<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1998
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
-------------
<TABLE>
<CAPTION>
TERRA NOVA INSURANCE TERRA NOVA (BERMUDA)
(UK) HOLDINGS PLC HOLDINGS LTD.
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
<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)
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 LAN 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 telephone number, including (Address, including zip code, and telephone number,
area code, of Registrant's principal executive offices) including area code, of Registrant's principal
executive offices)
------------------------
CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 664-1666
(Name, address, including zip code,
telephone number, including area code, of agents
-----------------------
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 08, BERMUDA
(441) 292-7731
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------------
If the securities being registered on this Form are 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. [_]
<TABLE>
<CAPTION>
---------------------
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
Title of Each Class of Amount To Be Proposed Maximum Proposed Maximum
Securities to Be Registered(1) Offering Price Per Aggregate Offering Amount of Registration
Registered Unit (1) Price (1) Fee(1)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$100,000,000
7% Senior Notes due 2008 principal amount 100% $100,000,000 $29,500
- - -----------------------------------------------------------------------------------------------------------------------------------
Guarantee of 7% Senior
Notes due 2008 N/A N/A N/A (2)
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no registration
fee is payable with respect to the Guarantee.
__________________________
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.
- - ----------------------
* This Registration Statement constitutes a filing on Form F-4 for the
Exchange Notes and on Form S-4 for the Guarantee.
==============================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
*****
SUBJECT TO COMPLETION, DATED MAY 29, 1998
PROSPECTUS
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
OFFER TO EXCHANGE 7% SENIOR NOTES DUE 2008,
WHICH WILL BE FULLY AND UNCONDITIONALLY
GUARANTEED BY TERRA NOVA (BERMUDA)
HOLDINGS LTD. AND 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
_____________, 1998, 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 $100.0
million aggregate principal amount of its 7% Senior Notes due 2008 (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% Senior Notes
due 2008 (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 May 15, 2008. Interest on the
Exchange Notes will accrue from May 18, 1998, the issue date of the Old Notes,
and is payable semiannually on November 15 and May 15 of each year, commencing
on November 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 $75 million pursuant to the Issuer's 7.2% Senior Notes due 2007
(the "1997 Senior Notes") which are fully and unconditionally guaranteed by a
guarantee
<PAGE>
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 March 31, 1998 consisted principally of
insurance liabilities and aggregated approximately $2 billion.
____________
SEE "RISK FACTORS" COMMENCING ON PAGE 13 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 ____________, 1998.
2
<PAGE>
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
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."
3
<PAGE>
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
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 New York Stock Exchange, Inc. 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, ___________, 1998 (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 May 18, 1998. 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."
The Issuer intends to list the Exchange Notes on the New York Stock
Exchange, Inc.
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.
4
<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 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, 1997;
(2) Bermuda Holdings' Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998; and
(3) Bermuda Holdings' Current Report on Form 8-K, dated May 28, 1998.
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 __________, 1998.
<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, five 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, marine, aviation and auto
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 Paris, France and through branch
offices in Toronto, Canada and Brussels, Belgium. 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 $338.2 million for the three months
ended March 31, 1998, and had shareholders' equity of $506.0 million at March
31, 1998.
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").
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.
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, (iii)
marine and aviation coverage written both on a primary and a reinsurance basis
and (iv) auto business written largely on a primary basis, accounting for
approximately 38.3%, 18.3%, 33.5%, and 9.9%, respectively, of the Company's
gross premiums written for 1997. Additionally, of the Company's gross premiums
written for 1997, approximately 51.0% consisted of reinsurance business and
approximately 34.5%, 33.5%, and 32.0% were attributable to clients from the
U.S., 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 28-year existence, except for
1980 and 1992. The weighted average combined and operating ratios of the Company
were 99.4% and 74.4%, respectively, for the period from 1995 through 1997. For
the three months ended March 31, 1998, the Company had a combined and operating
ratio of 99.5% and 82.7%, respectively. The Company's income from continuing
operations before income taxes, interest expense, depreciation, amortization and
minority interests ("EBITDA") was $108.5 million for 1997 and $35.3 million for
the three months ended March 31, 1998.
At March 31, 1998, approximately 94.0% of the Company's $1.5 billion
investment portfolio consisted of fixed maturity debt securities and cash and
cash equivalents, with the balance consisting of equity securities. Of the fixed
maturity debt securities, 89.9% were rated "A" or better by Standard & Poor's
Corporation ("S&P") and Moody's Investors Service, Inc. ("Moody's"). The Company
currently has no investments in high yield fixed income securities, real estate
or mortgages.
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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 the Continental European
Market, and having offices in London, Bermuda, Paris, 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 $1.5 billion conservatively
managed investment portfolio as of March 31, 1998, the Company has been
able to generate significant and consistent levels of investment income
that have helped to stabilize profits. Of the $1.5 billion of invested
assets at March 31, 1998, $766.5 million were held by Terra Nova and $491.6
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 weighted average operating ratio of the Company over
the last three years of 74.4%.
The key elements of the Company's growth strategy include:
. CAPITAL GROWTH. With an expected pro forma total capitalization as of March
31, 1998 of $669.2 million after giving effect to the offering of the Old
Notes and the Debt Tender (as defined herein), 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.
. EXPECTED FURTHER PARTICIPATION IN THE OCTAVIAN SYNDICATES. In 1997 the
Company provided $293.9 million of capacity to Octavian, representing 47%
of the Octavian Syndicates, total underwriting capacity for the 1997 year
of account. This capacity provided the Company with $204.3 million of gross
written premiums for 1997. In 1998, the Company has provided $372.8 million
of capacity to Octavian, representing approximately 60% of the Octavian
Syndicates' total underwriting capacity for the 1998 year of account. Based
on the Octavian Syndicates' recent utilization of capacity, the Company
estimates that this capacity will provide the Company with gross premiums
written of between $260 and $300 million in 1998. 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 eight for the 1998 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 1997 was $24 million, of which $2.4 million was reflected in the
Company's financial statements for the year ended December 31, 1997.
RECENT DEVELOPMENTS
On May 4, 1998, William O. Bailey retired as Chairman, President and Chief
Executive Officer of the Company. On the same day, John J. Dwyer was appointed
Chairman and Nigel H.J. Rogers was appointed Chief Executive Officer of the
Company.
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RELATED TRANSACTION
On April 20, 1998, the Issuer commenced a tender offer to purchase all of its
10 3/4% Senior Notes due 2005 (the "1995 Senior Notes"). Concurrently with the
tender offer, the Issuer commenced a related consent solicitation to eliminate
substantially all of the restrictive covenants relating to the 1995 Senior
Notes. The offer to purchase the outstanding 1995 Senior Notes and the related
consent solicitation are hereafter referred to as the "Debt Tender." As of May
1, 1998, all of the outstanding 1995 Senior Notes had been tendered. At the
closing of the Debt Tender on May 18, 1998, the Issuer purchased all of the
outstanding 1995 Senior Notes.
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5
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________________________________________________________________________________
ORGANIZATION
The Company and its principal subsidiaries are currently organized as
follows:
[CHART APPEARS HERE]
________________________________________________________________________________
6
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THE EXCHANGE OFFER
The Exchange Offer......................... Up to $100.0 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 May 18, 1998, 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
________, 1998 (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 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
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7
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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
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8
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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.
