S-3ASR
As filed with the Securities and
Exchange Commission on December 15, 2008
Registration Statement
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
The Travelers Companies,
Inc.
Travelers Capital Trust
II
Travelers Capital Trust
III
Travelers Capital Trust
IV
Travelers Capital Trust
V
(Exact name of Registrant as
specified in its charter)
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Minnesota
Delaware
Delaware
Delaware
Delaware
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41-0518860
41-6495364
20-1341934
20-1341964
20-1342011
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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385 Washington Street
St. Paul, Minnesota
55102
(651) 310-7911
(Address, including zip code,
and telephone number, including area code, of Registrants
principal executive offices)
Matthew S.
Furman, Esq.
Senior Vice President
The Travelers Companies,
Inc.
385 Washington Street
St. Paul, Minnesota
55102
(917) 778-6828
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copy to:
Avrohom J.
Kess, Esq.
Simpson Thacher & Bartlett
LLP
425 Lexington Avenue
New York, New York
10017
(212) 455-2000
Approximate date of commencement of proposed sale to the
public: From time to time after the effective
date of this registration statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) 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. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. þ
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company o
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CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering Price
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Aggregate
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Registration
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Securities to be Registered
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Registered(1)
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per Unit(1)
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Offering Price(1)
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Fee(1)
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Senior Debt Securities of The Travelers Companies, Inc.
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Subordinated Debt Securities of The Travelers Companies,
Inc.
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Junior Subordinated Debt Securities of The Travelers Companies,
Inc.
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Preferred Stock of The Travelers Companies, Inc.
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Depositary Shares of The Travelers Companies, Inc.(2)
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Common Stock, without par value, of The Travelers Companies,
Inc.
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Warrants of The Travelers Companies, Inc.
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Stock Purchase Contracts of The Travelers Companies, Inc.
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Units of The Travelers Companies, Inc.
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Preferred Securities of Travelers Capital Trust II
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Preferred Securities of Travelers Capital Trust III
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Preferred Securities of Travelers Capital Trust IV
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Preferred Securities of Travelers Capital Trust V
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The Travelers Companies, Inc. Guarantee of Preferred Securities
of Travelers Capital Trust II, Travelers Capital
Trust III, Travelers Capital Trust IV and Travelers
Capital Trust V(3)
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(1)
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An indeterminate aggregate initial offering price or number of
the securities of each identified class is being registered as
may from time to time be offered at indeterminate prices.
Separate consideration may or may not be received for securities
that are issuable upon exercise, conversion or exchange of other
securities or that are issued in units or represented by
depositary shares. In accordance with Rules 456(b) and
457(r) of the Securities Act, the registrants are deferring
payment of all of the registration fee. Registration fees will
be paid subsequently on a pay as you go basis.
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(2)
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Each depositary share will be issued under a deposit agreement
and will be evidenced by a depositary receipt. In the event The
Travelers Companies, Inc. elects to offer to the public
fractional interests in shares of the preferred stock registered
hereunder, depositary receipts will be distributed to those
persons purchasing such fractional interests, and shares of
preferred stock will be issued to the depositary under the
deposit agreement. No separate consideration will be received
for the depositary shares.
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(3)
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The Travelers Companies, Inc. is also registering the guarantees
and other obligations that it may have with respect to preferred
securities to be issued by any of Travelers Capital
Trust II, Travelers Capital Trust III, Travelers Capital
Trust IV and Travelers Capital Trust V or with respect
to similar securities that may be issued by similar entities
formed in the future. No separate consideration will be received
for any guarantee, and pursuant to Rule 457(n) under the
Securities Act, no separate registration fee will be paid in
respect of any such guarantee.
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PROSPECTUS
The Travelers Companies,
Inc.
Senior Debt
Securities
Subordinated Debt
Securities
Junior Subordinated Debt
Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
Stock Purchase
Contracts
and
Units
Travelers Capital
Trust II
Travelers Capital
Trust III
Travelers Capital
Trust IV
Travelers Capital
Trust V
Preferred Securities
guaranteed to the extent set
forth herein
by The Travelers Companies,
Inc.
We will provide you with more specific terms of these securities
in supplements to this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully
before you invest.
We may offer these securities from time to time in amounts, at
prices and on other terms to be determined at the time of
offering. We may offer and sell these securities to or through
one or more underwriters, dealers and agents or directly to
purchasers, on a continuous or delayed basis.
The Travelers Companies, Inc.s common stock is listed on
the New York Stock Exchange under the symbol TRV.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
Prospectus dated December 15, 2008.
Table of
Contents
Unless the context otherwise indicates, the terms
Travelers, we, us or
our means The Travelers Companies, Inc. and its
consolidated subsidiaries, and the term Trusts
means, collectively, Travelers Capital Trust II, Travelers
Capital Trust III, Travelers Capital Trust IV and
Travelers Capital Trust V.
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission (the
SEC) utilizing a shelf registration or continuous
process. Under this shelf process, we may sell any combination
of the securities described in this prospectus in one or more
offerings.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will
provide a prospectus supplement containing specific information
about the terms of the securities being offered. A prospectus
supplement may include or incorporate by reference a discussion
of any risk factors or other special considerations applicable
to those securities or to us. A prospectus supplement may also
add, update or change information in this prospectus. If there
is any inconsistency between the information in this prospectus
and the applicable prospectus supplement, you should rely on the
information in the prospectus supplement. You should read both
this prospectus and any prospectus supplement together with
additional information described under the heading Where
You Can Find More Information.
The registration statement containing this prospectus, including
exhibits to the registration statement, provides additional
information about us and the securities offered under this
prospectus. The registration statement can be read at the SEC
web site or at the SEC office mentioned under the heading
Where You Can Find More Information.
When acquiring any securities discussed in this prospectus, you
should rely only on the information provided in this prospectus
and in the applicable prospectus supplement, including the
information
incorporated by reference. Neither we, the Trusts nor any
underwriters or agents have authorized anyone to provide you
with different information. We are not offering the securities
in any state where the offer is prohibited. You should not
assume that the information in this prospectus, any prospectus
supplement or any document incorporated by reference is truthful
or complete at any date other than the date mentioned on the
cover page of these documents.
We may sell securities to underwriters who will sell the
securities to the public on terms fixed at the time of sale. In
addition, the securities may be sold by us directly or through
dealers or agents designated from time to time. If we, directly
or through agents, solicit offers to purchase the securities, we
reserve the sole right to accept and, together with any agents,
to reject, in whole or in part, any of those offers.
Any prospectus supplement will contain the names of the
underwriters, dealers or agents, if any, together with the terms
of offering, the compensation of those underwriters and the net
proceeds to us. Any underwriters, dealers or agents
participating in the offering may be deemed
underwriters within the meaning of the Securities
Act of 1933, as amended (the Securities Act).
Unless otherwise stated, currency amounts in this prospectus and
any prospectus supplement are stated in United States dollars
($).
A SPECIAL
NOTE REGARDING FORWARD-LOOKING
STATEMENT DISCLOSURE AND CERTAIN RISKS
This prospectus may contain, and documents incorporated by
reference herein may contain, certain forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical facts, may be forward-looking
statements. Specifically, earnings guidance, statements about
our share repurchase plans, statements about the potential
impact of the recent disruption in the investment markets and
other economic conditions on our investment portfolio and
underwriting results are forward looking, and we may make
forward-looking statements about our results of operations
(including, among others, premium volume, net and operating
income, investment income, return on equity, expected returns
and combined ratio) and financial condition (including, among
others, invested assets and liquidity); the sufficiency of our
asbestos and other reserves (including, among others, asbestos
claim payment patterns); the cost and availability of
reinsurance coverage; catastrophe losses; investment
performance; investment, economic and underwriting market
conditions; and strategic initiatives. Such statements are
subject to risks and uncertainties, many of which are difficult
to predict and generally beyond our control, that could cause
actual results to differ materially from those expressed in, or
implied or projected by, the forward-looking information and
statements.
Some of the factors that could cause actual results to differ
include, but are not limited to, the following: catastrophe
losses could materially and adversely affect our results of
operations, our financial position
and/or
liquidity and could adversely impact our ratings, our ability to
raise capital and the availability and cost of reinsurance; if
actual claims exceed our loss reserves, or if changes in the
estimated level of loss reserves are necessary, our financial
results could be materially and adversely affected; our business
could be harmed because of our potential exposure to asbestos
and environmental claims and related litigation; we are exposed
to, and may face adverse developments involving, mass tort
claims such as those relating to exposure to potentially harmful
products or substances; the effects of emerging claim and
coverage issues on our business are uncertain; we may not be
able to collect all amounts due to us from reinsurers, and
reinsurance coverage may not be available to us in the future at
commercially reasonable rates or at all; the intense competition
that we face could harm our ability to maintain or increase our
profitability and premium volume; we are exposed to credit risk
in certain of our business operations and in our investment
portfolio; the insurance industry and we are the subject of a
number of investigations by state and federal authorities in the
United States, and we cannot predict the outcome of these
investigations or their impact on our business or financial
results; our businesses are heavily regulated, and changes in
regulation may reduce our profitability and limit our growth; a
downgrade in our claims-paying and debt ratings could adversely
impact our business volumes, adversely impact our ability to
access the capital markets and increase our borrowing costs; our
investment portfolio may suffer reduced returns or losses;
deteriorating economic conditions in the United States and
abroad could
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adversely impact our ability to grow our business profitably,
and inflation could result in an increase in loss costs which
could negatively impact our profitability; the inability of our
insurance subsidiaries to pay dividends to our holding company
in sufficient amounts would harm our ability to meet our
obligations and to pay future shareholder dividends; disruptions
to our relationships with our independent agents and brokers
could adversely affect us; we are subject to a number of risks
associated with our business outside the United States including
operational, legal and foreign exchange rate risk; we could be
adversely affected if our controls to ensure compliance with
guidelines, policies and legal and regulatory standards are not
effective; our business success and profitability depend, in
part, on effective information technology systems and on
continuing to develop and implement improvements in technology;
certain significant multiyear technology projects are currently
in process but may not be successful; and if we experience
difficulties with technology, data security
and/or
outsourcing relationships, our ability to conduct our business
could be negatively impacted.
Our forward-looking statements speak only as of the date of this
prospectus or as of the date of the documents incorporated
herein by reference, and we undertake no obligation to update
our forward-looking statements. For a more detailed discussion
of these factors, see the information under the caption
Risk Factors in the Companys most recent
annual report on
Form 10-K
filed with the Securities and Exchange Commission and under
Managements Discussion and Analysis of Financial
Condition and Results of Operations in the
Form 10-K.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SECs web
site at
http://www.sec.gov.
You may also read and copy any document we file with the SEC at
the SECs Public Reference Room at 100 F. Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the Public Reference Room. Our common
stock is traded on the New York Stock Exchange under the symbol
TRV. You may inspect the reports, proxy statements
and other information concerning us at the offices of the
New York Stock Exchange, 20 Broad Street, New York,
New York 10005. You may find additional information about us at
our web site at
http://www.travelers.com.
The information on our web site is not part of this prospectus.
The SEC allows us to incorporate by reference the information we
file with them, which means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is an important part of
this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We
incorporate by reference the documents listed below and any
future filings made by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 prior to the termination of the offering
under this prospectus:
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Annual Report on
Form 10-K
for the year ended December 31, 2007;
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Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2008, June 30, 2008
and September 30, 2008;
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Current Reports on
Form 8-K
filed on May 13, 2008, June 17, 2008, August 11,
2008 and October 14, 2008; and
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Form 8-A
filed on October 17, 1991, including any amendments or
supplements thereto.
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You may request a copy of these filings at no cost, by writing
or telephoning us at the following address:
The Travelers Companies, Inc.
Attn: Corporate Secretary
385 Washington Street
St. Paul, Minnesota 55102
Telephone No.:
(917) 778-6828
We have not included or incorporated by reference in this
prospectus any separate financial statements of the Trusts. We
do not believe that these financial statements would provide
holders of preferred securities with any important information
for the following reasons:
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we will own all of the voting securities of the Trusts;
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the Trusts do not and will not have any independent operations
other than to issue securities and to purchase and hold our debt
securities; and
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we are fully and unconditionally guaranteeing the obligations of
the Trusts as described in this prospectus.
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Although the Trusts would normally be required to file
information with the SEC on an ongoing basis, we expect the SEC
to exempt the Trusts from filing this information for as long as
we continue to file our information with the SEC.
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THE
TRAVELERS COMPANIES, INC.
The Travelers Companies, Inc. is a holding company principally
engaged, through its subsidiaries, in providing a wide range of
commercial and personal property and casualty insurance products
and services to businesses, government units, associations and
individuals. The company, known as The St. Paul Companies, Inc.,
or St. Paul, prior to its merger on April 1, 2004 with
Travelers Property Casualty Corp., or Travelers Property, is
incorporated as a general business corporation under the laws of
the State of Minnesota and is one of the oldest insurance
organizations in the United States, dating back to 1853. Upon
completion of the merger with Travelers Property, the company
was named The St. Paul Travelers Companies, Inc. The
companys name was changed to The Travelers Companies, Inc.
on February 26, 2007.
The principal executive offices of the company are located at
385 Washington Street, St. Paul, Minnesota 55102, and the
telephone number is
(651) 310-7911.
Unless the context otherwise indicates, the terms
we, us, our or
Travelers mean The Travelers Companies, Inc. and its
consolidated subsidiaries.
THE
TRUSTS
Each of Travelers Capital Trust II, Travelers Capital
Trust III, Travelers Capital Trust IV and Travelers
Capital Trust V (each a Trust and collectively
the Trusts) is a statutory trust created under
Delaware law. Each of the Trusts exists for the exclusive
purposes of:
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issuing the preferred securities, which represent preferred
undivided beneficial ownership interests in such Trusts
assets;
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issuing the common securities, which represent common undivided
beneficial ownership interests in such Trusts assets, to
us;
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using the proceeds from the issuances to purchase one or more
series of securities issued by us, including senior debt
securities, subordinated debt securities, junior subordinated
debt securities and warrants;
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maintaining the Trusts status as a grantor trust for
federal income tax purposes; and
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engaging in only those other activities necessary, advisable or
incidental to these purposes, such as registering the transfer
of preferred securities.
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Any senior debt securities, subordinated debt securities, junior
subordinated debt securities and warrants we sell to a Trust
will be the sole assets of such Trust, and, accordingly,
payments under the senior, subordinated or junior subordinated
debt securities will be the sole revenues of such Trust, and
such Trusts ability to distribute shares of our common
stock or other securities upon conversion of the preferred
securities, if convertible, will depend solely on our
performance under the warrants or convertible debt securities
sold by us to such Trust. We will acquire and own all of the
common securities of each of the Trusts. The common securities
will rank on a parity with, and payments will be made on the
common securities pro rata with, the preferred
securities, except that upon an event of default under the
applicable declaration of trust resulting from an event of
default under the senior, subordinated or junior subordinated
debt securities, our rights as holder of the common securities
to distributions and payments upon liquidation or redemption
will be subordinated to the rights of the holders of the
preferred securities.
Each Trust has a term as to be provided in each respective
declaration of trust, which will be described in the prospectus
supplement. The Trusts business and affairs are conducted
by the trustees. The trustees for the Trusts are The Bank of New
York Mellon Trust Company, N.A., as institutional trustee, BNY
Mellon Trust of Delaware, as the Delaware trustee, and two
regular trustees or administrative trustees who are
officers of The Travelers Companies, Inc. The Bank of New York
Mellon Trust Company, N.A., as institutional trustee, will act
as sole indenture trustee under the declarations of trust. The
Bank of New York Mellon Trust Company, N.A. will also act
as guarantee trustee under the guarantee and as indenture
trustee under the senior debt indenture, the subordinated debt
indenture and the junior subordinated debt indenture.
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The duties and obligations of each trustee are governed by the
declarations of trust. As sponsor of the Trusts, we will pay all
fees, expenses, debts and obligations (other than the payment of
distributions and other payments on the preferred securities)
related to the Trusts and any offering of the Trusts
preferred securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trusts. The
principal executive office of the Trusts is
c/o The
Travelers Companies, Inc., 385 Washington Street, St. Paul,
Minnesota 55102, and the telephone number is
(651) 310-7911.
USE OF
PROCEEDS
We intend to use the net proceeds from the sale of the
securities as set forth in the applicable prospectus supplement.
RATIOS OF
EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to fixed
charges and our ratio of earnings to combined fixed charges and
preferred dividend requirements for each of the periods
indicated:
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Nine Months
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Ended
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September 30,
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Year Ended December 31,
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2008
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2007
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2006
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2005
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2004
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2003
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Ratio of earnings to fixed charges
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9.32
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15.64
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15.24
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x
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8.46
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x
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4.11
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x
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11.89
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x
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Ratio of earnings to combined fixed charges and preferred
dividend requirements
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9.21
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x
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15.41
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x
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14.96
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x
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8.25
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x
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4.01
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x
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11.89
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x
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For accounting purposes, the merger of St. Paul and Travelers
Property was accounted for as a reverse acquisition with
Travelers Property treated as the accounting acquirer.
Accordingly, this transaction was accounted for as a purchase
business combination, using Travelers Propertys historical
financial information and applying fair value estimates to the
acquired assets, liabilities and commitments of St. Paul as of
April 1, 2004. Beginning on April 1, 2004, the results
of operations and financial condition of St. Paul were
consolidated with Travelers Property. Accordingly, all financial
information presented for the twelve months ended
December 31, 2004 reflects the accounts of Travelers
Property for the three months ended March 31, 2004 and the
consolidated accounts of St. Paul and Travelers Property for the
nine months ended December 31, 2004. The financial
information for 2003 reflects the accounts of Travelers Property.
The ratio of earnings to fixed charges is computed by dividing
income available for fixed charges by the fixed charges. For
purposes of this ratio, fixed charges consist of that portion of
rentals deemed representative of the appropriate interest factor.
DESCRIPTION
OF DEBT SECURITIES WE MAY OFFER
We may issue senior debt securities, subordinated debt
securities or junior subordinated debt securities. None of the
senior debt securities, the subordinated debt securities or the
junior subordinated debt securities will be secured by any of
our property or assets. Thus, by owning a debt security issued
by us, you are one of our unsecured creditors.
The senior debt securities will constitute part of our senior
debt, will be issued under a senior debt indenture described
below and will rank equally with all of our other unsecured and
unsubordinated debt.
The subordinated debt securities will constitute part of our
subordinated debt, will be issued under a subordinated debt
indenture described below and will be subordinate in right of
payment to all of our senior indebtedness, as
defined in the subordinated debt indenture. The junior
subordinated debt securities will constitute part of our junior
subordinated debt, will be issued under a junior subordinated
indenture described below and will be subordinate in right of
payment to all of our senior indebtedness, including
our
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subordinated debt, as defined in the junior subordinated
indenture. The prospectus supplement for any series of
subordinated debt securities or junior subordinated debt
securities will indicate the approximate amount of senior
indebtedness outstanding as of the end of the most recent fiscal
quarter. None of the indentures limit our ability to incur
additional indebtedness, including senior indebtedness.
Debt securities in this prospectus refers to the
senior debt securities, the subordinated debt securities and the
junior subordinated debt securities.
The debt securities are each governed by a document called an
indenture the senior debt indenture, in the case of
the senior debt securities, the subordinated debt indenture, in
the case of the subordinated debt securities, and the junior
subordinated debt indenture, in the case of the junior
subordinated debt securities. Each of the senior debt indenture
and the subordinated debt indenture is a contract between us and
The Bank of New York Mellon Trust Company, N.A., which will
act as trustee. The indentures are substantially similar, except
for (i) the covenant described below under
Restrictive Covenants Limitations
on Liens and Other Encumbrances on Voting Stock of Designated
Subsidiaries and the related provisions regarding the
treatment of liens when we merge or engage in similar
transactions (as described under Special
Situations Mergers and Similar Events), which
are included only in the senior debt indenture, (ii) the
provisions relating to subordination, which are included only in
the subordinated debt indenture and the junior subordinated debt
indenture, (iii) the definition of senior indebtedness in
the subordinated debt indenture and the junior subordinated debt
indenture, which is different in each indenture and
(iv) the events of default contained in the junior
subordinated indenture, which are limited to payment defaults
and certain events of bankruptcy.
Reference to the indenture or the trustee with respect to any
debt securities means the indenture under which those debt
securities are issued and the trustee under that indenture.
The trustee has two main roles:
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First, the trustee can enforce your rights against us if
we default on our obligations under the terms of the applicable
indenture or the debt securities. There are some limitations on
the extent to which the trustee acts on your behalf, described
later under Default and Related
Matters Events of Default Remedies if an
Event of Default Occurs; and
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Second, the trustee performs administrative duties for
us, such as sending you interest payments, transferring your
debt securities to a new buyer if you sell and sending you
notices.
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The indentures and their associated documents contain the full
legal text of the matters described in this section. The
indentures and the debt securities are governed by the laws of
the State of New York. A copy of the senior debt indenture,
dated as of March 12, 2002, the form of subordinated debt
indenture and the form of junior subordinated debt indenture
appear as exhibits to our registration statement. See
Where You Can Find More Information for information
on how to obtain a copy.
We may issue as many distinct series of debt securities under
any of the indentures as we wish. This section summarizes the
material terms of the debt securities that are common to all
series, although the prospectus supplement which describes the
terms of each series of debt securities may also describe
differences with the material terms summarized here.
Because this section is a summary, it does not describe every
aspect of the debt securities. This summary is subject to and
qualified in its entirety by reference to all the provisions of
the indentures, including definitions of some of the terms used
in the indentures. We describe the meaning for only the more
important terms. Whenever we refer to the defined terms of the
indentures in this prospectus or in the prospectus supplement,
those defined terms are incorporated by reference in this
prospectus or in the prospectus supplement. You must look to the
indentures for the most complete description of what we describe
in summary form in this prospectus or in the prospectus
supplement.
This summary also is subject to and qualified by reference to
the description of the particular terms of your series described
in the prospectus supplement. Those terms may vary from the
terms described in this prospectus. The prospectus supplement
relating to each series of debt securities will be attached to
the front of this prospectus.
