As filed with the Securities and Exchange Commission on September 23, 2005
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------
THE NAVIGATORS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-3138397
(I.R.S. Employer Identification No.)
One Penn Plaza
New York, New York 10119
(212) 244-2333
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
---------------------------------
Elliot S. Orol
Senior Vice President and General Counsel
The Navigators Group, Inc.
One Penn Plaza
New York, New York 10119
(212) 244-2333
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------------
Copy to:
William S. Lamb, Esq.
Sheri E. Bloomberg, Esq.
LeBoeuf, Lamb, Greene & MacRae LLP
125 West 55th Street
New York, New York 10019
Telephone: (212) 424-8000
Facsimile: (212) 424-8500
---------------------------------
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. [ ]
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. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
================================================================================
CALCULATION OF REGISTRATION FEE
Proposed Proposed maximum
maximum aggregate Amount of
Title of each class of Amount to be aggregate price offering registration
securities to be registered registered per unit price (1) fee
------------------------------------------------------------------------------------------------------
Debt Securities of The
Navigators Group, Inc. ......
Common Stock, par value $0.10
per share, of The Navigators
Group, Inc. .................
Preferred Stock, par value $0.10
per share, of The Navigators
Group, Inc. .................
Depositary Shares of The
Navigators Group, Inc. (2)...
Total.......................... $250,000,000 100% $250,000,000 (3) $29,425
======================================================================================================
(1) The proposed maximum aggregate offering price has been estimated for the
sole purpose of computing the registration fee pursuant to Rule 457(o) under
the Securities Act of 1933 and is exclusive of accrued interest,
distributions and dividends, if any.
(2) There is being registered hereunder an indeterminate number of Depositary
Shares evidenced by Depositary Receipts as may be issued in the event that
The Navigators Group, Inc. elects to offer fractional interests in the Debt
Securities or shares of either Common Stock or Preferred Stock registered
hereby. No separate consideration will be received for the Depositary
Shares.
(3) No separate consideration will be received for the Debt Securities,
Preferred Stock, Common Stock or the Depositary Shares issuable upon
conversion of or in exchange for any securities registered hereunder that
provide for conversion or exchange into such securities.
---------------------------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission acting pursuant
to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell securities, and we are not soliciting offers to buy these securities, in
any jurisdiction where the offer or sale is not permitted or would require
registration or qualification under the securities laws of the jurisdiction.
SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 2005
PROSPECTUS
$ 250,000,000
[LOGO]
THE NAVIGATORS GROUP, INC.
Debt Securities
Common Stock
Preferred Stock
Depositary Shares
--------------------
By this prospectus, we may offer from time to time up to $250,000,000 of
any combination of the securities described in this prospectus.
We will provide the specific terms of these securities in supplements to
this prospectus. We can only use this prospectus to offer and sell any specific
security by also including a prospectus supplement for that security. You should
read this prospectus and the prospectus supplements carefully before you invest.
Our common stock is listed on The NASDAQ Stock Market(R) under the
symbol "NAVG."
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.
--------------------
The date of this prospectus is , 2005
TABLE OF CONTENTS
Page
----
ABOUT THIS PROSPECTUS..........................................................i
WHERE YOU CAN FIND MORE INFORMATION............................................i
THE NAVIGATORS GROUP, INC. FILINGS............................................ii
NOTE ON FORWARD-LOOKING STATEMENTS............................................ii
THE NAVIGATORS GROUP, INC......................................................1
RATIO OF EARNINGS TO FIXED CHARGES.............................................1
USE OF PROCEEDS................................................................2
DESCRIPTION OF DEBT SECURITIES.................................................2
DESCRIPTION OF CAPITAL STOCK..................................................18
DESCRIPTION OF DEPOSITARY SHARES..............................................22
PLAN OF DISTRIBUTION..........................................................25
LEGAL OPINION.................................................................26
EXPERTS.......................................................................26
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission ("SEC") using a "shelf" registration
process. Under this shelf process, we may sell the securities described in the
prospectus from time to time. This prospectus provides you with a general
description of the securities we may offer. We may also add, update or change
information contained in this prospectus through one or more supplements to this
prospectus. Any statement that we make in this prospectus will be modified or
superseded by any inconsistent statement made by us in a prospectus supplement.
The rules of the SEC allow us to incorporate by reference information into this
prospectus. This information incorporated by reference is considered to be a
part of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. See "The Navigators Group,
Inc. Filings." You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information."
No person has been authorized to give any information or to make any
representations, other than those contained or incorporated by reference in this
prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by The Navigators Group, Inc., or any
underwriter, agent, dealer or remarketing firm. Neither the delivery of this
prospectus nor any sale made hereunder shall under any circumstances create any
implication that there has been no change in the affairs of The Navigators
Group, Inc. since the date hereof or that the information contained or
incorporated by reference herein is correct as of any time subsequent to the
date of such information. This prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any securities by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or solicitation.
References to the "Company," "we," "us" and "our" in this prospectus are
references to The Navigators Group, Inc. and not to any of our subsidiaries,
unless we state otherwise or the context otherwise requires.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the SEC to register
the securities covered by this prospectus. This prospectus forms a part of that
registration statement and does not contain all of the information in the
registration statement or the exhibits to the registration statement.
We are subject to the informational requirements of the Securities Exchange
Act of 1934. Accordingly, we file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may review a copy of those
reports, statements or other information at the SEC's public reference room,
which is located 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.
These SEC filings are also available to the public from commercial document
retrieval services and at the website maintained by the SEC at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus, except
for any information superseded by information contained directly in this
prospectus or in later filed documents incorporated by reference in this
prospectus. This prospectus incorporates by reference the documents set forth
below that we have previously filed with the SEC. These documents contain
important business and financial information about us that is not included in or
delivered with this prospectus.