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THE EXCHANGE NOTES
Securities Offered..................... Up to $100.0 million principal amount of
7% Senior Notes due 2008. The Exchange
Notes will be issued and the Old Notes
were issued under an Indenture dated as
of May 18, 1998 (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.......................... May 15, 2008.
Interest............................... Interest on the Exchange Notes will
accrue at the rate of 7% per annum
and is payable semi-annually on
November 15 and May 15 of each year,
commencing on November 15, 1998.
Each Exchange Note will bear interest
from May 18, 1998, 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 May 18,
1998.
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."
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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 New York Stock Exchange,
Inc.
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 New
York Stock Exchange, Inc. 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,
together with the available cash of the
Issuer, were used to fund the Debt
Tender. 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
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11
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- - --------------------------------------------------------------------------------
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 November 18, 1998, then the annual interest
rate borne by the Old Notes shall be increased to 7.25%. If the Exchange Offer
is not consummated or a Shelf Registration Statement is not declared effective
by February 18, 1999, then the annual interest rate borne by the Old Notes shall
be increased to 7.5%. 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%.
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12
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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 and Terra Nova Capital, and Bermuda Holdings is a
holding company whose primary assets are the capital stock of the Issuer and
Terra Nova (Bermuda) and a loan that has been extended to Terra Nova SAS, the
direct parent of Corifrance. Accordingly, substantially all 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) and interest paid on the Terra Nova SAS loan. 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. HM Treasury
- - -- Insurance Directorate Department of Trade and Industry (the "Treasury"),
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 Treasury 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 March
31, 1998 consisted principally of insurance liabilities of an aggregate $2.0
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 satisfy its obligations under 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.
13
<PAGE>
LEVERAGE
As of March 31, 1998, after adjustment to give effect to the issuance and
sale of the Senior Notes and the Debt Tender, the Company had outstanding
indebtedness of approximately $175 million and shareholders' equity of $494.2
million.
The indenture pursuant to which the 1997 Notes were issued, 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 through 1997, property catastrophe
reinsurance rates fell from the strong levels of 1993. Management believes, in
light of its experience with the Company's renewals for 1998 business that
premium rates can be expected to decline in 1998 in the absence of a major
catastrophe event, but that rates and retention levels in the near future are
likely to remain 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 1998.
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 and 1997. Management believes that increased competition
will lead generally to a further decline in rates in 1998. 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.
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
14
<PAGE>
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. The Company
carries 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 Treasury to carry
on insurance business (including reinsurance) in the U.K. and is subject to
regulation and supervision in the U.K. by the Treasury. 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 Treasury powers to supervise,
investigate and intervene in the affairs of U.K. insurance companies. As is
often the practice of the Treasury 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 Secretary of State for Trade and Industry, the
predecessor to the Treasury, 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 Treasury, (ii) requires Terra Nova to give notice
and, in some instances, obtain Treasury consent, prior to entering into certain
transactions with connected persons and (iii) imposes restrictions, subject to
obtaining Treasury consent, on the type of investments which Terra Nova can
make. 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.
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.
15
<PAGE>
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.
The Issuer also believes that its French subsidiary, Corifrance, will
likely be entitled to the benefits of the Income Tax Convention between the
United States and France, with the result that Corifrance will not be subject to
income tax arising from the conduct of a U.S. trade or business unless such
income is effectively connected with a U.S. permanent establishment of
Corifrance. Corifrance does not believe that it maintains a permanent
establishment in the U.S.
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.
16
<PAGE>
ENFORCEMENT OF JUDGMENTS
All of the directors and executive officers of the Issuer, all of the
executive officers of Bermuda Holdings, five 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.
17
<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, 1996 and 1997 and the selected Balance Sheet
Data as of December 31, 1997 have been derived from the Company's audited
Consolidated Financial Statements incorporated herein by reference. The selected
Statement of Operations Data for the three months ended March 31, 1997 and 1998
and the selected Balance Sheet Data as of March 31, 1998 have been derived from
the Company's unaudited condensed consolidated financial statements incorporated
by reference herein. The financial information for the Company as of March 31,
1998 and for the three month periods ended March 31, 1997 and 1998 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 March
31, 1997 and 1998 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,
1997 and for the three months ended March 31, 1998 have been derived from the
unaudited return made to the U.K. HM Treasury. The Selected Statutory Data for
Terra Nova (Bermuda) for the year ended December 31, 1997 has been derived from
the audited statutory financial statements of Terra Nova (Bermuda) and for the
three months ended March 31, 1998 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
--------------------- -------------------------------------------------------------
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1997 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Gross premiums written.................. $ 320,183 $ 359,362 $ 302,658 $ 361,010 $ 550,243 $ 227,656 $ 338,237
Net premiums written.................... 262,019 282,503 246,985 311,166 483,545 183,166 281,845
Net premiums earned..................... 229,510 250,434 251,900 278,756 419,069 78,463 134,584
Net investment income................... 46,888 51,575 74,478 78,130 85,130 19,989 22,582
Realized net capital gains on sales
of investments......................... 40,533 13,898 9,384 11,750 15,333 5,930 11,388
Total revenues.......................... 314,877 320,722 336,872 378,059 533,835 108,335 171,917
Income from continuing
operations before income taxes and
minority interests..................... 81,869 50,737 62,433 82,668 91,049 23,482 30,052
Income tax expense ..................... 27,586 16,458 16,630 17,777 17,639 5,338 5,629
Minority interest in income of
consolidated subsidiaries.............. -- -- 2,552 985 -- -- --
Income from continuing
operations............................. 54,283 34,279 43,251 63,906 73,410 18,144 24,423
Net income ............................. 51,634 27,449 43,251 63,906 73,410 18,144 24,423
Dividends on the convertible
redeemable preferred shares............ -- -- 3,700 1,088 -- -- --
Net income to common
shareholders........................... 51,634 27,449 39,551 62,818 73,410 18,144 24,423
BALANCE SHEET DATA (AT END OF PERIOD)...
Total investments and cash.............. $1,475,556 $1,247,538 $1,497,230
Total assets............................ 2,220,134 1,987,536 2,481,639
Unpaid losses and loss adjustment
expenses............................... 1,157,724 1,046,043 1,184,709
Long-term debt.......................... 175,000 100,000 175,000
Total shareholders' equity.............. 481,888 394,926 505,958
</TABLE>
(Continued on following page)
18
<PAGE>
<TABLE>
<CAPTION>
TERRA NOVA COMPANY
-------------------------- ------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1993 1994 1995 1996 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
(Continued from previous page)
SELECTED STATUTORY DATA (AT END OF PERIOD)(1)
Terra Nova--Capital and surplus................. $ 231,674
Terra Nova (Bermuda)--Capital and
surplus........................................ 260,612
OTHER DATA
EBITDA(2)........................................ 82,564 51,669 72,889 97,032 108,508
Adjusted EBITDA(3)............................... 42,031 37,771 63,505 85,282 93,175
Loss and loss adjustment expense ratio(4)........ 71.24% 76.53% 71.10% 64.00% 67.41%
Underwriting expense ratio(5).................... 29.15 30.25 32.71 33.20 30.81
-------- -------- -------- -------- ----------
Combined ratio(6)................................ 100.39% 106.78% 103.81% 97.20% 98.22%
======== ======== ======== ======== ==========
Operating ratio(7)............................... 79.96% 86.19% 74.24% 69.13% 77.91%
======== ======== ======== ======== ==========
<CAPTION>
----------------------
THREE MONTHS
ENDED MARCH 31,
----------------------
1997 1998
<S> <C> <C>
(Continued from previous page)
SELECTED STATUTORY DATA (AT END OF PERIOD)(1)
Terra Nova--Capital and surplus................. $ 237,446
Terra Nova (Bermuda)--Capital and
surplus........................................ 263,567
OTHER DATA
EBITDA(2)........................................ 27,966 35,262
Adjusted EBITDA(3)............................... 22,036 23,874
Loss and loss adjustment expense ratio(4)........ 65.34% 70.74%
Underwriting expense ratio(5).................... 33.92 28.76
-------- --------
Combined ratio(6)................................ 99.26% 99.50%
======== ========
Operating ratio(7)............................... 73.78% 82.72%
======== ========
</TABLE>
(1) Capital and surplus under U.K. and Bermuda law, respectively.