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There may also be a further prospectus supplement, known as a
pricing supplement, which contains the precise terms of debt
securities you are offered.
We may issue the debt securities as original issue discount
securities, which are securities that are offered and sold at a
substantial discount to their stated principal amount. The
prospectus supplement relating to original issue discount
securities will describe federal income tax consequences and
other special considerations applicable to them. The debt
securities may also be issued as indexed securities or
securities denominated in foreign currencies or currency units,
as described in more detail in the prospectus supplement
relating to any of the particular debt securities. The
prospectus supplement relating to specific debt securities will
also describe any special considerations and any material
additional tax considerations applicable to such debt securities.
In addition, the specific financial, legal and other terms
particular to a series of debt securities will be described in
the prospectus supplement and the pricing supplement, if any,
relating to the series. The prospectus supplement relating to a
series of debt securities will describe the following terms of
the series:
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the title of the series of debt securities;
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whether it is a series of senior debt securities, a series of
subordinated debt securities or a series of junior subordinated
debt securities;
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any limit on the aggregate principal amount of the series of
debt securities;
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the person to whom interest on a debt security is payable, if
other than the holder on the regular record date;
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the date or dates on which the series of debt securities will
mature;
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the rate or rates, which may be fixed or variable, per annum at
which the series of debt securities will bear interest, if any,
and the date or dates from which that interest, if any, will
accrue;
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the place or places where the principal of (and premium, if any)
and interest on the debt securities are payable;
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the dates on which interest, if any, on the series of debt
securities will be payable, the regular record dates for the
interest payment dates and whether interest payments may be
deferred;
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any mandatory or optional sinking funds or analogous provisions
or provisions for redemption at our option or the option of the
holder;
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the date, if any, after which and the price or prices at which
the series of debt securities may, in accordance with any
optional or mandatory redemption provisions, be redeemed and the
other detailed terms and provisions of those optional or
mandatory redemption provisions, if any;
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if the debt securities may be converted into or exercised or
exchanged for our common stock or preferred stock or any other
of our securities, the terms on which conversion, exercise or
exchange may occur, including whether conversion, exercise or
exchange is mandatory, at the option of the holder or at our
option, the date on or the period during which conversion,
exercise or exchange may occur, the initial conversion, exercise
or exchange price or rate and the circumstances or manner in
which the amount of common stock or preferred stock or other
securities issuable upon conversion, exercise or exchange may be
adjusted;
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if other than denominations of $2,000 and any integral multiple
of $1,000 in excess of $2,000, the denominations in which the
series of debt securities will be issuable;
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if other than the principal amount thereof, the portion of the
principal amount of the series of debt securities which will be
payable upon the declaration of acceleration of the maturity of
such series of debt securities;
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the currency of payment of principal, premium, if any, and
interest on the series of debt securities;
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if the currency of payment for principal, premium, if any, and
interest on the series of debt securities is subject to our or a
holders election, the currency or currencies in which
payment can be made and the period within which, and the terms
and conditions upon which, the election can be made;
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any index, formula or other method used to determine the amount
of payment of principal or premium, if any, and interest on the
series of debt securities;
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the applicability of the provisions described under
Restrictive Covenants
Defeasance;
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any event of default under the series of debt securities if
different from those described under Default
and Related Matters Events of Default
What Is an Event of Default?;
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if the series of debt securities will be issuable only in the
form of a global security, as described under
Legal Ownership Global
Securities, the depository or its nominee with respect to
the series of debt securities and the circumstances under which
the global security may be registered for transfer or exchange
in the name of a person other than the depository or its nominee;
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any proposed listing of the series of debt securities on any
securities exchange; and
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any other special feature of the series of debt securities.
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Those terms may vary from the terms described here. Accordingly,
this summary also is subject to and qualified by reference to
the description of the terms of the series described in the
prospectus supplement. The prospectus supplement relating to
each series of debt securities will be attached to the front of
this prospectus.
Legal
Ownership
Street
Name and Other Indirect Holders
Investors who hold debt securities in accounts at banks or
brokers will generally not be recognized by us as legal holders
of debt securities. This is called holding in street
name. Instead, we would recognize only the bank or broker
or the financial institution the bank or broker uses to hold its
debt securities. These intermediary banks, brokers and other
financial institutions pass along principal, interest and other
payments on the debt securities, either because they agree to do
so in their customer agreements or because they are legally
required to do so. If you hold debt securities in street name,
you should check with your own institution to find out:
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how it handles securities payments and notices;
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whether it imposes fees or charges;
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how it would handle voting if ever required;
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whether and how you can instruct it to send you debt securities
registered in your own name so you can be a direct holder as
described below; and
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how it would pursue rights under the debt securities if there
were a default or other event triggering the need for holders to
act to protect their interests.
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Direct
Holders
Our obligations, as well as the obligations of the trustees and
those of any third parties employed by us or the trustees, run
only to persons or entities who are the direct holders of debt
securities (i.e., those who are registered as holders of
debt securities). As noted above, we do not have obligations to
you if you hold in street name or through other indirect means,
either because you choose to hold debt securities in that manner
or because the debt securities are issued in the form of global
securities as described below. For example, once we make payment
to the registered holder, we have no further responsibility for
the payment even if that registered holder is legally required
to pass the payment along to you as a street name customer but
does not do so.
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Global
Securities
What Is a Global Security? A global security is a special
type of indirectly held security, as described above under
Street Name and Other Indirect Holders.
If we choose to issue debt securities in the form of global
securities, the ultimate beneficial owners can only be indirect
holders. We do this by requiring that the global security be
registered in the name of a financial institution we select and
by requiring that the debt securities included in the global
security not be transferred to the name of any other direct
holder unless the special circumstances described below occur.
The financial institution that acts as the sole direct holder of
the global security is called the depositary.
Any person wishing to own a debt security included in the global
security must do so indirectly by virtue of an account with a
broker, bank or other financial institution that in turn has an
account with the depositary. The prospectus supplement indicates
whether your series of debt securities will be issued only in
the form of global securities.
Special Investor Considerations for Global
Securities. As an indirect holder, an
investors rights relating to a global security will be
governed by the account rules of the investors financial
institution and of the depositary, as well as general laws
relating to securities transfers. We do not recognize this type
of investor as a registered holder of debt securities and
instead deal only with the depositary that holds the global
security.
If you are an investor in debt securities that are issued only
in the form of global securities, you should be aware that:
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you cannot get debt securities registered in your own name;
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you cannot receive physical certificates for your interest in
the debt securities;
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you will be a street name holder and must look to your own bank
or broker for payments on the debt securities and protection of
your legal rights relating to the debt securities. See
Street Name and Other Indirect Holders;
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you may not be able to sell interests in the debt securities to
some insurance companies and other institutions that are
required by law to own their securities in the form of physical
certificates;
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the depositarys policies will govern payments, transfers,
exchange and other matters relating to your interest in the
global security. We and the trustee have no responsibility for
any aspect of the depositarys actions or for its records
of ownership interests in the global security. We and the
trustee also do not supervise the depositary in any way; and
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the depositary will require that interests in a global security
be purchased or sold within its system using
same-day
funds for settlement.
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Special Situations When Global Security Will Be
Terminated. In a few special situations described
later, the global security will terminate and interests in it
will be exchanged for physical certificates representing debt
securities. After that exchange, the choice of whether to hold
debt securities directly or in street name will be up to you.
You must consult your own bank or broker to find out how to have
your interests in debt securities transferred to your own name,
so that you will be a direct holder. The rights of street name
investors and direct holders in the debt securities have been
previously described in the subsections entitled,
Street Name and Other Indirect Holders
and Direct Holders.
The special situations for termination of a global security are:
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when the depositary notifies us that it is unwilling, unable or
no longer qualified to continue as depositary;
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when we notify the trustee that we wish to terminate the global
security; or
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when an event of default on the debt securities has occurred and
has not been cured.
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Defaults are discussed below under Default and
Related Matters.
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The prospectus supplement may also list additional situations
for terminating a global security that would apply only to the
particular series of debt securities covered by the prospectus
supplement. When a global security terminates, the depositary
(and not we or the applicable trustee) is responsible for
deciding the names of the institutions that will be the initial
direct holders.
In the remainder of this description you means
direct holders and not street name or other indirect holders of
debt securities. Indirect holders should read the previous
subsection entitled Street Name and Other
Indirect Holders.
Overview
of the Remainder of this Description
The remainder of this description summarizes:
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Additional Mechanics relevant to the debt securities
under normal circumstances, such as how you transfer ownership
and where we make payments;
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your rights under several Special Situations, such as if
we merge with another company or if we want to change a term of
the debt securities;
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Subordination Provisions in the subordinated debt
indenture and the junior subordinated indenture that may
prohibit us from making payments on those securities;
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a Restrictive Covenant contained in the senior debt
indenture that restricts our ability to incur liens and other
encumbrances on the voting stock of some of our subsidiaries. A
particular series of debt securities may have additional
restrictive covenants, which will be described in the prospectus
supplement;
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situations in which we may invoke the provisions relating to
Defeasance;
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your rights if we Default or experience other financial
difficulties; and
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our Relationship With the Trustee.
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Additional
Mechanics
Form,
Exchange and Transfer
The debt securities will be issued:
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only in fully registered form;
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without interest coupons; and
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unless otherwise indicated in the prospectus supplement, in
denominations of $2,000 and multiples of $1,000 in excess of
$2,000.
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You may have your debt securities broken into more debt
securities of smaller denominations or combined into fewer debt
securities of larger denominations, as long as the total
principal amount is not changed. This is called an exchange.
You may exchange or transfer debt securities at the office of
the trustee. The trustee acts as our agent for registering debt
securities in the names of holders and transferring debt
securities. We may change this appointment to another entity or
perform the service ourselves. The entity performing the role of
maintaining the list of registered direct holders is called the
security registrar. It will also register transfers of the debt
securities.
You will not be required to pay a service charge to transfer or
exchange debt securities, but you may be required to pay for any
tax or other governmental charge associated with the exchange or
transfer. The transfer or exchange will only be made if the
security registrar is satisfied with your proof of ownership.
7
If we designate additional transfer agents, they will be named
in the prospectus supplement. We may cancel the designation of
any particular transfer agent. We may also approve a change in
the office through which any transfer agent acts.
If the debt securities are redeemable and we redeem less than
all of the debt securities of a particular series, we may block
the issuance, transfer or exchange of debt securities during the
period beginning at the opening of business 15 days before
the day we mail the notice of redemption and ending at the close
of business on the day of that mailing, in order to freeze the
list of holders to prepare the mailing. We may also refuse to
register transfers or exchanges of debt securities selected for
redemption, except that we will continue to permit transfers and
exchanges of the unredeemed portion of any debt security being
partially redeemed.
Payment
and Paying Agents
We will pay interest to you if you are a direct holder listed in
the trustees records at the close of business on a
particular day in advance of each due date for interest, even if
you no longer own the debt security on the interest due date.
That particular day, usually about two weeks in advance of the
interest due date, is called the regular record date and is
stated in the prospectus supplement. Holders buying and selling
debt securities must work out between them how to compensate for
the fact that we will pay all the interest for an interest
period to the one who is the registered holder on the regular
record date. The most common manner is to adjust the sales price
of the debt securities to prorate interest fairly between buyer
and seller. This prorated interest amount is called accrued
interest.
We will pay interest, principal and any other money due on the
debt securities at the corporate trust office of the trustee in
New York City. You must make arrangements to have your payments
picked up at or wired from that office. We may also choose to
pay interest by mailing checks.
Street name and other indirect holders should consult their
banks or brokers for information on how they will receive
payments.
We may also arrange for additional payment offices and may
cancel or change these offices, including our use of the
trustees corporate trust office. These offices are called
paying agents. We may also choose to act as our own paying
agent. We must notify you of changes in the paying agents for
any particular series of debt securities.
Notices
We and the trustee will send notices regarding the debt
securities only to direct holders, using their addresses as
listed in the trustees records.
Regardless of who acts as paying agent, all money paid by us to
a paying agent that remains unclaimed at the end of one year
after the amount is due to direct holders will be repaid to us.
After that one-year period, you may look only to us for payment
and not to the trustee, any other paying agent or anyone else.
Special
Situations
Mergers
and Similar Events
We are generally permitted to consolidate or merge with another
company or firm. We are also permitted to sell or lease
substantially all of our assets to another firm, or to buy or
lease substantially all of the assets of another firm. However,
we may not take any of these actions unless the following
conditions (among others) are met:
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Where we merge out of existence or sell or lease substantially
all our assets, the other firm may not be organized under a
foreign countrys laws; that is, it must be a corporation,
partnership or trust organized under the laws of a State of the
United States or the District of Columbia or under federal law,
and it must agree to be legally responsible for the debt
securities.
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The merger, sale of assets or other transaction must not cause a
default on the debt securities, and we must not already be in
default, unless the merger or other transaction would cure the
default. For purposes of this no-default test, a default would
include an event of default that has occurred and not been
cured. A default for this purpose would also include any event
that would be an event of default if the requirements for giving
us notice of our default or our default having to exist for a
specific period of time were disregarded.
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It is possible that the merger, sale of assets or other
transaction would cause some of our property to become subject
to a mortgage or other legal mechanism giving lenders
preferential rights in that property over other lenders,
including the direct holders of the senior debt securities, or
over our general creditors if we fail to pay them back. We have
promised in our senior debt indenture to limit these
preferential rights on voting stock of any designated
subsidiaries, called liens, as discussed under
Restrictive Covenants Limitation
on Liens and Other Encumbrances on Voting Stock of Designated
Subsidiaries. If a merger or other transaction would
create any liens on the voting stock of our designated
subsidiaries, we must comply with that restrictive covenant. We
would do this either by deciding that the liens were permitted,
or by following the requirements of the restrictive covenant to
grant an equivalent or higher-ranking lien on the same voting
stock to the direct holders of the senior debt securities.
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Modification
and Waiver
There are four types of changes we can make to either indenture
and the debt securities issued under that indenture.
Changes Requiring Your Approval. First, there
are changes that cannot be made to your debt securities without
your specific approval. The following is a list of those types
of changes:
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change the payment due date of the principal or interest on a
debt security;
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reduce any amounts due on a debt security;
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reduce the amount of principal payable upon acceleration of the
maturity of a debt security (including the amount payable on an
original issue discount security) following a default;
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change the place or currency of payment on a debt security;
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impair your right to sue for payment of any amount due on your
debt security;
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impair any right that you may have to exchange or convert the
debt security for or into securities or other property;
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reduce the percentage of direct holders of debt securities whose
consent is needed to modify or amend the applicable indenture;
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reduce the percentage of direct holders of debt securities whose
consent is needed to waive our compliance with certain
provisions of the applicable indenture or to waive certain
defaults; and
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modify any other aspect of the provisions dealing with
modification and waiver of the applicable indenture.
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Changes Requiring a Majority Vote. The second
type of change to a particular indenture and the debt securities
is the kind that requires a vote in favor by direct holders of
debt securities owning a majority of the principal amount of all
series affected thereby, voting together as a single class. Most
changes, including waivers, as described below, fall into this
category, except for changes noted above as requiring the
approval of the holders of each security affected thereby, and,
as noted below, changes not requiring approval.
Each indenture provides that a supplemental indenture which
changes or eliminates any covenant or other provision of the
applicable indenture which has expressly been included solely
for the benefit of one or more particular series of securities,
or which modifies the rights of the holders of securities of
such series with
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respect to such covenant or other provision, shall be deemed not
to affect the rights under the applicable indenture of the
holders of securities of any other series.
Changes Not Requiring Approval. The third type
of change does not require any vote by holders of debt
securities. This type is limited to clarifications and certain
other changes that would not adversely affect holders of the
debt securities.
Changes by Waiver Requiring a Majority
Vote. Fourth, we need a vote by direct holders of
senior debt securities owning a majority of the principal amount
of the particular series affected to obtain a waiver of certain
of the restrictive covenants, including the one described later
under Restrictive Covenants
Limitation on Liens and Other Encumbrances on Voting Stock of
Designated Subsidiaries. We also need such a majority vote
to obtain a waiver of any past default, except a payment default
listed in the first category described later under
Default and Related Matters Events
of Default.
Modification of Subordination Provisions. In
addition, we may not modify the subordination provisions of the
subordinated debt indenture or the junior subordinated indenture
in a manner that would adversely affect the outstanding
subordinated debt securities or junior subordinated debt
securities, as the case may be, of any one or more series in any
material respect, without the consent of the direct holders of a
majority in aggregate principal amount of all affected series,
voting together as one class.
Further Details Concerning Voting. When taking
a vote, we will use the following rules to decide how much
principal amount to attribute to a debt security:
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for original issue discount securities, we will use the
principal amount that would be due and payable on the voting
date if the maturity of the debt securities were accelerated to
that date because of a default;
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for debt securities whose principal amount is not known (for
example, because it is based on an index) we will use a special
rule for that debt security described in the prospectus
supplement; or
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for debt securities denominated in one or more foreign
currencies or currency units, we will use the U.S. dollar
equivalent.
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Debt securities will not be considered outstanding, and
therefore will not be eligible to vote, if we have deposited or
set aside in trust for you money for their payment or
redemption. Debt securities will also not be eligible to vote if
they have been fully defeased as described under
Defeasance Full Defeasance.
We will generally be entitled to set any day as a record date
for the purpose of determining the direct holders of outstanding
debt securities that are entitled to vote or take other action
under the applicable indenture. In some circumstances, the
trustee will be entitled to set a record date for action by
direct holders. If we or the trustee set a record date for a
vote or other action to be taken by holders of a particular
series, that vote or action may be taken only by persons who are
direct holders of outstanding securities of that series on the
record date and must be taken within 90 days following the
record date.
Street name and other indirect holders should consult their
banks or brokers for information on how approval may be granted
or denied if we seek to change an indenture or the debt
securities or request a waiver.
Subordination
Provisions
Direct holders of subordinated debt securities or junior
subordinated debt securities should recognize that contractual
provisions in the subordinated debt indenture and junior
subordinated debt indenture may prohibit us from making payments
on those securities. Subordinated debt securities are
subordinate and junior in right of payment, to the extent and in
the manner stated in the subordinated debt indenture, to all of
our senior indebtedness, as defined in the subordinated debt
indenture, including all debt securities we have issued and will
issue under the senior debt indenture. Junior subordinated debt
securities are subordinate and junior in right of payment, to
the extent and in the manner stated in the junior subordinated
debt indenture, to all of our
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senior indebtedness, as defined in the junior subordinated debt
indenture, including all debt securities we have issued and will
issue under the senior debt indenture and subordinated debt
indenture.
Subject to the qualifications described below, the term
senior indebtedness is defined in the subordinated
debt indenture to include principal of, and interest and premium
(if any) on, and any other payment due pursuant to any of the
following, whether incurred prior to, on or after the date of
this prospectus:
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all of our obligations (other than obligations pursuant to the
subordinated debt indenture, the subordinated debt securities,
the junior subordinated debt indenture and the junior
subordinated debt securities) for borrowed money;
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all of our obligations evidenced by notes, debentures, bonds or
other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or
businesses;
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all of our obligations under leases required or permitted to be
capitalized under generally accepted accounting principles;
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all of our reimbursement obligations with respect to letters of
credit, bankers acceptances or similar facilities issued
for our account;
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all of our obligations issued or assumed as the deferred
purchase price of property or services, including all
obligations under master lease transactions pursuant to which we
or any of our subsidiaries have agreed to be treated as owner of
the subject property for federal income tax purposes (but
excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business);
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all of our payment obligations under interest rate swap or
similar agreements or foreign currency hedge, exchange or
similar agreements at the time of determination, including any
such obligations we incurred solely to act as a hedge against
increases in interest rates that may occur under the terms of
other outstanding variable or floating rate indebtedness of ours;
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all obligations of the types referred to in the preceding bullet
points of another person and all dividends of another person the
payment of which, in either case, we have assumed or guaranteed
or for which we are responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or
otherwise;
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all compensation and reimbursement obligations of ours to the
trustee pursuant to the subordinated debt indenture and the
junior subordinated indenture; and
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all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings of any of the above
types of indebtedness.
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Notwithstanding anything to the contrary in the foregoing, under
the subordinated debt indenture, senior indebtedness will not
include:
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indebtedness we owe to a subsidiary of ours or our employees;
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indebtedness which, by its terms, expressly provides that it
does not rank senior to the subordinated debt securities;
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indebtedness incurred for the purchase of goods, materials or
property, or for services obtained in the ordinary course of
business or for other liabilities arising in the ordinary course
of business; and
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indebtedness we may incur in violation of the subordinated debt
indenture.
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Subject to the qualifications described below, the term
senior indebtedness is defined in the junior
subordinated indenture to include principal of, and interest and
premium (if any) on, and any other payment due pursuant to any
of the following, whether incurred prior to, on or after the
date of this prospectus:
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all of our obligations (other than obligations pursuant to the
junior subordinated indenture and the junior subordinated debt
securities) for money borrowed;
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all of our obligations evidenced by notes, debentures, bonds or
other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or
businesses and including all other debt securities issued by us
to any trust or a trustee of such trust, or to a partnership or
other affiliate that acts as a financing vehicle for us, in
connection with the issuance of securities by such vehicles
(including but not limited to the junior subordinated
debentures, series A, issued pursuant to the indenture
dated as of December 24, 1996, between USF&G
Corporation and The Bank of New York, as amended, the
junior subordinated debentures, series C, issued pursuant
to the indenture dated as of July 8, 1997, between
USF&G Corporation and The Bank of New York, as amended and
the junior subordinated deferrable interest debentures, issued
pursuant to the indenture dated as of December 23, 1997
between MMI Companies, Inc. and The Bank of New York, as
amended);
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all of our obligations under leases required or permitted to be
capitalized under generally accepted accounting principles;
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all of our reimbursement obligations with respect to letters of
credit, bankers acceptances or similar facilities issued
for our account;
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all of our obligations issued or assumed as the deferred
purchase price of property or services, including all
obligations under master lease transactions pursuant to which we
or any of our subsidiaries have agreed to be treated as owner of
the subject property for federal income tax purposes (but
excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business);
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all of our payment obligations under interest rate swap or
similar agreements or foreign currency hedge, exchange or
similar agreements at the time of determination, including any
such obligations we incurred solely to act as a hedge against
increases in interest rates that may occur under the terms of
other outstanding variable or floating rate indebtedness of ours;
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all obligations of the types referred to in the preceding bullet
points of another person and all dividends of another person the
payment of which, in either case, we have assumed or guaranteed
or for which we are responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or
otherwise;
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all compensation and reimbursement obligations of ours to the
trustee pursuant to the junior subordinated indenture; and
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all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings of any of the above
types of indebtedness.