THE NAVIGATORS GROUP, INC. FILINGS
(File No. 001-15886) Period or Date Filed
-------------------- --------------------
Annual Report on Form 10-K and the portions of Fiscal Year ended December 31, 2004
our Proxy Statement dated April 14, 2005 for our
2005 Annual Meeting incorporated by reference
into our Annual Report
Quarterly Reports on Form 10-Q Quarters ended March 31, 2005 and June 30,
2005
Current Reports on Form 8-K Filed on January 18, February 4, March 11,
June 17, September 9, September 20 and
September 23, 2005
Description of our common stock contained in our Filed on May 20, 1987
our Form 8-A
We are also incorporating by reference all other documents subsequently
filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the termination of this offering.
You can request a copy of these filings, without charge, by writing or
telephoning The Navigators Group, Inc., Attn: Bradley D. Wiley, Senior Vice
President, Financial Compliance Officer and Secretary, Reckson Executive Park, 6
International Drive, Rye Brook, New York 10573, Telephone: (914) 933-6025. In
addition, we make available through our website at www.navg.com under the
Financial Information link, free of charge, our Annual Report on Form 10-K
including exhibits, quarterly reports on Form 10-Q including exhibits, current
reports on Form 8-K including exhibits, and all amendments to those reports as
soon as reasonably practicable after such material is electronically filed with
or furnished to the SEC.
NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference contain
"forward-looking statements" within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Whenever used in this report, the
words "estimate," "expect," "believe" or similar expressions are intended to
identify such forward-looking statements. Forward-looking statements are derived
from information that we currently have and assumptions that we make. We cannot
assure that anticipated results will be achieved, since results may differ
materially because of both known and unknown risks and uncertainties which we
face. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Factors that could cause actual results to differ
materially from our forward-looking statements include, but are not limited to:
o the effects of domestic and foreign economic conditions, and
conditions which affect the market for property and casualty
insurance;
ii
o changes in the laws, rules and regulations which apply to our
insurance companies;
o the effects of emerging claim and coverage issues on our business,
including adverse judicial or regulatory decisions and rulings;
o the effects of competition from banks and other insurers and the trend
toward self-insurance;
o risks that we face in entering new markets and diversifying the
products and services we offer;
o unexpected turnover of our professional staff;
o changing legal and social trends and inherent uncertainties in the
loss estimation process that can adversely impact the adequacy of loss
reserves and the allowance for reinsurance recoverables, including our
estimates relating to ultimate asbestos and environmental liabilities
and related reinsurance recoverables;
o risks inherent in the collection of reinsurance recoverable amounts
from our reinsurers over many years into the future based on their
financial ability and intent to meet such obligations to the Company;
o risks associated with our continuing ability to obtain reinsurance
covering our exposures at appropriate prices and/or in sufficient
amounts and the related recoverability of our reinsured losses;
o weather-related events and other catastrophes (including acts of
terrorism) impacting our insureds and/or reinsurers, including,
without limitation, the impact of Hurricane Katrina;
o our ability to attain adequate prices, obtain new business and retain
existing business consistent with our expectations;
o the possibility of downgrades in our claims-paying and financial
strength ratings significantly adversely affecting us, including
reducing the number of insurance policies we write generally, or
causing clients who require an insurer with a certain rating level to
use higher-rated insurers;
o the inability of our internal control framework to provide absolute
assurance that all incidents of fraud or unintended material errors
will be detected and prevented;
o the risk that our investment portfolio suffers reduced returns or
investment losses which could reduce our profitability; and
o other risks that we identify in future filings with the SEC, including
without limitation the risks described under the caption "Risk
Factors" in our Annual Report on Form 10-K for the year ended December
31, 2004.
In light of these risks, uncertainties and assumptions, any forward-looking
events discussed in this prospectus may not occur. You are cautioned not to
place undue reliance on any forward-looking statements, which speak only as of
their respective dates.
iii
THE NAVIGATORS GROUP, INC.
We are an international insurance holding company focusing on specialty
products for niches within the overall property/casualty insurance market. Our
largest product line and most long-standing area of specialization is marine
insurance. We also have developed specialty niches in professional liability
insurance, and in specialty liability insurance primarily consisting of
contractors' liability coverages.
We conduct operations through our insurance company subsidiaries, five
wholly owned underwriting agencies (the "Navigators Agencies") and our
operations at Lloyd's of London (the "Lloyd's Operations"). Our insurance
company subsidiaries consist of Navigators Insurance Company, which includes a
United Kingdom Branch, and NIC Insurance Company, which writes excess and
surplus lines. Navigators Insurance Company is rated 'A' (Excellent) by A.M.
Best Company and 'A' (Strong) by Standard & Poor's. The Navigators Agencies
consist of five wholly-owned insurance underwriting agencies that produce
business for our insurance subsidiaries and unaffiliated insurers. Our Lloyd's
Operations include Navigators Underwriting Agency Ltd. ("NUAL"), a Lloyd's of
London ("Lloyd's") marine underwriting agency which manages Lloyd's Syndicate
1221. We participate in the capacity of Syndicate 1221 through two wholly-owned
Lloyd's corporate members. In January 2005, we formed Navigators NV, a wholly
owned subsidiary of NUAL, which is located in Antwerp, Belgium. Navigators NV
produces transport liability, cargo and marine liability premium on behalf of
Syndicate 1221.