(2) 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.
(3) Adjusted EBITDA is comprised of EBITDA excluding realized gains or
losses on sales of investments.
(4) Loss and loss adjustment expense ratio represents the sum of losses
and loss adjustment expenses as a percentage of net premiums earned.
(5) Underwriting expense ratio represents underwriting expenses as a
percentage of net premiums earned.
(6) Combined ratio represents the sum of the loss and loss adjustment
expense ratio and underwriting expense ratio.
(7) 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
--------------------------------------------------------------------------
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------------------------------------
1993 1994 1995 1996 1997 1997 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
NM NM 7.07 7.64 7.25 7.44 7.75
</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 service payments on the 1997 Senior Notes and the Senior
Notes have been made. Terra Nova had no indebtedness through December 21, 1994,
the date of its acquisition by Bermuda Holdings.
19
<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, together with available cash of the
Issuer, were used to fund the Debt Tender.
CAPITALIZATION
The table below summarizes the capitalization of the Company as of March
31, 1998 and as adjusted for the offering of the Senior Notes and the Debt
Tender, including the estimated costs of $11.8 million, net of tax, relating to
the Debt Tender.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
----------------------
ACTUAL AS ADJUSTED
<S> <C> <C>
(DOLLARS IN MILLIONS)
Senior Notes.................................. $ 0.0 $100.0
1995 Senior Notes............................. 100.0 0.0
1997 Senior Notes............................. 75.0 75.0
Stockholders' Equity:
Common Stock............................... 150.5 150.5
Stock Held in Trust........................ (9.5) (9.5)
Deferred equity compensation............... 4.0 4.0
Additional paid-in capital................. 111.7 111.7
Retained earnings.......................... 193.0 181.2
Accumulated other comprehensive income/(1)/ 56.3 56.3
------ ------
Total Stockholders' Equity.................... 506.0 494.2
------ ------
Total Capitalization.......................... $681.0 $669.2
====== ======
</TABLE>
________________
(1) Following the implementation of SFAS No. 130 "Reporting Comprehensive
Income," accumulated other comprehensive income includes unrealized
appreciation of investments and cumulative translation adjustments,
net of tax.
20
<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 May 18, 1998, 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 May 18, 1998 (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 New York Stock
Exchange, Inc.
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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 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 $100.0
million. The Senior Notes will mature on May 15, 2008. Interest on the Senior
Notes accrues at the rate of 7% per annum and is payable semi-annually in
arrears in cash on each November 15 and May 15, commencing November 15, 1998
(each, an "Interest Payment Date"), to holders of record on the immediately
preceding November 1 and May 1, respectively. Each Exchange Note will bear
interest from May 18, 1998, 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.
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"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 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
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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.
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
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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.
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
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been entitled to any Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the holder of such Senior Note.
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
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(viii) default in the performance, or breach, of the provisions described
under "--Merger, Consolidation or Sale of Assets."
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
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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;
(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
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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 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
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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.
"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
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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 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
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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.
"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.
"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
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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 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 or other governmental charges of whatever
nature except as may be required by law. If any such deduction
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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 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.
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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.
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.
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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.
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.
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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 May 18, 1998 (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 May 18, 2001 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 November 18, 1998, then the annual interest rate borne by the Old Notes
shall be increased to 7.25%. If the Exchange Offer is not consummated or a Shelf
Registration Statement is not declared effective by February 18, 1999, then the
annual interest rate borne by the Old Notes shall be increased to 7.5%. 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%.
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
____________, 1998; 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, $100.0 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,
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."
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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, the Issuer and Bermuda Holdings 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 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 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
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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-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.
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INTEREST ON THE EXCHANGE NOTES
Each Exchange Note will bear interest from May 18, 1998, 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
May 18, 1998.
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 withdrawal 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
retendered by following one of the procedures described under "--Procedures for
Tendering Old Notes" at any time prior to the Expiration Date.
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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 Bermuda Holdings will make
any payment to brokers, dealers, or others soliciting acceptances of the
Exchange
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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 $ ,000.
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."
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,
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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.
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 New York Stock Exchange, Inc. 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:
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(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 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."
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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 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 New York Stock Exchange, Inc. 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 New York
Stock Exchange, Inc. 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.
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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 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
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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.
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 any 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.
EXPERTS
The consolidated financial statements of Bermuda Holdings and its
subsidiaries as of December 31, 1996 and 1997 and for each of the three years in
the period ended December 31, 1997, 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.
48
<PAGE>
================================================================================
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.......................................................... 7
The Exchange Notes.......................................................... 10
Certain Consequences of a Failure to Exchange Old Notes..................... 11
Risk Factors................................................................ 13
Summary Consolidated Financial Data......................................... 18
Ratio of Earnings to Fixed Charges.......................................... 19
Use of Proceeds............................................................. 20
Capitalization.............................................................. 20
Description of Exchange Notes............................................... 21
Description of Depositary Agreement......................................... 33
Description of Old Notes.................................................... 37
The Exchange Offer.......................................................... 37
Plan of Distribution........................................................ 42
Certain Tax Considerations.................................................. 43
Erisa Considerations........................................................ 48
Legal Matters............................................................... 48
Experts..................................................................... 48
</TABLE>
Terra Nova Insurance (UK)
Holdings plc
OFFER TO EXCHANGE 7% SENIOR NOTES DUE
2008, 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 1933, AS
AMENDED, FOR ANY AND ALL OUTSTANDING
7% SENIOR NOTES DUE 2008
______________
PROSPECTUS
______________
__________, 1998
================================================================================
<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 in whole or in part from the liability sought to be enforced against him,
withdraw the case in whole or in part from the
II-1
<PAGE>
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 December 31, 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 December 31, 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>
1.1 -- Registration Rights Agreement, dated August 20, 1997, among
the Issuer, Bermuda Holdings, and the Initial Purchaser.
(Filed as Exhibit 1.1 to the Issuer's Registration Statement
on Form F-4/S-4, Registration No. 333-38063 and incorporated
herein be reference)
1.2 -- Registration Rights Agreement, dated May 18, 1998, 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.