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The junior subordinated debt securities will rank senior to all
of our equity securities.
The senior indebtedness will continue to be senior indebtedness
and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any
term of the senior indebtedness or extension or renewal of the
senior indebtedness.
Notwithstanding anything to the contrary in the foregoing, under
the junior subordinated indenture, senior indebtedness will not
include:
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indebtedness incurred for the purchase of goods, materials or
property, or for services obtained in the ordinary course of
business or for other liabilities arising in the ordinary course
of business;
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any indebtedness which by its terms expressly provides that it
is not superior in right of payment to the junior subordinated
debt securities; or
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any of our indebtedness owed to a person who is our subsidiary
or our employees.
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Each of the subordinated debt indenture and junior subordinated
debt indenture provides that no payment or other distribution
may be made in respect of any subordinated debt securities or
junior subordinated debt securities, as the case may be, in the
following circumstances:
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in the event of any default in the payment of principal of (or
premium, if any) or interest on any senior indebtedness (as
defined in the applicable indenture) when due, whether at the
stated maturity of any such payment or by declaration of
acceleration, call for redemption, mandatory payment or
prepayment or otherwise (senior payment default),
unless and until such senior payment default has been cured or
waived; or
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in the event of any senior nonmonetary default (as defined
below), during the period commencing on the date of receipt by
us and the trustee of written notice of such senior nonmonetary
default from the holder of such senior indebtedness and ending
(subject to any blockage of payments that may then or thereafter
be in effect as the result of any senior payment default) on the
earlier of (i) the date on which the senior indebtedness to
which such senior nonmonetary default relates is discharged or
such senior nonmonetary default has been cured or waived in
writing or has ceased to exist and any acceleration of senior
indebtedness to which such senior nonmonetary default relates
has been rescinded or annulled or (ii) the 179th day
after the date of such receipt of such written notice.
Senior nonmonetary default is defined as the
occurrence and continuance of any default (other than a senior
payment default) or any event which, after notice or lapse of
time (or both), would become an event of default (other than a
senior payment default), under the terms of any instrument or
agreement pursuant to which any senior indebtedness is
outstanding, permitting a holder of such senior indebtedness (or
a trustee or agent on behalf of the holder) to declare such
senior indebtedness due and payable prior to the date on which
it would otherwise become due and payable.
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If the trustee under the subordinated debt indenture or junior
subordinated debt indenture, as the case may be, or any direct
holders of the subordinated debt securities or junior
subordinated debt securities, as the case may be, receive any
payment or distribution that is prohibited under the
subordination provisions, then the trustee or the direct holders
will have to repay that money to the direct holders of the
senior indebtedness.
Even if the subordination provisions prevent us from making any
payment when due on the subordinated debt securities or junior
subordinated debt securities, as the case may be, of any series,
we will be in default on our obligations under that series if we
do not make the payment when due. This means that the trustee
under the subordinated debt indenture or the junior subordinated
debt indenture, as the case may be, and the direct holders of
that series can take action against us, but they will not
receive any money until the claims of the direct holders of
senior indebtedness have been fully satisfied.
Restrictive
Covenants
General
We have made certain promises in each indenture called
covenants where, among other things, we promise to
maintain our corporate existence and all licenses and material
permits necessary for our business. In addition, in the senior
debt indenture, we have made the promise described in the next
paragraph. The subordinated debt indenture and junior
subordinated debt indenture do not include the promise described
in the next paragraph.
Limitation
on Liens and Other Encumbrances on Voting Stock of Designated
Subsidiaries
Some of our property may be subject to a mortgage or other legal
mechanism that gives our lenders preferential rights in that
property over other lenders, including the direct holders of the
senior debt securities, or over our general creditors if we fail
to pay them back. These preferential rights are called liens. In
the senior debt indenture, we promise not to create, issue,
assume, incur or guarantee any indebtedness for borrowed money
that is secured by a mortgage, pledge, lien, security interest
or other encumbrance on any voting stock of a designated
subsidiary, unless we also secure all the senior debt securities
that are deemed outstanding under the senior debt indenture
equally and ratably with, or prior to, the indebtedness being
secured, together with, at our election, any of our or any
designated subsidiarys other indebtedness. This promise
does not restrict our ability to sell or otherwise dispose of
our interests in any designated subsidiary.
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As used here:
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voting stock means all classes of stock (including any interest
in such stock) outstanding of a designated subsidiary that are
normally entitled to vote in elections of directors;
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designated subsidiary means any of our subsidiaries that,
together with its subsidiaries, has assets exceeding 20% of our
consolidated assets. As of the date of this prospectus, St. Paul
Fire and Marine Insurance Company, Travelers Property and its
wholly-owned subsidiaries, Travelers Insurance Group Holdings
Inc., The Travelers Indemnity Company and Travelers Casualty and
Surety Company are the only subsidiaries satisfying this 20%
test. For purposes of applying the 20% test, the assets of a
subsidiary and our consolidated assets are both determined as of
the last day of the most recent calendar quarter ended at least
30 days prior to the date of the 20% test and in accordance
with generally accepted accounting principles as in effect on
the last day of such calendar quarter; and
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subsidiary means a corporation in which we
and/or one
or more of our other subsidiaries owns at least 50% of the
voting stock, which is a kind of stock that ordinarily permits
its owners to vote for election of directors.
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Defeasance
The following discussion of full defeasance and covenant
defeasance will be applicable to your series of debt securities
only if we choose to have them apply to that series. If we do so
choose, we will state that in the prospectus supplement.
Full
Defeasance
If there is a change in federal tax law, as described below, we
can legally release ourselves from any payment or other
obligations on the debt securities, called full defeasance, if
we put in place the following arrangements for you to be repaid:
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we must deposit in trust for your benefit and the benefit of all
other direct holders of the debt securities a combination of
money and U.S. government or U.S. government agency
notes or bonds that will generate enough cash to make interest,
principal and any other payments on the debt securities on their
various due dates;
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there must be a change in current federal tax law or a
U.S. Internal Revenue Service ruling that lets us make the
above deposit without causing you to be taxed on the debt
securities any differently than if we did not make the deposit
and such defeasance had not occurred. (Under current federal tax
law, the deposit and our legal release from the debt securities
would be treated as though we took back your debt securities and
gave you your share of the cash and notes or bonds deposited in
trust. In that event, you could recognize gain or loss on the
debt securities you give back to us.);
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we must deliver to the trustee a legal opinion of our counsel
confirming the tax law change described above; and
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in the case of the subordinated debt securities and junior
subordinated debt securities, the following requirements must
also be met:
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no event or condition may exist that, under the provisions
described above under Subordination
Provisions, would prevent us from making payments of
principal, premium or interest on those subordinated debt
securities or junior subordinated debt securities, as the case
may be, on the date of the deposit referred to above or during
the 90 days after that date; and
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we must deliver to the trustee an opinion of counsel to the
effect that (a) the trust funds will not be subject to any
rights of direct holders of senior indebtedness and
(b) after the
90-day
period referred to above, the trust funds will not be subject to
any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors rights generally, except that if
a court were to rule under any of those laws in any case or
proceeding that the trust funds remained our property, then the
relevant trustee and the direct holders of the subordinated debt
securities or junior subordinated debt
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securities, as the case may be, would be entitled to some
enumerated rights as secured creditors in the trust funds.
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If we accomplished full defeasance, as described above, you
would have to rely solely on the trust deposit for repayment on
the debt securities. In addition, in the case of subordinated
debt securities and junior subordinated debt securities, the
provisions described above under Subordination
Provisions will not apply. You could not look to us for
repayment in the unlikely event of any shortfall. Conversely,
the trust deposit would most likely be protected from claims of
our lenders and other creditors if we ever become bankrupt or
insolvent.
Covenant
Defeasance
Under current federal tax law, we can make the same type of
deposit described above and be released from some of the
restrictive covenants in the debt securities. This is called
covenant defeasance. In that event, you would lose the
protection of those restrictive covenants but would gain the
protection of having money and securities set aside in trust to
repay the debt securities. In order to achieve covenant
defeasance, we must do the following:
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we must deposit in trust for your benefit and the benefit of all
other direct holders of the debt securities a combination of
money and U.S. government or U.S. government agency
notes or bonds that will generate enough cash to make interest,
principal and any other payments on the debt securities on their
various due dates; and
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we must deliver to the trustee a legal opinion of our counsel
confirming that under current federal income tax law we may make
the above deposit without causing you to be taxed on the debt
securities any differently than if we did not make the deposit
and such covenant defeasance had not occurred.
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If we accomplish covenant defeasance, the following provisions,
among others, of the indentures and the debt securities would no
longer apply:
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our promises regarding conduct of our business previously
described under Limitation on Liens and Other
Encumbrances on Voting Stock of Designated Subsidiaries
and any other covenants applicable to the series of debt
securities described in the prospectus supplement;
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the condition regarding the treatment of liens when we merge or
engage in similar transactions, as described under
Special Situations Mergers and
Similar Events; and
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the events of default relating to breach of covenants, described
under Default and Related Matters
Events of Default What Is an Event of Default?.
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In addition, in the case of subordinated debt securities and
junior subordinated debt securities, the provisions described
above under Subordination Provisions
will not apply if we accomplish covenant defeasance.
If we accomplish covenant defeasance, you could still look to us
for repayment of the debt securities if there were a shortfall
in the trust deposit. In fact, if one of the remaining events of
default occurs, such as our bankruptcy, and the debt securities
become immediately due and payable, there may be a shortfall in
the trust deposit. Depending on the event causing the default,
you may not be able to obtain payment of the shortfall.
Default
and Related Matters
Ranking
With Our Other Unsecured Creditors
The debt securities are not secured by any of our property or
assets. Accordingly, your ownership of debt securities means
that you are one of our unsecured creditors. The senior debt
securities are not subordinated to any of our debt obligations,
and therefore, they rank equally with all of our other unsecured
and unsubordinated indebtedness. The subordinated debt
securities and the junior subordinated debt securities are
subordinate and junior in right of payment to all of our senior
indebtedness, as defined in the subordinated debt indenture and
the junior subordinated debt indenture, as the case may be.
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Events
of Default
You will have special rights if an event of default occurs and
is not cured, as described later in this subsection.
What Is an Event of Default? The term
event of default generally means any of the
following:
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we do not pay the principal or any premium on a debt security on
its due date;
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we do not pay interest on a debt security within 30 days of
its due date;
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we do not deposit money into a separate custodial account, known
as sinking fund, when such deposit is due, if we agree to
maintain any such sinking fund;
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we remain in breach of the restrictive covenant described
previously under Restrictive
Covenants Limitation on Liens and Other Encumbrances
on Voting Stock of Designated Subsidiaries or any other
term of the applicable indenture for 90 days after we
receive a notice of default stating we are in breach. The notice
must be sent by either the trustee or direct holders of at least
25% of the principal amount of debt securities of the affected
series;
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we file for bankruptcy or certain other events of bankruptcy,
insolvency or reorganization occur; or
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any other event of default described in the prospectus
supplement occurs.
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However, unless otherwise specified in the applicable prospectus
supplement, under the terms of the junior subordinated debt
indenture, a covenant default and failure to deposit money into
a sinking fund when required are not an event of default.
Remedies If an Event of Default Occurs. If you
are a holder of a subordinated debt or junior subordinated debt
security, all remedies available upon the occurrence of an event
of default under the applicable indenture will be subject to the
restrictions on the subordinated debt securities and junior
subordinated debt securities, as the case may be, described
above under Subordination Provisions. If
an event of default has occurred and has not been cured, the
trustee or the direct holders of 25% in principal amount of the
debt securities of the affected series may declare the entire
principal amount (or, in the case of original issue discount
securities, the portion of the principal amount that is
specified in the terms of the affected debt security) of all the
debt securities of that series to be due and immediately
payable. This is called a declaration of acceleration of
maturity. However, a declaration of acceleration of maturity may
be canceled by the direct holders of at least a majority in
principal amount of the debt securities of the affected series.
Reference is made to the prospectus supplement relating to any
series of debt securities which are original issue discount
securities for the particular provisions relating to
acceleration of the maturity of a portion of the principal
amount of original issue discount securities upon the occurrence
of an event of default and its continuation.
Except in cases of default, where the trustee has some special
duties, the trustee is not required to take any action under the
indentures at the request of any holders unless the direct
holders offer the trustee reasonable protection from expenses
and liability, called an indemnity. If reasonable indemnity is
provided, the direct holders of a majority in principal amount
of the outstanding debt securities of the relevant series may
direct the time, method and place of conducting any lawsuit or
other formal legal action seeking any remedy available to the
trustee. These majority direct holders may also direct the
trustee in performing any other action under the applicable
indenture with respect to the debt securities of that series.
Before you bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your
rights or protect your interests relating to the debt
securities, the following must occur:
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you must give the trustee written notice that an event of
default has occurred and remains uncured;
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the direct holders of 25% in principal amount of all outstanding
debt securities of the relevant series must make a written
request that the trustee take action because of the default and
must offer reasonable indemnity to the trustee against the cost
and other liabilities of taking that action;
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the trustee must have not received from direct holders of a
majority in principal amount of the outstanding debt securities
of that series a direction inconsistent with the written
notice; and
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the trustee must have not taken action for 90 days after
receipt of the above notice and offer of indemnity.
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However, you are entitled at any time to bring a lawsuit for the
payment of money due on your debt security on or after its due
date.
Street name and other indirect holders should consult their
banks or brokers for information on how to give notice or
direction to or make a request of the trustee and to make or
cancel a declaration of acceleration.
We will furnish to the trustee every year a written statement of
certain of our officers certifying that to their knowledge we
are in compliance with the applicable indenture and the debt
securities issued under it, or else specifying any default.
Our
Relationship With the Trustee
The Bank of New York Mellon Trust Company, N.A. is the
trustee under the senior debt indenture, the subordinated debt
indenture and the junior subordinated indenture. The Bank of New
York Mellon is also a lender under a revolving credit agreement
among us and certain banks named therein providing for aggregate
borrowing by us of a maximum of $1.0 billion. No borrowings
under this facility were outstanding at September 30, 2008.
At September 30, 2008, The Bank of New York Mellon had
issued $32.4 million in letters of credit on our behalf.
The Bank of New York Mellon or its affiliates are also the
trustee under other indentures pursuant to which we or our
subsidiaries have issued debt securities and have provided, and
may in the future provide, commercial and investment banking
services to us from time to time.
DESCRIPTION
OF PREFERRED STOCK WE MAY OFFER
We may issue preferred stock in one or more series, as described
below. The following briefly summarizes the provisions of our
amended and restated articles of incorporation that would be
important to holders of our preferred stock. The following
description may not be complete and is subject to, and qualified
in its entirety by reference to, the terms and provisions of our
amended and restated articles of incorporation which is an
exhibit to the registration statement which contains this
prospectus.
The description of most of the financial and other specific
terms of your series will be in the prospectus supplement
accompanying this prospectus. Those terms may vary from the
terms described here.
As you read this section, please remember that the specific
terms of your series of preferred stock as described in your
prospectus supplement will supplement and, if applicable, may
modify or replace the general terms described in this section.
If there are differences between your prospectus supplement and
this prospectus, your prospectus supplement will control. Thus,
the statements we make in this section may not apply to your
series of preferred stock.
Reference to a series of preferred stock means all of the shares
of preferred stock issued as part of the same series under a
certificate of designations filed as part of our amended and
restated articles of incorporation. Reference to your prospectus
supplement means the prospectus supplement describing the
specific terms of the preferred stock you purchase. The terms
used in your prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.
Our
Authorized Preferred Stock
Under our amended and restated articles of incorporation, our
board of directors is authorized, without further action by our
shareholders, to establish from the 5,000,000 undesignated
shares authorized by our amended and restated articles of
incorporation one or more classes and series of shares, to
designate each such class and series, to fix the relative rights
and preferences of each such class and series and to issue such
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shares. Such rights and preferences may be superior to common
stock as to dividends, distributions of assets (upon liquidation
or otherwise) and voting rights. Undesignated shares may be
convertible into shares of any other series or class of stock,
including common stock, if our board of directors so determines.
Our board of directors will fix the terms of the series of
preferred stock it designates by resolution adopted before we
issue any shares of the series of preferred stock.
The prospectus supplement relating to the particular series of
preferred stock will contain a description of the specific terms
of that series as fixed by our board of directors, including, as
applicable:
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the offering price at which we will issue the preferred stock;
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the title, designation of number of shares and stated value of
the preferred stock;
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the dividend rate or method of calculation, the payment dates
for dividends and the place or places where the dividends will
be paid, whether dividends will be cumulative or noncumulative,
and, if cumulative, the dates from which dividends will begin to
cumulate;
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any conversion or exchange rights;
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whether the preferred stock will be subject to redemption and
the redemption price and other terms and conditions relative to
the redemption rights;
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any liquidation rights;
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any sinking fund provisions;
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any voting rights; and
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any other rights, preferences, privileges, limitations and
restrictions that are not inconsistent with the terms of our
amended and restated articles of incorporation.
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When we issue and receive payment for shares of preferred stock,
the shares will be fully paid and nonassessable, which means
that its holders will have paid their purchase price in full and
that we may not ask them to surrender additional funds. Unless
otherwise specified in the prospectus supplement relating to a
particular series of preferred stock, holders of preferred stock
will not have any preemptive or subscription rights to acquire
more of our stock. Unless otherwise specified in the prospectus
supplement relating to a particular series of preferred stock,
each series of preferred stock will rank on a parity in all
respects with each other series of preferred stock and prior to
our common stock as to dividends and any distribution of our
assets.
Unless otherwise specified in the prospectus supplement relating
to a particular series of preferred stock, the rights of holders
of the preferred stock offered may be adversely affected by the
rights of holders of any shares of preferred stock that may be
issued in the future. Our board of directors may cause shares of
preferred stock to be issued in public or private transactions
for any proper corporate purposes, which may include issuances
to obtain additional financing in connection with acquisitions
and issuances to officers, directors and employees pursuant to
benefit plans. Our board of directors ability to issue
shares of preferred stock may discourage attempts by others to
acquire control of us without negotiation with our board of
directors, as it may make it difficult for a person to acquire
us without negotiating with our board of directors.
Redemption
If so specified in the applicable prospectus supplement, a
series of preferred stock may be redeemable at any time, in
whole or in part, at our option or the holders and may be
mandatorily redeemed.
Any restriction on the repurchase or redemption by us of our
preferred stock while we are in arrears in the payment of
dividends will be described in the applicable prospectus
supplement.
Any partial redemptions of preferred stock will be made in a way
that our board of directors decides is equitable.
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Unless we default in the payment of the redemption price,
dividends will cease to accrue after the redemption date on
shares of preferred stock called for redemption, and all rights
of holders of these shares will terminate except for the right
to receive the redemption price.
Dividends
Holders of each series of preferred stock will be entitled to
receive dividends when, as and if declared by our board of
directors from funds legally available for payment of dividends.
The rates and dates of payment of dividends will be set forth in
the applicable prospectus supplement relating to each series of
preferred stock. Dividends will be payable to holders of record
of preferred stock as they appear on our books on the record
dates fixed by the board of directors. Dividends on any series
of preferred stock may be cumulative or noncumulative, as set
forth in the applicable prospectus supplement.
We may not declare, pay or set apart funds for payment of
dividends on a particular series of preferred stock unless full
dividends on any other series of preferred stock that ranks
equally with or senior to the series of preferred stock have
been paid or sufficient funds have been set apart for payment
for either of the following:
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all prior dividend periods of the other series of preferred
stock that pay dividends on a cumulative basis; or
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the immediately preceding dividend period of the other series of
preferred stock that pay dividends on a noncumulative basis.
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Partial dividends declared on shares of any series of preferred
stock and other series of preferred stock ranking on an equal
basis as to dividends will be declared pro rata. A pro
rata declaration means that the ratio of dividends declared
per share to accrued dividends per share will be the same for
each series of preferred stock.
Conversion
or Exchange Rights
The prospectus supplement relating to any series of preferred
stock that is convertible, exercisable or exchangeable will
state the terms on which shares of that series are convertible
into or exercisable or exchangeable for shares of common stock,
another series of our preferred stock or any other securities.
Liquidation
Preference
In the event of our voluntary or involuntary liquidation,
dissolution or
winding-up,
holders of each series of our preferred stock will have the
right to receive distributions upon liquidation in the amount
described in the applicable prospectus supplement relating to
each series of preferred stock, plus an amount equal to any
accrued and unpaid dividends. These distributions will be made
before any distribution is made on the common stock or on any
securities ranking junior to the preferred stock upon
liquidation, dissolution or
winding-up.
If the liquidation amounts payable relating to the preferred
stock of any series and any other securities ranking on a parity
regarding liquidation rights are not paid in full, the holders
of the preferred stock of that series and the other securities
will have the right to a ratable portion of our available
assets, up to the full liquidation preference of each security.
Holders of these series of preferred stock or other securities
will not be entitled to any other amounts from us after they
have received their full liquidation preference.
Voting
Rights
The holders of shares of preferred stock will have no voting
rights, except:
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as otherwise stated in the applicable prospectus supplement;
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as otherwise stated in the certificate of designations
establishing the series; or
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as required by applicable law.
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Transfer
Agent and Registrar
The transfer agent, registrar and dividend disbursement agent
for the preferred stock will be stated in the applicable
prospectus supplement. The registrar for shares of preferred
stock will send notices to shareholders of any meetings at which
holders of the preferred stock have the right to elect directors
or to vote on any other matter.