Our business strategy reflects certain factors that management believes are
fundamental to understanding how the Company is managed. First, underwriting
profit is consistently emphasized as a primary goal, above premium growth. Our
assessment of our trends and potential growth in underwriting profit is the
dominant factor in our decisions with respect to whether or not to expand a
business line, enter into a new niche, product or territory or, conversely, to
contract capacity in any business line. Second, we focus on managing the costs
of our operations. We believe that careful monitoring of the costs of existing
operations and assessment of costs of potential growth opportunities are
important to our profitability. In addition, access to capital also has a
significant impact on our outlook for our operations. Our insurance company
subsidiaries' operations and ability to grow their business and take advantage
of market opportunities are particularly constrained by regulatory capital
requirements and rating agency assessments of capital adequacy.
For the six months ended June 30, 2005 and the year ended December 31,
2004, our net earned premium was $163.4 million and $311.0 million,
respectively. For the same periods, our net income was $21.0 million and $34.9
million, respectively.
We are a Delaware corporation with our principal executive offices located
at One Penn Plaza, New York, New York 10119. Our telephone number at that
location is (212) 244-2333.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges for the
Company and its subsidiaries for the periods indicated:
For the year ended
For the six months December 31,
ended June 30, -------------------------------------
2005 2004 2003 2002 2001 2000
------ ------ ------ ------ ------- ------
Ratio of earnings to fixed charges (1)(2)..... 24.0x 25.5x 2.2x 12.1x 3.0x 4.5x
1
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(1) We have authority to issue up to 1,000,000 shares of preferred stock, par
value $0.10 per share; however, there are currently no shares outstanding
and we do not have a preferred stock dividend obligation. Therefore, the
ratio of earnings to fixed charges and preferred stock dividends is equal to
the ratio of earnings to fixed charges and is not disclosed separately.
(2) For purposes of this computation, earnings consist of income from
continuing operations before income taxes, plus fixed charges to the extent
that such charges are included in the determination of income. Fixed
charges consist of interest expense, letters of credit costs, amortization
of financing costs and one-third of rental expense under operating leases
which is estimated to be representative of the interest factor of such
rentals.
USE OF PROCEEDS
Unless we specify otherwise in the applicable prospectus supplement
accompanying this prospectus, we will use the net proceeds from the sale of the
securities for general corporate purposes, which may include investments in, or
advances to, our insurance subsidiaries.
DESCRIPTION OF DEBT SECURITIES
The following is a general description of the debt securities that we may
issue from time to time. The particular terms relating to each debt security
will be set forth in a prospectus supplement.
The debt securities will be our direct obligations. The senior debt
securities will be our unsecured obligations and will rank equally with all of
our other senior debt. The senior debt securities will be issued under a senior
indenture.
Our subordinated debt securities are to be issued under an indenture that
we sometimes refer to in this prospectus as the "subordinated indenture." The
subordinated debt securities will have a junior position to all of our senior
debt.
The senior indenture and the subordinated indenture will be qualified
under the Trust Indenture Act of 1939 and will be between us and JPMorgan Chase
Bank, N.A., as trustee.
Pursuant to the terms of our Second Amended and Restated Credit Agreement
dated January 31, 2005, with JPMorgan Chase Bank, N.A., as Administrative Agent,
and a syndicate of lenders, during the term of the credit agreement, which
expires June 30, 2007, we may not issue any of the debt securities without the
prior written consent of the lenders.
Because a significant part of our operations are conducted through our
insurance subsidiaries, a significant portion of our cash flow, and
consequently, our ability to service debt, including the debt securities, is
dependent upon the earnings of those subsidiaries and the transfer of funds by
those subsidiaries to us in the form of dividends or other transfers,
supplemented with borrowings. Our insurance subsidiaries may only declare and
pay dividends to us if they are permitted to do so under the insurance laws and
regulations of the states where they are domiciled.
Some of our subsidiaries may finance their operations by borrowing from
external creditors; lending agreements between some of the operating
subsidiaries and external creditors may restrict the amount of net assets
available for cash dividends and other payments to us.
In addition, holders of the debt securities of the Company will have a
junior position to claims of creditors of our subsidiaries, including
policyholders, trade creditors, debt holders, secured creditors, taxing and
regulatory authorities, guarantee holders and any preferred stockholders. As of
the date of this
2
prospectus, excluding trade creditors, the claims of policyholders and
short-term borrowings, none of our subsidiaries has incurred any material amount
of indebtedness or other obligations that would effectively rank senior to our
debt securities. Any claims we have as an unsecured creditor of our subsidiary
would be subordinate to any security interest in the assets of that subsidiary
and any indebtedness of that subsidiary senior to the indebtedness held by us.
We have summarized below the material provisions of the two indentures. The
summary is not complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the forms of indentures, which are
filed as exhibits to the registration statement of which this prospectus forms a
part. The senior indenture and the subordinated indenture are substantially
identical, except for certain covenants of ours and provisions relating to
subordination. You should read the indentures for provisions that may be
important to you.
Terms Applicable to All Debt Securities
No Limit on Debt Amounts
The indentures do not limit the amount of debt that can be issued under the
indentures. These amounts are set from time to time by our board of directors.