(Filed as Exhibit 4.1 to the Issuer's Registration Statement
on Form F-4/S-4, Registration No. 333-38063 and incorporated
herein be reference)
4.2 -- Indenture, dated May 18, 1998, among the Issuer, Bermuda
Holdings, The Chase Manhattan Bank, as Trustee.
4.3 -- 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.
(Filed as Exhibit 4.2 to the Issuer's Registration Statement
on Form F-4/S-4, Registration No. 333-38063 and incorporated
herein be reference)
4.4 -- Deposit and Custody Agreement, dated May 18, 1998, among the
Issuer, Bermuda Holdings, Chase Manhattan Bank Luxembourg
S.A. as Custodian, and the The Chase Manhattan Bank, as
Depositary.
4.5 -- Form of Global Note. Included as Exhibit A to the Indenture
filed herewith as Exhibit 4.2.
4.6 -- Form of Global Receipt. Included as Exhibit C to the Deposit
and Custody Agreement filed herewith as Exhibit 4.4.
5.1 -- Opinion of Clifford Chance as to the legality of the Exchange
Notes.*
5.2 -- Opinion of Conyers, Dill & Pearman as to the legality of the
Guarantee.*
5.3 -- Opinion of Milbank, Tweed, Hadley & McCloy as to the legality
of the Global Receipt.*
8.1 -- Opinion of Clifford Chance as to U.K. tax matters relative to
the Exchange Notes.*
8.2 -- Opinion of Conyers, Dill & Pearman as to Bermuda tax matters
relative to the Guarantee.*
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
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' annual report on Form 10-K for the year ended December 31,
1997, Commission File Number 001-13834, and incorporated herein by
reference).
12.1 -- Statement re computation of ratios.*
21.1 -- Subsidiaries of the Issuer and Bermuda Holdings (filed as Exhibit 21.1 to
the Issuer's registration statement on Form F-4/S-4 Registration No.
333-38063 and incorporated herein by reference).
23.1 -- Consent of Clifford Chance.*
23.2 -- Consent of Conyers, Dill & Pearman.*
23.3 -- Consent of Coopers & Lybrand.
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.*
* To be filed by amendment.
</TABLE>
(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
II-5
<PAGE>
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 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 undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(f) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (e) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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.
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 Hamilton, Bermuda,
on the 29th day of May, 1998.
TERRA NOVA (BERMUDA)
HOLDINGS LTD.
By /s/ Jean M. Waggett
--------------------------------
Jean M. Waggett, as Attorney-in-Fact
May 29, 1998
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 J. Dwyer* Chairman and Director
Nigel H.J. Rogers* Chief Executive Officer
(Principal Executive and
Accounting Officer) and Director
William J. Wedlake* Chief Financial Officer
(Principal Financial Officer)
John Riddick* Deputy Chairman and Director
David L. Jaffe* Director
Philip F. Petronis* Director
Allan W. Fulkerson* Director
Robert S. Fleischer* 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-7
<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 Hamilton, Bermuda,
on the 29th day of May, 1998.
TERRA NOVA (BERMUDA)
HOLDINGS LTD.
By /s/ Jean M. Waggett
------------------------------------
Jean M. Waggett, as Attorney-in-Fact
May 29, 1998
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* Chief Financial Officer
(Principal Financial Officer
and Accounting Officer)
John J. Dwyer* Director
Nigel H. J. Rogers* 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-8
<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
May 29, 1998
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF DOCUMENT PAGE
- - -------- ----------------------- ----
<S> <C>
1.1 -- Registration Rights Agreement, dated August 20, 1997, among the Issuer, Bermuda Holdings, and the
Initial Purchaser. (Filed as Exhibit 1.1 to the Issuer's Registration Statement on Form F-4/S-4,
Registration No. 333-38063 and incorporated herein be reference)
1.2 -- Registration Rights Agreement, dated May 18, 1998, 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. (Filed as Exhibit 4.1 to the Issuer's Registration Statement on Form F-4/S-4,
Registration No. 333-38063 and incorporated herein be reference)
4.2 -- Indenture, dated May 18, 1998, among the Issuer, Bermuda Holdings, The Chase Manhattan Bank, as Trustee.
4.3 -- 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.
(Filed as Exhibit 4.2 to the Issuer's Registration Statement on Form F-4/S-4,
Registration No. 333-38063 and incorporated herein be reference)
4.4 -- Deposit and Custody Agreement, dated May 18, 1998, among the Issuer, Bermuda Holdings, Chase Manhattan Bank
Luxembourg S.A. as Custodian, and the The Chase Manhattan Bank, as Depositary.
4.5 -- Form of Global Note. Included as Exhibit A to the Indenture filed herewith as Exhibit 4.2.
4.6 -- Form of Global Receipt. Included as Exhibit C to the Deposit and Custody Agreement filed herewith as
Exhibit 4.4.
5.1 -- Opinion of Clifford Chance as to the legality of the Exchange Notes.*
5.2 -- Opinion of Conyers, Dill & Pearman as to the legality of the Guarantee.*
5.3 -- Opinion of Milbank, Tweed, Hadley & McCloy as to the legality of the Global Receipt.*
8.1 -- Opinion of Clifford Chance as to U.K. tax matters relative to the Exchange Notes.*
8.2 -- Opinion of Conyers, Dill & Pearman as to Bermuda tax matters relative to the Guarantee.*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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' annual report on
Form 10-K for the year ended December 31, 1997, Commission File Number 001-13834, and incorporated
herein by reference).
12.1 -- Statement re computation of ratios.*
21.1 -- Subsidiaries of the Issuer and Bermuda Holdings (filed as Exhibit 21.1 to the Issuer's registration statement
on Form F-4/S-4 Registration No. 333-38063 and incorporated herein by reference).
23.1 -- Consent of Clifford Chance.*
23.2 -- Consent of Conyers, Dill & Pearman.*
23.3 -- Consent of Coopers & Lybrand.
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.*
* To be filed by amendment.
</TABLE>
<PAGE>
EXHIBIT 1.2
REGISTRATION RIGHTS AGREEMENT
Dated as of May 18, 1998
by and among
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
and
TERRA NOVA (BERMUDA) HOLDINGS LTD.
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
_________________________________
7.0% Senior Notes Due 2008
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of May 18, 1998, 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") and Donaldson, Lufkin & Jenrette Securities
Corporation (the "PURCHASER").
This Agreement is made pursuant to the Purchase Agreement dated May 12,
1998 (the "PURCHASE AGREEMENT") between the Company, the Guarantor and the
Purchaser which provides for the sale by the Company to the Purchaser of
$100,000,000 aggregate principal amount of the Company's 7.0% Senior Notes Due
2008 (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:
Section 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 7.0% Senior Notes Due 2008 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 May 18, 1998, (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 S-4 or 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 May
18, 1998 among the Company, the Guarantor and The Chase Manhattan Bank, 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.
"PERSON" means an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
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<PAGE>
"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.
"SHELF REGISTRATION" means a registration under the Securities Act
effected pursuant to Section 2(b) hereof.
3
<PAGE>
"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.
Section 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 November 18, 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;
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<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 conditions, other than that the Exchange Offer does not
5
<PAGE>
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 November 18, 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
6
<PAGE>
offering of Registrable Notes pursuant to such Registration 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
November 18, 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 February 18, 1999, 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.