DESCRIPTION
OF DEPOSITARY SHARES WE MAY OFFER
The following briefly summarizes the provisions of the
depositary shares and depositary receipts that we may issue from
time to time and which would be important to holders of
depositary receipts, other than pricing and related terms which
will be disclosed in the applicable prospectus supplement. The
prospectus supplement will also state whether any of the
generalized provisions summarized below do not apply to the
depositary shares or depositary receipts being offered and
provide any additional provisions applicable to the depositary
shares or depositary receipts being offered. The following
description and any description in a prospectus supplement may
not be complete and is subject to, and qualified in its entirety
by reference to, the terms and provisions of the form of deposit
agreement, which will be filed as an exhibit to the registration
statement which contains this prospectus.
Description
of Depositary Shares
We may offer depositary shares evidenced by depositary receipts.
Each depositary share represents a fraction or a multiple of a
share of the particular series of preferred stock issued and
deposited with a depositary. The fraction or the multiple of a
share of preferred stock which each depositary share represents
will be set forth in the applicable prospectus supplement.
We will deposit the shares of any series of preferred stock
represented by depositary shares according to the provisions of
a deposit agreement to be entered into between us and a bank or
trust company which we will select as our preferred stock
depositary. We will name the depositary in the applicable
prospectus supplement. Each holder of a depositary share will be
entitled to all the rights and preferences of the underlying
preferred stock in proportion to the applicable fraction or
multiple of a share of preferred stock represented by the
depositary share. These rights include dividend, voting,
redemption, conversion and liquidation rights. The depositary
will send the holders of depositary shares all reports and
communications that we deliver to the depositary and which we
are required to furnish to the holders of depositary shares.
Depositary
Receipts
The depositary shares will be evidenced by depositary receipts
issued pursuant to the deposit agreement. Depositary receipts
will be distributed to anyone who is buying a fraction or a
multiple of a share of preferred stock in accordance with the
terms of the applicable prospectus supplement.
Withdrawal
of Preferred Stock
Unless the related depositary shares have previously been called
for redemption, a holder of depositary shares may receive the
number of whole shares of the related series of preferred stock
and any money or other property represented by the holders
depositary receipts after surrendering the depositary receipts
at the corporate trust office of the depositary, paying any
taxes, charges and fees provided for in the deposit agreement
and complying with any other requirement of the deposit
agreement. Partial shares of preferred stock will not be issued.
If the surrendered depositary shares exceed the number of
depositary shares that represent the number of whole shares of
preferred stock the holder wishes to withdraw, then the
depositary will deliver to the holder at the same time a new
depositary receipt evidencing the excess number of depositary
shares. Once the holder has withdrawn the preferred stock, the
holder will not be entitled to re-deposit that preferred stock
under the deposit agreement or to receive depositary shares in
exchange for such preferred stock. We do not expect that there
will be any public trading market for withdrawn shares of
preferred stock.
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Dividends
and Other Distributions
The depositary will distribute to record holders of depositary
shares any cash dividends or other cash distributions it
receives on preferred stock, after deducting its fees and
expenses. Each holder will receive these distributions in
proportion to the number of depositary shares owned by the
holder. The depositary will distribute only whole
U.S. dollars and cents. The depositary will add any
fractional cents not distributed to the next sum received for
distribution to record holders of depositary shares.
In the event of a non-cash distribution, the depositary will
distribute property to the record holders of depositary shares,
unless the depositary determines that it is not feasible to make
such a distribution. If this occurs, the depositary may, with
our approval, sell the property and distribute the net proceeds
from the sale to the holders.
The amounts distributed to holders of depositary shares will be
reduced by any amounts required to be withheld by the preferred
stock depositary or by us on account of taxes or other
governmental charges.
Redemption
of Depositary Shares
If the series of preferred stock represented by depositary
shares is subject to redemption, then we will give the necessary
proceeds to the depositary. The depositary will then redeem the
depositary shares using the funds they received from us for the
preferred stock. The redemption price per depositary share will
be equal to the redemption price payable per share for the
applicable series of the preferred stock and any other amounts
per share payable with respect to the preferred stock multiplied
by the fraction or multiple of a share of preferred stock
represented by one depositary share. Whenever we redeem shares
of preferred stock held by the depositary, the depositary will
redeem the depositary shares representing the shares of
preferred stock on the same day provided we have paid in full to
the depositary the redemption price of the preferred stock to be
redeemed and any accrued and unpaid dividends. If fewer than all
the depositary shares of a series are to be redeemed, the
depositary shares will be selected by lot or ratably or by any
other equitable methods as the depositary will decide.
After the date fixed for redemption, the depositary shares
called for redemption will no longer be considered outstanding.
Therefore, all rights of holders of the depositary shares will
cease, except that the holders will still be entitled to receive
any cash payable upon the redemption and any money or other
property to which the holder was entitled at the time of
redemption. To receive this amount or other property, the
holders must surrender the depositary receipts evidencing their
depositary shares to the preferred stock depositary. Any funds
that we deposit with the preferred stock depositary for any
depositary shares that the holders fail to redeem will be
returned to us after a period of one year from the date we
deposit the funds.
Voting
the Preferred Stock
Upon receipt of notice of any meeting at which the holders of
preferred stock are entitled to vote, the depositary will notify
holders of depositary shares of the upcoming vote and arrange to
deliver our voting materials to the holders. The record date for
determining holders of depositary shares that are entitled to
vote will be the same as the record date for the preferred
stock. The materials the holders will receive will
(1) describe the matters to be voted on and
(2) explain how the holders, on a certain date, may
instruct the depositary to vote the shares of preferred stock
underlying the depositary shares. For instructions to be valid,
the depositary must receive them on or before the date
specified. To the extent possible, the depositary will vote the
shares as instructed by the holder. We agree to take all
reasonable actions that the depositary determines are necessary
to enable it to vote as a holder has instructed. If the
depositary does not receive specific instructions from the
holders of any depositary shares, it will vote all shares of
that series held by it proportionately with instructions
received.
Conversion
or Exchange
The depositary, with our approval or at our instruction, will
convert or exchange all depositary shares if the preferred stock
underlying the depositary shares is converted or exchanged. In
order for the depositary to do so, we will need to deposit the
other preferred stock, common stock or other securities into
which the preferred stock is to be converted or for which it
will be exchanged.
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The exchange or conversion rate per depositary share will be
equal to:
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the exchange or conversion rate per share of preferred stock,
multiplied by the fraction or multiple of a share of preferred
stock represented by one depositary share;
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plus all money and any other property represented by one
depositary share; and
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including all amounts per depositary share paid by us for
dividends that have accrued on the preferred stock on the
exchange or conversion date and that have not been paid.
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The depositary shares, as such, cannot be converted or exchanged
into other preferred stock, common stock, securities of another
issuer or any other of our securities or property. Nevertheless,
if so specified in the applicable prospectus supplement, a
holder of depositary shares may be able to surrender the
depositary receipts to the depositary with written instructions
asking the depositary to instruct us to convert or exchange the
preferred stock represented by the depositary shares into other
shares of our preferred stock or common stock or to exchange the
preferred stock for any other securities registered pursuant to
the registration statement of which this prospectus forms a
part. If the depositary shares carry this right, we would agree
that, upon the payment of any applicable fees, we will cause the
conversion or exchange of the preferred stock using the same
procedures as we use for the delivery of preferred stock. If a
holder is only converting part of the depositary shares
represented by a depositary receipt, new depositary receipts
will be issued for any depositary shares that are not converted
or exchanged.
Amendment
and Termination of the Deposit Agreement
We may agree with the depositary to amend the deposit agreement
and the form of depositary receipt without consent of the holder
at any time. However, if the amendment adds or increases fees or
charges (other than any change in the fees of any depositary,
registrar or transfer agent) or prejudices an important right of
holders, it will only become effective with the approval of
holders of at least a majority of the affected depositary shares
then outstanding. We will make no amendment that impairs the
right of any holder of depositary shares, as described above
under Withdrawal of Preferred Stock, to
receive shares of preferred stock and any money or other
property represented by those depositary shares, except in order
to comply with mandatory provisions of applicable law. If an
amendment becomes effective, holders are deemed to agree to the
amendment and to be bound by the amended deposit agreement if
they continue to hold their depositary receipts.
The deposit agreement automatically terminates if:
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all outstanding depositary shares have been redeemed or
converted or exchanged for any other securities into which they
or the underlying preferred stock are convertible or
exchangeable;
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each share of preferred stock has been converted into or
exchanged for common stock; or
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a final distribution in respect of the preferred stock has been
made to the holders of depositary receipts in connection with
our liquidation, dissolution or
winding-up.
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We may also terminate the deposit agreement at any time we wish.
If we do so, the depositary will give notice of termination to
the record holders not less than 30 days before the
termination date. Once depositary receipts are surrendered to
the depositary, it will send to each holder the number of whole
or fractional shares of the series of preferred stock underlying
that holders depositary receipts.
Charges
of Depositary and Expenses
We will pay the fees, charges and expenses of the depositary
provided in the deposit agreement to be payable by us. Holders
of depositary receipts will pay any taxes and governmental
charges and any charges provided in the deposit agreement to be
payable by them. If the depositary incurs fees, charges or
expenses for which it is not otherwise liable at the election of
a holder of a depositary receipt or other person, that holder or
other person will be liable for those fees, charges and expenses.
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Limitations
on Our Obligations and Liability to Holders of Depositary
Receipts
The deposit agreement expressly limits our obligations and the
obligations of the depositary. It also limits our liability and
the liability of the depositary as follows:
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we and the depositary are only liable to the holders of
depositary receipts for negligence or willful misconduct;
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we and the depositary have no obligation to become involved in
any legal or other proceeding related to the depositary receipts
or the deposit agreement on your behalf or on behalf of any
other party, unless you provide us with satisfactory
indemnity; and
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we and the depositary may rely upon any written advice of
counsel or accountants and on any documents we believe in good
faith to be genuine and to have been signed or presented by the
proper party.
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Resignation
and Removal of Depositary
The depositary may resign at any time by notifying us of its
election to do so. In addition, we may remove the depositary at
any time. Within 60 days after the delivery of the notice
of resignation or removal of the depositary, we will appoint a
successor depositary.
DESCRIPTION
OF OUR COMMON STOCK
The following briefly summarizes the provisions of our amended
and restated articles of incorporation and bylaws that would be
important to holders of common stock. The following description
may not be complete and is subject to, and qualified in its
entirety by reference to, the terms and provisions of our
amended and restated articles of incorporation and amended and
restated bylaws which are exhibits to the registration statement
which contains this prospectus.
Our
Common Stock
Our authorized capital stock includes 1,745,000,000 shares
of common stock. As of December 4, 2008, there were
585,006,811 shares of common stock outstanding, which were
held by 80,286 shareholders of record.
Each share of common stock is entitled to participate pro
rata in distributions upon liquidation, subject to the
rights of holders of preferred shares, and to one vote on all
matters submitted to a vote of shareholders, including the
election of directors. Holders of common stock have no
preemptive or similar equity preservation rights, and cumulative
voting of shares in the election of directors is prohibited.
The holders of common stock may receive cash dividends as
declared by our board of directors out of funds legally
available for that purpose, subject to the rights of any holders
of preferred shares. We are a holding company, and our primary
source for the payment of dividends is dividends from our
subsidiaries. Various state laws and regulations limit the
amount of dividends that may be paid to us by our insurance
subsidiaries. The declaration and payment of future dividends to
holders of our common stock will be at the discretion of our
board of directors and will depend upon many factors, including
our financial condition, earnings, capital requirements of our
operating subsidiaries, legal requirements, regulatory
constraints and other factors as the board of directors deems
relevant.
The outstanding shares of common stock are, and the shares of
common stock offered by the registration statement when issued
will be, fully paid and nonassessable.
Our common stock is listed on the New York Stock Exchange under
the symbol TRV.
Transfer
Agent
The transfer agent and registrar for our common stock is Wells
Fargo Bank, N.A.
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Limitation
of Liability and Indemnification Matters
We are subject to Minnesota Statutes, Chapter 302A.
Minnesota Statutes, Section 302A.521, provides that a
corporation shall indemnify any person made or threatened to be
made a party to a proceeding by reason of the former or present
official capacity (as defined in Section 302A.521 of the
Minnesota Statutes) of that person against judgments, penalties,
fines (including, without limitation, excise taxes assessed
against such person with respect to an employee benefit plan),
settlements and reasonable expenses (including attorneys
fees and disbursements), incurred by such person in connection
with the proceeding, if, with respect to the acts or omissions
of that person complained of in the proceeding, that person:
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has not been indemnified therefor by another organization or
employee benefit plan;
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acted in good faith;
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received no improper personal benefit and Section 302A.255
(with respect to director conflicts of interest), if applicable,
has been satisfied;
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in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and
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reasonably believed that the conduct was in the best interests
of the corporation in the case of acts or omissions in that
persons official capacity for the corporation, or, in the
case of acts or omissions in that persons official
capacity for other affiliated organizations, reasonably believed
that the conduct was not opposed to the best interests of the
corporation.
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Our bylaws provide that we will indemnify and make permitted
advances to a person made or threatened to be made a party to a
proceeding by reason of his former or present official capacity
against judgments, penalties, fines (including, without
limitation, excise taxes assessed against the person with
respect to an employee benefit plan), settlements and reasonable
expenses (including, without limitation, attorneys fees
and disbursements) incurred by that person in connection with
the proceeding in the manner and to the fullest extent permitted
or required by Section 302A.521.
We have directors and officers liability insurance
policies, with coverage of up to $250 million, subject to
various deductibles and exclusions from coverage.
DESCRIPTION
OF WARRANTS WE MAY OFFER
General
We may issue warrants to purchase senior debt securities,
subordinated debt securities, junior subordinated debt
securities, preferred stock, common stock or any combination of
these securities, and these warrants may be issued by us
independently or together with any underlying securities and may
be attached or separate from the underlying securities. We will
issue each series of warrants under a separate warrant agreement
to be entered into between us and a warrant agent. The warrant
agent will act solely as our agent in connection with the
warrants of such series and will not assume any obligation or
relationship of agency for or with holders or beneficial owners
of warrants.
The following outlines some of the general terms and provisions
of the warrants. Further terms of the warrants and the
applicable warrant agreement will be stated in the applicable
prospectus supplement. The following description and any
description of the warrants in a prospectus supplement may not
be complete and is subject to and qualified in its entirety by
reference to the terms and provisions of the warrant agreement,
a form of which will be filed as an exhibit to the registration
statement which contains this prospectus.
The applicable prospectus supplement will describe the terms of
any warrants that we may offer, including the following:
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the title of the warrants;
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the total number of warrants;
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the price or prices at which the warrants will be issued;
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the currency or currencies investors may use to pay for the
warrants;
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the designation and terms of the underlying securities
purchasable upon exercise of the warrants;
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the price at which and the currency or currencies, including
composite currencies, in which investors may purchase the
underlying securities purchasable upon exercise of the warrants;
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the date on which the right to exercise the warrants will
commence and the date on which the right will expire;
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whether the warrants will be issued in registered form or bearer
form;
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information with respect to book-entry procedures, if any;
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if applicable, the minimum or maximum amount of warrants which
may be exercised at any one time;
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if applicable, the designation and terms of the underlying
securities with which the warrants are issued and the number of
warrants issued with each underlying security;
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if applicable, the date on and after which the warrants and the
related underlying securities will be separately transferable;
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if applicable, a discussion of material United States federal
income tax considerations;
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the identity of the warrant agent;
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the procedures and conditions relating to the exercise of the
warrants; and
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any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the
warrants.
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Warrant certificates may be exchanged for new warrant
certificates of different denominations, and warrants may be
exercised at the warrant agents corporate trust office or
any other office indicated in the applicable prospectus
supplement. Prior to the exercise of their warrants, holders of
warrants exercisable for debt securities will not have any of
the rights of holders of the debt securities purchasable upon
such exercise and will not be entitled to payments of principal
(or premium, if any) or interest, if any, on the debt securities
purchasable upon such exercise. Prior to the exercise of their
warrants, holders of warrants exercisable for shares of
preferred stock or common stock will not have any rights of
holders of the preferred stock or common stock purchasable upon
such exercise and will not be entitled to dividend payments, if
any, or voting rights of the preferred stock or common stock
purchasable upon such exercise.
Exercise
of Warrants
A warrant will entitle the holder to purchase for cash an amount
of securities at an exercise price that will be stated in, or
that will be determinable as described in, the applicable
prospectus supplement. Warrants may be exercised at any time up
to the close of business on the expiration date set forth in the
applicable prospectus supplement. After the close of business on
the expiration date, unexercised warrants will become void.
Warrants may be exercised as set forth in the applicable
prospectus supplement. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the
corporate trust office of the warrant agent or any other office
indicated in the prospectus supplement, we will, as soon as
practicable, forward the securities purchasable upon such
exercise. If less than all of the warrants represented by such
warrant certificate are exercised, a new warrant certificate
will be issued for the remaining warrants.
Enforceability
of Rights; Governing Law
The holders of warrants, without the consent of the warrant
agent, may, on their own behalf and for their own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against us to enforce their rights to exercise and
receive the securities purchasable upon exercise of their
warrants. Unless otherwise stated in the prospectus supplement,
each issue of warrants and the applicable warrant agreement will
be governed by the laws of the State of New York.
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DESCRIPTION
OF STOCK PURCHASE CONTRACTS WE MAY OFFER
We may issue stock purchase contracts, representing contracts
obligating holders to purchase from or sell to us, and
obligating us to purchase from or sell to the holders, a
specified number of shares of our common stock or preferred
stock, as applicable, at a future date or dates. The price per
share of common stock or preferred stock, as applicable, may be
fixed at the time the stock purchase contracts are issued or may
be determined by reference to a specific formula contained in
the stock purchase contracts. We may issue stock purchase
contracts in such amounts and in as many distinct series as we
wish.
The applicable prospectus supplement may contain, where
applicable, the following information about the stock purchase
contracts issued under it:
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whether the stock purchase contracts obligate the holder to
purchase or sell, or both purchase and sell, our common stock or
preferred stock, as applicable, and the nature and amount of
each of those securities, or the method of determining those
amounts;
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whether the stock purchase contracts are to be prepaid or not;
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whether the stock purchase contracts are to be settled by
delivery, or by reference or linkage to the value, performance
or level of our common stock or preferred stock;
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any acceleration, cancellation, termination or other provisions
relating to the settlement of the stock purchase
contracts; and
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whether the stock purchase contracts will be issued in fully
registered or global form.
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The applicable prospectus supplement will describe the terms of
any stock purchase contracts. The preceding description and any
description of stock purchase contracts in the applicable
prospectus supplement does not purport to be complete and is
subject to and is qualified in its entirety by reference to the
stock purchase contract agreement, a form of which will be filed
as an exhibit to the registration statement which contains this
prospectus, and, if applicable, collateral arrangements and
depository arrangements relating to such stock purchase
contracts.
DESCRIPTION
OF UNITS WE MAY OFFER
We may issue units comprised of one or more of the other
securities described in this prospectus in any combination. Each
unit will be issued so that the holder of the unit is also the
holder of each security included in the unit. Thus, the holder
of a unit will have the rights and obligations of a holder of
each included security. The unit agreement under which a unit is
issued may provide that the securities included in the unit may
not be held or transferred separately, at any time or at any
time before a specified date.
The applicable prospectus supplement may describe:
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the designation and terms of the units and of the securities
comprising the units, including whether and under what
circumstances those securities may be held or transferred
separately;
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any provisions for the issuance, payment, settlement, transfer
or exchange of the units or of the securities comprising the
units; and
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whether the units will be issued in fully registered or global
form.
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The applicable prospectus supplement will describe the terms of
any units. The preceding description and any description of
units in the applicable prospectus supplement does not purport
to be complete and is subject to and is qualified in its
entirety by reference to the unit agreement, a form of which
will be filed as an exhibit to the registration statement which
contains this prospectus, and, if applicable, collateral
arrangements and depositary arrangements relating to such units.
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DESCRIPTION
OF PREFERRED SECURITIES THAT THE TRUSTS MAY OFFER
The following summary outlines the material terms and provisions
of the preferred securities that the Trusts may offer. The
particular terms of any preferred securities a Trust offers and
the extent, if any, to which these general terms and provisions
may or may not apply to the preferred securities will be
described in the applicable prospectus supplement.
Each of the Trusts will issue the preferred securities under a
declaration of trust which we will enter into at the time of any
offering of preferred securities by such Trust. The declarations
of trust for the Trusts are subject to and governed by the
Delaware law and the Trust Indenture Act of 1939, as
amended (the Trust Indenture Act), and BNY
Mellon Trust of Delaware will act as Delaware trustee and The
Bank of New York Mellon Trust Company, N.A. will act as
institutional trustee under the declarations of trusts for the
purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the preferred securities
will be those contained in the applicable declaration of trust
and those made part of the declaration of trust by the
Trust Indenture Act and the Delaware Statutory
Trust Act. The following summary may not be complete and is
subject to, and qualified in its entirety by reference to, the
declarations of trust, a form of which is filed as an exhibit to
the registration statement which contains this prospectus, the
Trust Indenture Act and the Delaware Statutory
Trust Act.
Terms
Each declaration of trust will provide that the applicable Trust
may issue, from time to time, only one series of preferred
securities and one series of common securities. The preferred
securities will be offered to investors and the common
securities will be held by us. The terms of the preferred
securities, as a general matter, will mirror the terms of the
senior, subordinated or junior subordinated debt securities that
we will issue to a Trust in exchange for the proceeds of the
sales of the preferred and common securities, and because the
preferred securities represent undivided interests in the
related debt securities, any conversion feature applicable to
the preferred securities will mirror the terms of the
convertible debt securities or warrants, if any, that we will
have issued to such Trust. If we fail to make a payment on the
senior, subordinated or junior subordinated debt securities, the
Trust holding those debt securities will not have sufficient
funds to make related payments, including cash distributions, on
its preferred securities. If the related debt securities, and,
accordingly, the preferred securities are convertible into or
exchangeable for shares of our common stock or other securities,
in the event that we fail to perform under any convertible debt
securities or warrants we issue to a Trust, such Trust will be
unable to distribute to the holders any of our shares of common
stock or other securities to be distributed to the holders of
the preferred securities upon their conversion.
