<PAGE>
Exhibit A
---------
[FORM OF RESTRICTED GLOBAL RECEIPT]
UNLESS THIS GLOBAL RECEIPT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE DEPOSITARY UNDER THE
DEPOSIT AND CUSTODY AGREEMENT DATED AS OF AUGUST 26, 1997 AMONG THE CHASE
MANHATTAN BANK AS DEPOSITARY, CHASE MANHATTAN BANK LUXEMBOURG S.A., AS
CUSTODIAN, THE CHASE MANHATTAN BANK AS TRUSTEE, TERRA NOVA INSURANCE (UK)
HOLDINGS PLC, AND TERRA NOVA (BERMUDA) HOLDINGS LTD FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL RECEIPT ISSUED IS REGISTERED IN
THE NAME CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE TO CEDE
& CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS GLOBAL RECEIPT HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING ITS INTEREST IN THIS GLOBAL RECEIPT IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER ITS INTEREST IN THIS GLOBAL
RECEIPT EXCEPT, (A) TO BERMUDA HOLDINGS OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
<PAGE>
SECURITIES ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM ITS
INTEREST IN THIS GLOBAL RECEIPT IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF AN INTEREST IN THIS GLOBAL RECEIPT IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
THE CHASE MANHATTAN BANK, AS DEPOSITARY
GLOBAL RECEIPT
representing
7.2% SENIOR NOTES DUE 2007
CUSIP NO. 88100D AB 1
of
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
(Incorporated under the laws of England)
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
(Incorporated under the laws of Bermuda)
THE CHASE MANHATTAN BANK, a New York banking corporation, as
depositary (the "Depositary"), hereby certifies that Cede & Co., as the nominee
of The Depository Trust Company, is the registered owner of this Global Receipt
representing a 100% interest in a global note in bearer form representing
$75,000,000 (less the principal amount, if any, of any outstanding Regulation S
Global Note (as defined in the Indenture) and any Definitive Senior Notes
evidencing such Notes, as reflected in the records of the Trustee) aggregate
principal amount of 7.2% Senior Notes due 2007 (the "Senior Notes") of Terra
Nova Insurance (UK) Holdings plc (the "Company"), which Senior Notes are fully
and unconditionally guaranteed by Terra Nova (Bermuda) Holdings Ltd. (the
"Guarantor"). The Senior Notes were issued
2
<PAGE>
pursuant to an Indenture (the "Indenture"), dated as of August 26, 1997, among
the Company, the Guarantor and The Chase Manhattan Bank, as Trustee.
THE CHASE MANHATTAN BANK,
as Depositary
By:_____________________________________
Authorized Signatory
The address of the Depositary's office is 450 West 33rd Street, 15th
Floor, New York, New York 10001.
<PAGE>
Exhibit B
---------
[FORM OF REGULATION S GLOBAL RECEIPT]
UNLESS THIS GLOBAL RECEIPT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE DEPOSITARY UNDER THE
DEPOSIT AND CUSTODY AGREEMENT DATED AS OF AUGUST 26, 1997 AMONG THE CHASE
MANHATTAN BANK, AS DEPOSITARY, CHASE MANHATTAN BANK LUXEMBOURG S.A., AS
CUSTODIAN, THE CHASE MANHATTAN BANK, AS TRUSTEE, TERRA NOVA INSURANCE (UK)
HOLDINGS PLC, AND TERRA NOVA (BERMUDA) HOLDINGS LTD FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL RECEIPT ISSUED IS REGISTERED IN
THE NAME CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE TO CEDE
& CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE CHASE MANHATTAN BANK, AS DEPOSITARY
GLOBAL RECEIPT
representing
7.2% SENIOR NOTES DUE 2007
CUSIP NO. G87617 AA 7
of
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
(Incorporated under the laws of England)
<PAGE>
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
(Incorporated under the laws of Bermuda)
THE CHASE MANHATTAN BANK, a New York banking corporation, as
depositary (the "Depositary"), hereby certifies that Cede & Co., as the nominee
of The Depository Trust Company, is the registered owner of this Global Receipt
representing a 100% interest in a global note in bearer form representing
$75,000,000 (less the principal amount, if any, of any outstanding Restricted
Global Note (as defined in the Indenture) and any Definitive Senior Notes
evidencing such Notes, as reflected in the records of the Trustee) aggregate
principal amount of 7.2% Senior Notes due 2007 (the "Senior Notes") of Terra
Nova Insurance (UK) Holdings plc (the "Company"), which Senior Notes are fully
and unconditionally guaranteed by Terra Nova (Bermuda) Holdings Ltd. (the
"Guarantor"). The Senior Notes were issued pursuant to an Indenture (the
"Indenture"), dated as of August 26, 1997, among the Company, the Guarantor and
The Chase Manhattan Bank, as Trustee.
THE CHASE MANHATTAN BANK,
as Depositary
By:_____________________________________
Authorized Signatory
The address of the Depositary's office is 450 West 33rd Street, 15th
Floor, New York, New York 10001.
2
<PAGE>
Exhibit C
---------
[FORM OF EXCHANGE NOTE GLOBAL RECEIPT]
UNLESS THIS GLOBAL RECEIPT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE DEPOSITARY UNDER THE
DEPOSIT AND CUSTODY AGREEMENT DATED AS OF AUGUST 26, 1997 AMONG THE CHASE
MANHATTAN BANK, AS DEPOSITARY, CHASE MANHATTAN BANK LUXEMBOURG S.A., AS
CUSTODIAN, THE CHASE MANHATTAN BANK, AS TRUSTEE, TERRA NOVA INSURANCE (UK)
HOLDINGS PLC, AND TERRA NOVA (BERMUDA) HOLDINGS LTD FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL RECEIPT ISSUED IS REGISTERED IN
THE NAME CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE TO CEDE
& CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE CHASE MANHATTAN BANK, AS DEPOSITARY
GLOBAL RECEIPT
representing
7.2% SENIOR NOTES DUE 2007
of
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
(Incorporated under the laws of England)
<PAGE>
Guaranteed by
TERRA NOVA (BERMUDA) HOLDINGS LTD.
(Incorporated under the laws of Bermuda)
THE CHASE MANHATTAN BANK, a New York banking corporation, as
depositary (the "Depositary"), hereby certifies that Cede & Co., as the nominee
of The Depository Trust Company, is the registered owner of this Global Receipt
representing a 100% interest in a global note in bearer form representing
$[_______]* aggregate principal amount of 7.2% Senior Notes due 2007 (the
"Senior Notes") of Terra Nova Insurance (UK) Holdings plc (the "Company"), which
Senior Notes are fully and unconditionally guaranteed by Terra Nova (Bermuda)
Holdings Ltd. (the "Guarantor"). The Senior Notes were issued pursuant to an
Indenture (the "Indenture"), dated as of August 26, 1997, among the Company, the
Guarantor and The Chase Manhattan Bank, as Trustee.
THE CHASE MANHATTAN BANK,
as Depositary
By:_____________________________________
Authorized Signatory
The address of the Depositary's office is 450 West 33rd Street, 15th Floor,
New York, New York 10001.
_______________________
* Include aggregate principal amount of Exchange Notes.
2
<PAGE>
Exhibit 5.1
[LETTERHEAD OF CLIFFORD CHANCE]
16 October 1997
Terra Nova Insurance (UK) Holdings plc
Terra Nova House
Mincing Lane
London EC3R 7AP (the "Issuer")
Dear Sirs,
We are rendering this opinion to you in connection with an exchange offer
registration statement (on forms S-4 and F-4) which is to be filed with the
Securities and Exchange Commission ("SEC") on 15 October 1997 (the "Registration
Statement") which relates to an offer to exchange US$75,000,00 7.2% senior
guaranteed notes due 2007 which were issued by the Issuer on 26 August 1997 (the
"Old Notes) for an identical principal amount of 7.2% senior guaranteed notes
due 2007 (the "Exchange Notes"). The Exchange Notes were constituted by an
indenture dated 26 August 1997 (the "Indenture") between The Chase Manhattan
Bank, as Trustee, the Issuer and Terra Nova (Bermuda) Holdings Ltd.
We have examined copies of:
(a) the Memorandum and Articles of Association of the Issuer confirmed by the
secretary of the Issuer as being those now in force;
(b) copy resolutions of the board of directors of the Issuer passed on 15
October 1997;
(c) an executed copy dated 26 August 1997 of the Indenture; and
<PAGE>
(d) a copy of the draft Registration Statement and the prospectus (the
"Prospectus") dated 14 October 1997 the final form of which is to be
incorporated in the Registration Statement and to be issued on 16 October
1997 in respect of the Exchange Notes.
Our opinion is confined solely to the laws of England.
The Indenture and the Exchange Notes are expressed to be governed by the laws of
New York. We have made no investigation of such laws and do not express or
imply any opinions on such laws. In addition, we have assumed that, so far as
the laws of New York are concerned, the Indenture and the Exchange Notes will
constitute legal, valid and binding obligations of the Issuer and that such laws
do not qualify or affect our opinion as set out below.
We have also assumed that:
(i) in so far as any obligation falls to be performed in any jurisdiction
outside England, its performance will not be illegal or ineffective by
virtue of the laws of that jurisdiction;
(ii) all signatures on the executed documents which, or copies of which, we
have examined are genuine;
(iii) each of the parties to the Indenture, other than the Issuer, is able
lawfully to enter into such instrument;
(iv) the execution and delivery of the Indenture has been or, when such
instrument is executed and delivered, will have been duly authorised,
executed and delivered by each of the parties thereto (other than the
Issuer);
(v) that the Indenture has been and the Exchange Notes will be executed before
issue of the Exchange Notes in or substantially in the form examined by us
and in
2
<PAGE>
accordance with the procedures specified in the Board Resolutions;
(vi) the Memorandum and Articles of Association of the Issuer which we have
examined are those now in force and the Resolution which we have examined
were passed at a meeting duly convened and held;
(vii) the issue of the Exchange Notes will not cause any limit on borrowings to
which the Issuer is subject to be exceeded.