Section 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
7
<PAGE>
to become effective and remain effective in accordance with Section 2
hereof;
(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
8
<PAGE>
would subject it to taxation in any such jurisdiction where it is not
then so subject;
(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;
9
<PAGE>
(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
(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
10
<PAGE>
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 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;
11
<PAGE>
(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
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 Section 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
12
<PAGE>
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, 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,
13
<PAGE>
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 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
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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 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.
SECTION 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
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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.
(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.
SECTION 5. Registration Expenses.
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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 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.
SECTION 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 (iv) 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
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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
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
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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 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,
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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, 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
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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 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.
(f) 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
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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 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.
SECTION 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.
SECTION 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.
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(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 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
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(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
2nd Floor
12 Par-La-Ville Road
Hamilton HM 08, Bermuda
Attention: Jean Waggett
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.
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(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 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
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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 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
26
<PAGE>
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 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.
27
<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:
28
<PAGE>
EXHIBIT 4.2
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 May 18, 1998
___________________
7% Senior Notes
due 2008
<PAGE>
TABLE OF CONTENTS
---------------
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RECITALS
--------
ARTICLE 1
Definitions and Other Provisions of General Application
Section 1.01. Definitions.............................................................. 2
Section 1.02. Other Definitions........................................................ 17
Section 1.03. Compliance Certificates and Opinions..................................... 17
Section 1.04. Form of Documents Delivered to Trustee................................... 18
Section 1.05. Acts of Holders.......................................................... 19
Section 1.06. Notices, Etc., to Trustee, the Issuer Bermuda Holdings................... 20
Section 1.07. Notice of Holders; Waiver................................................ 21
Section 1.08. Conflict of Any Provision of Indenture with Trust Act.................... 21
Section 1.09. Effect of Headings and Table of Contents................................. 22
Section 1.10. Successor and Assigns.................................................... 22
Section 1.11. Separability Clause...................................................... 22
Section 1.12. Benefits of Indenture.................................................... 22
Section 1.13. Governing Law............................................................ 22
Section 1.14. Legal Holidays........................................................... 22
Section 1.15. No Recourse Against Others............................................... 23
Section 1.16. Submission of Jurisdiction; Appointment of Agent for Service of Process.. 23
ARTICLE 2
---------
The Senior Notes
----------------
Section 2.01. Form and Dating........................................................ 24
Section 2.02. Execution and Authentication........................................... 26
Section 2.03. Senior Note Registrar and Paying Agent................................. 27
Section 2.04. Paying Agent to Hold Money in Trust.................................... 28
Section 2.05. Senior Note Holder Lists............................................... 30
Section 2.06. Transfer and Exchange.................................................. 30
Section 2.07. Replacement Securities................................................. 32
Section 2.08. Outstanding Securities................................................. 33
Section 2.09. Temporary Senior Notes................................................. 33
Section 2.10. Cancellation........................................................... 33
Section 2.11. Interest, Defaulted Interest........................................... 34
Section 2.12. Special Transfer Provisions............................................ 34
</TABLE>
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Section 2.13. CUSIP and CINS Numbers................................................ 38
ARTICLE 3
---------
Satisfaction and Discharge
---------------------------
Section 3.01. Satisfaction and Discharge of Indenture ............................... 38
Section 3.02. Application of Trust Money ............................................ 40
ARTICLE 4
---------
Defaults and Remedies
---------------------
Section 4.01. Events of Default ..................................................... 40
Section 4.02. Acceleration of Maturity; Rescission .................................. 42
Section 4.03. Collection of Indebtedness and Suits for Enforcement by Trustee ....... 43
Section 4.04. Trustee May File Proofs of Claim ...................................... 44
Section 4.05. Trustee May Enforce Claims Without Possession of Senior Notes ......... 45
Section 4.06. Application of Money Collected ........................................ 45
Section 4.07. Limitation of Suits ................................................... 46
Section 4.08. Unconditional Right of Holders to Receive Principal Premium and Interest 46
Section 4.09. Restoration of Rights and Remedies ..................................... 47
Section 4.10. Rights and Remedies Cumulative ......................................... 47
Section 4.11. Delay or Omission Not Waiver ........................................... 47
Section 4.12. Control by Holders ..................................................... 47
Section 4.13. Waiver of Defaults...................................................... 48
Section 4.14. Undertaking for Costs .................................................. 48
ARTICLE 5
---------
The Trustee
-----------
Section 5.01. Notice of Events of Default ............................................ 49
Section 5.02. Certain Rights of Trustee .............................................. 49
Section 5.03. Not Responsible for Recitals or Issuance of Senior Notes ............... 51
Section 5.04. Trustee and Agents May Hold Senior Notes; collections; etc ............. 52
Section 5.05. Money Held in Trust .................................................... 52
Section 5.06. Compensation and Reimbursement ......................................... 52
Section 5.07. Conflicting Interests .................................................. 53
Section 5.08. Corporate Trustee Required; Eligibility ................................ 53
</TABLE>
ii
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Section 5.09. Resignation and Removal; Appointment of Successor ...................... 53
Section 5.10. Acceptance of Appointment of Successor ................................. 55
Section 5.11. Merger, Conversion, Consolidation or Succession to Business ............ 56
Section 5.12. Preferential Collection of Claims Against the Issuer or Bermuda Holdings 56
ARTICLE 6
---------
Holders' Lists And Reports By Trustee
-------------------------------------
Section 6.01. Disclosure of Names and Addresses of Holders ........................... 57
Section 6.02. Reports by Trustee 57
ARTICLE 7
---------
Consolidation, Merger, Conveyance, Transfer Or Lease
----------------------------------------------------
Section 7.01. Bermuda Holdings May Consolidated, Etc., Only on Certain Terms.......... 57
Section 7.02. Successor Substituted .................................................. 58
ARTICLE 8
---------
Supplemental Indentures
-----------------------
Section 8.01. Supplemental Indentures Without Consent of Holders ..................... 59
Section 8.02. Supplemental Indentures with Consent of Holders ........................ 59
Section 8.03. Execution of Supplemental Indentures ................................... 60
Section 8.04. Effect of Supplemental Indentures ...................................... 60
Section 8.05. Conformity with Trust Indenture Act .................................... 61
Section 8.06. Reference in Senior Notes to Supplemental Indentures ................... 61
ARTICLE 9
---------
Covenants
---------
Section 9.01. Payment of Principal, Premium and Interest............................. 61
Section 9.02. Corporate Existence.................................................... 61
Section 9.03. Payment of Taxes and Other Claims...................................... 62
Section 9.04. Maintenance of Properties; Insurance; Books and
Records; Compliance with Law........................................... 62
Section 9.05. [Intentionally Omitted]................................................ 63
Section 9.06. [Intentionally Omitted]................................................ 63
Section 9.07. [Intentionally Omitted]................................................ 63
</TABLE>
iii
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Section 9.08. Liens.................................................................. 63
Section 9.09. [Intentionally Omitted]................................................. 63
Section 9.10. [Intentionally Omitted]................................................. 63
Section 9.11. [Intentionally Omitted]................................................. 63
Section 9.12. [Intentionally Omitted]................................................. 63
Section 9.13. [Intentionally Omitted]................................................. 64
Section 9.14. [Intentionally Omitted]................................................. 64
Section 9.15. [Intentionally Omitted]................................................. 64
Section 9.16. [Intentionally Omitted]................................................. 64
Section 9.17. Additional Amounts..................................................... 64
Section 9.18. Statement as to Compliance; Notice of Default; Provision of............ 65
Financial Statements................................................... 66
Section 9.19. Waiver of Stay; Extension of Usury Law................................. 66
Section 9.20. Waiver of Certain Covenants
ARTICLE 10
----------
Redemption Of Senior Notes
--------------------------
Section 10.01. Right of Redemption................................................... 67
Section 10.02. Applicability of Article.............................................. 67
Section 10.03. Election to Redeem; Notice to Trustee................................. 67
Section 10.04. Selection by Trustee of Senior Notes to Be Redeemed................... 67
Section 10.05. Notice of Redemption.................................................. 68
Section 10.06. Deposit of Redemption Price........................................... 69
Section 10.07. Senior Notes Payable on Redemption Date............................... 69
Section 10.08. Senior Notes Redeemed in Part......................................... 70
Section 10.09. Optional Redemption................................................... 70
Section 10.10. Tax Redemption........................................................ 70
ARTICLE 11
----------
Defeasance And Covenant Defeasance
----------------------------------
Section 11.01. Option to Effect Defeasance or Covenant Defeasance.................... 71
Section 11.02. Defeasance and Discharge.............................................. 71
Section 11.03. Covenant Defeasance................................................... 72
Section 11.04. Conditions to Defeasance or Covenant Defeasance....................... 72
Section 11.05. Deposited Money and U.S. Government Obligations to be................. 74
Held in Trust; Other Miscellaneous Provisions......................... 75
Section 11.06. Reinstatement
</TABLE>
iv
<PAGE>
<TABLE>
ARTICLE 12
----------
Guarantee of Senior Notes
------------------------
<S> <C>
Section 12.01. Guarantee............................................................. 76
Section 12.02. Execution of Guarantee................................................ 77