You should refer to the applicable prospectus supplement
relating to the preferred securities for specific terms of the
preferred securities, including, but not limited to:
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the distinctive designation of the preferred securities and
common securities;
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the total and per-security-liquidation amount of the preferred
securities;
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the annual distribution rate, or method of determining the rate
at which the Trust issuing the securities will pay
distributions, on the preferred securities and the date or dates
from which distributions will accrue;
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the date or dates on which the distributions will be payable and
any corresponding record dates;
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the right, if any, to defer distributions on the preferred
securities upon extension of the interest payment period of the
related debt securities;
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whether the preferred securities are to be issued in book-entry
form and represented by one or more global certificates and, if
so, the depositary for the global certificates and the specific
terms of the depositary arrangement;
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the amount or amounts which will be paid out of the assets of
the Trust issuing the securities to the holders of preferred
securities upon voluntary or involuntary dissolution,
winding-up
or termination of the Trust;
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any obligation of the Trust to purchase or redeem preferred
securities issued by it and the terms and conditions relating to
any redemption obligation;
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any voting rights of the preferred securities;
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any terms and conditions upon which the debt securities held by
the Trust issuing the preferred securities may be distributed to
holders of preferred securities;
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if the related debt securities, and, accordingly, the preferred
securities may be converted into or exercised or exchanged for
our common stock or preferred stock or any other of our
securities, the terms on which conversion, exercise or exchange
is mandatory, at the option of the holder or at the option of
the Trust, the date on or the period during which conversion,
exercise or exchange may occur, the initial conversion, exercise
or exchange price or rate and the circumstances or manner in
which the amount of common stock or preferred stock or other
securities issuable upon conversion, exercise or exchange may be
adjusted;
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any securities exchange on which the preferred securities will
be listed; and
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any other relevant rights, preferences, privileges, limitations
or restrictions of the preferred securities not inconsistent
with the applicable declaration of trust or with applicable law.
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We will guarantee the common and preferred securities to the
extent described below under Description of
Trust Guarantees. Our guarantee, when taken together
with our obligations under the related debt securities and the
related indenture and any warrants and related warrant
agreement, and our obligations under the declarations of trust,
would provide a full, irrevocable and unconditional guarantee of
amounts due on any common and preferred securities and the
distribution of any securities to which the holders would be
entitled upon conversion of the common and preferred securities,
if the related debt securities, and, accordingly, the common and
preferred securities are convertible into or exchangeable for
shares of our common stock or other securities. Certain United
States federal income tax considerations applicable to any
offering of preferred securities will be described in the
applicable prospectus supplement.
Liquidation
Distribution Upon Dissolution
Unless otherwise specified in an applicable prospectus
supplement, each declaration of trust states that the applicable
Trust will be dissolved:
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on the expiration of the term of the Trust;
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upon bankruptcy, dissolution or liquidation of us or the holder
of the common securities of the Trust;
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upon our written direction to the institutional trustee to
dissolve the Trust and distribute the related debt securities
directly to the holders of the preferred securities and common
securities;
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upon the redemption by the Trust of all of the preferred and
common securities in accordance with their terms; or
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upon entry of a court order for the dissolution of the Trust.
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Unless otherwise specified in an applicable prospectus
supplement, in the event of a dissolution as described above
other than in connection with redemption, after a Trust
satisfies all liabilities to its creditors as provided by
applicable law, each holder of the preferred or common
securities issued by the Trust will be entitled to receive:
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distributions in an amount equal to the aggregate liquidation
amount of the preferred or common securities held by the holder,
plus accumulated and unpaid distributions to the date of
payment, unless in connection with such dissolution, the related
debt securities in an aggregate principal amount equal
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to the aggregate liquidation amount of the preferred or common
securities held by the holder, plus accumulated and unpaid
distributions to the date of payment, have been distributed on a
pro rata basis to the holder in exchange for such preferred or
common securities; and
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if we issued warrants to the Trust, a number of warrants equal
to the holders proportionate share to total number of
warrants held by the Trust.
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If a Trust cannot pay the full amount due on its preferred and
common securities because it has insufficient assets available
for payment, then the amounts payable by the Trust on its
preferred and common securities will be paid on a pro rata
basis. However, if an event of default under the indenture
has occurred and is continuing with respect to any series of
related debt securities, the total amounts due on the preferred
securities will be paid before any distribution on the common
securities.
Events of
Default
The following will be events of default under each declaration
of trust:
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an event of default under the applicable debt indenture occurs
with respect to any related series of debt securities; or
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any other event of default specified in the applicable
prospectus supplement occurs.
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At any time after a declaration of acceleration has been made
with respect to a related series of debt securities and before a
judgment or decree for payment of the money due has been
obtained, the holders of a majority in liquidation amount of the
affected preferred securities may rescind any declaration of
acceleration with respect to the related debt securities and its
consequences:
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if we have paid or deposited with the trustee funds sufficient
to pay all overdue principal of and premium and interest on the
related debt securities and other amounts due to the indenture
trustee and the institutional trustee; and
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if all existing events of default with respect to the related
debt securities have been cured or waived except non-payment of
principal and interest on the related debt securities that has
become due solely because of the acceleration.
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The holders of a majority in liquidation amount of the affected
preferred securities may waive any past default under the
indenture with respect to related debt securities, other than a
default in the payment of principal of, or any premium or
interest on, any related debt security or a default with respect
to a covenant or provision that cannot be amended or modified
without the consent of the holder of each affected outstanding
related debt security. In addition, the holders of at least a
majority in liquidation amount of the affected preferred
securities may waive any past default under the declarations of
trust, subject to certain qualifications provided in the
declaration of trust.
The holders of a majority in liquidation amount of the affected
preferred securities shall have the right to direct the time,
method and place of conducting any proceedings for any remedy
available to the institutional trustee or to direct the exercise
of any trust or power conferred on the institutional trustee
under the declarations of trust.
A holder of preferred securities may institute a legal
proceeding directly against us, without first instituting a
legal proceeding against the institutional trustee or anyone
else, for enforcement of payment to the holder of principal and
any premium or interest on the related series of debt securities
having a principal amount equal to the aggregate liquidation
amount of the preferred securities of the holder, if we fail to
pay principal and any premium or interest on the related series
of debt securities when payable.
We are required to furnish annually, to the institutional
trustee for the Trusts, officers certificates to the
effect that, to the best knowledge of the individuals providing
the certificates, we and the Trusts are not in default under the
applicable declaration of trust or, if there has been a default,
specifying the default and its status.
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Consolidation,
Merger or Amalgamation of the Trusts
Each of the Trusts may not consolidate, amalgamate or merge with
or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, any
entity, except as described below or as described in
Liquidation Distribution Upon
Dissolution. Each Trust may, with the consent of the
administrative trustees but without the consent of the holders
of the outstanding preferred securities or the other trustees of
the Trust, consolidate, amalgamate or merge with or into, or be
replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to, a trust organized under
the laws of any State if:
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the successor entity either:
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expressly assumes all of the obligations of the Trust relating
to its preferred and common securities; or
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substitutes for the Trusts preferred securities other
securities having substantially the same terms as the preferred
securities, so long as the substituted successor securities rank
the same as the preferred securities for distributions and
payments upon liquidation, redemption and otherwise;
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we appoint a trustee of the successor entity who has
substantially the same powers and duties as the institutional
trustee of the Trust;
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the successor securities are listed or traded, or any
substituted successor securities will be listed upon notice of
issuance, on the same national securities exchange or other
organization on which the preferred securities are then listed
or traded, if any;
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the merger, consolidation, amalgamation or replacement (the
merger event) does not cause the preferred
securities or any substituted successor securities to be
downgraded by any national rating agency;
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the merger event does not adversely affect the rights,
preferences and privileges of the holders of the preferred or
common securities or any substituted successor securities in any
material respect;
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the successor entity has a purpose substantially identical to
that of the Trust;
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prior to the merger event, we shall provide to the Trust an
opinion of counsel from a nationally recognized law firm stating
that:
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the merger event does not adversely affect the rights,
preferences and privileges of the holders of the Trusts
preferred or common securities in any material respect;
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following the merger event, neither the Trust nor the successor
entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended (the
Investment Company Act); and
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following the merger event, the Trust or the successor entity
will continue to be classified as a grantor trust for United
States federal tax purposes; and
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we own, or our permitted transferee owns, all of the common
securities of the successor entity and we guarantee or our
permitted transferee guarantees the obligations of the successor
entity under the substituted successor securities at least to
the extent provided under the applicable preferred securities
guarantee.
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In addition, unless all of the holders of the preferred and
common securities approve otherwise, a Trust may not
consolidate, amalgamate or merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any other entity, or permit any
other entity to consolidate, amalgamate, merge with or into or
replace it if the transaction would cause the Trust or the
successor entity to be taxable as a corporation or classified
other than as a grantor trust for United States federal income
tax purposes.
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Voting
Rights
Unless otherwise specified in the applicable prospectus
supplement, the holders of the preferred securities will have no
voting rights except as discussed below and under
Amendment to the Trust Agreements
and Description of Trust Guarantees
Modification of the Trust Guarantees; Assignment and
as otherwise required by law.
If any proposed amendment to a declaration of trust provides
for, or the trustee of the Trust otherwise proposes to effect:
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any action that would adversely affect the powers, preferences
or special rights of the preferred securities in any material
respect, whether by way of amendment to the declaration of trust
or otherwise; or
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the dissolution,
winding-up
or termination of the Trust other than pursuant to the terms of
the declaration of trust,
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then the holders of the affected preferred securities as a class
will be entitled to vote on the amendment or proposal. In that
case, the amendment or proposal will be effective only if
approved by the holders of at least a majority in aggregate
liquidation amount of the affected preferred securities.
The holders of a majority in aggregate liquidation amount of the
preferred securities issued by a Trust have the right to direct
the time, method and place of conducting any proceeding for any
remedy available to the institutional trustee, or direct the
exercise of any trust or power conferred upon the institutional
trustee under the applicable declaration of trust, including the
right to direct the institutional trustee, as holder of the debt
securities and, if applicable, the warrants, to:
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direct the time, method and place of conducting any proceeding
for any remedy available to the indenture trustee for any
related debt securities or execute any trust or power conferred
on the indenture trustee with respect to the related debt
securities;
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if we issue warrants to the Trust, direct the time, method and
place of conducting any proceeding for any remedy available to
the institutional trustee as the registered holder of the
warrants;
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waive certain past defaults under the indenture with respect to
any related debt securities, or the warrant agreement with
respect to any warrants;
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cancel an acceleration of the maturity of the principal of any
related debt securities; or
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consent to any amendment, modification or termination of the
indenture or any related debt securities or the warrant
agreement or warrants where consent is required.
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In addition, before taking any of the foregoing actions, we will
provide to the institutional trustee an opinion of counsel
experienced in such matters to the effect that, as a result of
such actions, the trust will not be taxable as a corporation or
classified as other than a grantor trust for United States
federal income tax purposes.
The institutional trustee will notify all preferred securities
holders of a Trust of any notice of default received from the
indenture trustee with respect to the debt securities held by
the Trust.
Any required approval of the holders of preferred securities may
be given at a meeting of the holders of the preferred securities
convened for the purpose or pursuant to written consent. The
administrative trustees will cause a notice of any meeting at
which holders of securities are entitled to vote to be given to
each holder of record of the preferred securities at the
holders registered address at least 7 days and not
more than 60 days before the meeting.
No vote or consent of the holders of the preferred securities
will be required for a Trust to redeem and cancel its preferred
securities in accordance with its declaration of trust.
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Notwithstanding that holders of the preferred securities are
entitled to vote or consent under any of the circumstances
described above, any of the preferred securities that are owned
by us, or any affiliate of ours will, for purposes of any vote
or consent, be treated as if they were not outstanding.
Amendment
to the Declarations of Trust
The declarations of trust may be amended from time to time by us
and the institutional trustee and the administrative trustees of
the Trust, without the consent of the holders of the preferred
securities, to:
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cure any ambiguity or correct or supplement any provision which
may be defective or inconsistent with any other provision;
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add to the covenants, restrictions or obligations of the
sponsor; or
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modify, eliminate or add to any provisions to the extent
necessary to ensure that the Trust will not be taxable as a
corporation or classified as other than a grantor trust for
United States federal income tax purposes, to ensure that the
debt securities held by the Trust are treated as indebtedness
for United States federal income tax purposes or to ensure that
the Trust will not be required to register as an investment
company under the Investment Company Act;
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provided, however, that, in each case, the amendment would not
adversely affect in any material respect the interests of the
holders of the preferred securities.
Other amendments to the declarations of trust may be made by us
and the trustees of the Trust upon approval of the holders of a
majority in aggregate liquidation amount of the outstanding
preferred securities of a Trust and receipt by the trustees of
an opinion of counsel to the effect that the amendment will not
cause the Trust to be taxable as a corporation or classified as
other than a grantor trust for United States federal income tax
purposes, affect the treatment of the debt securities held by
the Trust as indebtedness for United States federal income tax
purposes or affect the Trusts exemption from the
Investment Company Act.
Notwithstanding the foregoing, without the consent of each
affected holder of common or preferred securities of a Trust, a
declaration of trust may not be amended to:
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change the amount or timing of any distribution on the common or
preferred securities of the Trust or otherwise adversely affect
the amount of any distribution required to be made in respect of
the securities as of a specified date;
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change any of the conversion or redemption provisions; or
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restrict the right of a holder of any securities to institute
suit for the enforcement of any payment on or after the
distribution date.
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Removal
and Replacement of Trustees
Unless an event of default exists under the declaration of trust
or, if the preferred securities are convertible and there is a
separate warrant agreement, the warrant agreement, we may remove
the institutional trustee and the Delaware trustee at any time.
If an event of default exists, the institutional trustee and the
Delaware trustee may be removed only by the holders of a
majority in liquidation amount of the outstanding preferred
securities. In no event will the holders of the preferred
securities have the right to vote to appoint, remove or replace
the administrative trustees because these voting rights are
vested exclusively in us as the holder of all the Trusts
common securities. No resignation or removal of the
institutional trustee or the Delaware trustee and no appointment
of a successor trustee shall be effective until the acceptance
of appointment by the successor trustee in accordance with the
applicable declaration of trust.
Merger or
Consolidation of Trustees
Any entity into which the institutional trustee or the Delaware
trustee may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger,
conversion or consolidation to which the trustee shall be a
party, or any entity succeeding to all or substantially all of
the corporate trust
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business of the trustee, shall be the successor of the trustee
under the applicable declaration of trust; provided, however,
that the entity shall be otherwise qualified and eligible.
Information
Concerning the Institutional Trustee
For matters relating to compliance with the Trust Indenture
Act, the institutional trustee for the Trusts will have all of
the duties and responsibilities of an indenture trustee under
the Trust Indenture Act. Except if an event of default
exists under the declarations of trust, the institutional
trustee will undertake to perform only the duties specifically
set forth in declarations of trust. While such an event of
default exists, the institutional trustee must exercise the same
degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this
provision, the institutional trustee is not obligated to
exercise any of the powers vested in it by the applicable
declaration of trust at the request of any holder of preferred
securities, unless the institutional trustee is offered an
indemnity reasonably satisfactory to it against the costs,
expenses and liabilities that it might incur. But the holders of
preferred securities will not be required to offer indemnity if
the holders, by exercising their voting rights, direct the
institutional trustee to take any action that is provided for in
the declaration of trust following a declaration of an event of
default.
The Bank of New York Mellon Trust Company, N.A., which is
the institutional trustee for the Trusts, also serves as the
senior debt indenture trustee, the subordinated debt indenture
trustee, the junior subordinated debt indenture trustee and the
guarantee trustee under the trust guarantee described below. We
and certain of our affiliates maintain banking relationships
with The Bank of New York Mellon Trust Company, N.A. or its
affiliates, which are described above under Description of
Debt Securities We May Offer Our Relationship With
the Trustee.
Miscellaneous
The administrative trustees of the each of the Trusts are
authorized and directed to conduct the affairs of and to operate
the applicable Trust in such a way that:
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the Trust will not be taxable as a corporation or classified as
other than a grantor trust for United States federal income tax
purposes;
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the debt securities held by the Trust will be treated as
indebtedness of ours for United States federal income tax
purposes; and
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the Trust will not be deemed to be an investment company
required to be registered under the Investment Company Act.
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The administrative trustees are authorized to take any action,
so long as it is consistent with applicable law, the certificate
of trust or the applicable declaration of trust that the
administrative trustees determine to be necessary or desirable
for the above purposes, as long as it does not materially and
adversely affect the holders of the securities.
Registered holders of the preferred securities have no
preemptive or similar rights.
No Trust may, among other things, incur indebtedness.
Governing
Law
The declarations of trust and the preferred securities will be
governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflict of laws
provisions thereof.
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DESCRIPTION
OF TRUST GUARANTEES
The following describes certain general terms and provisions of
the trust guarantees which we will execute and deliver for the
benefit of the holders from time to time of preferred securities
and the common securities issued by the Trusts. The trust
guarantees will be separately qualified as an indenture under
the Trust Indenture Act, and The Bank of New York Mellon
Trust Company, N.A. will act as indenture trustee under the
trust guarantees for the purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the
trust guarantees will be those contained in the trust guarantees
and those made part of the trust guarantees by the
Trust Indenture Act. The following summary may not be
complete and is subject to and qualified in its entirety by
reference to the form of trust guarantees, which is filed as an
exhibit to the registration statement which contains this
prospectus, and the Trust Indenture Act. The trust
guarantees will be held by the guarantee trustee of each Trust
for the benefit of the holders of the preferred securities.
General
We will irrevocably and unconditionally agree to pay or make the
following payments or distributions with respect to common and
preferred securities, in full, to the holders of the common and
preferred securities, as and when they become due regardless of
any defense, right of set-off or counterclaim that a Trust may
have except for the defense of payment:
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any accumulated and unpaid distributions which are required to
be paid on the common and preferred securities, to the extent
the Trust does not make such payments or distributions but has
sufficient funds available to do so;
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the redemption price and all accumulated and unpaid
distributions to the date of redemption with respect to any
preferred securities called for redemption, to the extent the
Trust does not make such payments or distributions but has
sufficient funds available to do so; and
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upon a voluntary or involuntary dissolution,
winding-up
or termination of the Trust (other than in connection with the
distribution of related debt securities to the holders of
preferred securities or the redemption of all of the preferred
securities), the lesser of:
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the total liquidation amount and all accumulated and unpaid
distributions on the common and preferred securities to the date
of payment, to the extent the Trust does not make such payments
or distributions but has sufficient funds available to do
so; and
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the amount of assets of the Trust remaining available for
distribution to holders of such common and preferred securities
in liquidation of the Trust.
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Our obligation to make a payment under the trust guarantee may
be satisfied by our direct payment of the required amounts to
the holders of common and preferred securities to which the
trust guarantee relates or by causing a Trust to pay the amounts
to the holders. Payments under the trust guarantee will be made
on the common and preferred securities on a pro rata basis.
However, if an event of default under the applicable indenture
has occurred and is continuing with respect to any series of
related debt securities, the total amounts due on the preferred
securities will be paid before any payment on the common
securities.
Modification
of the Trust Guarantees; Assignment
Except with respect to any changes which do not adversely affect
the rights of holders of preferred securities in any material
respect (in which case no vote will be required), each trust
guarantee may be amended only with the prior approval of the
holders of not less than a majority in liquidation amount of the
outstanding common and preferred securities to which the trust
guarantee relates. The manner of obtaining the approval of
holders of the preferred securities will be described in an
accompanying prospectus supplement. All guarantees and
agreements contained in each trust guarantee will bind our
successors, assigns, receivers, trustees and representatives and
will be for the benefit of the holders of the outstanding common
and preferred securities to which each trust guarantee relates.
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Termination
Each trust guarantee will terminate when any of the following
has occurred:
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all common and preferred securities to which the trust guarantee
relates have been paid in full or redeemed in full by us, the
applicable Trust or both;
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the debt securities held by the applicable Trust have been
distributed to the holders of the common and preferred
securities; or
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the amounts payable in accordance with the applicable
declaration of trust upon liquidation of the Trust have been
paid in full.
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Each trust guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of
common and preferred securities to which each trust guarantee
relates must restore payment of any amounts paid on the common
and preferred securities or under each trust guarantee.
Events of
Default
There will be an event of default under the trust guarantees if
we fail to perform any of our payment or other obligations under
the trust guarantees. However, other than with respect to a
default in payment of any guarantee payment, we must have
received notice of default and not have cured the default within
90 days after receipt of the notice. We, as guarantor, will
be required to file annually with the guarantee trustee a
certificate regarding our compliance with the applicable
conditions and covenants under each of our trust guarantees.
Each trust guarantee will constitute a guarantee of payment and
not of collection. The holders of a majority in liquidation
amount of the common and preferred securities to which a trust
guarantee relates have the right to direct the time, method and
place of conducting any proceeding for any remedy available to
the guarantee trustee in respect of such trust guarantee or to
direct the exercise of any trust or power conferred upon the
guarantee trustee under such trust guarantee. If the guarantee
trustee fails to enforce the applicable trust guarantee, any
holder of common or preferred securities to which the trust
guarantee relates may institute a legal proceeding directly
against us to enforce the holders rights under the trust
guarantee, without first instituting a legal proceeding against
the trust, the guarantee trustee or any one else. If we do not
make a guarantee payment, a holder of common or preferred
securities may directly institute a proceeding against us for
enforcement of the trust guarantee for such payment.
Status of
the Trust Guarantees
The applicable prospectus supplement relating to the preferred
securities will indicate whether the applicable trust guarantee
is our senior or subordinated obligation. If such trust
guarantee is our senior obligation, it will be our general
unsecured obligation and will rank equal to our other senior and
unsecured obligations.
Unless otherwise specified in the applicable prospectus
supplement, if such trust guarantee is our subordinated
obligation, it will be our general unsecured obligation and will
rank as follows:
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subordinate and junior in right of payment to all of our senior
indebtedness, as defined in the subordinated debt indenture or
the junior subordinated debt indenture, as the case may be;
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on parity with (i) our most senior preferred or preference
stock currently outstanding or issued in the future,
(ii) our guarantees currently outstanding or issued in the
future in respect of other preferred securities our affiliates
have issued or may issue and (iii) other issues of
subordinated debt securities; and
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senior to our common stock.