On the basis of the foregoing, and having regard to such legal considerations as
we deem relevant and subject as set out below, we are of the opinion that:
1. subject to paragraph 2, the Issuer is duly incorporated and validly
existing as a public company with limited liability (having re-registered
as a public limited company under the Companies Act 1985 on 8 June 1995)
under the laws of England;
2. We have on 14 October 1997 made a search of the Companies Registry in
London which revealed no order or resolution for the winding-up of the
Issuer and no order of appointment of a receiver or administrator with
respect to the Issuer. However, the search would not reveal whether or not
a winding-up petition has been presented. Furthermore, it is possible that
notice of a winding up order made or resolution passed or a receiver or
administrator appointed may not have been filed at the Companies Registry
immediately. We have also on 14 October 1997 made enquiry of the Companies
Court which has informed us that it has on its central index no record of
the presentation of any winding-up petition in respect of the Issuer. We
are assuming that there has been no change in the position since the
searches were made.
3
<PAGE>
3. The Issuer has all requisite corporate power to enter into the Indenture
and to issue the Exchange Notes (including the global note) and to perform
its obligations thereunder, the Indenture and the Exchange Notes (in the
form of the global note) have been duly authorised, executed and delivered
by the Issuer in accordance with the laws of England and the Memorandum
and Articles of Association of the Issuer, and there is no reason, so far
as English law is concerned, why the Indenture, the Exchange Notes and the
Definitive Senior Notes (if and when they have been executed,
authenticated and delivered as provided in the Indenture) will not
constitute legal, valid and binding obligations of the Issuer.
The opinions expressed in paragraphs 1 to 3 inclusive above are subject to the
following:
(a) a search at the Companies Registry is not capable of revealing whether or
not a winding-up petition or a petition for the making of an
administration order has been presented;
(b) notice of a winding-up order or resolution, notice of an administration
order and notice of the appointment of a receiver may not be filed at the
Companies Registry immediately and there may be a delay in the relevant
notice appearing on the file of the company concerned;
(c) Nothing in this opinion shall be taken as implying that an English court
would exercise jurisdiction in any proceedings relating to the Indenture
or the Exchange Notes (including the global note), or accordingly that any
remedy would be available in England for the enforcement of obligations
arising under the Indenture or the Exchange Notes (including the global
note). However, in our opinion, if an English court were to accept
jurisdiction it is highly likely that the English courts would give
4
<PAGE>
effect to the choice of New York law as the governing law of the Indenture
and the Exchange Notes.
(d) There could be circumstances in which an English court would not treat as
conclusive those certificates and determinations which the Indenture and
the Exchange Notes state are to be so treated (for example, where a
discretion is vested in any person or a person may determine a matter in
its opinion, if the discretion is not exercised reasonably or if the
opinion is not based on reasonable grounds).
(e) Our opinion as regards the binding nature and enforceability of the
obligations of the Issuer under the Exchange Notes and the Indenture are
subject to all limitations arising from bankruptcy, insolvency,
liquidation, reorganisation, moratorium or similar laws affecting the
rights of creditors generally.
(f) Any provision in the Indenture which involves an indemnity for the costs
of litigation is subject to the discretion of any English court (where
relevant) to decide whether and to what extent a party to litigation
should be awarded the costs incurred by it in connection with the
litigation.
(g) Except as expressly mentioned in this opinion, we have not investigated or
verified the truth or accuracy of the information contained in the
Registration Statement or Prospectus nor have we been responsible for
ensuring that no material information has been omitted therefrom.
This opinion shall be construed in accordance with English law. We express no
opinion as to any agreement, instrument or other document other than as
specified in this letter. We hereby consent to the filing of this opinion with
the SEC with and as part of the Registration Statement and to the use of our
name therein and in the Prospectus contained in
5
<PAGE>
the Registration Statement. In giving this consent, we do not hereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 of the United States.
The above consent is given on the basis that our name is not used in any
subsequent Registration Statement (or the Prospectus contained in it) except in
an amendment or supplement to such Registration Statement, including post-
effective amendments.
This opinion is given solely for the purposes of filing the Registration
Statement and for the information of the persons to whom it is addressed and may
not be relied upon for any other purpose or by any other person.
Yours faithfully,
Clifford Chance
6
<PAGE>
Exhibit 5.2
[LETTERHEAD OF CONYERS, DILL & PEARMAN]
October 16, 1997
Terra Nova (Bermuda) Holdings Ltd.
Richmond House
12 Par-la-Ville Road
Hamilton
Bermuda
Terra Nova Insurance (UK) Holdings PLC
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP
Great Britain
Dear Sirs,
RE: TERRA NOVA (BERMUDA) HOLDINGS, LTD. (THE "COMPANY")
EXCHANGE OFFER OF US$75,000,000 7.2% SENIOR NOTES DUE 2007
We have acted as special legal counsel to Terra Nova (Bermuda) Holdings, Ltd. a
Bermuda corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Forms F-4 and S-4 under the Securities Act of 1933, as amended (the
"Registration Statement"), related to the exchange of $75,000,000 aggregate
principal amount of its 7.2% Senior Notes due 2007 of Terra Nova Insurance (UK)
Holdings plc, fully and unconditionally guaranteed on a senior basis by the
Company.
For the purposes of giving this opinion, we have examined the following
documents:
<PAGE>
(i) a copy of an indenture dated as of August 26, 1997 among the
Issuer, the Company and Chase Manhattan Bank, as trustee (the
"Indenture")
(ii) the form of guarantee set out in Exhibit D of the Indenture (the
"Guarantee") to be endorsed on the global note to be issued
pursuant to the Indenture.
The Indenture and the Guarantee are herein sometimes collectively referred to as
the "Documents".
We have also reviewed and relied upon the memorandum of association and the bye-
laws of the Company, minutes of a meeting and its directors held on August 5,
1997 certified by the General Counsel of the Company, and such other documents
and made such enquiries as to questions of law as we have deemed necessary in
order to render the opinions set forth below.
We have assumed:
(i) the genuineness and authenticity of all signatures and the conformity to
the originals of all copies (whether or not certified) of all documents
examined by and the authenticity and completeness of the originals from
which such copies were taken;
(ii) the capacity, power and authority of each of the parties to the
Documents, other than the Company, to enter into and perform its
respective obligations under the Documents;
(iii) the due execution and delivery of the Documents by each of the parties
thereto, other than the Company;
(iv) the correctness, accuracy and completeness of all factual representations
made in the Documents and other documents reviewed by us;
2
<PAGE>
(v) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions
expressed herein;
(vi) the validity and binding effect under the laws of the State of New York
(the "Foreign Laws") of the Documents which are expressed to be subject
to such Foreign Laws in accordance with their respective terms; and
(vii) the validity under the Foreign Laws of the submission by the Company
pursuant to the Documents to the non-exclusive jurisdiction of any State
or federal court sitting in the City of New York (the "Foreign Courts").
The obligations of the Company under the Documents:
(i) will be subject to the laws from time to time in effect relating to
bankruptcy, insolvency, liquidation, possessory liens, rights of set off,
reorganization, amalgamation, moratorium or any other laws or legal
procedures, whether of a similar nature or otherwise, generally affecting
the rights of creditors;
(ii) will be subject to statutory limitation of the time within which
proceedings may be brought;
(iii) will be subject to general principles of equity and, as such, specific
performance and injunctive relief, being equitable remedies, may not be
available; and
(iv) may not be given effect to by a Bermuda court, whether or not it was
applying the Foreign Laws, if and to the extent they constitute the
payment of an amount which is in the nature of a penalty and not in the
nature of liquidated damages.
3
<PAGE>
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. This opinion is issued
solely for your benefit and is not to be relied upon by any other person, firm
or entity in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that the
Indenture has been duly executed and delivered by or on behalf of the Company,
and constitutes the valid and binding obligations of the Company enforceable in
accordance with the terms thereof and that when duly executed and delivered by
or on behalf of the Company the Guarantee will constitute the valid and binding
obligations of the Company enforceable in accordance with the terms thereof.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Yours faithfully,
CONYERS DILL & PEARMAN
4
<PAGE>
EXHIBIT 5.3
October 16, 1997
The Chase Manhattan Bank,
as Depositary
450 West 33rd Street
15th Floor
New York, New York 10001
Re: Exchange Note Global Receipt representing Senior Notes of
Terra Nova Insurance (UK) Holdings plc
---------------------------------------------------------
Gentlemen:
We refer to the registration statement to be filed on Form F-4/S-4 under
the Securities Act of 1933, as amended (the "Registration Statement") relating
to issuance of Global Receipts representing Senior Notes of Terra Nova Insurance
(UK) Holdings plc (the "Issuer") guaranteed by Terra Nova (Bermuda) Holdings
Ltd. ("Bermuda Holdings") for which you act as Depositary. Terms used as
defined, but not otherwise defined herein, have the meanings given to them in
the Deposit and Custody Agreement dated as of August 26, 1997 among the Issuer,
Bermuda Holdings, The Chase Manhattan Bank, as trustee, The Chase Manhattan
Bank, as depositary and Chase Manhattan Bank Luxembourg S.A., as custodian (the
"Deposit and Custody Agreement").
We are of the opinion that when the Exchange Note Global Receipt has
been duly executed, issued and delivered in accordance with the Deposit and
Custody Agreement, the Exchange Note Global Receipt will be legally issued and
the Exchange Note Global Receipt will entitle the holder thereof to the rights
specified in the Exchange Note Global Receipt and in the Deposit and Custody
Agreement.
The foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of New York, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. The foregoing opinion is
also subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws of general applicability
relating to or affecting the rights of creditors
<PAGE>
generally, and enforceability may be limited by general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy, (b) concepts of
materiality, reasonableness, good faith and fair dealing and (c) possible
judicial action giving effect to foreign governmental actions or foreign laws.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
RWM/RBW
<PAGE>
Exhibit 8.1
[LETTERHEAD OF CLIFFORD CHANCE]
16 October 1997
To: Terra Nova Insurance (UK) Holdings plc
Terra Nova House
Mincing Lane
London EC3R 7AP (the "Issuer")
Dear Sirs,
We are rendering this opinion to you in connection with an exchange offer
registration statement (on Forms S-4 and F-4) which is to be filed with the
Securities and Exchange Commission("SEC") on 15 October, 1997 (the "Registration
Statement") which relates to an offer to exchange US$75,000,000 7.2% senior
guaranteed notes due 2007 which were issued by the Issuer on 26 August 1997 (the
"Old Notes") for an identical principal amount of 7.2% senior guaranteed notes
due 2007 (the "Exchange Notes"). The Exchange Notes were constituted by an
indenture dated 25 August 1997 (the "Indenture") between The Chase Manhattan
Bank, as Trustee, the Issuer and Terra Nova (Bermuda) Holdings Ltd.