Section 12.03. Other Obligations of Bermuda Holdings................................. 77
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
</TABLE>
<PAGE>
INDENTURE, dated as of May 18, 1998, 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% Senior Notes
due 2008 (hereinafter called the "SENIOR NOTES") in an aggregate principal
amount not to exceed $100,000,000 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 1.01. 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.
"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,
2
<PAGE>
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
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.
3
<PAGE>
"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 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.
4
<PAGE>
"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 May 18, 1998, 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.
"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 Article4.
"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
5
<PAGE>
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 supplements
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 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.
6
<PAGE>
"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.
"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
7
<PAGE>
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.
"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
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<PAGE>
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.
"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.
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"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
undertaking, 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 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:
(i) Senior Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
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(ii) 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;
(iii) Senior Notes, except to the extent provided in Section 11.02 and
Section 11.03 with respect to which Bermuda Holdings has effected
defeasance or covenant defeasance as provided in Article 11; and
(iv) 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;
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
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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 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.
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"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.
"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.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of May 18, 1998, 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 May 1 or November 1 (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.
"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.
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"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.
"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.
"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 8.05.
"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
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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 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
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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.
Section 1.02. 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 1.03. 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,
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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 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 1.04. 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
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representations by, an officer or officers of the Issuer 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 1.05. 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
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<PAGE>
shall be a date not more than 30 days prior to the first 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 1.06. Notices, Etc., to Trustee, the Issuer 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, 41-43
Mincing Lane, London EC3R 7SP, Great Britain, Attention: Company Secretary,
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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 1.07. Notice of 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 1.08. Conflict of Any Provision of Indenture with Trust Act. If and
to the extent that any provision of this Indenture limits, qualifies or
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
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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 1.09. 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 In
denture 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 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.
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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 of 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 1.06, 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 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 he 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
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deemed, in every respect, effective service of process on the Issuer and Bermuda
Holdings, respectively.
ARTICLE 2
THE SENIOR NOTES
SECTION 2.01. Form and Dating. (a)(i) 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 (ii) 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 (i) and (ii) above, Exchange Notes (A)
shall contain the alternative Paragraph 1(b) appearing on the reverse thereof,
and (B) 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 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.
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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 2.08, 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 DEFINED 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
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
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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 2.02. 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 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.
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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
$100,000,000, 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 2.07 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 2.03. 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 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
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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 5.06.
The Issuer initially appoints the Trustee as Senior Note Registrar and
Paying Agent in connection with the Senior Notes.
SECTION 2.04. 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 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
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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.
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
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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 2.05. 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 2.06. 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
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
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Default; provided, however, that no Regulation S Definitive Senior Note may be
issued prior to June 28, 1998.
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 2.06.
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 requirements 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.
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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.
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 2.06.
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 2.07. 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
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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 2.08. Outstanding Securities. If a Senior Note is replaced
pursuant to Section 2.07 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 2.09. 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 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.
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SECTION 2.11. Interest, Defaulted Interest. Interest on the Senior Notes
shall accrue from May 18, 1998 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
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
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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 June
28, 1998. The following provisions shall apply with respect to registration of
any proposed transfer of interests in the Regulation S Global Note prior to June
28, 1998:
(i) The Registrar shall register the transfer of any interest in the
Regulation S Global Note prior to June 28, 1998 (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.
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(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 June 28, 1998. 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 June 28, 1998: 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 June 28, 1998, the Registrar shall register any pro
posed transfer of a Senior Note to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit E hereto from the proposed
transferor.
(ii) On and after June 28, 1998, 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
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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.
(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 2.06 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
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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.
ARTICLE 3
SATISFACTION AND DISCHARGE
SECTION 3.01. 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:
(i) 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 2.07 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
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such trust, as provided in Section 2.04) have been delivered to the Trustee
for cancellation; or
(ii) 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 3.01(a)(ii)(A),
Section 3.01(a)(ii)(B) or Section 3.01(a)(ii)(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 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.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 5.06 and, if money shall
have been deposited with the Trustee pursuant to this Section 3.01, the
obligations of the Trustee under Sections 2.04 and 3.02 shall survive.
SECTION 3.02. Application of Trust Money. Subject to the provisions of
Section 2.04, all money deposited with the Trustee pursuant to Section 3.01
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 3.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
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 3.01; 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 4.01. 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
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(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 4.01), 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
(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
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(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
(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 4.02 Acceleration of Maturity; Rescission. If an Event of Default
(other than an Event of Default specified in Section 4.01(f) or Section 4.01(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
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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 4.01(f)
-------
or Section 4.01(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 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 4.03. 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.
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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.
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 4.04. 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
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advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 5.06.
----
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.
SECTION 4.05. 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 4.06. 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 5.06;
----
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
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THIRD: The balance, if any, to the Issuer or Bermuda Holdings.
SECTION 4.07. Limitation of 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;
(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 4.08. 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
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of any such payment, and such rights shall not be impaired or affected without
the consent of such Holder.
SECTION 4.09. 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 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 2.07, 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.
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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:
(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(b).
-------
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 5.01. 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 5.02. 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:
(i) 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
(ii) 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.
(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:
(i) this Section 5.02(c) does not limit the effect of Section
-------
5.02(b);
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(ii) 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;
(iii) 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
----
(iv) 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 5.02.