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The terms of the preferred securities provide that each holder
of preferred securities by acceptance of the preferred
securities agrees to any subordination provisions and other
terms of the applicable trust guarantee relating to applicable
subordination.
Information
Concerning the Guarantee Trustee
The guarantee trustee, except if we default under the trust
guarantee, will undertake to perform only such duties as are
specifically set forth in the applicable trust guarantee and, in
case a default with respect to such trust guarantee has
occurred, must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the guarantee
trustee will not be obligated to exercise any of the powers
vested in it by the applicable trust guarantee at the request of
any holder of the common or preferred securities unless it is
offered reasonable indemnity against the costs, expenses and
liabilities that it may incur.
Governing
Law
Each trust guarantee will be governed by and construed in
accordance with the laws of the State of New York.
Effect of
Obligations Under the Debt Securities and the
Trust Guarantees
As long as we make payments of interest and any other payments
when they are due on the debt securities held by a Trust, those
payments will be sufficient to cover distributions and any other
payments due on the preferred securities issued by the Trust
because of the following factors:
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the total principal amount of the debt securities held by the
Trust will be equal to the total stated liquidation amount of
the preferred securities and common securities issued by the
Trust;
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the interest rate and the interest payment dates and other
payment dates on the debt securities held by the Trust will
match the distribution rate and distribution payment dates and
other payment dates for the preferred securities and common
securities issued by the Trust;
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we will pay, as sponsor, and the Trust will not be obligated to
pay, directly or indirectly, all costs, expenses, debt, and
obligations of the Trust (other than obligations under the trust
securities); and
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the applicable declaration of trust will further provide that
the Trust is not authorized to engage in any activity that is
not consistent with its limited purposes.
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We will irrevocably guarantee payments of distributions and
other amounts due on the preferred securities to the extent the
Trust has funds available to pay such amounts as and to the
extent set forth herein. Taken together, our obligations under
the debt securities, the applicable debt indenture, the
applicable declaration of trust and the applicable trust
guarantee will provide a full, irrevocable and unconditional
guarantee of a Trusts payments of distributions and other
amounts due on the preferred securities. No single document
standing alone or operating in conjunction with fewer than all
of the other documents constitutes this trust guarantee. Only
the combined operation of these documents effectively provides a
full, irrevocable and unconditional guarantee of a Trusts
obligations under the preferred securities.
If and to the extent that we do not make the required payments
on the debt securities, a Trust will not have sufficient funds
to make its related payments, including distributions on the
preferred securities. Our trust guarantee will not cover any
payments when a Trust does not have sufficient funds available
to make those payments. Your remedy, as a holder of preferred
securities, is to institute a direct action against us.
36
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Simpson Thacher & Bartlett LLP, our
special United States tax counsel, the following discussion is a
summary of the material United States federal income tax
consequences of the ownership of the debt securities, preferred
securities and common and preferred stock as of the date hereof.
Except where noted, this summary deals only with debt
securities, preferred securities and common and preferred stock
that are held as capital assets, and does not represent a
detailed description of the United States federal income tax
consequences applicable to you if you are subject to special
treatment under the United States federal income tax laws,
including if you are:
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a dealer in securities or currencies;
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a financial institution;
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a regulated investment company;
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a real estate investment trust;
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a tax-exempt organization;
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an insurance company;
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a person holding the debt securities, preferred securities,
common stock or preferred stock as part of a hedging,
integrated, conversion or constructive sale transaction or a
straddle;
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a trader in securities that has elected the mark-to-market
method of accounting for your securities;
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a person liable for alternative minimum tax;
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a partnership or other pass-through entity for United States
federal income tax purposes;
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a United States Holder (as defined below) whose
functional currency is not the U.S. dollar;
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a controlled foreign corporation;
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a passive foreign investment company; or
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a United States expatriate.
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This summary is based upon provisions of the Internal Revenue
Code of 1986, as amended (the Code), and
regulations, rulings and judicial decisions as of the date
hereof. Those authorities may be changed, perhaps retroactively,
so as to result in United States federal income tax consequences
different from those summarized below.
The discussion below assumes that all the debt securities issued
under this prospectus will be classified for United States
federal income tax purposes as our indebtedness and you should
note that in the event of an alternative characterization, the
tax consequences would differ from those discussed below.
Accordingly, if we intend to treat a debt security as other than
debt for United States federal income tax purposes, we will
disclose the relevant tax considerations in the applicable
prospectus supplement. We will summarize any special United
States federal tax considerations relevant to a particular issue
of the debt securities, preferred securities or common or
preferred stock in the applicable prospectus supplement. We will
also summarize material federal income tax consequences, if any,
applicable to any offering of warrants, stock purchase
contracts, units or depositary shares in the applicable
prospectus supplement.
For purposes of this summary, a United States Holder
means a beneficial owner of the debt securities, preferred
securities or common or preferred stock that is for United
States federal income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (or any other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or
the District of Columbia;
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an estate the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more United States
persons have the authority to control all substantial decisions
of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
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A
Non-United
States Holder means a beneficial owner of the debt
securities, preferred securities or common or preferred stock
who is neither a United States Holder nor a partnership for
United States federal income tax purposes.
If a partnership holds the debt securities, preferred securities
or common or preferred stock, the tax treatment of a partner
will generally depend upon the status of the partner and the
activities of the partnership. If you are a partner of a
partnership holding the debt securities, preferred securities or
common or preferred stock, you should consult your tax advisors.
This summary does not represent a detailed description of the
United States federal income tax consequences to you in light of
your particular circumstances and does not address the effects
of any state, local or
non-United
States tax laws. If you are considering the purchase of debt
securities, preferred securities or common or preferred stock,
you should consult your own tax advisors concerning the
particular United States federal income tax consequences to you,
as well as the consequences to you arising under the laws of any
other taxing jurisdiction.
Debt
Securities
Consequences
to United States Holders
The following is a summary of the material United States federal
income tax consequences that will apply to you if you are a
United States Holder of debt securities.
Payments
of Interest
Except as set forth below, interest on a debt security will
generally be taxable to you as ordinary income at the time it is
paid or accrued in accordance with your method of accounting for
tax purposes.
Original
Issue Discount
If you own debt securities issued with original issue discount
(OID), you will be subject to special tax accounting
rules, as described in greater detail below. In that case, you
should be aware that you generally must include OID in gross
income in advance of the receipt of cash attributable to that
income. However, you generally will not be required to include
separately in income cash payments received on the debt
securities, even if denominated as interest, to the extent those
payments do not constitute qualified stated
interest, as defined below. Notice will be given in the
applicable prospectus supplement when we determine that a
particular debt security will be an original issue discount debt
security.
Additional rules applicable to debt securities with OID that are
denominated in or determined by reference to a currency other
than the U.S. dollar are described under
Foreign Currency Debt Securities below.
A debt security with an issue price that is less
than the stated redemption price at maturity (the sum of all
payments to be made on the debt security other than
qualified stated interest) generally will be issued
with OID if that difference is at least 0.25% of the stated
redemption price at maturity multiplied by the number of
complete years to maturity. The issue price of each
debt security in a particular offering will be the first price
at which a substantial amount of that particular offering is
sold to the public. The term
38
qualified stated interest means stated interest that
is unconditionally payable in cash or in property, other than
debt instruments of the issuer, and meets all of the following
conditions:
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it is payable at least once per year;
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it is payable over the entire term of the debt security; and
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it is payable at a single fixed rate or, subject to certain
conditions, based on one or more interest indices.
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We will give you notice in the applicable prospectus supplement
when we determine that a particular debt security will bear
interest that is not qualified stated interest.
If you own a debt security issued with de minimis OID,
which is discount that is not OID because it is less than 0.25%
of the stated redemption price at maturity multiplied by the
number of complete years to maturity, you generally must include
the de minimis OID in income at the time principal
payments on the debt securities are made in proportion to the
amount paid. Any amount of de minimis OID that you have
included in income will be treated as capital gain.
Certain of the debt securities may contain provisions permitting
them to be redeemed prior to their stated maturity at our option
and/or at
your option. Original issue discount debt securities containing
those features may be subject to rules that differ from the
general rules discussed herein. If you are considering the
purchase of original issue discount debt securities with those
features, you should carefully examine the applicable prospectus
supplement and should consult your own tax advisors with respect
to those features since the tax consequences to you with respect
to OID will depend, in part, on the particular terms and
features of the debt securities.
If you own original issue discount debt securities with a
maturity upon issuance of more than one year, you generally must
include OID in income in advance of the receipt of some or all
of the related cash payments using the constant yield
method described in the following paragraphs.
The amount of OID that you must include in income if you are the
initial United States Holder of an original issue discount debt
security is the sum of the daily portions of OID
with respect to the debt security for each day during the
taxable year or portion of the taxable year in which you held
that debt security (accrued OID). The daily portion
is determined by allocating to each day in any accrual
period a pro rata portion of the OID allocable to that
accrual period. The accrual period for an original
issue discount debt security may be of any length and may vary
in length over the term of the debt security, provided that each
accrual period is no longer than one year and each scheduled
payment of principal or interest occurs on the first day or the
final day of an accrual period. The amount of OID allocable to
any accrual period other than the final accrual period is an
amount equal to the excess, if any, of:
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the debt securitys adjusted issue price at the
beginning of the accrual period multiplied by its yield to
maturity, determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of the
accrual period; over
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the aggregate of all qualified stated interest allocable to the
accrual period.
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OID allocable to a final accrual period is the difference
between the amount payable at maturity, other than a payment of
qualified stated interest, and the adjusted issue price at the
beginning of the final accrual period. Special rules will apply
for calculating OID for an initial short accrual period. The
adjusted issue price of a debt security at the
beginning of any accrual period is equal to its issue price
increased by the accrued OID for each prior accrual period,
determined without regard to the amortization of any acquisition
or bond premium, as described below, and reduced by any payments
previously made on the debt security other than a payment of
qualified stated interest. Under these rules, you will generally
have to include in income increasingly greater amounts of OID in
successive accrual periods. We are required to provide
information returns stating the amount of OID accrued on debt
securities held by persons of record other than corporations and
other exempt holders.
Debt instruments that provide for a variable rate of interest
(variable rate debt securities) are subject to
special OID rules. In the case of an original issue discount
debt security that is a variable rate debt security, both the
yield to maturity and qualified stated
interest will be determined solely for purposes of
39
calculating the accrual of OID as though the debt security will
bear interest in all periods at a fixed rate generally equal to
the rate that would be applicable to interest payments on the
debt security on its date of issue or, in the case of certain
variable rate debt securities, the rate that reflects the yield
to maturity that is reasonably expected for the debt security.
Additional rules may apply if either:
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the interest on a variable rate debt security is based on more
than one interest index; or
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the principal amount of the debt security is indexed in any
manner.
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The discussion above generally does not address debt securities
providing for contingent payments. You should carefully examine
the applicable prospectus supplement regarding the United States
federal income tax consequences of the holding and disposition
of any debt securities providing for contingent payments.
You may elect to treat all interest on any debt security as OID
and calculate the amount includible in gross income under the
constant yield method described above. For purposes of this
election, interest includes stated interest, acquisition
discount, OID, de minimis OID, market discount, de
minimis market discount and unstated interest, as adjusted
by any amortizable bond premium or acquisition premium. You
should consult with your own tax advisors about this election.
Short-Term
Debt Securities
In the case of debt securities having a term of one year or
less, all payments, including all stated interest, will be
included in the stated redemption price at maturity and will not
be qualified stated interest. As a result, you will generally be
taxed on the discount instead of stated interest. The discount
will be equal to the excess of the stated redemption price at
maturity over the issue price of a short-term debt security,
unless you elect to compute this discount using tax basis
instead of issue price. In general, individuals and certain
other cash method United States Holders of short-term debt
securities are not required to include accrued discount in their
income currently unless they elect to do so, but may be required
to include stated interest in income as the income is received.
United States Holders that report income for United States
federal income tax purposes on the accrual method and certain
other United States Holders are required to accrue discount on
short-term debt securities (as ordinary income) on a
straight-line basis, unless an election is made to accrue the
discount according to a constant yield method based on daily
compounding. If you are not required, and do not elect, to
include discount in income currently, any gain you realize on
the sale, exchange or retirement of a short-term debt security
will generally be ordinary income to you to the extent of the
discount accrued by you through the date of sale, exchange or
retirement. In addition, if you do not elect to currently
include accrued discount in income you may be required to defer
deductions for a portion of your interest expense with respect
to any indebtedness attributable to the short-term debt
securities.
Market
Discount
If you purchase a debt security for an amount that is less than
its stated redemption price at maturity (or, in the case of an
original issue discount debt security, its adjusted issue
price), the amount of the difference will be treated as
market discount for United States federal income tax
purposes, unless that difference is less than a specified de
minimis amount. Under the market discount rules, you will be
required to treat any principal payment on, or any gain on the
sale, exchange, retirement or other disposition of, a debt
security as ordinary income to the extent of the market discount
that you have not previously included in income and are treated
as having accrued on the debt security at the time of its
payment or disposition.
In addition, you may be required to defer, until the maturity of
the debt security or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest
expense on any indebtedness attributable to the debt security.
You may elect, on a debt
security-by-debt
security basis, to deduct the deferred interest expense in a tax
year prior to the year of disposition. You should consult your
own tax advisors before making this election.
Any market discount will be considered to accrue ratably during
the period from the date of acquisition to the maturity date of
the debt security, unless you elect to accrue on a constant
interest method. You may
40
elect to include market discount in income currently as it
accrues, on either a ratable or constant interest method, in
which case the rule described above regarding deferral of
interest deductions will not apply.
Acquisition
Premium, Amortizable Bond Premium
If you purchase an original issue discount debt security for an
amount that is greater than its adjusted issue price but equal
to or less than the sum of all amounts payable on the debt
security after the purchase date other than payments of
qualified stated interest, you will be considered to have
purchased that debt security at an acquisition
premium. Under the acquisition premium rules, the amount
of OID that you must include in gross income with respect to the
debt security for any taxable year will be reduced by the
portion of the acquisition premium properly allocable to that
year.
If you purchase a debt security (including an original issue
discount debt security) for an amount in excess of the sum of
all amounts payable on the debt security after the purchase date
other than qualified stated interest, you will be considered to
have purchased the debt security at a premium and,
if it is an original issue discount debt security, you will not
be required to include any OID in income. You generally may
elect to amortize the premium over the remaining term of the
debt security on a constant yield method as an offset to
interest when includible in income under your regular accounting
method. Special rules limit the amortization of premium in the
case of convertible debt instruments. If you do not elect to
amortize bond premium, that premium will decrease the gain or
increase the loss you would otherwise recognize on disposition
of the debt security.
Sale,
Exchange and Retirement of Debt Securities
Your tax basis in a debt security will, in general, be your cost
for that debt security, increased by OID, market discount or any
discount with respect to a short-term debt security that you
previously included in income, and reduced by any amortized
premium and any cash payments on the debt security other than
qualified stated interest. Upon the sale, exchange, retirement
or other disposition of a debt security, you will recognize gain
or loss equal to the difference between the amount you realize
upon the sale, exchange, retirement or other disposition (less
an amount equal to any accrued and unpaid qualified stated
interest, which will be taxable as interest income to the extent
not previously included in income) and the adjusted tax basis of
the debt security. Except as described above with respect to
certain short-term debt securities or with respect to market
discount, with respect to gain or loss attributable to changes
in exchange rates as discussed below with respect to foreign
currency debt securities, and with respect to contingent payment
debt instruments which this summary generally does not discuss,
that gain or loss will be capital gain or loss. Capital gains of
individuals derived in respect of capital assets held for more
than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
Foreign
Currency Debt Securities
Payments of Interest. If you receive interest
payments made in a foreign currency and you use the cash basis
method of accounting, you will be required to include in income
the U.S. dollar value of the amount received, determined by
translating the foreign currency received at the spot
rate for such foreign currency on the date such payment is
received regardless of whether the payment is in fact converted
into U.S. dollars. You will not recognize exchange gain or
loss with respect to the receipt of such payment.
If you use the accrual method of accounting, you may determine
the amount of income recognized with respect to such interest in
accordance with either of two methods. Under the first method,
you will be required to include in income for each taxable year
the U.S. dollar value of the interest that has accrued
during such year, determined by translating such interest at the
average rate of exchange for the period or periods during which
such interest accrued. Under the second method, you may elect to
translate interest income at the spot rate on:
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the last day of the accrual period;
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the last day of the taxable year if the accrual period straddles
your taxable year; or
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the date the interest payment is received if such date is within
five days of the end of the accrual period.
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Upon receipt of an interest payment on such debt security
(including, upon the sale of a debt security, the receipt of
proceeds which include amounts attributable to accrued interest
previously included in income), you will recognize ordinary gain
or loss in an amount equal to the difference between the
U.S. dollar value of such payment (determined by
translating the foreign currency received at the spot rate for
such foreign currency on the date such payment is received) and
the U.S. dollar value of the interest income you previously
included in income with respect to such payment.
Original Issue Discount. OID on a debt
security that is also a foreign currency debt security will be
determined for any accrual period in the applicable foreign
currency and then translated into U.S. dollars, in the same
manner as interest income accrued by a holder on the accrual
basis, as described above. You will recognize exchange gain or
loss when OID is paid (including, upon the sale of a debt
security, the receipt of proceeds that include amounts
attributable to OID previously included in income) to the extent
of the difference between the U.S. dollar value of the
accrued OID (determined in the same manner as for accrued
interest) and the U.S. dollar value of such payment
(determined by translating the foreign currency received at the
spot rate for such foreign currency on the date such payment is
received). For these purposes, all receipts on a debt security
will be viewed:
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first, as the receipt of any stated interest payments called for
under the terms of the debt security;
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second, as receipts of previously accrued OID (to the extent
thereof), with payments considered made for the earliest accrual
periods first; and
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third, as the receipt of principal.
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Market Discount and Bond Premium. The amount
of market discount on foreign currency debt securities
includible in income will generally be determined by translating
the market discount determined in the foreign currency into
U.S. dollars at the spot rate on the date the foreign
currency debt security is retired or otherwise disposed of. If
you have elected to accrue market discount currently, then the
amount which accrues is determined in the foreign currency and
then translated into U.S. dollars on the basis of the
average exchange rate in effect during such accrual period. You
will recognize exchange gain or loss with respect to market
discount which is accrued currently using the approach
applicable to the accrual of interest income as described above.
Bond premium on a foreign currency debt security will be
computed in the applicable foreign currency. If you have elected
to amortize the premium, the amortizable bond premium will
reduce interest income in the applicable foreign currency. At
the time bond premium is amortized, exchange gain or loss, which
is generally ordinary gain or loss, will be realized based on
the difference between spot rates at such time and the time of
acquisition of the foreign currency debt security.
If you elect not to amortize bond premium, you must translate
the bond premium computed in the foreign currency into
U.S. dollars at the spot rate on the maturity date and such
bond premium will constitute a capital loss which may be offset
or eliminated by exchange gain.
Sale, Exchange and Retirement of Foreign Currency Debt
Securities. Upon the sale, exchange, retirement
or other taxable disposition of a foreign currency debt
security, you will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange,
retirement or other disposition (less an amount equal to any
accrued and unpaid qualified stated interest, which will be
treated as a payment of interest for United States federal
income tax purposes) and your adjusted tax basis in the foreign
currency debt security. Your initial tax basis in a foreign
currency debt security generally will be your U.S. dollar
cost. If you purchased a foreign currency debt security with
foreign currency, your cost generally will be the
U.S. dollar value of the foreign currency amount paid for
such foreign currency debt security determined at the time of
such purchase. If your foreign currency debt security is sold,
exchanged or retired for an amount denominated in foreign
currency, then your amount realized generally will be based on
the spot rate of the foreign currency on the date of sale,
exchange or retirement. If you are a cash method taxpayer and
the foreign currency debt securities are traded on an
established securities market, foreign currency paid or received
is translated into U.S. dollars at the spot rate on the
settlement date of the purchase or sale. An accrual method
taxpayer may elect the same treatment with respect to the
purchase and sale of foreign currency debt securities traded on
an established securities market, provided that the election is
applied consistently.
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Subject to the foreign currency rules discussed below, such gain
or loss will be capital gain or loss and will be long-term
capital gain or loss if at the time of sale, exchange,
retirement or other disposition, the foreign currency debt
security has been held for more than one year. Capital gains of
individuals derived with respect to capital assets held for more
than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations. Gain
or loss realized by you on the sale, exchange or retirement of a
foreign currency debt security would generally be treated as
U.S. source gain or loss.
A portion of your gain or loss with respect to the principal
amount of a foreign currency debt security may be treated as
exchange gain or loss. Exchange gain or loss will be treated as
ordinary income or loss and generally will be U.S. source
gain or loss. For these purposes, the principal amount of the
foreign currency debt security is your purchase price for the
foreign currency debt security calculated in the foreign
currency on the date of purchase, and the amount of exchange
gain or loss recognized is equal to the difference between
(i) the U.S. dollar value of the principal amount
determined on the date of the sale, exchange, retirement or
other disposition of the foreign currency debt security and
(ii) the U.S. dollar value of the principal amount
determined on the date you purchased the foreign currency debt
security. The amount of exchange gain or loss will be limited to
the amount of overall gain or loss realized on the disposition
of the foreign currency debt security.
Exchange Gain or Loss with Respect to Foreign
Currency. Your tax basis in the foreign currency
received as interest on a foreign currency debt security will be
the U.S. dollar value thereof at the spot rate in effect on
the date the foreign currency is received. Your tax basis in
foreign currency received on the sale, exchange or retirement of
a foreign currency debt security will be equal to the
U.S. dollar value of the foreign currency, determined at
the time of the sale, exchange or retirement. As discussed
above, if the foreign currency debt securities are traded on an
established securities market, a cash basis United States Holder
(or, upon election, an accrual basis United States Holder) will
determine the U.S. dollar value of the foreign currency by
translating the foreign currency received at the spot rate of
exchange on the settlement date of the sale, exchange or
retirement. Accordingly, your basis in the foreign currency
received would be equal to the spot rate of exchange on the
settlement date.