We have examined copies of:
(a) the Memorandum and Articles of Association of the Issuer certified by the
secretary of the Issuer as being those now in force;
(b) copy resolutions of the board of directors of the Issuer passed on 15
October 1997;
(c) an executed copy dated 26 August 1997 of the Indenture; and
(d) the draft Registration Statement and the prospectus (the "Prospectus")
dated 14 October 1997 the final form of which is to be incorporated in the
Registration Statement and to be issued on 16 October 1997 in respect of
the Exchange Notes.
<PAGE>
1997 incorporated in the Registration Statement and to be issued in respect
of the Exchange Notes.
Our opinion is confined solely to the tax laws of the United Kingdom and the
practice of the United Kingdom Inland Revenue as in force at the date of this
opinion and is confined to the matters discussed herein.
We have also assumed that:
(i) the Memorandum and Articles of Association of the Issuer, Terra Nova,
Octavian and Terra Nova Capital which we have examined are those now
in force;
(ii) the amount of interest and Additional Amounts payable on the Notes
neither exceeds a reasonable commercial return on the nominal amount
of the capital nor falls to be determined to any extent by reference
to the results of, or any part of, a business or to the value of any
property;
(iii) the Notes carry a right on repayment to an amount which does not
exceed the nominal value of the capital (or if it does, such amount
is reasonably comparable with what is generally repayable (in respect
of a similar nominal amount of capital) under the terms of issue of
loan capital issued in the Official List of The London Stock
Exchange);
(iv) the Notes do not carry a right (exercisable now or later) of
conversion into shares or other securities, or to the acquisition of
shares or other securities, including loan capital of the same
description.
Opinion
On the basis of the foregoing, we are of the opinion that the discussion of tax
matters set forth under the headings
2
<PAGE>
"Certain Tax Considerations - Certain U.K., U.S. and Bermuda Tax
Considerations," "Certain Tax Considerations - Certain Tax Consequences of the
Exchange Offer -United Kingdom" and "Certain Tax Considerations - Taxation of US
Holders of the Senior Notes - United Kingdom" in the Prospectus, insofar as such
discussions relate to the tax laws of the United Kingdom, fairly summarise
(albeit that they do not provide a complete analysis) the tax laws of the United
Kingdom (subject to the qualifications and assumptions set forth in such
discussion).
We confirm that you may release this opinion upon the filing of the Registration
Statement with the SEC on 16 October 1997.
This opinion is given solely for the purposes of filing the Registration
Statement and for the information of the persons to whom it is addressed and may
not be relied upon for any other purpose or by any other person.
Yours faithfully,
Clifford Chance
3
<PAGE>
Exhibit 8.2
[LETTERHEAD OF CONYERS, DILL & PEARMAN]
October 16, 1997
Terra Nova (Bermuda) Holdings Ltd.
Richmond House
12 Par-la-Ville Road
Hamilton
Bermuda
Dear Sirs,
RE: REGISTRATION STATEMENT ON FORMS F-4 AND S-4
We have acted as special legal counsel to Terra Nova (Bermuda) Holdings Ltd., a
Bermuda corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Forms F-4 and S-4 under the Securities Act of 1933, as amended (the
"Registration Statement"), related to the exchange of $75,000,000 aggregate
principal amount of its 7.2% Senior Notes due 2007 of Terra Nova Insurance (UK)
Holdings plc, fully and unconditionally guaranteed on a senior basis by the
Company.
As such counsel, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of the Registration Statements, the Memorandum
of Association and Bye-Laws of the Company as well as resolutions of the
Company's Board of Directors. We have also examined originals, or copies
certified to our satisfaction, of such corporate records of the Company and
other instruments, certificates of appropriate public officials and certificates
of officers and representatives of the Company and other documents as we have
deemed necessary as a basis for the opinions hereinafter expressed. In such
examination, we have assumed the authenticity of all documents submitted to us
as originals, the conformity with the originals of all documents submitted to us
as copies,
<PAGE>
the genuineness of all signatures and the legal capacity of natural persons.
On the basis of the foregoing, we are of the opinion that the discussions set
forth in the prospectus contained in the Registration Statement under the
headings "CERTAIN TAX CONSIDERATIONS--Certain U.K., U.S. and Bermuda Tax
Considerations," "CERTAIN TAX CONSIDERATIONS--Certain Tax Consequences of the
exchange Offer" and "CERTAIN TAX CONSIDERATIONS--Certain U.K., U.S. and Bermuda
Tax Considerations--Bermuda" accurately reflect our opinion as to such matters.
We are members of the bar of Bermuda and we have made no investigation of and
express no opinion in relation to the laws of any jurisdiction other than
Bermuda. This opinion is to be governed by and construed in accordance with the
laws of Bermuda and is limited to and is given on the basis of the current law
and practice in Bermuda.
We consent to the filing of this opinion as an exhibit to the Registration
Statement. We also consent to the reference made to us under the captions
"Enforceability of Civil Liabilities", "Risk Factors--Enforcement of Judgments"
and "Certain Tax Considerations" in the prospectus contained in the Registration
Statement.
Yours faithfully,
CONYERS DILL & PEARMAN
2
<PAGE>
Exhibit 12.1
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31, 6 Months to June 30,
------------------------------------------------ --------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest portion of rental expense (1) 822 678 900 752 1,266 633 696
Amortization of deferred debt issuance costs 118 438 227 242
Interest on indebtedness 221 9,411 10,750 5,375 5,375
-----------------------------------------------------------------------
822 678 1,121 10,281 12,454 6,235 6,313
=======================================================================
Earnings before tax, discontinued operations and
minority interests (49,599) 81,869 50,737 62,433 82,668 45,256 43,700
Fixed Charges 822 678 1,121 10,281 12,454 6,235 6,313
-----------------------------------------------------------------------
Earnings from continuing operations before income taxes
and fixed charges (48,777) 82,547 51,858 72,714 95,122 51,491 50,013
=======================================================================
Ratio of earnings to fixed Charges N/M N/M N/M 7.07 7.64 8.26 7.92
</TABLE>
- - ---------------
(1) Represents 1/3 of rental expense which the Company's management believes to
be representative of the interest portion.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE ISSUER AND BERMUDA HOLDINGS
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation % Owned
- - ---------------------------------------------------- ----------------- --------
<S> <C> <C>
Terra Nova (Bermuda) Holdings Ltd. Bermuda 100%
Terra Nova (Bermuda) Insurance Co. Bermuda 100%
TN Investments Ltd. Bermuda 100%
Terra Nova Underwriting Agency Ltd. Bermuda 100%
Terra Nova Insurance (UK) Holdings plc England and Wales 100%
Terra Nova Asset Management Limited England and Wales 100%
Octavian Syndicate Management Limited England and Wales 100%
Octavian Computer Services Limited England and Wales 100%
Octavian Leasing Limited England and Wales 100%
Terra Nova Capital Limited England and Wales 100%
Terra Nova Insurance Company Limited England and Wales 100%
Terra Nova S.A.S. France 100%
Compagnie de Reassurance d'Ile de France France 100%
Terra Nova Pension Trustee Limited England and Wales 100%
</TABLE>
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement on
Forms F-4 and S-4 dated October 16, 1997 related to the offering of Senior Notes
due 2007 (the "Exchange Notes") by Terra Nova Insurance (UK) Holdings plc fully
and unconditionally guaranteed by Terra Nova (Bermuda) Holdings Ltd. ("Bermuda
Holdings"), of our report dated February 26, 1997 included in the annual report
on Form 10-K for the year ended December 31, 1996 (the "Form 10-K") of Bermuda
Holdings, on our audit of the consolidated financial statements of Bermuda
Holdings and subsidiaries as of December 31, 1995 and 1996 and for each of the
two years in the period ended December 31, 1996 and the consolidated financial
statements of Terra Nova Insurance Company Limited (the Predecessor) and
subsidiaries for the year ended December 31, 1994, and of our report dated
February 26, 1997 included in the Form 10-K of Bermuda Holdings, on the
financial statement schedules listed in Item 14 therein. We also consent to the
reference to our firm under the caption "Experts".