----
(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 5.02(a), 5.02(b), 5.02(c), 5.02(d)
------- ------- ------- -------
and 5.02(e):
-------
(i) 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.
(ii) 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).
-------
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(iii) 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.
(iv) 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.
(v) 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.
(vi) 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 4.01 (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 5.03. 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 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 5.04. Trustee and Agents May Hold Senior Notes; collections; etc.
The Trustee and any Paying Agent, Senior Note Registrar or other agent of
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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 5.05. 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 5.06. 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,
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 5.06
----
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.
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As security for the performance of the obligation of the Issuer and Bermuda
Holdings under this Section 5.06, 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 4.01(f) or Section 4.01(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 5.07. Conflicting Interests. The Trustee shall comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 5.08. 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 2.03,
----
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 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 5.09. 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
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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:
(i) 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
(ii) the Trustee shall cease to be eligible under Section 5.08 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
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any 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
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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 of 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 5.06(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, 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
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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 5.09. 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).
ARTICLE 6
HOLDERS' LISTS AND REPORTS BY TRUSTEE
SECTION 6.01. 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.
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SECTION 6.02. 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 7.01. Bermuda Holdings May Consolidated, 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) (i) Bermuda Holdings shall be the continuing corporation, or (ii) 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,
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
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Consolidated Net Worth of Bermuda Holdings immediately before such transaction;
(d) if any of the property or assets of Bermuda Holdings would there upon
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; and
(e) 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 7.01, comply with this Section 7.01 and that all conditions precedent
---- ----
herein provided for relating to such transaction have been complied with.
SECTION 7.02. 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 7.01, 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 8.01. 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 in consistent with any other provision herein;
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(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
7.01;
- - ----
(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 8.05 or otherwise;
----
(e) to evidence and provide the acceptance of the appointment of a
successor Trustee hereunder; or
(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 8.02. 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:
(i) 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
(ii) reduce the percentage in principal amount of the Outstanding
Senior Notes, the consent of whose Holders is required for any such
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supplemental 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
(iii) modify any of the provisions of this Section 8.02, 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.
It shall not be necessary for any Act of Holders under this Section 8.02 to
----
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 8.03. 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 5.02 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 8.04. 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 8.05. 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 8.06. 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
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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.
ARTICLE 9
COVENANTS
SECTION 9.01. 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 9.02. 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 9.03. 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
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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 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 9.04. 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 9.04 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.
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(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 (financial or otherwise) or results of operations
of Bermuda Holdings and its Subsidiaries taken as a whole.
SECTION 9.05. [Intentionally Omitted]
SECTION 9.06. [Intentionally Omitted]
SECTION 9.07. [Intentionally Omitted]
SECTION 9.08. 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 9.09. [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,
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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 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, 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 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 Holdings shall file with the Commission and the Trustee such reports and
information and furnish without cost to each Holder of Senior Notes all
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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 Law. 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 9.08 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 10.01. 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,
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.
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Section 10.02. 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 10.03. Election to Redeem; Notice to Trustee. The election of the
Issuer to redeem any Senior Notes pursuant to Section 10.01 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 10.04. 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 10.05. 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 10.09.
All notices of redemption shall state:
(a) the Redemption Date;
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(b) the Redemption Price including, in connection with an optional
redemption pursuant to Section 10.09, 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 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.
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Section 10.06. Deposit of Redemption Price. On or prior to any Re
Redemption 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 2.04) 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 10.07. 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 10.03, 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 2.05.
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 10.08. 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 2.05 (with, if the
Issuer, the Senior 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
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reduce the principal amount of such Global Note to an amount equal to the
unredeemed portion of the Global Note surrendered.
Section 10.09. 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 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.
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ARTICLE 11
Defeasance and Covenant Defeasance
Section 11.01. 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 11.02 or Section 11.03 be applied to all
Outstanding Senior Notes upon compliance with the conditions set forth below in
this Article 11.
Section 11.02. Defeasance and Discharge. Upon the Issuer's or Bermuda
Holdings' exercise under Section 11.01 of the option applicable to this Section
11.02, 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 11.05 and the other sections of this Indenture referred to
in Section 11.02(a) and Section 11.02(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 11.05 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Senior 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 2.05, Section 2.04, Section 2.06, Section 2.07, 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 11.02 notwithstanding the prior exercise of its option under
Section 11.03 with respect to the Senior Notes.
SECTION 11.03. Covenant Defeasance. Upon the Issuer's or Bermuda Holdings'
exercise under Section 11.01 of the option applicable to this Section 11.03,
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
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covenants contained in Article 7, Sections 9.02 through 9.04, Section 9.08 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 4.01(b) or 4.01(h), but, except as specified above, the
remainder of this Indenture and such Senior Notes shall be unaffected thereby.
SECTION 11.04. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 11.02 or
Section 11.03 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
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
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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 11.02, 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 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;
(c) In the case of an election under Section 11.03, 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 4.01(f) or Section 4.01(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 11.02 or Section 11.03 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;
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(f) In the case of an election under either Section 11.02 or Section
11.03, 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 11.02 or Section
11.03, 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 11.02 or Section 11.03 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
(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 11.02 or the covenant defeasance under Section 11.04 (as the case may
be) have been complied with as contemplated by this Section 11.03.
SECTION 11.05. Deposited Money and U.S. Government Obligations to be Held
in Trust; Other Miscellaneous Provisions. Subject to the provisions of Section
2.04, 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 11.05, the "TRUSTEE") pursuant to Section 11.04 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 11.04 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
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in Section 11.04 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
11.04) are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 11.06. Reinstatement. If the Trustee or Paying Agent is unable to
apply any United States dollars or U.S. Government Obligations in accordance
with Section 11.02 or Section 11.03 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 11.02 or
Section 11.03 as the case may be, until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 11.02 or Section
11.03, 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 12.01. 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;
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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 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 12.01 by reason of his or its status as such
stockholder, officer, director, employee or incorporator.
The Guarantee set forth in this Section 12.01 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 12.02. Execution of Guarantee. To evidence its guarantee to the
Holders specified in Section 12.01, 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 12.01
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
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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 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 12.03. 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.
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:___________________________
Name: Jean M. Waggett
Title: Secretary
Attest:_________________________
Name:
Title:
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By:___________________________
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Name: Jean M. Waggett
Title: Senior Vice-President, Secretary
and General Counsel
Attest:_________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:______________________________
Name:
Title:
Attest:_________________________
Name:
Title:
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% Senior Notes due 2008
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. $100,000,000 (less the principal
amount, if any, of any outstanding Regulation S Global Note and any outstanding
<PAGE>
Definitive Senior Notes evidencing such Notes, as reflected in the records of
the Trustee hereinafter referred to), on May 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing November 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.
Additional provisions of this Restricted Global Note are set forth on the
other side of this Global Note.