Prospectus Supplements
The applicable prospectus supplement will summarize the specific terms for
the debt securities and the related offering including, with respect to each
series of debt securities, some or all of the following:
o title and form of the securities;
o offering price;
o any limit on the amount that may be issued;
o maturity date(s);
o interest rate or the method of computing the interest rate (including,
if applicable, any provisions relating to the resetting of such rate
and any maximum rate applicable to any reset rate);
o dates on which interest will accrue, or how the dates will be
determined, the interest payment dates and any related record dates;
o terms and conditions on which the debt securities may be redeemed, in
whole or in part, at our option;
o date(s), if any, on which, and the price(s) at which, we are obligated
to redeem, or at the holder's option to purchase, in whole or in part,
the debt securities and related terms and provisions;
o details of any required sinking fund payments;
o the currency or currencies in which the debt securities will be
denominated or payable, if other than U.S. dollars;
3
o any index, formula or other method by which payments on the debt
securities will be determined, and any special voting or defeasance
provisions in connection with a determination, if the amount of
payments are to be determined with reference to an index, formula or
other method;
o the persons to whom payments of interest will be made;
o any provisions granting special rights to holders when a specified
event occurs;
o any changes to or additional events of default or covenants;
o any special tax implications of the debt securities, including under
what circumstances, if any, and with what procedures and documentation
we will pay additional amounts on the debt securities held by a
non-U.S. person in respect of taxes, assessments or similar charges
withheld or deducted and, if so, the terms related to any option we
will have to redeem those debt securities rather than pay those
additional amounts;
o whether or not the debt securities will be issued in global form and
who the depositary will be;
o any restrictions on the registration, transfer or exchange of the debt
securities;
o the place or places where debt securities may be surrendered for
registration of transfer or for exchange, where notices and demands to
or upon us in respect of the debt securities and the indentures may be
served;
o terms, if any, on which a series of debt securities may be convertible
into or exchangeable for our shares of common stock, including
provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at our option;
o if the debt securities are convertible or exchangeable, the events or
circumstances that will result in adjustments to the conversion or
exchange price and the formulae for determining the adjusted price;
o subordination terms of any subordinated debt securities; and
o any other terms that are not inconsistent with the indenture
applicable to a series of debt securities, including any terms that
may be required by or advisable under United States laws or
regulations or advisable (as determined by us) in connection with the
marketing of that series of debt securities.
Unless otherwise provided in an applicable indenture relating to debt
securities, the debt securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple thereof. No
service charge will be made for any transfer or exchange of the debt securities,
but we may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with a transfer or exchange, other
than exchanges not involving any transfer, like the issuance of definitive
securities in replacement of temporary securities or the issuance of new
securities upon surrender of a security that is redeemed or purchased in part.
A series of debt securities may be issued under the relevant indenture as
original issue discount securities, which are securities that are offered and
sold at a substantial discount from their stated
4
principal amount. In addition, debt securities offered and sold at their stated
principal amount may under some circumstances, pursuant to applicable Treasury
Regulations, be treated as issued at an original issue discount for federal
income tax purposes. Federal income tax consequences and other special
considerations applicable to any such original issue discount securities (or
other debt securities treated as issued at an original issue discount) will be
described in the prospectus supplement relating to those securities.
Covenants
We will agree in the indentures to:
o pay the principal, interest and any premium on the debt securities
when due;
o maintain an office or agency in the State of New York or other place
of payment specified in the debt securities or the relevant indenture,
where debt securities may be surrendered for registration of transfer
or for exchange and where notices and demands to or upon us in respect
of the debt securities and the relevant indenture may be served;
o prepare and file or deliver certain reports, as more fully specified
in the relevant indenture, with the trustee under the relevant
indenture, the SEC, and/or registered holders of debt securities, as
the case may be;
o deliver to the trustee under the relevant indenture, as more fully
specified in that indenture, officers' certificates relating to our
compliance under the relevant indenture and the occurrence of any
default or event of default under that indenture;
o file with the trustee under the relevant indenture and the SEC, in
accordance with, and as may be required by, the rules and regulations
prescribed from time to time by the SEC, the additional information,
documents and reports with respect to compliance by us with the
conditions and covenants provided for in the relevant indenture;
o unless our board of directors determines that it is no longer
desirable in the conduct of our business and our significant
subsidiaries, taken as a whole, and that there will be no adverse
impact in any material respect to the holders of debt securities,
subject to those exceptions as more fully specified in the relevant
indenture, do or cause to be done all things necessary to preserve and
keep in full force and effect:
o our existence as a corporation or other permitted entity, and the
corporate, partnership or other existence of each of our
significant subsidiaries, in accordance with their respective
organizational documents; and
o the rights, licenses and franchises of us and certain of our
subsidiaries; and
o not at any time seek application of any applicable stay, extension or
usury law that may affect the covenants or the performance under the
indentures.
Consolidation, Merger and Sale of Assets
We will not consolidate or amalgamate with or merge into any other entity
or transfer all or substantially all of our properties or assets unless:
5
o we are the surviving entity; or
o the successor or surviving entity is organized or existing under the
laws of the United States of America, any state thereof, or the
District of Columbia or Bermuda and assumes all of our obligations
under the debt securities and the indentures pursuant to supplemental
indentures in forms reasonably satisfactory to the trustee(s) under
the indentures; and, in either case,
o after giving effect to such transaction, no event of default under the
indentures and no event which, after notice or lapse of time, or both,
would become an event of default, will have happened and be
continuing.
Upon any such consolidation, amalgamation, merger or transfer, the
successor will be substituted for us under the indentures. In the case of a
sale, assignment, transfer, conveyance or other disposition (other than a lease)
of all or substantially all of our properties or assets that meets the
requirements stated in the immediately preceding paragraph, we will be relieved
of all obligations and covenants under the indentures and the debt securities.