Coopers & Lybrand
Hamilton, Bermuda
October 16, 1997
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each undersigned does hereby
make, constitute and appoint William O. Bailey, John Riddick, John J. Dwyer,
Jean M. Waggett, William J. Wedlake and Peter W. Norledge, and each of them,
with full power to act without the other, his or her true and lawful attorney-
in-fact and agent, in his or her name, place and stead to execute on his or her
behalf, as an officer and/or director of Terra Nova Insurance (UK) Holdings plc
(the "Company"), the Registration Statement of the Company on Forms S-4 and F-4
(the "Registration Statement") for the registration of up to $75,000,000
aggregate principal amount of 7.2% Senior Notes due 2007 to be issued by the
Company and fully and unconditionally guaranteed by Terra Nova (Bermuda)
Holdings Ltd. (the "Exchange Notes") and any and all amendments (including post-
effective amendments) to the Registration Statement, and file the same with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of
1933, as amended (the "Act"), and any and all other instruments which either of
said attorneys-in-fact and agents deem necessary or advisable to enable the
Company to comply with the Act, the rules, regulations and requirements of the
SEC in respect thereof, and the securities or Blue Sky laws of any State or
other governmental subdivision, giving and granting to each of said attorneys-
in-fact and agents full power and authority to do and perform each and every act
and thing whatsoever necessary or appropriate to be done in and about the
premises as fully to all intents as he or she might or could do if personally
present at the doing thereof, with full power of substitution and
resubstitution, hereby ratifying and confirming all that his or her said
attorney-in-fact and agents or substitutes may or shall lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, each undersigned has hereunto set his hand on the
date indicated below:
/s/ John Riddick Chairman and Managing Director
- - ------------------------- (Principal Executive Officer)
John Riddick
/s/ William J. Wedlake Chief Financial Officer and Director
- - ------------------------- (Principal Financial and Accounting Officer)
William J. Wedlake
/s/ William O. Bailey Director
- - -------------------------
William O. Bailey
/s/ Nigel H.J. Rogers Director
- - -------------------------
Nigel H.J. Rogers
/s/ Peter Norledge Secretary and Director
- - -------------------------
Peter Norledge
/s/ John J. Dwyer Director
- - -----------------------
John J. Dwyer
/s/ Anthony F. Aldridge Director
- - -----------------------
Anthony F. Aldridge
Dated: October 15, 1997
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each undersigned does hereby
make, constitute and appoint William O. Bailey, John Riddick, John J. Dwyer,
Jean M. Waggett, William J. Wedlake and Peter W. Norledge, and each of them,
with full power to act without the other, his or her true and lawful attorney-
in-fact and agent, in his or her name, place and stead to execute on his or her
behalf, as an officer and/or director of Terra Nova (Bermuda) Holdings Ltd. (the
"Company"), the Registration Statement of the Company on Forms S-4 and F-4 (the
"Registration Statement"), for the registration of its full and unconditional
guarantee of up to $75,000,000 aggregate principal amount of 7.2% Senior Notes
due 2007 to be issued by Terra Nova Insurance (UK) Holdings plc (the "Exchange
Notes"), and any and all amendments (including post-effective amendments) to the
Registration Statement, and file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
(the "SEC") pursuant to the Securities Act of 1933, as amended (the "Act"), and
any and all other instruments which either of said attorneys-in-fact and agents
deem necessary or advisable to enable the Company to comply with the Act, the
rules, regulations and requirements of the SEC in respect thereof, and the
securities or Blue Sky laws of any State or other governmental subdivision,
giving and granting to each of said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing whatsoever necessary or
appropriate to be done in and about the premises as fully to all intents as he
or she might or could do if personally present at the doing thereof, with full
power of substitution and resubstitution, hereby ratifying and confirming all
that his or her said attorney-in-fact and agents or substitutes may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each undersigned has hereunto set his hand on the
date indicated below:
/s/ William O. Bailey Chairman and Chief Executive Officer
- - ------------------------- (Principal Executive and Accounting Officer)
William O. Bailey
/s/ William J. Wedlake Chief Financial Officer
- - ------------------------- (Principal Financial Officer)
William J. Wedlake
/s/ John Riddick Deputy Chairman
- - ------------------------- and Director
John Riddick
/s/ John J. Dwyer Deputy Chairman
- - ------------------------- and Director
John J. Dwyer
/s/ Nigel H.J. Rogers Deputy Chairman
- - ------------------------- and Director
Nigel H.J. Rogers
/s/ David L. Jaffe Director
- - -------------------------
David L. Jaffe
/s/ Allan W. Fulkerson Director
- - ----------------------
Allan W. Fulkerson
/s/ Hugh P. Lowenstein Director
- - ----------------------
Hugh P. Lowenstein
/s/ Robert S. Fleischer Director
- - -----------------------
Robert S. Fleischer
/s/ Mark J. Byrne Director
- - -----------------------
Mark J. Byrne
<PAGE>
/s/ Philip F. Petronis Director
- - -------------------------
Philip F. Petronis
/s/ Jean M. Waggett Senior Vice President,
- - ------------------------- Secretary and General Counsel
Jean M. Waggett
/s/ Steven J. Gilbert Director
- - -----------------------
Steven J. Gilbert
Dated: October 15, 1997
2
<PAGE>
-------------------------------------------------------------------
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)
-------------------------------------------------------
Terra Nova Insurance (UK) Holdings PLC
(Exact name of obligor as specified in its charter)
England and Wales Not Applicable
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP, Great Britain
(171) 283-3000
(Address of principal executive offices) (Zip Code)
---------------------------------------------------
7.2% Senior Notes due 2007
(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 8th day of October, 1997.
THE CHASE MANHATTAN BANK
By /s/ David G. Safer
--------------------
/s/ David G. Safer
- 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 June 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin............................................. $ 13,892
Interest-bearing balances..................................... 4,282
Securities:...................................
Held to maturity securities..................................... 2,857
Available for sale securities................................... 34,091
Federal funds sold and securities purchased
under agreements to resell..................................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income $124,827
Less: Allowance for loan and lease losses 2,753
Less: Allocated transfer risk reserve...... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve........................................ 122,061
Trading Assets.................................................. 56,042
Premises and fixed assets (including
capitalized leases)............................................ 2,904
Other real estate owned......................................... 306
Investments in unconsolidated subsidiaries and
associated companies.......................................... 232
Customers' liability to this bank on
acceptances outstanding........................................ 2,092
Intangible assets............................................... 1,532
Other assets.................................................... 10,448
--------
TOTAL ASSETS.................................................... $280,709
========
</TABLE>
- 4 -
<PAGE>
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices............................................ $ 91,249
Noninterest-bearing.................................... $38,157
Interest-bearing....................................... 53,092
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's...................................................... 70,192
Noninterest-bearing ................................... $ 3,712
Interest-bearing...................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase.............................................. 35,185
Demand notes issued to the U.S. Treasury......................... 1,000
Trading liabilities.............................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less.................. 4,593
With a remaining maturity of more than one year
through three years....................................... 260
With a remaining maturity of more than three years............. 146
Bank's liability on acceptances executed and outstanding......... 2,092
Subordinated notes and debentures................................ 5,715
Other liabilities................................................ 11,373
TOTAL LIABILITIES................................................ 264,112
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus.................... 0
Common stock..................................................... 1,211
Surplus (exclude all surplus related to preferred stock)........ 10,283
Undivided profits and capital reserves........................... 5,280
Net unrealized holding gains (losses)
on available-for-sale securities................................. (193)
Cumulative foreign currency translation adjustments.............. 16
TOTAL EQUITY CAPITAL............................................. 16,597
------
TOTAL LIABILITIES AND EQUITY CAPITAL............................. $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
Exhibit 99.1
------------
LETTER OF TRANSMITTAL
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
OFFER TO EXCHANGE ITS 7.2% SENIOR NOTES DUE 2007
("EXCHANGE NOTES"), FULLY AND UNCONDITIONALLY GUARANTEED BY
TERRA NOVA (BERMUDA) HOLDINGS LTD.
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OUTSTANDING 7.2% SENIOR NOTES DUE 2007 ("OLD NOTES"),
PURSUANT TO THE PROSPECTUS DATED OCTOBER __, 1997
- - --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER
___, 1997, OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY BE
EXTENDED (SUCH DATE AND TIME, THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE.
- - --------------------------------------------------------------------------------
To: The Chase Manhattan Bank, Exchange Agent
By Hand or Overnight Facsimile Transmissions: By Registered Or
Delivery: (Eligible Institutions Certified Mail:
Only)
The Chase Manhattan Bank (212) 946-8177 The Chase Manhattan Bank
450 W. 33rd St. 450 W. 33rd St.
15th Floor 15th Floor
New York, New York 10001 To Confirm by Telephone New York, New York 10001
or for Information Call:
Attention: Corporate Attention: Corporate
Trust Administration (212) 946-3352 Trust Administration
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER
THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW
-----------
The undersigned acknowledges that he, she or it has received and
reviewed the Prospectus, dated October __, 1997 (the "Prospectus"), of Terra
Nova Insurance (UK) Holdings plc, a public limited company organized under
the laws of England and Wales ("the Issuer"), and this Letter of Transmittal
(the "Letter of Transmittal"), which together constitute the Issuer's offer
(the "Exchange Offer") to exchange up to $75,000,000 aggregate principal
amount of its Exchange Notes, which are fully and unconditionally guaranteed
by Terra Nova (Bermuda) Holdings Ltd. ("Bermuda Holdings"), which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount of its issued and outstanding 7.2% Senior
Notes due 2007 (the "Old Notes"). The Exchange Notes and the Old Notes are
collectively referred to as the "Senior Notes." Capitalized terms used but
not defined herein have the meanings ascribed to them in the Prospectus.
This Letter of Transmittal is to be completed by holders of Old
Notes who wish to tender their Old Notes pursuant to the Tender Offer. In
addition, either (i) a timely confirmation of a book-entry transfer of Old
Notes (a "Book-Entry Confirmation") into an account maintained by the Exchange
Agent at DTC, pursuant to the procedures set forth in "The Exchange Offer--
Book-Entry Transfer" in the Prospectus, must be received by the Exchange Agent
prior to the Expiration Date, or (ii) the holder must comply with the
guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" in the Prospectus. Delivery of this Letter of
Transmittal and any other required documents should be made to the Exchange
Agent. Delivery of documents to DTC does not constitute delivery to the
Exchange Agent.
Holders who cannot deliver the documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Old Notes
according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 1. Any financial institution that is a participant in DTC's
systems can execute the tender through the DTC
<PAGE>
Automated Tender Offer Program ("ATOP"), for which the transaction will be
eligible. DTC participants should transmit their acceptance to DTC, which
will verify the acceptance and execute a book-entry delivery to the Exchange
Agent's account at DTC. DTC will then send an Agent's Message to the Exchange
Agent for its acceptance. DTC participants may also accept the Exchange Offer
by submitting a notice of guaranteed delivery through ATOP. SEE INSTRUCTION
1. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The undersigned will be deemed to have tendered a beneficial interest in
the Old Notes in exchange for a beneficial interest in Exchange Notes
represented by one or more fully registered global receipts, which will be
deposited with, or on behalf of, DTC and registered in the name of Cede & Co.,
its nominee. Beneficial interests in such registered global receipts will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. See "Description of Exchange Note--
Book-Entry System" as set forth in the Prospectus.