Dated: May 18, 1998
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
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[REVERSE SIDE OF RESTRICTED GLOBAL NOTE]
TERRA NOVA INSURANCE (UK) HOLDINGS PLC
7% Senior Notes due 2008
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 May 15, 2008. Interest on
this Note shall accrue at the rate of 7% per annum and is payable semiannually
in arrears on May 15 and November 15 of each year, commencing on November 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 November 18, 1998, then
additional interest shall accrue at a rate of 0.25% per annum from November 18,
1998, and shall be payable in cash semiannually in arrears on May 15 and
November 15 of each year, commencing on May 15, 1999. If such Exchange Offer has
not been consummated or such Shelf Registration Statement has not been declared
effective on or prior to February 18, 1999, the rate per annum at which such
additional interest shall accrue shall increase from 0.25% to 0.50% per annum
from February 18, 1999, and shall be payable in cash semi-annually in arrears on
May 15 and November 15 of each year, commencing May 15, 1999. The accrual of
additional interest shall cease upon the consummation of such Exchange Offer or
the effectiveness of such Shelf Registration Statement.]/1/
_________________________
/1/ To be included in Senior Notes which are not Exchange Notes.
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[(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 May 18, 1998, at the rate of 7% per
annum and shall be payable in cash semiannually in arrears on May 15 and
November 15 of each year, commencing on November 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 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
____________________________
/2/ To be included in Exchange Notes.
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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 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
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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 May 18, 1998
(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
$100,000,000 aggregate principal amount at maturity (subject to Section 2.7 of
the Indenture).
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
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<PAGE>
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.
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 $100,000,000 (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.
5
<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 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
----------------------------------------------------
6
<PAGE>
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 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
7
<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% Senior Notes due 2008
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 May 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing November 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% Senior Notes due 2008
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 May 15, 2008. Interest on
this Note shall accrue at the rate of 7% per annum and is payable semiannually
on May 15 and November 15 of each year, commencing on November 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 November 18, 1998, then additional
interest shall accrue at a rate of 0.25% per annum from November 18, 1998, and
shall be payable in cash semiannually in arrears on May 15 and November 15 of
each year, commencing on May 15, 1999. If such Exchange Offer has not been
consummated or such Shelf Registration Statement has not been declared effective
on or prior to February 18, 1999, the rate per annum at which such additional
interest shall accrue shall increase from 0.25% to 0.50% per annum from February
18, 1999, and shall be payable in cash semi-annually in arrears on May 15 and
November 15 of each year, commencing May 15, 1999. The accrual of additional
interest shall cease upon the consummation of such Exchange Offer or the
effectiveness of such Shelf Registration Statement.]/3/
___________________________
/3/ To be included in Senior Notes which are not Exchange Notes.
<PAGE>
[(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 May 18, 1998, at the rate of 7% per
annum and shall be payable in cash semiannually in arrears on May 15 and
November 15 of each year, commencing on November 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 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
____________________________
/4/ To be included in Exchange Notes.
2
<PAGE>
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 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
3
<PAGE>
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 May 18, 1998
(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
$100,000,000 aggregate principal amount at maturity (subject to Section 2.7 of
the Indenture).
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
4
<PAGE>
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.
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
-----------------
5
<PAGE>
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 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
----------------------------------------------------
6
<PAGE>
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 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
7
<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% Senior Notes due 2008
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 May 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing November 15,
1998.
This Senior 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.
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: ________________________
<PAGE>
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% Senior Notes due 2008
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 Senior 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 May 15, 2008.
Interest on this Senior Note shall accrue at the rate of 7% per annum and is
payable semiannually in arrears on May 15 and November 15 of each year,
commencing on November 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 November 18, 1998, then additional interest shall accrue at a rate of
0.25% per annum from November 18, 1998, and shall be payable in cash
semiannually in arrears on May 15 and November 15 of each year, commencing on
May 15, 1999. If such Exchange Offer has not been consummated or such Shelf
Registration Statement has not been declared effective on or prior to February
18, 1999, the rate per annum at which such additional interest shall accrue
shall increase from 0.25% to 0.50% per annum from February 18, 1999, and shall
be payable in cash semi-annually in arrears on May 15 and November 15 of each
year, commencing May 15, 1999. The accrual of additional interest shall cease
upon the
<PAGE>
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 May 18,
1998, at the rate of 7% per annum and shall be payable in cash semiannually in
arrears on May 15 and November 15 of each year, commencing on November 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 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
cease to be paid such additional amounts ("ADDITIONAL AMOUNTS") as may be
necessary in order that the net amounts received by a holder of this Senior Note
after such deduction or 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
__________________________
/5/ To be included in Senior Notes which are not Exchange Notes.
/6/ To be included in Exchange Notes.
2
<PAGE>
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;
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
3
<PAGE>
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 May 18,
1998 (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.
The Senior Notes are senior unsecured obligations of the Issuer limited to
$100,000,000 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
4
<PAGE>
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 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 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 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
---------------------------------
5
<PAGE>
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.
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
6
<PAGE>
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 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.
7
<PAGE>
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.
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
8
<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.
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
9
<PAGE>
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
10
<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 withholding
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>
EXHIBIT E
[Name of Transferor]
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% SENIOR NOTES DUE 2008 (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
(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
<PAGE>
covered hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
2
<PAGE>
EXHIBIT 23.3
[Letterhead of Coopers & Lybrand]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement on
Forms F-4 and S-4 dated May 29, 1998 related to the offering of Senior Notes due
2008 (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 March 6, 1998 included in the annual report on
Form 10-K for the year ended December 31, 1997 (the "Form 10-K") of Bermuda
Holdings, on our audit of the consolidated financial statements of Bermuda
Holdings and subsidiaries as of December 31, 1996 and 1997 and for each of the
three years in the period ended December 31, 1997, and of our report dated March
6, 1998 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
May 29, 1998
<PAGE>
Exhibit 24.1.
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each undersigned does hereby
make, constitute and appoint 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 $100,000,000 aggregate principal amount of 7% Senior Notes due 2008 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 to 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:
<TABLE>
<S> <C> <C> <C>
/s/ John J. Dwyer Chairman /s/ Allan W. Fulkerson Director
- - ------------------------ --------------------------
John J. Dwyer and Director Allan W. Fulkerson
/s/ Nigel H.J. Rogers Chief Executive /s/ Robert S. Fleischer Director
- - ------------------------ --------------------------
Nigel H.J. Rogers Office (Principal Robert S. Fleischer
Executive and
Accounting Officer)
and Director
/s/ William J. Wedlake Chief Financial /s/ Steven J. Gilbert Director
- - ------------------------ --------------------------
William J. Wedlake Officer (Principal Steven J. Gilbert
Financial Officer)
/s/ John Riddick Deputy Chairman and /s/ Philip F. Petronis Director
- - ------------------------ --------------------------
John Riddick Director Philip F. Petronis
/s/ David L. Jaffe Director
- - ------------------------
David L. Jaffe May 28, 1998
</TABLE>
<PAGE>
Exhibit 24.2.
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each undersigned does hereby
make, constitute and appoint 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 $100,000,000 aggregate principal
amount of 7% Senior Notes due 2008 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 to 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 /s/ John J. Dwyer Director
- - ----------------------- -------------------
John Riddick Managing Director John J. Dwyer
Principal Executive
Officer)
/s/ William J. Wedlake Chief Financial
- - -----------------------
William J. Wedlake Officer and Director
(Principal Financial
and Accounting
Officer)
/s/ Nigel H.J. Rogers Director
- - -----------------------
Nigel H.J. Rogers
Dated: May 28 , 1998