Satisfaction and Discharge
Upon our request, the relevant indenture will no longer be effective with
respect to any series for almost all purposes if either:
o all outstanding securities of that series have been delivered to the
trustee for cancellation, we have paid all sums payable in respect of
that series and we have delivered to the trustee a certificate and
opinion of legal counsel that all conditions precedent to satisfaction
and discharge have been fulfilled; or
o the only securities that are still outstanding have, or within one
year will, become due and payable or are to be called for redemption,
we have deposited with the trustee funds that are sufficient to make
all future payments, no default or event of default will have occurred
and be continuing on the date of that deposit and that deposit will
not result in a breach of any other instrument by which we are bound,
we have paid all other sums payable in respect of that series, and we
have delivered to the trustee a certificate and opinion of counsel
that all conditions precedent to satisfaction and discharge have been
fulfilled.
Legal Defeasance and Covenant Defeasance
Under each indenture, we may elect, with respect to a series of debt
securities at the option of our board of directors and subject to the
satisfaction of the conditions described below, either:
o to be deemed to have paid and discharged the entire indebtedness
represented by the outstanding debt securities of the applicable
series and to have satisfied all of our other obligations under the
debt securities of the applicable series and under the provisions of
the relevant indenture, which we refer to as legal defeasance; or
o to be released from some of our obligations under the relevant
indenture, which we refer to as covenant defeasance.
We can exercise legal or covenant defeasance if we put in place the
following arrangements:
6
o we must irrevocably deposit with the applicable indenture trustee (or
another trustee meeting certain eligibility requirements and agreeing
to be bound by the applicable provisions of the relevant indenture
pursuant to the terms of an irrevocable trust agreement), in trust,
for the benefit of the holders of the applicable series of debt
securities:
o cash in United States dollars;
o non-callable and non-redeemable direct obligations of the United
States of America or of an agency or instrumentality controlled
or supervised by the United States of America, in each instance,
the payment of which is unconditionally guaranteed as a full
faith and credit obligation of the United States of America; or
o a combination of the foregoing that, in each case, is sufficient,
in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, and interest and
premium, if any, on, the outstanding debt securities of the
applicable series on their stated maturity or applicable
redemption date, as the case may be, and any mandatory sinking
fund payments applicable to that particular series of the debt
securities on the day on which the payments are due;
o we must deliver to the trustee an opinion of counsel confirming that
the holders of the outstanding securities of the applicable series
will not recognize income, gain or loss for federal income tax
purposes solely as a result of the defeasance;
o no default or event of default shall have occurred and be continuing
on the date of the deposit of the amounts to be held in trust for the
benefit of the holders (other than a default or event of default
resulting from the borrowing of funds to be applied to the deposit) or
in the case of any insolvency-related defaults, at any time in the
period ending on the 91st day after the date of the deposit (or
greater period of time in which any such deposit of trust funds may
remain subject to bankruptcy or insolvency laws that apply to the
deposit by us); and
o we must deliver to the trustee an officers' certificate and an opinion
of counsel, each stating that all conditions precedent provided for or
relating to legal defeasance or covenant defeasance, as the case may
be, have been complied with.
After satisfying the conditions for legal defeasance, the applicable debt
securities will be deemed outstanding only for limited purposes as more fully
set forth in the relevant indenture. After legal defeasance, the holders of
outstanding debt securities will have to rely solely on the deposits we make to
the trustee for repayment of the debt securities.
After satisfying the conditions for covenant defeasance, the debt
securities of the applicable series will be deemed not outstanding for the
purposes of the covenants from which we have been released, but will continue to
be deemed outstanding for all other purposes under the relevant indenture.
The applicable prospectus supplement may further describe additional
provisions, if any, permitting legal defeasance or covenant defeasance,
including any modifications to the provisions described above, with respect to
the debt securities of or within a particular series.
7
Information Concerning the Trustee
JPMorgan Chase Bank, N.A. is the trustee under the indentures. The
prospectus supplement with respect to particular debt securities will describe
any changes in our relationship with the trustee at the time that any debt
securities are offered.
JPMorgan Chase Bank, N.A. administers its corporate trust business in the
Borough of Manhattan, the City of New York, at its offices located at 4 New York
Plaza, 15th Floor, New York, New York 10004.
Form, Exchange, Transfer
Unless otherwise specified in the prospectus supplement, debt securities
will be issued in registered form without coupons. They may also be issued in
global form with accompanying book-entry procedures as outlined below.
A holder of debt securities of any series can exchange the debt securities
for other debt securities of the same series, in any authorized denomination and
with the same terms and aggregate principal amount. They are transferable at the
corporate trust office or corporate trust agency office of the trustee or at any
transfer agent designated by us for that purpose. No service charge will be made
for any transfer or exchange of the debt securities, but we may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection with a transfer or exchange, other than exchanges not involving any
transfer, such as the issuance of definitive securities in replacement of
temporary securities or the issuance of new securities upon surrender of a
security that is redeemed or purchased in part.
Global Securities
The registered debt securities may be issued in the form of one or more
fully registered global securities that will be deposited with and registered in
the name of a depositary or with a nominee for a depositary identified in the
prospectus supplement. The specific terms of the depositary arrangement with
respect to any debt securities to be represented by a registered global security
will be described in the prospectus supplement.
Ownership of beneficial interests in a registered global security will be
limited to persons that have accounts with the depositary for such registered
global security ("participants") or persons that may hold interests through
participants. Upon the issuance of a registered global security, the depositary
will credit, on its book-entry registration and transfer system, the
participants' accounts with the principal amounts of the debt securities
represented by the registered global security beneficially owned by such
participants. Ownership of beneficial interests in such registered global
security will be shown on, and the transfer of such ownership interests will be
effected only through, records maintained by the depositary for such registered
global security or on the records of participants for interests of persons
holding through participants.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of a registered global security, the depositary or the
nominee will be considered the sole owner or holder of the debt securities
represented by the registered global security for all purposes. Except as set
forth below, owners of beneficial interests in a registered global security will
not:
o be entitled to have the debt securities represented by such registered
global security registered in their names;
8
o receive or be entitled to receive physical delivery of such debt
securities in definitive forms; or
o be considered the owners or holders of the debt securities.