In order to participate in the Exchange Offer, the undersigned must
complete the appropriate boxes below and sign this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the
Exchange Offer.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the Old Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the principal amount of
such Old Notes should be listed on a separate signed schedule affixed thereto.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Description of Old Notes
- - --------------------------------------------------------------------------------
DTC Participant and DTC Participant's Principal
DTC Account Number in which Amount of Old
Old Notes are Held Notes
Tendered*
- - --------------------------------------------------------------------------------
<S> <C>
---------------
---------------
- - --------------------------------------------------------------------------------
* The beneficial owner will be deemed to have tendered a beneficial interest
in the Old Notes in exchange for a beneficial interest in Exchange Notes
represented by one or more fully registered global receipts, which will be
deposited with, or on behalf of, The Depositary Trust Company and registered
in the name of Cede & Co., its nominee.
- - --------------------------------------------------------------------------------
</TABLE>
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution
---------------------------------------------------
DTC Account Number
--------------------------------------------------------------
Transaction Code Number
---------------------------------------------------------
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
----------------------------------------------------
Window Ticket Number (if any)
---------------------------------------------------
2
<PAGE>
Date of Execution of Notice of Guaranteed Delivery
------------------------------
Name of Eligible Institution that Guaranteed Delivery
---------------------------
Name of Tendering Institution
---------------------------------------------------
DTC Account Number
--------------------------------------------------------------
Transaction Code Number
---------------------------------------------------------
[_] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
[_] CHECK HERE IF YOU (I) ARE A BROKER-DEALER, (II) WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS MADE THERETO, (III) WILL RECEIVE EXCHANGE NOTES FOR YOUR OWN
ACCOUNT IN EXCHANGE FOR OLD NOTES THAT WERE ACQUIRED AS A RESULT OF MARKET
MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-
DEALER") AND (IV) ACKNOWLEDGE THAT YOU WILL DELIVER THE PROSPECTUS IN
CONNECTION WITH ANY RESALE OF SUCH NEW NOTES (BY SO ACKNOWLEDGING AND
DELIVERING THE PROSPECTUS, YOU WILL NOT, HOWEVER, BE DEEMED TO ADMIT THAT
YOU ARE AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to conditions of the Exchange Offer described
herein and in the Prospectus, the undersigned hereby tenders to the Issuer the
aggregate principal amount of Old Notes indicated above. Subject to, and
effective upon, the acceptance for exchange of Old Notes tendered herewith in
accordance with the terms and conditions of the Exchange Offer (including, if
the Exchange Offer is extended or amended, the terms and conditions of any such
extension or amendment), the undersigned hereby sells, assigns and transfers to,
or upon the order of, the Exchange Agent, as agent of the Issuer, all right,
title and interest in and to such Old Notes as are being tendered hereby, and
irrevocably constitutes and appoints the Exchange Agent as the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that the
Exchange Agent is also acting as agent of the Issuer in connection with the
Exchange Offer) to cause the Old Notes tendered hereby to be transferred and
exchanged.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND TO ACQUIRE THE EXCHANGE NOTES ISSUABLE UPON THE
EXCHANGE OF SUCH TENDERED OLD NOTES, AND THAT THE ISSUER WILL ACQUIRE GOOD AND
UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES
AND ENCUMBRANCES AND NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES WHEN THE SAME
ARE ACCEPTED BY THE EXCHANGE AGENT, AS AGENT FOR THE ISSUER. THE UNDERSIGNED
WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE
ISSUER, BERMUDA HOLDINGS OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED
HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE
OFFER.
The undersigned acknowledges that the Issuer is making the Exchange Offer
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 no-action letters addressed to third parties in other transactions
(including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley & Co. Incorporated (available June 5, 1991), K-III Communications
Corporation (available May 14, 1993) and Shearman & Sterling (available July 2,
1993)). However, neither the Issuer nor Bermuda Holdings has sought its own no-
action 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 no-action letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance, and subject to the two immediately following sentences, the
Issuer believes that the Exchange Notes issued pursuant to this Exchange Offer
in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer or
an "affiliate" of the Issuer or Bermuda Holdings within the meaning of Rule 405
of the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any Person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Notes. Any holder of Old Notes who is an
"affiliate" of the Issuer or Bermuda Holdings or who intends to participate in
the Exchange Offer for the purpose of distributing Exchange Notes, or any
broker-dealer who purchased Old Notes from the Issuer or Bermuda Holdings to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exception 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 Notes in the Exchange Offer and (c)
must comply with the registration and prospectus delivery requirement of the
Securities Act in connection with any sale or other transfer of such Old Notes
unless such sale is made pursuant to an
4
<PAGE>
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Notes acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Notes for
Exchange Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Notes.
By exchanging Old Notes for Exchange Notes, the undersigned hereby
represents and agrees that (i) it is not an "affiliate" of the Issuer or Bermuda
Holdings, (ii) any Exchange Notes to be received by it are being acquired in the
ordinary course of its business, and (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Notes. A holder of Old Notes
which is a broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer represents and agrees that such Old Notes were
acquired by such broker-dealer for its own account as a result of market-making
activities or other trading activities and it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes (provided 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). A broker-dealer that
acquired Existing Notes in a transaction other than as part of its market-making
or other trading activities will not be able to participate in the Exchange
Offer.
By acceptance of the Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer hereby acknowledges and agrees
that, upon receipt of notice by the Issuer or Bermuda Holdings of the happening
of any event which makes any statement in the Prospectus untrue in any material
respect or which requires the making of any changes in the Prospectus in order
to make the statements therein not misleading (which notice the Issuer or
Bermuda Holdings agrees to deliver promptly to such broker-dealer), such broker-
dealer will suspend use of the Prospectus until the Issuer or Bermuda Holdings
has amended or supplemented the Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented prospectus to
such broker-dealer.
The undersigned understands that interest on the Exchange Notes will accrue
at the rate of 7.2% per annum and is payable semi-annually on February 15 and
August 15 of each year, commencing on February 15, 1998. Each Exchange Note will
bear interest from August 26, 1997, the issue date for the Old Notes. Holders of
the Old Notes whose Old Notes are accepted for exchange will not receive accrued
interest on such Old Notes, and will be deemed to have waived the right to
receive any interest on such Old Notes accrued from and after August 26, 1997.
The undersigned recognizes that the holder of Old Notes, when tendering
such Old Notes, will be deemed to have tendered its beneficial ownership in such
Old Notes in exchange for a beneficial interest in one or more fully registered
global receipts, which will be deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., its nominee. Beneficial interests in such
registered global receipts will be shown on, and transfers thereof will effected
only through, records maintained by DTC and its participants. See "Description
of the Exchange Notes--Book Entry System" in the Prospectus.
All authority conferred or agreed to be conferred in this Letter of
Transmittal and every obligation of the undersigned hereunder shall be binding
upon the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated under "The Exchange Offer--Withdrawal Rights" in the Prospectus
and in this Letter of Transmittal, this tender is irrevocable.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described under "The Exchange Offer--Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned, the Issuer and Bermuda
Holdings in accordance with the terms and subject to the conditions of the
Exchange Offer.
5
<PAGE>
The undersigned recognizes that, under certain circumstances set forth in
the Prospectus under "The Exchange Offer--Certain Conditions to the Exchange
Offer," the Issuer and Bermuda Holdings may not be required to accept for
exchange any of the Old Notes tendered.
THE UNDERSIGNED, BY SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AS SET FORTH ABOVE.
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH A CONFIRMATION OF
BOOK-ENTRY TRANSFER OF SUCH OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
6
<PAGE>
- - --------------------------------------------------------------------------------
HOLDER(S) SIGN HERE
(See Instructions 2 and 5)
(Note: Signature(s) Must be Guaranteed if Required by Instruction 2)
(Complete Accompanying Internal Revenue Service Form W-9)
Must be signed by holder(s) exactly as name(s) appear(s) on a security
position listing, or by any person(s) authorized to become the holder(s) by
endorsements and documents transmitted herewith. If signature is by an attorney-
in-fact, executor, administrator, trustee, guardian, officer of a corporation or
another acting in a fiduciary or representative capacity, please set forth the
signer's full title. See Instruction 5.
- - --------------------------------------------------------------------------------
(Signature(s) of Holder(s))
Date , 1997
------------------------------------
Name(s)
-------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Please Print)
Capacity:
-----------------------------------------------------------------------
(Include Full Title)
Address:
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
- - --------------------------------------------------------------------------------
(Tax Identification or Social Security Number(s))
SIGNATURE GUARANTEE
(See Instructions 2 and 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Date:
---------------------------------------------------------------------------
Capacity or Title:
--------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
- - --------------------------------------------------------------------------------
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of Letter of Transmittal and Certificates: Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by all holders who
wish to tender their Old Notes pursuant to the Exchange Offer. Timely
confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC (a "Book-Entry Confirmation"), as well as this Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at one of its
addresses set forth herein on or prior to the Expiration Date. Old Notes may be
tendered in whole or in part in the principal amount of $1,000 and integral
multiples of $1,000.
Holders who wish to tender their Old Notes and who cannot complete the
procedures for delivery by book-entry transfer on a timely basis may tender
their Old Notes by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth in "The
Exchange Offer - Guaranteed Delivery Procedures" in the Prospectus. Pursuant to
such procedures: (a) such tender must be made by or through an Eligible
Institution (as defined below); (b) a properly completed and duly executed
Letter of Transmittal (or facsimile) thereof and Notice of Guaranteed Delivery,
substantially in the form made available by the Issuer and Bermuda Holdings,
setting forth the name and address of the holder of Old Notes and the amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, a Book-Entry
Confirmation and any other documents required by this Letter of Transmittal will
be deposited by the Eligible Institution with the Exchange Agent prior to the
Expiration Date; and (c) the Book-Entry Confirmation representing all tendered
Old Notes, in proper form for transfer, together with a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be deposited by the Eligible Institution with the Exchange
Agent within five NYSE trading days after the date of execution of such Notice
of Guaranteed Delivery, all as provided in "The Exchange Offer--Guaranteed
Delivery Procedures" in the Prospectus.
The Notice of Guaranteed Delivery must be delivered by hand or transmitted
by telegram, telex, facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such notice. For
Old Notes to be properly tendered pursuant to the guaranteed delivery procedure,
the Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to
the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means a firm which is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office or correspondent in the
United States.
THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER. IF
SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OTHER
REQUIRED DOCUMENTS SHOULD BE SENT TO THE ISSUER OR BERMUDA HOLDINGS.
The Issuer will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if Old Notes are tendered for the account of a firm that
is an Eligible Institution. In all other cases, an Eligible Institution must
guarantee the signature(s) on this Letter of Transmittal. See Instruction 5.
8
<PAGE>
3. Inadequate Space. If the space provided above is inadequate, any
required information should be listed on a separate signed schedule which is
attached to this Letter of Transmittal.
4. Partial Tenders and Withdrawal Rights. Old Notes may be tendered in
whole or in part. Tenders of Old Notes will be accepted only in the principal
amount of $1,000 and integral multiples thereof. Except as otherwise provided
herein, tenders of Old Notes may be withdrawn at any time prior to the
Expiration Date. In order for withdrawal to be effective on or prior to that
time, a written notice of withdrawal must be timely received by the Exchange
Agent at one of its addresses set forth above or in the Prospectus prior to the
Expiration Date. Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, the number of the account
at DTC from which the Old Notes were tendered, the principal amount of the Old
Notes to be withdrawn, and the name and number of the account at DTC to be
credited with the withdrawn Old Notes, and otherwise comply with the procedures
of such facility. Old Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any time
prior to the Expiration Date by following one of the procedures described in the
Prospectus under "The Exchange Offer--Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Issuer and Bermuda
Holdings, whose determination shall be final and binding on all parties. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be credited to an account maintained with DTC for the Old Notes as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If
this Letter of Transmittal is signed by the owner(s) as evidenced by a Book-
Entry Confirmation of the Old Notes tendered hereby, the signature(s) must
correspond exactly with the name(s) as they appear in the Book-Entry
Confirmation without alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If this Letter of Transmittal or any other required documents or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by the Issuer or Bermuda Holdings, proper evidence satisfactory to
the Issuer or Bermuda Holdings of such persons' authority to so act must be
submitted.
If this Letter of Transmittal is signed by a person other than the owner as
evidenced by a Book-Entry Confirmation, such Letter of Transmittal must be
accompanied by an endorsement or appropriate powers of attorney, in satisfactory
form as determined by the Issuer or Bermuda Holdings in their sole discretion
and executed by the owner as evidenced by such Book-Entry Confirmation, in
either case signed exactly as the name or names of such owner appears on the
Book-Entry Confirmation. Signatures on such powers of attorney must be
guaranteed by an Eligible Institution.
6. Irregularities. The Issuer and Bermuda Holdings will determine, in
their sole discretion, all questions as to the form, validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of Old
Notes, which determination shall be final and binding. The Issuer and Bermuda
Holdings reserve the absolute right to reject any and all tenders of any
particular Old Notes not properly tendered or to not accept any particular Old
Notes which acceptance might, in the judgment of the Issuer and Bermuda Holdings
or their counsel, be unlawful. Neither the Issuer or Bermuda Holdings has any
obligation, and will not knowingly, permit acceptances of tenders of Old Notes
from Affiliates of the Issuer or Bermuda Holdings or from any other holder or
holders of Old Notes who are not eligible to participate in the Exchange Offer
under applicable law or interpretations thereof by the Commission, or if the
Exchange Notes to be received by such holder or holders
9
<PAGE>
of Old Notes in the Exchange Offer, upon receipt, will not be tradable by such
holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the blue sky or securities laws of
substantially all of the states of the United States. The Issuer and Bermuda
Holdings also reserve the absolute right, in their sole discretion, to waive any
defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Issuer and Bermuda Holdings shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with the
tender of Old Notes for exchange must be cured within such reasonable period of
time as the Issuer or Bermuda Holdings shall determine. Neither the Issuer,
Bermuda Holdings, the Exchange Agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to any
tender of Old Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
7. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
8. Backup Federal Income Tax Withholding and Internal Revenue Service Form
W-9. Under the federal income tax laws, payments that may be made by the Issuer
on account of Exchange Notes issued pursuant to the Exchange Offer may be
subject to backup withholding at the rate of 31%. In order to avoid such backup
withholding, each tendering holder should complete and sign the Internal Revenue
Service Form W-9 (the "IRS Form W-9") included in this Letter of Transmittal and
either (a) provide the correct taxpayer identification number ("TIN") and
certify, under penalties of perjury, that the TIN provided is correct and that
(i) the holder has not been notified by the Internal Revenue Service (the "IRS")
that the holder is subject to backup withholding as a result of failure to
report all interest or dividends or (ii) the IRS has notified the holder that
the holder is no longer subject to backup withholding; or (b) provide an
adequate basis for exemption. If the tendering holder has not been issued a TIN
and has applied for one, or intends to apply for one in the near future, such
holder should write "Applied For" in the space provided for the TIN in Part I of
the IRS Form W-9, sign and date the IRS Form W-9 and sign the Certificate of
Payee Awaiting Taxpayer Identification Number. If "Applied For" is written in
Part I, the Issuer (or the Exchange Agent with respect to the Exchange Notes or
a broker or custodian) shall retain 31% of the payments made to the holder
during the sixty (60) day period following the date of the IRS Form W-9. If the
holder furnishes the Issuer (or the Exchange Agent with respect to the Exchange
Notes or a broker or custodian) with its TIN within sixty (60) days after the
date of the IRS Form W-9, the Issuer (or the Exchange Agent with respect to the
Exchange Notes or such broker or custodian, as the case may be) shall remit such
amounts retained during the sixty (60) day period to such holder and no further
amounts shall be retained or withheld from payments made to such holder
thereafter. If, however, the holder has not provided the Issuer (or the Exchange
Agent with respect to the Exchange Notes or such broker or custodian, as the
case may be) with its TIN within such sixty (60) day period, the Issuer (or the
Exchange Agent with respect to the Exchange Notes or such broker or custodian,
as the case may be) shall remit such previously retained amounts to the IRS as
backup withholding. In general, if a holder is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Exchange Agent or the Issuer is not provided with the correct TIN, the holder
may be subject to a $50 penalty imposed by the IRS. Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, such holder must submit a
statement (generally, IRS Form W-8), signed under penalties of perjury,
attesting to that individual's exempt status. Such statements can be obtained
from the Exchange Agent. For further information concerning backup withholding
and instructions for completing the IRS Form W-9 (including how to obtain a
taxpayer identification number if you do not have one and how to complete the
IRS Form W-9 if Old Notes are registered in more than one name), consult the
enclosed instructions to the IRS Form W-9.
10
<PAGE>
Failure to complete the IRS Form W-9 will not, by itself, cause Old Notes to
be deemed invalidly tendered, but may require the Issuer or the Exchange Agent
with respect to the Exchange Notes, broker or custodian to withhold 31% of the
amount of any payments made on account of the Exchange Notes. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the IRS.
9. Security Transfer Taxes. Holders who tender their Old Notes for exchange
will not be obligated to pay any transfer taxes in connection therewith.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF),
OR AN AGENT'S MESSAGE IN LIEU THEREOF, AND ALL OTHER REQUIRED
DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT
ON OR PRIOR TO THE EXPIRATION DATE.
11
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
For Tender Of
7.2% Senior Notes due 2007
of
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Exchange Offer (as defined below) if, with respect to
the 7.2% Senior Notes due 2007 (the "Old Notes") of the Issuer (as defined
below), the procedures for book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand or sent by
facsimile transmission, overnight courier, telex, telegram or mail to The Chase
Manhattan Bank (the "Exchange Agent"). See "The Exchange Offer -- Guaranteed
Delivery Procedures" in the Prospectus dated October __, 1997 (which, together
with the related Letter of Transmittal, constitutes the "Exchange Offer") of
Terra Nova Insurance (UK) Holdings plc, a public limited company organized under
the laws of England and Wales (the "Issuer").
The Exchange Agent for the Exchange Offer is:
THE CHASE MANHATTAN BANK
By Hand or Overnight Facsimile Transmissions: By Registered Or
Delivery: (Eligible Institutions Certified Mail:
Only)
The Chase Manhattan Bank The Chase Manhattan Bank
450 W. 33rd St. (212) 946-8177 450 W. 33rd St.
15th Floor 15th Floor
New York, New York 10001 To Confirm by Telephone New York, New York 10001
or for Information Call:
Attention: Corporate Attention: Corporate
Trust Administration (212) 946-3352 Trust Administration
<PAGE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A
FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER
OF TRANSMITTAL.
2
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for Signature Guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States, hereby guarantees to deliver to the Exchange
Agent, at one of its addresses set forth above, confirmation of the book-entry
transfer of such Old Notes to the Exchange Agent's account at the Depository
Trust Company ("DTC"), pursuant to the procedures for book-entry transfer set
forth in the Prospectus, in either case together with one or more properly
completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and
any other documents required by such Letter of Transmittal, within five New York
Stock Exchange trading days after the date of execution of this Notice of
Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and all other documents required by the Letter of Transmittal to,
and a Book-Entry Confirmation must be received by, the Exchange Agent within the
time period set forth above and that failure to do so could result in a
financial loss to the undersigned.
Name of Firm:
---------------------- -----------------------------------
(Authorized Signature)
Address: Title:
----------------------------- -----------------------------
Name:
- - ------------------------------------- ------------------------------
(Zip Code) (Please type or print)
Area Code and Telephone Number: Date:
------------------------------
- - -------------------------------------
NOTE: ACTUAL SURRENDER OF OLD NOTES MUST BE MADE BY A PROPERLY COMPLETED AND
FULLY EXECUTED LETTER OF TRANSMITTAL, ANY OTHER REQUIRED DOCUMENTS REQUIRED
THEREBY AND A BOOK-ENTRY CONFIRMATION BEING RECEIVED BY, THE EXCHANGE AGENT.