Any gain or loss recognized by you on a sale, exchange or other
disposition of the foreign currency will be ordinary income or
loss and generally will be United States source gain or loss.
Reportable Transactions. Treasury regulations
issued under the Code meant to require the reporting of certain
tax shelter transactions could be interpreted to cover
transactions generally not regarded as tax shelters, including
certain foreign currency transactions. Under the Treasury
regulations, certain transactions are required to be reported to
the Internal Revenue Service (IRS), including, in
certain circumstances, a sale, exchange, retirement or other
taxable disposition of a foreign currency debt security or
foreign currency received in respect of a foreign currency debt
security to the extent that such sale, exchange, retirement or
other taxable disposition results in a tax loss in excess of a
threshold amount. If you are considering the purchase of a
foreign currency debt security, you should consult with your own
tax advisors to determine the tax return obligations, if any,
with respect to an investment in the debt securities, including
any requirement to file IRS Form 8886 (Reportable
Transaction Disclosure Statement).
Consequences
to
Non-United
States Holders
The following is a summary of the material United States federal
income and estate tax consequences that will apply to you if you
are a
Non-United
States Holder of debt securities.
United
States Federal Withholding Tax
The 30% United States federal withholding tax will not apply to
any payment of interest on the debt securities (including OID)
under the portfolio interest rule, provided that:
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interest paid on the debt securities is not effectively
connected with your conduct of a trade or business in the United
States;
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and applicable United States
Treasury regulations;
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you are not a controlled foreign corporation that is related to
us through stock ownership;
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you are not a bank whose receipt of interest on the debt
securities is described in Section 881(c)(3)(A) of the Code;
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the interest is not considered contingent interest under Section
871(h)(4)(A) of the Code and the United States Treasury
regulations thereunder; and
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either (a) you provide your name and address on an IRS
Form W-8BEN
(or other applicable form), and certify, under penalties of
perjury, that you are not a United States person as defined
under the Code or (b) you hold your debt securities through
certain foreign intermediaries and satisfy the certification
requirements of applicable United States Treasury regulations.
Special certification rules apply to
Non-United
States Holders that are pass-through entities rather than
corporations or individuals.
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If you cannot satisfy the requirements described above, payments
of interest, including OID, made to you will be subject to the
30% United States federal withholding tax, unless you provide us
with a properly executed:
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IRS
Form W-8BEN
(or other applicable form) claiming an exemption from or
reduction in withholding under the benefit of an applicable
income tax treaty; or
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IRS
Form W-8ECI
(or other applicable form) stating that interest paid on the
debt securities is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business
in the United States (as discussed below under
United States Federal Income Tax).
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The 30% United States federal withholding tax generally will not
apply to any payment of principal or gain that you realize on
the sale, exchange, retirement or other disposition of a debt
security.
United
States Federal Income Tax
If you are engaged in a trade or business in the United States
and interest, including OID, on the debt securities is
effectively connected with the conduct of that trade or business
(and, if required by an applicable income tax treaty, is
attributable to a United States permanent establishment), then
you will be subject to United States federal income tax on that
interest on a net income basis (although you will be exempt from
the 30% United States federal withholding tax, provided the
certification requirements discussed above in
United States Federal Withholding Tax
are satisfied) in the same manner as if you were a United States
person as defined under the Code. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax
equal to 30% (or lower applicable income tax treaty rate) of
such interest, subject to adjustments.
Any gain realized on the disposition of a debt security
generally will not be subject to United States federal income
tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment); or
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you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met.
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United
States Federal Estate Tax
Your estate will not be subject to United States federal estate
tax on debt securities beneficially owned by you at the time of
your death, provided that any payment to you on the debt
securities, including OID, would be eligible for exemption from
the 30% United States federal withholding tax under the
portfolio interest rule described above under
United States Federal Withholding Tax,
without regard to the statement requirement described in the
sixth bullet point of that section.
44
Information
Reporting and Backup Withholding
Consequences
to United States Holders
In general, information reporting requirements will apply to
certain payments of principal, interest (including OID) and
premium paid on debt securities and to the proceeds of sale of a
debt security paid to you (unless you are an exempt recipient
such as a corporation). A backup withholding tax may apply to
such payments if you fail to provide a taxpayer identification
number or a certification of exempt status, or if you fail to
report in full dividend and interest income.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States
federal income tax liability provided the required information
is furnished to the IRS.
Consequences
to
Non-United
States Holders
Generally, we must report to the IRS and to you the amount of
interest (including OID) on the debt securities paid to you and
the amount of tax, if any, withheld with respect to those
payments. Copies of the information returns reporting such
interest payments and any withholding may also be made available
to the tax authorities in the country in which you reside under
the provisions of an applicable income tax treaty.
In general, you will not be subject to backup withholding with
respect to payments on the debt securities that we make to you
provided that we do not have actual knowledge or reason to know
that you are a United States person as defined under the Code,
and we have received from you the statement described above in
the sixth bullet point under Debt
Securities Consequences to
Non-United
States Holders United States Federal Withholding
Tax.
In addition, no information reporting or backup withholding will
be required regarding the proceeds of the sale of a debt
security made within the United States or conducted through
certain United States-related financial intermediaries, if the
payor receives the statement described above and does not have
actual knowledge or reason to know that you are a United States
person as defined under the Code, or you otherwise establish an
exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States
federal income tax liability provided the required information
is furnished to the IRS.
Preferred
Securities
Classification
of the Trust
We intend to take the position that each Trust will be
classified as a grantor trust for United States federal income
tax purposes and not as an association taxable as a corporation.
As a result, for United States federal income tax purposes, you
generally will be treated as owning an undivided beneficial
ownership interest in the related debt securities held by the
Trust. Thus, you will be required to include in your gross
income your pro rata share of the interest income or OID that is
paid or accrued on the related debt securities. See
Consequences to United States Holders Interest
Income and Original Issue Discount below.
Classification
of the Debt Securities
We intend to take the position that the debt securities will be
classified as our indebtedness for all United States tax
purposes. We, the Trust and you (by your acceptance of a
beneficial ownership interest in a preferred security) will
agree to treat the debt securities as indebtedness for all
United States tax purposes. The remainder of this discussion
assumes that the debt securities will be classified as our
indebtedness.
Consequences
to United States Holders
Interest
Income and Original Issue Discount
We anticipate that the debt securities will not be issued with
an issue price that is less than their stated redemption price
at maturity. In this case, subject to the discussion below, the
debt securities will not be
45
subject to the special OID rules, at least upon initial
issuance, so that you will generally be taxed on the stated
interest on the debt securities as ordinary income at the time
it is paid or accrued in accordance with your regular method of
tax accounting.
If, however, we exercise our right to defer payments of interest
on the debt securities, the debt securities will become OID
instruments at such time. In such case, you will be subject to
the special OID rules described below. Once the debt securities
become OID instruments, they will be taxed as OID instruments
for as long as they remain outstanding.
Under the OID economic accrual rules, the following occurs:
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regardless of your method of accounting, you would accrue an
amount of interest income each year that approximates the stated
interest payments called for under the terms of the debt
securities using the constant-yield-to-maturity method of
accrual described in Section 1272 of the Code;
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the actual cash payments of interest you receive on the debt
securities would not be reported separately as taxable income;
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any amount of OID included in your gross income (whether or not
during a deferral period) with respect to the preferred
securities will increase your tax basis in such preferred
securities; and
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the amount of distributions that you receive in respect of such
accrued OID will reduce your tax basis in such preferred
securities.
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The Treasury regulations dealing with OID and the deferral of
interest payments have not yet been addressed in any rulings or
other interpretations by the IRS. It is possible that the IRS
could assert that the debt securities were issued initially with
OID merely because of our right to defer interest payments. If
the IRS were successful in this regard, you would be subject to
the special OID rules described above, regardless of whether we
exercise our option to defer payments of interest on such debt
securities.
Because the debt securities are treated as debt for tax
purposes, any income you recognize with respect to the preferred
securities will not be eligible for the corporate
dividends-received deduction or taxation for individuals at
long-term capital gain rates as qualified dividend income.
Distribution
of Debt Securities or Cash upon Liquidation of the
Trust
As described under the caption Description of Preferred
Securities That the Trusts May Offer Liquidation
Distribution Upon Dissolution in this prospectus, the debt
securities held by the Trust may be distributed to you in
exchange for your preferred securities if the Trust is dissolved
before the maturity of the debt securities. Under current law,
this type of distribution from a grantor trust would not be
taxable. Upon such a distribution, you will receive your pro
rata share of the debt securities previously held indirectly
through the Trust. Your holding period and aggregate tax basis
in the debt securities will equal the holding period and
aggregate tax basis that you had in your preferred securities
before the distribution.
We may also have the option to redeem the debt securities and
distribute the resulting cash in liquidation of the Trust. This
redemption would be taxable as described below in
Sales of Preferred Securities or Redemption of
Debt Securities.
If you receive debt securities in exchange for your preferred
securities, you would accrue interest in respect of the debt
securities received from the Trust in the manner described above
under Interest Income and Original Issue
Discount.
46
Sales of
Preferred Securities or Redemption of Debt Securities
If you sell your preferred securities or receive cash upon
redemption of the debt securities, you will recognize gain or
loss equal to the difference between:
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your amount realized on the sale or redemption of the preferred
securities or debt securities (less an amount equal to any
accrued but unpaid qualified stated interest, which will be
taxable as such to the extent not previously included in
income); and
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your adjusted tax basis in your preferred securities or debt
securities sold or redeemed.
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Your gain or loss will be a capital gain or loss, provided that
you hold the preferred securities or debt securities as a
capital asset. The gain or loss will generally be a long-term
capital gain or loss if you have held your preferred securities
or debt securities for more than one year. Long-term capital
gains of individuals derived with respect to capital assets held
for more than one year are subject to reduced rates of taxation.
The deductibility of capital losses is subject to limitations.
Tax
Shelter Regulations
Under applicable Treasury regulations, taxpayers engaging in
certain transactions, including loss transactions above a
threshold, may be required to include tax shelter disclosure
information with their annual United States federal income
tax return. The IRS has provided an exception from this
disclosure requirement for losses arising from cash investments,
but this exception does not apply to investments in flow-through
entities. You should consult your own tax advisors about whether
the limitation applicable to flow-through entities would apply
to your investment in a Trust.
Consequences
to
Non-United
States Holders
The following discussion only applies to you if you are a
Non-United
States Holder. As discussed above, the preferred securities will
be treated by the parties as evidence of indirect undivided
beneficial ownership interests in the debt securities. See above
under Classification of the Trust in
this section.
United
States Federal Withholding Tax
Under the portfolio interest exception, the 30%
United States federal withholding tax will not apply to any
payment by us or any paying agent of interest (including OID) on
the preferred securities (or the debt securities), provided that:
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interest paid on the preferred securities (or the debt
securities) is not effectively connected with your conduct of a
trade or business in the United States;
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and applicable United States
Treasury regulations;
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you are not a controlled foreign corporation that is related to
us through stock ownership;
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you are not a bank whose receipt of interest on the preferred
securities (or the debt securities) is described in Section
881(c)(3)(A) of the Code; and
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either (a) you provide your name and address on an IRS
Form W-8BEN
(or other applicable form), and certify, under penalties of
perjury, that you are not a United States person as defined
under the Code or (b) if you hold your preferred securities
(or debt securities) through certain foreign intermediaries, you
satisfy the certification requirements of applicable United
States Treasury regulations. Special certification rules apply
to certain
Non-United
States Holders that are pass-through entities rather than
corporations or individuals.
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47
If you cannot satisfy the requirements described above, payments
of interest (including OID) made to you will be subject to the
30% United States federal withholding tax, unless you provide us
or our paying agent, as the case may be, with a properly executed
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IRS
Form W-8BEN
(or other applicable form) claiming an exemption from or
reduction in withholding under the benefit of an applicable
income tax treaty; or
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IRS
Form W-8ECI
(or other applicable form) stating that interest paid on the
preferred securities (or debt securities) is not subject to
withholding tax because it is effectively connected with your
conduct of a trade or business in the United States (as
discussed below under United States Federal
Income Tax).
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The 30% United States federal withholding tax generally will not
apply to any payment of principal or gain that you realize on
the sale, exchange, retirement or other disposition of the
preferred securities (or debt securities).
United
States Federal Income Tax
If you are engaged in a trade or business in the United States
and interest on the preferred securities (or the debt
securities) is effectively connected with the conduct of that
trade or business (and, if required by an applicable income tax
treaty, is attributable to a United States permanent
establishment), then you will be subject to United States
federal income tax on that interest on a net income basis in the
same manner as if you were a United States person as defined
under the Code. However, you will not be subject to the
withholding described above, as long as you provide a properly
executed IRS
Form W-8ECI
as described above. In addition, if you are a foreign
corporation, you may be subject to a branch profits tax equal to
30% (or lower applicable income tax treaty rate) of your
earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with the conduct by
you of a trade or business in the United States. For this
purpose, interest on preferred securities (or debt securities)
will be included in earnings and profits.
You will generally not be subject to United States federal
income tax on any gain you realize upon the disposition of a
preferred security (or a debt security) unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment); or
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you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met.
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United
States Federal Estate Tax
Your estate will not be subject to United States federal estate
tax on the preferred securities (or the debt securities)
beneficially owned by you at the time of your death, provided
that any payment to you on the preferred securities (or the debt
securities), including OID, would be eligible for exemption from
the 30% United States federal withholding tax under the
portfolio interest exception described above under
United States Federal Withholding Tax,
without regard to the statement requirement described in the
fifth bullet point of that section.
Information
Reporting and Backup Withholding
Consequences
to United States Holders
In general, information reporting requirements will apply to
certain payments of principal, interest (including OID) and
premium paid on the preferred securities (or debt securities)
and to the proceeds of sale of preferred securities (or debt
securities) paid to you (unless you are an exempt recipient such
as a corporation). A backup withholding tax may apply to such
payments if you fail to provide a taxpayer identification
number, a certification of exempt status, or if you fail to
report in full dividend and interest income.
48
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States
federal income tax liability provided the required information
is furnished to the IRS.
Consequences
to
Non-United
States Holders
Generally, we must report to the IRS and to you the amount of
interest (including OID) paid to you and the amount of tax, if
any, withheld with respect to those payments. Copies of the
information returns reporting such interest payments and any
withholding may also be made available to the tax authorities in
the country in which you reside under the provisions of an
applicable income tax treaty.
In general, you will not be subject to backup withholding with
respect to payments that we make to you provided that we do not
have actual knowledge or reason to know that you are a United
States person as defined under the Code, and you have provided
the statement described above in the fifth bullet point under
Preferred Securities Consequences
to
Non-United
States Holders United States Federal Withholding
Tax.
In addition, no information reporting or backup withholding will
be required regarding the proceeds of the sale of preferred
securities (or debt securities) made within the United States or
conducted through certain United States-related financial
intermediaries, if the payor receives the statement described
above and does not have actual knowledge or reason to know that
you are a United States person as defined under the Code, or you
otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States
federal income tax liability provided the required information
is furnished to the IRS.
Common
and Preferred Stock
Consequences
to United States Holders
The United States federal income tax consequences of the
purchase, ownership or disposition of our stock depend on a
number of factors including:
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the terms of the stock;
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any put or call option or redemption provisions with respect to
the stock;
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any conversion or exchange feature with respect to the
stock; and
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the price at which the stock is sold.
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United States Holders should carefully examine the applicable
prospectus supplement regarding the material United States
federal income tax consequences, if any, of the holding and
disposition of our stock.
Consequences
to
Non-United
States Holders
The following is a summary of the material United States federal
income tax consequences that will apply to you if you are a
Non-United
States Holder of common or preferred stock.
Dividends
Dividends paid to you generally will be subject to withholding
of United States federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty.
However, dividends that are effectively connected with your
conduct of a trade or business within the United States (and, if
required by an applicable income tax treaty, are attributable to
a United States permanent establishment) are not subject to the
withholding tax, provided certain certification and disclosure
requirements are satisfied. Instead, such dividends are subject
to United States federal income tax on a net income basis in the
same manner as if you were a United States person as defined
under the Code. If you are a foreign corporation, any such
effectively connected dividends received by you may be subject
to an additional branch profits tax at a 30% rate or
such lower rate as may be specified by an applicable income tax
treaty.
49
A Non-United
States Holder of our common or preferred stock who wishes to
claim the benefit of an applicable treaty rate and avoid backup
withholding, as discussed below, for dividends will be required
(a) to complete IRS
Form W-8BEN
(or other applicable form) and certify under penalties of
perjury that such holder is not a United States person as
defined under the Code and is eligible for treaty benefits or
(b) if our common stock is held through certain foreign
intermediaries, to satisfy the relevant certification
requirements of applicable United States Treasury regulations.
Special certification and other requirements apply to certain
Non-United
States Holders that are pass-through entities rather than
corporations or individuals.
If you are eligible for a reduced rate of United States
withholding tax pursuant to an income tax treaty you may obtain
a refund of any excess amounts withheld by filing an appropriate
claim for refund with the IRS.
Gain on
Disposition of Common Stock and Preferred Stock
Any gain realized on the disposition of our common or preferred
stock generally will not be subject to United States federal
income tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment);
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you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met; or
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we are or have been a United States real property holding
corporation for United States federal income tax purposes.
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If you are an individual
Non-United
States Holder described in the first bullet point immediately
above, you will be subject to tax on the net gain derived from
the sale under regular graduated United States federal income
tax rates. If you are an individual
Non-United
States Holder described in the second bullet point immediately
above, you will be subject to a flat 30% tax on the gain derived
from the sale, which may be offset by United States source
capital losses, even though you are not considered a resident of
the United States. If you are a
Non-United
States Holder that is a foreign corporation and you are
described in the first bullet point immediately above, you will
be subject to tax on your net gain in the same manner as if you
were a United States person as defined under the Code and, in
addition, you may be subject to the branch profits tax equal to
30% of your effectively connected earnings and profits or at
such lower rate as may be specified by an applicable income tax
treaty.
We believe we are not and do not anticipate becoming a
United States real property holding corporation for
United States federal income tax purposes.
Federal
Estate Tax
If you are an individual, common or preferred stock held by you
at the time of your death will be included in you gross estate
for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.
Information
Reporting and Backup Withholding
We must report annually to the IRS and you the amount of
dividends paid to you and the tax withheld with respect to such
dividends, regardless of whether withholding was required.
Copies of the information returns reporting such dividends and
withholding may also be made available to the tax authorities in
the country in which you reside under the provisions of an
applicable income tax treaty.
You will be subject to backup withholding for dividends paid to
you unless you certify under penalties of perjury that you are a
Non-United
States Holder (and we do not have actual knowledge or reason to
know that you are a United States person as defined under the
Code), or you otherwise establish an exemption.
50
Information reporting and, depending on the circumstances,
backup withholding will apply to the proceeds of a sale of our
common or preferred stock within the United States or conducted
through certain United States-related financial intermediaries,
unless you certify under penalties of perjury that you are a
Non-United
States Holder (and the payor does not have actual knowledge or
reason to know that you are a United States person as defined
under the Code), or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States
federal income tax liability provided the required information
is furnished to the IRS.
Other
Securities
If you are considering the purchase of warrants, stock purchase
contracts, depositary shares or units, you should carefully
examine the applicable prospectus supplement regarding the
special United States federal income tax consequences, if any,
of the holding and disposition of such securities including any
tax considerations relating to the specific terms of such
securities.
ERISA
MATTERS
Unless otherwise indicated in the applicable prospectus
supplement, the offered securities may, subject to certain legal
restrictions, be held by (i) pension, profit sharing and
other employee benefit plans which are subject to Title I
of the Employee Retirement Security Act of 1974, as amended
(which we refer to as ERISA), (ii) plans,
accounts and other arrangements that are subject to
Section 4975 of the Code or provisions under federal,
state, local,
non-U.S. or
other laws or regulations that are similar to any of the
provisions of Title I of ERISA or Section 4975 of the
Code (which we refer to as Similar Laws) and
(iii) entities whose underlying assets are considered to
include plan assets of any such plans, accounts or
arrangements. A fiduciary of any such plan, account or
arrangement must determine that the purchase and holding of an
interest in the offered securities is consistent with its
fiduciary duties and will not constitute or result in a
non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code, or a violation under any
applicable Similar Laws.
VALIDITY
OF SECURITIES
Unless otherwise indicated in the applicable prospectus
supplement, certain matters of Delaware law relating to the
Trust and its preferred securities will be passed upon for the
Trust and us by Richards, Layton & Finger, P.A.,
Wilmington, Delaware. Unless otherwise indicated in the
applicable prospectus supplement, the validity of the securities
will be passed upon for us by Wendy C. Skjerven, Esq., our
Vice President, Associate Group General Counsel and Deputy
Corporate Secretary, and by Simpson Thacher & Bartlett
LLP, New York, New York.
EXPERTS
The consolidated financial statements and all related financial
statement schedules of The Travelers Companies, Inc. as of
December 31, 2007 and 2006, and for each of the years in
the three-year period ended December 31, 2007, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2007
have been incorporated by reference in the registration
statement in reliance upon the reports of KPMG LLP, independent
registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in
accounting and auditing.
51
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other
Expenses of Issuance and Distribution
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SEC registration fee
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*
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Accounting fees and expenses
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*
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Legal fees and expenses
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*
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Printing expenses
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*
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Trustee fees and expenses
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*
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Rating agency fees
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*
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Blue Sky fees and expenses
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*
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Miscellaneous
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*
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Total
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*
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* |
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All fees and expenses are calculated based on the number of
issuances and amount of securities offered and, accordingly,
cannot be estimated at this time. |
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Item 15.