If the depositary notifies us that it is unwilling or unable to continue as
depositary for the global security or if at any time the depositary ceases to be
a clearing agency registered under the Securities Exchange Act of 1934, if so
required by applicable law or regulation, and, in either case, we do not appoint
a successor depositary within 90 days, we will issue debt securities in
certificated form in exchange for the global security. In addition, we may at
any time in our sole discretion decide not to have any debt securities
represented by a global security. In such event we will issue debt securities in
certificated form in exchange for a global security. The debt securities in
certificated form shall be in the same minimal denominations and be of the same
aggregate principal amount and tenor as the portion of each global security to
be exchanged.
Accordingly, each person owning a beneficial interest in a registered
global security must rely on the procedures of the depositary for such
registered global security and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the applicable indenture. We understand
that under existing industry practices, if we request any action of holders, or
if an owner of a beneficial interest in a registered global security desires to
take any action that a holder is entitled to take under the applicable
indenture, the depositary would authorize the participants holding the relevant
beneficial interests to take such action, and such participants would authorize
beneficial owners owning through such participants to take such action.
Principal, premium, if any, and interest payments on debt securities
represented by a registered global security registered in the name of a
depositary or its nominee will be made to such depositary or its nominee, as the
case may be, as the registered owner of such registered global security. Neither
we nor the trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in such registered global security.
We expect that the depositary for any debt securities represented by a
registered global security, upon receipt of any payment of principal, premium or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
registered global security as shown on the records of such depositary. We also
expect that payments by participants to owners of beneficial interests in such a
registered global security held by the participants will be governed by standing
customer instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name."
We may at any time determine not to have any of the debt securities of a
series represented by one or more registered global securities and, in such
event, will issue debt securities of such series in definitive form in exchange
for all of the registered global security or securities representing such debt
securities. Any debt securities issued in definitive form in exchange for a
registered global security will be registered in such name or names as the
depositary shall instruct the relevant trustee. We expect that such instructions
will be based upon directions received by the depositary from participants with
respect to ownership of beneficial interests in such registered global security.
If provided in a prospectus supplement relating to a series of debt
securities, the debt securities of that series may also be issued in the form of
one or more global securities that will be deposited with a common depositary
identified in the prospectus supplement. The specific terms and procedures,
including the specific terms of the depositary arrangement, with respect to any
portion of a series of debt securities to be represented by a global security
will be described in the prospectus supplement.
9
Particular Terms of the Senior Debt Securities
Ranking of Senior Debt Securities
The senior debt securities will constitute part of our senior debt and rank
equally with all other senior debt that is unsecured. The senior debt securities
will be senior to our subordinated debt.
Events of Default
The following are events of default under a series of senior debt
securities:
o we fail to pay the principal, any premium, or any sinking fund
payment, on any senior debt securities of that series when due;
o we fail to pay interest on any senior debt securities of that series
within 30 days following the due date;
o we fail to observe or perform any other covenant, representation,
warranty or other agreement in the senior indenture applicable to that
series and that failure continues for 60 days after we receive notice
to comply from the trustee or holders of at least 25% in aggregate
principal amount of the outstanding senior debt securities of all
series affected by that failure, treating all those series as a single
class; and
o certain events of bankruptcy or insolvency relating to us, whether
voluntary or not.
The prospectus supplement for a particular series may describe additional
or different events of default that apply to that series. An event of default
with respect to one series of senior debt securities does not necessarily
constitute an event of default with respect to any other series of senior debt
securities.
If a default or an event of default occurs and is continuing, and if a
responsible officer of the trustee under the indenture has actual knowledge
thereof, the trustee will mail to the holders of senior debt securities of the
affected series a notice to that effect within 90 days after it occurs. Except
in the case of a default in the payment of principal or interest, the trustee
under the senior indenture may withhold notice if and so long as a committee of
the trustee's responsible officers in good faith determines that withholding the
notice is in the interests of the holders.
If an event of default with respect to one or more series of senior debt
securities occurs and is continuing, the trustee or the holders of at least 25%
in aggregate principal amount of the then outstanding senior debt securities of
all series with respect to which the event of default occurs and is continuing,
treating all those series as a single class, may declare the principal of,
premium, if any, and accrued and unpaid interest on, all the senior debt
securities of those series to be immediately due and payable by written notice
to us and the trustee (if the notice is given by holders). The holders of a
majority in aggregate principal amount of the then outstanding senior debt
securities of all series covered by such declaration may annul or rescind the
declaration and any related payment default that resulted from the declaration,
but not any other payment default. Certain events of bankruptcy and insolvency
will result in all outstanding series of senior debt securities becoming due and
payable immediately without any further action on the part of the trustee or the
holders.
The senior indenture entitles the trustee to be indemnified by the holders
before proceeding to exercise any right or power at the request of any of the
holders.
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The holders of a majority in principal amount of the outstanding senior
debt securities of all series with respect to which an event of default occurs
and is continuing, treating all those series as a single class, may direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust power conferred on it, except that:
o the direction cannot conflict with any law or regulation or the
indenture;
o the trustee may take any other action deemed proper by the trustee
that is not inconsistent with the direction; and
o the trustee need not take any action that might involve it in personal
liability or be unduly prejudicial to the holders of the senior debt
securities not joining in the action.