3
<PAGE>
EXHIBIT 99.3
Offer to Exchange
for Any and All Outstanding
(Registered under the Securities Act of 1933)
7.2% Senior Notes due 2007
of
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
To the Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Terra Nova Insurance (UK) Holdings plc, a public limited company organized
under the laws of England and Wales (the "Issuer"), to exchange its 7.2% Senior
Notes due 2007 (the "Exchange Notes") fully and unconditionally guaranteed by
Terra Nova (Bermuda) Holdings Ltd. ("Bermuda Holdings"), pursuant to an offering
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding 7.2% Senior Notes due
2007 (the "Old Notes") upon the terms and subject to the conditions set forth in
the Issuer's Prospectus, dated _______, 1997, and the related Letter of
Transmittal (which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated _______ __, 1997;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Book-Entry Transfer Participant from Owner; and
5. Letter which may be sent to your clients for whose account you hold Old
Notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's
instruction with regard to the Exchange Offer.
<PAGE>
We urge you to contact your clients promptly. Please note that the
Exchange Offer will expire at 5:00 p.m., New York City time, on November__, 1997
unless extended.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Issuer and Bermuda Holdings that (i) the holder is not an
"affiliate" of the Issuer or of Bermuda Holdings, (ii) any Exchange Notes to be
received by it are being acquired in the ordinary course of its business and
(iii) the holder has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Notes. If the tendering holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Old Notes, you will represent
on behalf of such broker-dealer that the Old Notes to be exchanged for the
Exchange Notes were acquired by it as a result of market-making activities or
other trading activities, and acknowledge on behalf of such broker-dealer that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. A broker-dealer that
acquired Old Notes in a transaction other than as part of its market-making or
other trading activities will not be able to participate in the Exchange Offer.
By acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes, such broker-dealer is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The enclosed Instruction to Book-Entry Transfer Participant from Owner
contains an authorization by the beneficial owners of the Old Notes for you to
make the foregoing representations.
The Issuer will not pay any fee or commission to any broker or dealer or to
any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Issuer
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 9 of the enclosed
Letter of Transmittal.
2
<PAGE>
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
THE CHASE MANHATTAN BANK
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF THE ISSUER, BERMUDA HOLDINGS OR THE CHASE MANHATTAN BANK OR AUTHORIZE
YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH
THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99.4
OFFER TO EXCHANGE
7.2% SENIOR NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
7.2% SENIOR NOTES DUE 2007
OF
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
To Our Clients:
We are enclosing herewith a Prospectus, dated November __, 1997, of Terra
Nova Insurance (UK) Holdings plc, a public limited company organized under the
laws of England and Wales (the "Issuer"), and a related Letter of Transmittal
(which together constitute the "Exchange Offer") relating to the offer by the
Issuer to exchange its 7.2% Senior Notes due 2007 (the "Exchange Notes") fully
and unconditionally guaranteed by Terra Nova (Bermuda) Holdings Ltd. ("Bermuda
Holdings"), pursuant to an offering registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like principal amount of its issued and
outstanding 7.2% Senior Notes due 2007 (the "Old Notes") upon the terms and
subject to the conditions set forth in the Exchange Offer. We are also
enclosing herewith a letter of instruction to participant, relating to the
Exchange Offer (the "Letter of Instruction").
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON NOVEMBER __, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
We are the participant in the book-entry transfer facility of Old Notes
held by us for your account. A tender of such Old Notes can be made only by us
as the participant in the book-entry transfer facility and pursuant to your
instructions as provided in the Letter of Instruction. The Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange
<PAGE>
Offer by returning the Letter of Instruction to us prior to the Expiration Date.
We also request that you confirm that we may on your behalf make the
representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Issuer and Bermuda Holdings that (i) the holder is not an
"affiliate" of the Issuer or of Bermuda Holdings, (ii) any Exchange Notes to be
received by the holder are being acquired in the ordinary course of its
business, and (iii) the holder has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of such Exchange Notes. If the tendering holder is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Old Notes, we
will represent on behalf of such broker-dealer that the Old Notes to be
exchanged for the Exchange Notes were acquired by it as a result of market-
making activities or other trading activities, and acknowledge on behalf of such
broker-dealer that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes. A broker-
dealer that acquired Old Notes in a transaction other than as part of its
market-making or other trading activities will not be able to participate in the
Exchange Offer. By acknowledging that it will deliver and by delivering a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes, such broker-dealer is not deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
Very truly yours,
2
<PAGE>
EXHIBIT 99.5
INSTRUCTION TO
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM OWNER
OF
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7.2% SENIOR NOTES DUE 2007
TO PARTICIPANT OF THE BOOK-ENTRY TRANSFER FACILITY:
The undersigned hereby acknowledges receipt of the Prospectus dated
November __, 1997 (the "Prospectus") of Terra Nova Insurance (UK) Holdings plc,
a public limited company organized under the laws of England and Wales (the
"Issuer"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Issuer's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meaning as
ascribed to them in the Prospectus.
This will instruct you, the book-entry transfer facility participant, as to
the action to be taken by you relating to the Exchange Offer with respect to the
Old Notes held by you for the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount):
$______ of the 7.2% Senior Notes due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[_] To TENDER the following Old Notes held by you for the account of the
undersigned (insert principal amount of Old Notes to be tendered, if any):
$______ of the 7.2% Senior Notes due 2007.
[_] NOT to TENDER any Old Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf
<PAGE>
of the undersigned (and the undersigned, by its signature below, hereby makes to
you), the representations and warranties contained in the Letter of Transmittal
that are to be made with respect to the undersigned as a beneficial owner,
including but not limited to the representations, that (i) the holder is not an
"affiliate" of the Issuer or of Bermuda Holdings, (ii) any Exchange Notes to be
received by the holder are being acquired in the ordinary course of its
business, and (iii) the holder has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of such Exchange Notes. If the undersigned is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Old Notes, it
represents that such Old Notes were acquired as a result of market-making
activities or other trading activities, and it acknowledges that it will deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes. A broker-dealer that acquired Old Notes in a
transaction other than as part of its market-making or other trading activities
will not be able to participate in the Exchange Offer. By acknowledging that it
will deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes, such
broker-dealer is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act of 1933, as amended.
SIGN HERE
Name of beneficial owner(s):
----------------------------------------------------
Signature(s):
-------------------------------------------------------------------
Name(s) (please print):
---------------------------------------------------------
Address:
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
- - --------------------------------------------------------------------------------
Date:
---------------------------------------------------------------------------
2
<PAGE>
EXHIBIT 99.7
PAYING AGENCY AGREEMENT
PAYING AGENCY AGREEMENT, dated as of October __, 1997 (this
"Agreement"), among Chase Manhattan Bank Luxembourg S.A. ("Chase Luxembourg", or
--------- ----------------
in its capacity as paying agent hereunder, the "Luxembourg Paying Agent"), Chase
-----------------------
Manhattan Bank, as paying agent (individually, "Chase", or in its capacity as
-----
paying agent, the "Principal Paying Agent") under the Indenture (as defined
----------------------
below), Terra Nova Insurance (UK) Holdings plc (the "Issuer"), and Terra Nova
------
(Bermuda) Holdings Ltd. ("Bermuda Holdings").
W I T N E S S E T H:
WHEREAS, the Issuer and Bermuda Holdings, have entered into an
indenture with Chase, as trustee (the "Trustee"), dated as of August 26, 1997
(the "Indenture"), pursuant to which the Issuer issued an aggregate principal
---------
amount of US$75,000,000 of its 7.2% Senior Notes due 2007, fully and
unconditionally guaranteed by Bermuda Holdings (the "Senior Notes"; capitalized
------------
terms used herein without other definition have the respective meanings
specified in the Indenture);
WHEREAS, pursuant to a deposit and custody agreement, dated as of
August 26, 1997 (the "Depositary Agreement"), by and among the Issuer, Bermuda
--------------------
Holdings, the Trustee, Chase, as depositary (the "Depositary"), and Chase
----------
Luxembourg, as custodian (the "Custodian"), among other things, the Custodian
---------
agreed to accept custody of the Global Notes from the Trustee as instructed by
the Issuer and to act as Custodian thereof on behalf of the Depositary in
accordance with the terms therein;
WHEREAS, pursuant to the Indenture, the Issuer has appointed the
Trustee as a paying agent and may appoint additional paying agents to which
Senior Notes may be presented or surrendered for payment, which additional
paying agents shall be subject to the terms of the Indenture;
WHEREAS, the Issuer desires to appoint Chase Luxembourg as a paying
agent, and Chase Luxembourg desires to accept such appointment;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises expressed herein and other consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by
and
<PAGE>
among the Issuer, Bermuda Holdings, the Luxembourg Paying Agent and the
Principal Paying Agent as follows:
1. Appointment of Luxembourg Paying Agent. The Issuer hereby
--------------------------------------
appoints and designates Chase Luxembourg, and by execution hereof Chase
Luxembourg hereby accepts such appointment and designation as the Luxembourg
Paying Agent, to receive the payments on the terms and conditions herein set
forth.
2. The Payments by the Issuer. Interest on the Senior Notes is
--------------------------
payable by the Issuer semi-annually on each February 15 and August 15,
commencing February 15, 1998 (each, a "Semi-annual Payment Date"). The Senior
------------------------
Notes will mature on August 15, 2007. Pursuant to the terms of the Indenture,
so long as the Issuer has one or more paying agents on the Senior Notes, the
Issuer shall, at least one Business Day before the due date for the payment of
principal of and any premium and interest on the Senior Notes (and any
Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof), deposit with the Principal Paying Agent (or any other paying agent
appointed in accordance with the Indenture) a sum in same day funds sufficient
to pay such principal, premium and interest to become due on the Senior Notes
(and any Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof), such sum to be held in trust for the benefit of the Persons entitled
to such principal, premium or interest on the Senior Notes and the Issuer will
promptly notify the Trustee of such action or any failure so to act. For
purposes of this Agreement, "Principal Paying Agent" shall refer to the Trustee
or any other paying agent appointed in accordance with the Indenture to whom the
Issuer shall make a deposit pursuant to the terms of this Section 2.