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Indemnification
of Directors and Officers
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The Travelers Companies, Inc. (Travelers) is subject
to Minnesota Statutes, Chapter 302A. Minnesota Statutes,
Section 302A.521, provides that a corporation shall
indemnify any person made or threatened to be made a party to a
proceeding by reason of the former or present official capacity
(as defined in Section 302A.521) of such person against
judgments, penalties, fines (including, without limitation,
excise taxes assessed against such person with respect to an
employee benefit plan), settlements and reasonable expenses
(including attorneys fees and disbursements), incurred by
such person in connection with the proceeding, if, with respect
to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified
therefor by another organization or employee benefit plan;
(2) acted in good faith; (3) received no improper
personal benefit and Section 302A.255 (with respect to
director conflicts of interest), if applicable, has been
satisfied; (4) in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and
(5) reasonably believed that the conduct was in the best
interests of the corporation in the case of acts or omissions in
such persons official capacity for the corporation, or, in
the case of acts or omissions in such persons official
capacity for other affiliated organizations, reasonably believed
that the conduct was not opposed to the best interests of the
corporation.
The bylaws of Travelers provide that it will indemnify and make
permitted advances to a person made or threatened to be made a
party to a proceeding by reason of his former or present
official capacity against judgments, penalties, fines
(including, without limitation, excise taxes assessed against
the person with respect to an employee benefit plan),
settlements and reasonable expenses (including, without
limitation, attorneys fees and disbursements) incurred by
him in connection with the proceeding in the manner and to the
fullest extent permitted or required by Section 302A.521.
Travelers has directors and officers liability
insurance policies, with coverage of up to $250 million,
subject to various deductibles and exclusions from coverage.
Travelers, as depositor, has agreed in the declarations of trust
to (i) reimburse the trustees of the Trust for all
reasonable expenses (including reasonable fees and expenses of
counsel and other experts) and (ii) indemnify, defend and
hold harmless the trustees and any of the officers, directors,
employees and agents of the trustees (the Indemnified
Persons) from and against any and all losses, damages,
liabilities, claims, actions, suits, costs, expenses,
disbursements (including the reasonable fees and expenses of
counsel), taxes and penalties of any kind and nature whatsoever
(collectively, Expenses), to the extent that such
Expenses arise out of, or are imposed upon, or asserted at any
time against, such Indemnified Persons with respect to the
performance of the declarations of trust, the creation,
operation, administration or termination of a trust or the
II-1
transactions contemplated thereby; provided, however, that
Travelers shall not be required to indemnify any Indemnified
Person for any Expenses which are a result of the willful
misconduct, bad faith or negligence of such Indemnified Person.
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1
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.1
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Form of Underwriting Agreement for senior debt securities,
subordinated debt securities, junior subordinated debt
securities and warrants.*
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.2
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Form of Underwriting Agreement for preferred stock and
depositary shares.*
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1
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.3
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Form of Underwriting Agreement for common stock.*
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1
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.4
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Form of Underwriting Agreement for convertible debt securities.*
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1
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.5
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Form of Underwriting Agreement for preferred securities of
Travelers Capital Trust II, Travelers Capital
Trust III, Travelers Capital Trust IV and Travelers
Capital Trust V.*
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.6
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Form of Underwriting Agreement for stock purchase contracts.*
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1
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.7
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Form of Underwriting Agreement for units.*
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|
3
|
.1
|
|
Amended and Restated Articles of Incorporation (incorporated by
reference to Exhibit 3.1 to our Quarterly Report on
Form 10-Q
for the fiscal quarter ended June 30, 2007).
|
|
3
|
.2
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to our Current Report on
Form 8-K
filed on August 11, 2008).
|
|
4
|
.1
|
|
Indenture for senior debt securities (incorporated by reference
to Exhibit 4.1 of our Current Report on
Form 8-K
filed March 13, 2002).
|
|
4
|
.2
|
|
Form of Indenture for subordinated debt securities.
|
|
4
|
.3
|
|
Form of Indenture for junior subordinated debt securities.(1)
|
|
4
|
.4
|
|
Form of Deposit Agreement.*
|
|
4
|
.5
|
|
Form of Depositary Receipt (included in Exhibit 4.4).
|
|
4
|
.6
|
|
Form of Senior Debt Security (included in Exhibit 4.1).
|
|
4
|
.7
|
|
Form of Subordinated Debt Security (included in
Exhibit 4.2).
|
|
4
|
.8
|
|
Form of Junior Subordinated Debt Security (included in
Exhibit 4.3).
|
|
4
|
.9
|
|
Form of Warrant Agreement, including the form of the Warrant
Certificate.*
|
|
4
|
.10
|
|
Form of Stock Purchase Contract Agreement, including the form of
the Security Certificate.*
|
|
4
|
.11
|
|
Form of Unit Agreement, including the form of the Unit
Certificate.*
|
|
4
|
.12
|
|
Form of Pledge Agreement.*
|
|
4
|
.13
|
|
Form of Specimen Certificate of Common Stock.(2)
|
|
4
|
.14
|
|
Form of Specimen Certificate of Preferred Stock and Form of
Certificate of Designations for Preferred Stock.*
|
|
4
|
.15
|
|
Certificate of Trust of Travelers Capital Trust II.(3)
|
|
4
|
.16
|
|
Certificate of Trust of Travelers Capital Trust III.(2)
|
|
4
|
.17
|
|
Certificate of Trust of Travelers Capital Trust IV.(2)
|
|
4
|
.18
|
|
Certificate of Trust of Travelers Capital Trust V.(2)
|
|
4
|
.19
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust II, dated as of June 28, 2004.(2)
|
|
4
|
.20
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust II, dated as of February 27, 2007.(1)
|
|
4
|
.21
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust III, dated as of February 27, 2007.(1)
|
|
4
|
.22
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust IV, dated as of February 27, 2007.(1)
|
|
4
|
.23
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust V, dated as of February 27, 2007.(1)
|
II-2
|
|
|
|
|
|
4
|
.24
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust II.
|
|
4
|
.25
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust III.
|
|
4
|
.26
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust IV.
|
|
4
|
.27
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust V.
|
|
4
|
.28
|
|
Form of Second Amended and Restated Declaration of Trust for
Travelers Capital Trust II, Travelers Capital
Trust III, Travelers Capital Trust IV and Travelers
Capital Trust V.
|
|
4
|
.29
|
|
Form of Preferred Security (included in Exhibit 4.28).
|
|
4
|
.30
|
|
Form of Common Security (included in Exhibit 4.28).
|
|
4
|
.31
|
|
Form of Preferred Securities Guarantee Agreement.
|
|
4
|
.32
|
|
Form of Common Securities Guarantee Agreement.
|
|
5
|
.1
|
|
Opinion of Wendy C. Skjerven, Esq.
|
|
5
|
.2
|
|
Opinion of Richards, Layton & Finger, P.A.
|
|
5
|
.3
|
|
Opinion of Simpson Thacher & Bartlett LLP.
|
|
12
|
|
|
Computation of ratios of earnings to fixed charges and of
earnings to combined fixed charges and preferred stock
dividends.(4)
|
|
23
|
.1
|
|
Consent of KPMG LLP.
|
|
23
|
.2
|
|
Consent of Wendy C. Skjerven, Esq. (included in
Exhibit 5.1).
|
|
23
|
.3
|
|
Consent of Richards, Layton & Finger, P.A. (included
in Exhibit 5.2).
|
|
23
|
.4
|
|
Consent of Simpson Thacher & Bartlett LLP (included in
Exhibit 5.3).
|
|
24
|
|
|
Powers of Attorney.
|
|
25
|
.1
|
|
Statement of Eligibility and Qualification of Trustee on
Form T -l under the Trust Indenture Act of 1939, as
amended, of The Bank of New York Mellon Trust Company, N.A.
to act as trustee under the Senior Debt Indenture for the Senior
Debt Securities.
|
|
25
|
.2
|
|
Statement of Eligibility and Qualification of Trustee on
Form T -l under the Trust Indenture Act of 1939, as
amended, of The Bank of New York Mellon Trust Company, N.A.
to act as trustee under the Subordinated Debt Indenture for the
Subordinated Debt Securities.
|
|
25
|
.3
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee under the Junior Subordinated Debt Indenture for the
Junior Subordinated Debt Securities.
|
|
25
|
.4
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A.to act as
trustee for the Preferred Securities of Travelers Capital
Trust II.
|
|
25
|
.5
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities of Travelers Capital
Trust III.
|
|
25
|
.6
|
|
Statement of Eligibility and Qualification of Trustee on
Form T 1 under the Trust Indenture Act of 1939, as
amended, of The Bank of New York Mellon Trust Company, N.A.
to act as trustee for the Preferred Securities of Travelers
Capital Trust IV.
|
|
25
|
.7
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities of Travelers Capital
Trust V.
|
|
25
|
.8
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust II.
|
|
25
|
.9
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust III.
|
II-3
|
|
|
|
|
|
25
|
.10
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust IV.
|
|
25
|
.11
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust V.
|
|
|
|
* |
|
To be filed by amendment or as an exhibit to a document to be
incorporated by reference herein in connection with an offering
of the offered securities. |
|
(1) |
|
Incorporated by reference to the Post-Effective Amendment
No. 1 to the Registration Statement on
Form S-3
(Registration
No. 333-130323)
filed with the SEC on March 5, 2007. |
|
(2) |
|
Incorporated by reference to the Registration Statement on
Form S-3
(Registration
No. 333-130323)
filed with the SEC on December 14, 2005 |
|
(3) |
|
Incorporated by reference to the Registration Statement on
Form S-3
(Registration Nos.
333-73848,
333-73848-01
and
333-44122)
filed with the SEC on November 21, 2001. |
|
(4) |
|
Incorporated by reference to Exhibit 12.1 to The Travelers
Companies, Inc. Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 and
Exhibit 12.1 to The Travelers Companies, Inc. Quarterly
Report on
Form 10-Q
for the period ended September 30, 2008. |
|
|
|
Filed herewith. |
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the Calculation of Registration Fee
table in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and
(a)(1)(iii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the SEC
by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement, or
is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
(2) That, for the purpose 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-4
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser:
(i) each prospectus filed by a registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration
statement as of the date the filed prospectus was deemed part of
and included in the registration statement; and
(ii) each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5) or (b)(7) as part of a registration statement
in reliance on Rule 430B relating to an offering made
pursuant to Rule 415(a)(1)(i), (vii) or (x) for the
purpose of providing the information required by
Section 10(a) of the Securities Act of 1933 shall be deemed
to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which the prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date.
(5) Each of the undersigned registrants hereby undertakes
that, for the purpose of determining liability of a registrant
under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities, each undersigned registrant
undertakes that in a primary offering of securities of an
undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of an
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of an undersigned registrant or used or
referred to by an undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
an undersigned registrant or its securities provided by or on
behalf of an undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by an undersigned registrant to the purchaser.
(b) Each of the undersigned registrants hereby undertakes
that, for purposes of determining any liability under the
Securities Act of 1933, each filing of registrants annual
report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans 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.
(c) Each of the undersigned registrants hereby undertakes
to file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act
II-5
in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the
Trust Indenture Act.
(d) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of each registrant
pursuant to the provisions described under Item 15 above,
or otherwise, each registrant has been advised that in the
opinion of the SEC 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 a registrant
of expenses incurred or paid by a director, officer or
controlling person of a registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, that 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.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of St. Paul and State of Minnesota, on the 15th day of
December, 2008.
THE TRAVELERS COMPANIES, INC.
|
|
|
|
By:
|
/s/ Matthew
S. Furman
|
Name: Matthew S. Furman, Esq.
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on
December 15, 2008, by the following persons in the
capacities indicated:
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ Jay
S.
Fishman (Jay
S. Fishman)
|
|
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
|
|
|
|
/s/ Jay
S.
Benet (Jay
S. Benet)
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
/s/ Douglas
K.
Russell (Douglas
K. Russell)
|
|
Senior Vice President, Corporate Controller and Treasurer
(Principal Accounting Officer)
|
|
|
|
* (Alan
L. Beller)
|
|
Member of the Board of Directors
|
|
|
|
* (John
H. Dasburg)
|
|
Member of the Board of Directors
|
|
|
|
* (Janet
M. Dolan)
|
|
Member of the Board of Directors
|
|
|
|
* (Kenneth
M. Duberstein)
|
|
Member of the Board of Directors
|
|
|
|
* (Lawrence
G. Graev)
|
|
Member of the Board of Directors
|
|
|
|
* (Patricia
L. Higgins)
|
|
Member of the Board of Directors
|
|
|
|
* (Thomas
R. Hodgson)
|
|
Member of the Board of Directors
|
II-7
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
* (Cleve
L. Killingsworth)
|
|
Member of the Board of Directors
|
|
|
|
* (Robert
I. Lipp)
|
|
Member of the Board of Directors
|
|
|
|
* (Blythe
J. McGarvie)
|
|
Member of the Board of Directors
|
|
|
|
* (Glen
D. Nelson, M.D.)
|
|
Member of the Board of Directors
|
|
|
|
* (Laurie
J. Thomsen)
|
|
Member of the Board of Directors
|
|
|
|
*By /s/ Matthew
S. Furman
|
|
|
Matthew S. Furman
Attorney-in-fact
|
|
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of St. Paul and State of Minnesota, on the 15th day of
December, 2008.
TRAVELERS CAPITAL TRUST II
|
|
|
|
By:
|
THE TRAVELERS COMPANIES, INC.,
|
as Sponsor
|
|
|
|
By:
|
/s/ Matthew
S. Furman
|
Name: Matthew S. Furman
|
|
|
|
Title:
|
Senior Vice President
|
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of St. Paul and State of Minnesota, on the 15th day of
December, 2008.
TRAVELERS CAPITAL TRUST III
|
|
|
|
By:
|
THE TRAVELERS COMPANIES, INC.,
|
as Sponsor
|
|
|
|
By:
|
/s/ Matthew
S. Furman
|
Name: Matthew S. Furman
|
|
|
|
Title:
|
Senior Vice President
|
II-9
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of St. Paul and State of Minnesota, on the 15th day of
December, 2008.
TRAVELERS CAPITAL TRUST IV
|
|
|
|
By:
|
THE TRAVELERS COMPANIES, INC.,
as Sponsor
|
|
|
|
|
By:
|
/s/ Matthew
S. Furman
|
Name: Matthew S. Furman
|
|
|
|
Title:
|
Senior Vice President
|
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of St. Paul and State of Minnesota, on the 15th day of
December, 2008.
TRAVELERS CAPITAL TRUST V
|
|
|
|
By:
|
THE TRAVELERS COMPANIES, INC.,
|
as Sponsor
|
|
|
|
By:
|
/s/ Matthew
S. Furman
|
Name: Matthew S. Furman
|
|
|
|
Title:
|
Senior Vice President
|
II-10
EXHIBIT INDEX
|
|
|
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement for senior debt securities,
subordinated debt securities, junior subordinated debt
securities and warrants.*
|
|
1
|
.2
|
|
Form of Underwriting Agreement for preferred stock and
depositary shares.*
|
|
1
|
.3
|
|
Form of Underwriting Agreement for common stock.*
|
|
1
|
.4
|
|
Form of Underwriting Agreement for convertible debt securities.*
|
|
1
|
.5
|
|
Form of Underwriting Agreement for preferred securities of
Travelers Capital Trust II, Travelers Capital
Trust III, Travelers Capital Trust IV and Travelers
Capital Trust V.*
|
|
1
|
.6
|
|
Form of Underwriting Agreement for stock purchase contracts.*
|
|
1
|
.7
|
|
Form of Underwriting Agreement for units.*
|
|
3
|
.1
|
|
Amended and Restated Articles of Incorporation (incorporated by
reference to Exhibit 3.1 to our Quarterly Report on
Form 10-Q
for the fiscal quarter ended June 30, 2007).
|
|
3
|
.2
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to our Current Report on
Form 8-K
filed on August 11, 2008).
|
|
4
|
.1
|
|
Indenture for senior debt securities (incorporated by reference
to Exhibit 4.1 of our Current Report on
Form 8-K
filed March 13, 2002).
|
|
4
|
.2
|
|
Form of Indenture for subordinated debt securities.
|
|
4
|
.3
|
|
Form of Indenture for junior subordinated debt securities.(1)
|
|
4
|
.4
|
|
Form of Deposit Agreement.*
|
|
4
|
.5
|
|
Form of Depositary Receipt (included in Exhibit 4.4).
|
|
4
|
.6
|
|
Form of Senior Debt Security (included in Exhibit 4.1).
|
|
4
|
.7
|
|
Form of Subordinated Debt Security (included in
Exhibit 4.2).
|
|
4
|
.8
|
|
Form of Junior Subordinated Debt Security (included in
Exhibit 4.3).
|
|
4
|
.9
|
|
Form of Warrant Agreement, including the form of the Warrant
Certificate.*
|
|
4
|
.10
|
|
Form of Stock Purchase Contract Agreement, including the form of
the Security Certificate.*
|
|
4
|
.11
|
|
Form of Unit Agreement, including the form of the Unit
Certificate.*
|
|
4
|
.12
|
|
Form of Pledge Agreement.*
|
|
4
|
.13
|
|
Form of Specimen Certificate of Common Stock.(2)
|
|
4
|
.14
|
|
Form of Specimen Certificate of Preferred Stock and Form of
Certificate of Designations for Preferred Stock.*
|
|
4
|
.15
|
|
Certificate of Trust of Travelers Capital Trust II.(3)
|
|
4
|
.16
|
|
Certificate of Trust of Travelers Capital Trust III.(2)
|
|
4
|
.17
|
|
Certificate of Trust of Travelers Capital Trust IV.(2)
|
|
4
|
.18
|
|
Certificate of Trust of Travelers Capital Trust V.(2)
|
|
4
|
.19
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust II, dated as of June 28, 2004.(2)
|
|
4
|
.20
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust II, dated as of February 27, 2007.(1)
|
|
4
|
.21
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust III, dated as of February 27, 2007.(1)
|
|
4
|
.22
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust IV, dated as of February 27, 2007.(1)
|
|
4
|
.23
|
|
Certificate of Amendment to Certificate of Trust of Travelers
Capital Trust V, dated as of February 27, 2007.(1)
|
|
4
|
.24
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust II.
|
|
4
|
.25
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust III.
|
|
4
|
.26
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust IV.
|
|
4
|
.27
|
|
Amended and Restated Declaration of Trust of Travelers Capital
Trust V.
|
|
|
|
|
|
|
4
|
.28
|
|
Form of Second Amended and Restated Declaration of Trust for
Travelers Capital Trust II, Travelers Capital
Trust III, Travelers Capital Trust IV and Travelers
Capital Trust V.
|
|
4
|
.29
|
|
Form of Preferred Security (included in Exhibit 4.28).
|
|
4
|
.30
|
|
Form of Common Security (included in Exhibit 4.28).
|
|
4
|
.31
|
|
Form of Preferred Securities Guarantee Agreement.
|
|
4
|
.32
|
|
Form of Common Securities Guarantee Agreement.
|
|
5
|
.1
|
|
Opinion of Wendy C. Skjerven, Esq.
|
|
5
|
.2
|
|
Opinion of Richards, Layton & Finger, P.A.
|
|
5
|
.3
|
|
Opinion of Simpson Thacher & Bartlett LLP.
|
|
12
|
|
|
Computation of ratios of earnings to fixed charges and of
earnings to combined fixed charges and preferred stock
dividends.(4)
|
|
23
|
.1
|
|
Consent of KPMG LLP.
|
|
23
|
.2
|
|
Consent of Wendy C. Skjerven, Esq. (included in
Exhibit 5.1).
|
|
23
|
.3
|
|
Consent of Richards, Layton & Finger, P.A. (included
in Exhibit 5.2).
|
|
23
|
.4
|
|
Consent of Simpson Thacher & Bartlett LLP (included in
Exhibit 5.3).
|
|
24
|
|
|
Powers of Attorney.
|
|
25
|
.1
|
|
Statement of Eligibility and Qualification of Trustee on
Form T -l under the Trust Indenture Act of 1939, as
amended, of The Bank of New York Mellon Trust Company, N.A.
to act as trustee under the Senior Debt Indenture for the Senior
Debt Securities.
|
|
25
|
.2
|
|
Statement of Eligibility and Qualification of Trustee on
Form T -l under the Trust Indenture Act of 1939, as
amended, of The Bank of New York Mellon Trust Company, N.A.
to act as trustee under the Subordinated Debt Indenture for the
Subordinated Debt Securities.
|
|
25
|
.3
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee under the Junior Subordinated Debt Indenture for the
Junior Subordinated Debt Securities.
|
|
25
|
.4
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A.to act as
trustee for the Preferred Securities of Travelers Capital
Trust II.
|
|
25
|
.5
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities of Travelers Capital
Trust III.
|
|
25
|
.6
|
|
Statement of Eligibility and Qualification of Trustee on
Form T 1 under the Trust Indenture Act of 1939, as
amended, of The Bank of New York Mellon Trust Company, N.A.
to act as trustee for the Preferred Securities of Travelers
Capital Trust IV.
|
|
25
|
.7
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities of Travelers Capital
Trust V.
|
|
25
|
.8
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust II.
|
|
25
|
.9
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust III.
|
|
25
|
.10
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust IV.
|
|
25
|
.11
|
|
Statement of Eligibility and Qualification of Trustee on
Form T-1
under the Trust Indenture Act of 1939, as amended, of The
Bank of New York Mellon Trust Company, N.A. to act as
trustee for the Preferred Securities Guarantee Agreement for the
benefit of the holders of the Preferred Securities of Travelers
Capital Trust V.
|
|
|
|
* |
|
To be filed by amendment or as an exhibit to a document to be
incorporated by reference herein in connection with an offering
of the offered securities. |
|
(1) |
|
Incorporated by reference to the Post-Effective Amendment
No. 1 to the Registration Statement on
Form S-3
(Registration
No. 333-130323)
filed with the SEC on March 5, 2007. |
|
(2) |
|
Incorporated by reference to the Registration Statement on
Form S-3
(Registration
No. 333-130323)
filed with the SEC on December 14, 2005 |
|
(3) |
|
Incorporated by reference to the Registration Statement on
Form S-3
(Registration Nos.
333-73848,
333-73848-01
and
333-44122)
filed with the SEC on November 21, 2001. |
|
(4) |
|
Incorporated by reference to Exhibit 12.1 to The Travelers
Companies, Inc. Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 and
Exhibit 12.1 to The Travelers Companies, Inc. Quarterly
Report on
Form 10-Q
for the period ended September 30, 2008. |
|
|
|
Filed herewith. |