A holder may pursue a remedy directly under the indenture or the series of
senior debt securities, but before doing so, the following must occur:
o the holder must give to the trustee written notice that an event of
default has occurred and is continuing;
o the holders of at least 25% in principal amount of the then
outstanding senior debt securities of all affected series, treating
all those series as a single class, must make a written request to the
trustee to pursue the remedy;
o the holder, or holders, must offer and, if requested, provide to the
trustee an indemnity satisfactory to the trustee against any loss,
liability or expense from the taking of the action;
o the trustee does not comply with the request within 30 days after
receipt of such notice, request and offer and, if requested, provision
of indemnity; and
o during the 30 day period, the holders of a majority in principal
amount of the then outstanding senior debt securities of all those
series, treating all those series as a single class, do not give the
trustee a direction inconsistent with the written request.
However, holders have an absolute right to receipt of principal, premium,
if any, and interest on or after the respective due dates and to institute suit
for the enforcement of those payments. The right of a holder of senior debt
securities to bring suit for the enforcement of any payments of principal,
premium, if any, and interest on senior debt securities on or after the
respective due dates may not be impaired or affected without the consent of that
holder.
The holders of a majority in principal amount of the senior debt securities
then outstanding of all affected series, treating all such series as a single
class, may by notice to the trustee on behalf of all holders of the senior debt
securities of such series waive any past defaults, except:
o a continuing default in payment of the principal of, premium, if any,
or interest on, or any sinking fund payment on, senior debt securities
of the series; and
o a continuing default in respect of a covenant or provision of the
indenture that cannot be amended or modified without the consent of
each holder of senior debt securities affected.
11
We will periodically file statements with the trustee regarding our
compliance with covenants in the senior indenture.
Modifications and Amendments
Except as provided below or more fully specified in the senior indenture,
the senior indenture may be amended or supplemented by us and the trustee with
the consent of holders of a majority in principal amount of all series of senior
debt securities affected by the amendment or supplement, treating all such
series as a single class. In addition, the record holders of a majority in
principal amount of the outstanding senior debt securities of all series
affected by the waiver, treating all such series as a single class, may, with
respect to those series, waive defaults under, or compliance with, the
provisions of the senior indenture. However, some amendments or waivers require
the consent of each holder of any senior debt security affected. Without the
consent of each holder, an amendment or waiver may not:
o reduce the principal amount of the senior debt securities of any
series whose holders must consent to an amendment, supplement or
waiver;
o reduce the principal or change the fixed maturity of the principal of,
any premium on, or any mandatory sinking fund obligation of any senior
debt securities of any series or alter the provisions with respect to
the redemption of the senior debt securities;
o reduce the rate, or change the time for payment, of interest,
including default interest, on any senior debt security of any series;
o waive a default or event of default in the payment of principal of, or
interest or premium on, the senior debt securities of any series,
except a rescission of acceleration of the senior debt securities by
the holders of a majority in aggregate principal amount of the senior
debt securities of any series and a waiver of the payment default that
resulted from that acceleration;
o make any senior debt security of any series payable in currency other
than that stated in the senior debt securities of that series;
o make any change in the provisions of the senior indenture relating to
waivers of past defaults or the rights of the holders of senior debt
securities to receive payments of principal of, or interest or premium
on, the senior debt securities;
o waive a redemption payment with respect to any senior debt security;
o make any change in the right of any holders of senior debt securities
regarding waivers of defaults or impair or affect the right of any
holder of a senior debt security of any series to receive payment of
principal, premium, if any, and interest on that security on or after
the due date expressed in that security or to bring suit for the
enforcement of any payment on or after the due date; or
o make any change in the above amendment and waiver provisions.
We and the trustee under the senior indenture may amend or supplement the
senior indenture or the senior debt securities issued thereunder without the
consent of any holder:
12
o to evidence the succession of another person to us, or successive
successions, and the assumption by the successors of our covenants,
agreements and obligations under the indenture;
o to add other covenants, restrictions or conditions for the protection
of the holders of all or any series of senior debt securities;
o to add events of default;
o to provide for the issuance of senior debt securities in coupon form
and to provide for exchangeability of those senior debt securities
under the indenture in fully registered form;
o to provide for the issuance of, and to establish the form, terms and
conditions of, senior debt securities of any series;
o to evidence and provide for the acceptance of appointment by a
successor trustee;
o to cure any ambiguity, or to correct or supplement any provision in
the indenture that may be defective or inconsistent with any other
provision contained in the indenture or in any supplemental indenture,
or to make any other provisions with respect to matters or questions
arising under that indenture, so long as the interests of holders of
senior debt securities of any series are not adversely affected in any
material respect under that indenture;
o to make any change that does not adversely affect in any material
respect the interests of any holder; or
o to comply with the requirements of the SEC in order to effect or
maintain the qualification of the senior indenture under the Trust
Indenture Act of 1939, as amended.
Particular Terms of the Subordinated Debt Securities
Ranking of Subordinated Debt Securities
The subordinated debt securities issued pursuant to the subordinated
indenture will be subordinated and junior in right of payment to any senior debt
securities issued by us, as well as certain other indebtedness incurred by us to
the extent set forth in the prospectus supplement.
Subordination
Unless the prospectus supplement indicates otherwise, the following
provisions will apply to the subordinated debt securities. Our obligations under
the subordinated debt securities will be subordinated in right of payment to our
obligations under our senior debt. For this purpose, "senior debt" generally
includes any indebtedness that does not expressly provide that it is on a parity
with or subordinated in right of payment to the subordinated debt securities, as
well as any other indebtedness that the subordinated debt is expressly junior
to, as set forth in the prospectus supplement. Specifically, senior debt
includes obligations under any credit facility with banks or other institutional
lenders and obligations under the senior debt securities described in this
prospectus. Senior debt will not include:
o any indebtedness to any of our subsidiaries or other affiliates;
13
o any trade payables; or
o any indebtedness that we may incur in violation of the subordinated
indenture.