3. Payments by the Luxembourg Paying Agent. The Luxembourg Paying
---------------------------------------
Agent acting through its office shall make payments of principal and interest in
respect of the Senior Notes in accordance with the terms of the Indenture and
the Senior Notes; provided, however, that:
(a) if any Definitive Senior Note is presented or surrendered for payment
to the Luxembourg Paying Agent and the Luxembourg Paying Agent has delivered a
replacement therefor or has been notified that the same has been replaced, the
Luxembourg Paying Agent shall forthwith notify the Issuer and the Guarantor of
such presentation or surrender and shall not make payment against the same until
it is so instructed by the Issuer and has received the amount to be so paid; and
2
<PAGE>
(b) the Luxembourg Paying Agent shall cancel each Definitive Senior Note
against surrender of which it has made full payment and shall deliver each
Definitive Senior Note so cancelled by it to the Trustee.
4. Reimbursement by Principal Paying Agent. If the Luxembourg Paying
---------------------------------------
Agent makes any payment in accordance with Section 3:
(a) it shall notify the Principal Paying Agent of the amount so paid by it
and the certificate or serial number of the Definitive Senior Note or Global
Receipt against presentation or surrender of which payment of principal or
interest was made; and
(b) the Principal Paying Agent shall pay to the Luxembourg Paying Agent
out of the funds received by the Principal Paying Agent under Section 2, an
amount equal to the amount so paid by the Luxembourg Paying Agent.
5. Reimbursement by Issuer. If the Luxembourg Paying Agent makes a
-----------------------
payment in respect of the Senior Notes at a time which the Principal Paying
Agent has not received the full amount of the relevant payment due to it under
Section 2 and the Principal Paying Agent is not able out of the funds received
by it under Section 2 to reimburse the Luxembourg Paying Agent therefor by
payment under Section 4, the Issuer or Bermuda Holdings shall from time to time
on demand pay to the Principal Paying Agent for the account of the Luxembourg
Paying Agent the amount so paid out by the Luxembourg Paying Agent and not so
reimbursed to it; provided, however, that the Issuer shall not reimburse the
Principal Paying Agent for amounts reimbursed to the Luxembourg Paying Agent in
the case of the Principal Paying Agent's or the Luxembourg Paying Agent's gross
negligence or willful misconduct.
6. Partial Payments. If any time and for any reason the Luxembourg
----------------
Paying Agent makes a partial payment in respect of any Senior Note presented for
payment to it, the Luxembourg Paying Agent shall endorse thereon a statement
indicating the amount and date of such payment.
7. Covenants. The Luxembourg Paying Agent agrees to:
---------
(a) hold all sums held by it for the payment of the principal of and any
premium and interest on the Senior Notes (and any Additional Amounts payable by
the Issuer or Bermuda Holdings in respect thereof) in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
3
<PAGE>
(b) give the Trustee notice of any default by the Issuer or Bermuda
Holdings (or any other obligor upon the Senior Notes) in the making of any
payment of principal and any premium and interest on the Senior Notes (and any
Additional Amounts payable by the Issuer or Bermuda Holdings in respect
thereof);
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by the Luxembourg Paying Agent;
(d) acknowledge, accept and agree to comply in all respects with the
provisions of the Indenture relating to the duties, rights and obligations of
the Luxembourg Paying Agent;
(e) maintain a paying agent office for payments in Luxembourg, and notify
in writing the Issuer, Bermuda Holdings, the Trustee, and the Principal Paying
Agent of any change of address of such office or if the Luxembourg Paying Agent
shall at any time cease or is otherwise unable to act as paying agent in the
Grand Duchy of Luxembourg; and
(f) make available to the Principal Paying Agent such information as is
reasonably required for the maintenance of any records required to be maintained
under the Indenture.
8. Concerning the Luxembourg Paying Agent.
--------------------------------------
(a) The Luxembourg Paying Agent shall not be liable, except to the extent
of its own gross negligence or willful misconduct and, except as aforesaid, the
Issuer and Bermuda Holdings shall indemnify and hold the Luxembourg Paying Agent
harmless (and any successor paying agent) from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of and in connection with this
Agreement, except to the extent such losses, liabilities, claims, actions,
damages and expenses arise out of the gross negligence or willful misconduct of
the Luxembourg Paying Agent.
(b) The Luxembourg Paying Agent shall be entitled to rely upon any
certification, demand, notice instrument or other writing delivered to the
Luxembourg Paying Agent by the Issuer, Bermuda Holdings or the Trustee without
being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity of the service thereof. The
Luxembourg Paying Agent may act in reliance upon any instrument or signature by
the Issuer, Bermuda Holdings or the Trustee
4
<PAGE>
believed by the Luxembourg Paying Agent to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
(c) The Luxembourg Paying Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Agreement and shall not be liable
for any action taken or omitted in reliance on such advice.
(d) The Luxembourg Paying Agent makes no representation or warranty and
shall not at any time have any responsibility for, or liability or obligation in
respect of, the legality, validity, binding effect, adequacy or enforceability
of the Senior Notes, the performance and observance by the Issuer or Bermuda
Holdings of its obligations under the Senior Notes or the recoverability of any
sum of interest, arrears of interest, premium or principal due or to become due
from the Issuer or Bermuda Holdings in respect of the Senior Notes.
(e) The Luxembourg Paying Agent shall at no time have any responsibility
for, or obligation or liability in respect of, the financial condition,
creditworthiness, affairs, status or nature of the Issuer or Bermuda Holdings.
(f) The Luxembourg Paying Agent shall at no time be liable for any act,
default or omission of the Issuer or Bermuda Holdings under or in respect of the
Senior Notes, except in connection with the Luxembourg Paying Agent's gross
negligence or bad faith in performing its duties under Section 7(b).
(g) The Luxembourg Paying Agent shall not be under any obligation to
appear in, prosecute or defend any action, suit or other proceeding in respect
of any Senior Note, or take any other action or omit to take any action under
the Agreement which in its opinion may involve it in expense or liability,
unless indemnity satisfactory to it against all expense and liability be
furnished as often as may be required.
(h) The Luxembourg Paying Agent shall not be liable for any acts or
omissions made by a successor paying agent in connection with a matter arising
wholly after the removal or resignation of the Luxembourg Paying Agent.
(i) The Luxembourg Paying Agent may own and deal in any class of
securities of the Issuer and its affiliates and in interests in the Senior
Notes.
5
<PAGE>
(j) The Luxembourg Paying Agent may enter into other dealings with the
Issuer and its affiliates of any nature whatsoever.
(k) The Luxembourg Paying Agent (and any successor paying agent) may at
any time resign by delivering all amounts held by it to the Principal Paying
Agent or, if the Principal Paying Agent shall have also resigned or the Issuer
or Bermuda Holdings otherwise directs, any successor paying agent designated by
the Issuer or Bermuda Holdings in writing, or to any court of competent
jurisdiction, provided that the Luxembourg Paying Agent shall not resign within
any 90-day period preceding a Semi-annual Payment Date. The Luxembourg Paying
Agent's resignation will only take effect on the appointment of a successor
which is qualified to act as a paying agent in Luxembourg.
(l) Every successor to the Luxembourg Paying Agent shall execute and
deliver to its predecessor, the Issuer and Bermuda Holdings an instrument in
writing accepting its appointment hereunder, and thereupon, such successor
paying agent, without any further act or deed, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor; provided,
that such successor paying agent such only become so vested if it is qualified
to act as a paying agent in Luxembourg.
(m) Any corporation into or with which the Luxembourg Paying Agent may be
merged or consolidated shall be the successor of the Luxembourg Paying Agent
without the execution or filing of any document or of any further act, except
for such documents or actions which may be required in connection with
qualification of such successor with the Luxembourg Stock Exchange.
9. Termination. The Issuer or Bermuda Holdings may at any time
-----------
terminate this Agreement or appoint additional paying agents to act as a paying
agent, including as a Principal Paying Agent.
10. Trust Indenture Act. This Agreement shall be subject to the
-------------------
terms of the Trust Indenture Act of 1939, as amended.
11. Counterparts. This Agreement may be executed in any number
------------
of counterparts by the parties hereto on separate counterparts, each of which,
when so executed and delivered, shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
12. Severability. In case any one or more of the provisions
------------
contained in this Agreement should be or become invalid, illegal or
unenforceable in
6
<PAGE>
any respect, the validity, legality and enforceability of the remaining
provisions contained herein or therein shall in no way be affected, prejudiced
or disturbed thereby.
13. Notices. Notices hereunder shall be mailed or delivered as
-------
follows:
To the Principal Paying Agent:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust Administration
Telephone No.: 212-946-3352
Telecopy No.: 212-946-8177
To the Luxembourg Paying Agent:
Chase Manhattan Bank Luxembourg S.A.
5 rue Plaetis
L-2338, Luxembourg
Attention: Corporate Trust Department
Telephone No.: 011-352-46-268-5223
Telecopy No.: 011-352-46-268-5380
To the Issuer:
Terra Nova Insurance (UK) Holdings plc
Terra Nova House
41-43 Mincing Lane
London EC3R 7SP Great Britain
Attention: Company Secretary
Telephone No.: 011-44-171-283-3000
Telecopy No.: 011-44-171-283-1749
7
<PAGE>
To Bermuda Holdings:
Terra Nova (Bermuda) Holdings Ltd.
Richmond House, 2nd Floor
12 Par-La-Ville Road
Hamilton HM 08, Bermuda
Attention: Secretary
Telephone No.: 809-292-7731
Telecopy No.: 809-292-7572
or as to each party at such other address as shall be designated by such party
in a written notice to the other parties. Any communication so addressed and
mailed or delivered to the Principal Paying Agent, the Luxembourg Paying Agent,
Bermuda Holdings or the Issuer shall be deemed to be given when received.
14. Section Headings . The section headings in this Agreement are
----------------
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
15. Miscellaneous. This Agreement shall be binding upon and inure
-------------
solely to the benefit of the parties hereto and their respective successors and
assigns, heirs, administrators and representatives and shall not be enforceable
by or inure to the benefit of any third party except for Section 8 (with respect
to a resignation by the Luxembourg Paying Agent). This Agreement shall be
construed in accordance with and governed by the laws of the State of New York,
without regard to the conflict of laws provisions therein.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
By:_______________________________________________
Name:
Title:
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By:_______________________________________________
Name:
Title:
CHASE MANHATTAN BANK LUXEMBOURG S.A.,
as Luxembourg Paying Agent
By:_______________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Principal Paying Agent
By:_______________________________________________
Name:
Title:
9