If we distribute our assets to creditors upon any dissolution, winding-up,
liquidation or reorganization or in bankruptcy, insolvency, receivership or
similar proceedings, we must first pay all amounts due or to become due on all
senior debt before we pay the principal of, or any premium or interest on, the
subordinated debt securities.
We may not make any payment on the subordinated debt securities if a
default in the payment of the principal, any premium, interest on, or other
obligations, including any repurchase or redemption obligation, in respect of
designated senior debt occurs and continues beyond any applicable grace period.
We may not make any payment on the subordinated debt securities if (1) any other
default occurs and continues with respect to designated senior debt that permits
holders of the designated senior debt to accelerate its maturity and (2) the
trustee receives a notice of default from us, a holder of designated senior debt
or other person permitted to give notice. We may not resume payments on the
subordinated debt securities until the defaults are cured or specified time
periods pass, unless the maturity of the senior debt is actually accelerated.
The term "designated senior debt" means our obligations under any
particular senior debt if the amount of that senior debt is at least the amount
specified in the applicable prospectus supplement or by board resolution and the
debt instrument expressly provides that the senior debt will be designated
senior debt with respect to the subordinated debt securities.
We expect that the terms of some of our senior debt will provide that an
event of default under the subordinated debt securities or an acceleration of
their maturity will constitute an event of default under the senior debt. In
that case, if the maturity of the subordinated debt securities is accelerated
because of an event of default, we may not make any payment on the subordinated
debt securities until we have paid all senior debt or the acceleration has been
rescinded. If the payment of the subordinated debt securities is accelerated
because of an event of default, we must promptly notify the holders of senior
debt of the acceleration.
If we experience a bankruptcy, dissolution or reorganization, holders of
senior debt may receive more, ratably, and holders of the subordinated debt
securities may receive less, ratably, than our other creditors.
The subordinated indenture does not limit the amount of additional senior
debt that we may incur. We expect from time to time to incur additional
indebtedness constituting senior debt.
The subordination provisions may not be amended without the consent of each
holder of senior debt that would be affected by the amendment.
Events of Default
The following are events of default under the subordinated debt securities:
o we fail to pay the principal of, or any premium or sinking fund
payment on, any subordinated debt securities when due;
o we fail to pay interest on any subordinated debt securities within 30
days following the due date;
14
o we fail to observe or perform any other covenant, representation,
warranty or other agreement in the subordinated indenture applicable
to the subordinated debt securities and that failure continues for 60
days after we receive notice to comply from the trustee or holders of
at least 25% in aggregate principal amount of the outstanding
subordinated debt securities; and
o certain events of bankruptcy or insolvency relating to us, whether
voluntary or not.
The prospectus supplement may describe additional or different events of
default that apply to any subordinated debt securities.
If a default or an event of default occurs and is continuing, and if a
responsible officer of the trustee under the subordinated indenture has actual
knowledge of the default or event of default, the trustee will mail to the
holders of subordinated debt securities a notice to that effect within 90 days
after it occurs. Except in the case of a default in the payment of principal or
interest, the trustee under the subordinated indenture may withhold notice if
and so long as a committee of the trustee's responsible officers in good faith
determines that withholding the notice is in the interests of the holders.
If an event of default with respect to the subordinated debt securities
occurs and is continuing, the trustee or the holders of at least 25% in
aggregate principal amount of the then outstanding subordinated debt securities
may declare the principal of, premium, if any, and accrued and unpaid interest
(subject to applicable subordination provisions in the subordinated indenture)
on, all the subordinated debt securities to be immediately due and payable by
written notice to us and the trustee (if the notice is given by holders). The
holders of a majority in aggregate principal amount of the then outstanding
subordinated debt securities may annul and rescind the declaration and any
related payment default that resulted from the declaration but not any other
payment default. Certain events of bankruptcy and insolvency will result in all
outstanding subordinated debt securities becoming due and payable immediately
without any further action on the part of the trustee or the holders.
The subordinated indenture entitles the trustee to be indemnified by the
holders before proceeding to exercise any right or power at the request of any
of the holders.
The holders of a majority in principal amount of the outstanding
subordinated debt securities may direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust
power conferred on it, except that:
o the direction cannot conflict with any law or regulation or the
subordinated indenture;
o the trustee may take any other action deemed proper by the trustee
that is not inconsistent with the direction; and
o the trustee need not take any action that might involve it in personal
liability or be unduly prejudicial to the holders of the subordinated
debt securities not joining in the action.
A holder may pursue a remedy directly under the subordinated indenture or
the subordinated debt securities, but before doing so, the following must occur:
o the holder must give to the trustee written notice that an event of
default has occurred and is continuing;
15
o the holders of at least 25% in principal amount of the then
outstanding subordinated debt securities must make a written request
to the trustee to pursue the remedy;
o the holder or holders must offer and, if requested, provide to the
trustee an indemnity satisfactory to the trustee against any loss,
liability or expense from the taking of the action;
o the trustee does not comply with the request within 30 days after
receipt of the request and offer and, if requested, the provision of
indemnity; and
o during the 30 day period, the holders of a majority in principal
amount of the then outstanding subordinated debt securities do not
give the trustee a direction inconsistent with the written request.
However, holders have an absolute right to receipt of principal, premium,
if any, and interest on or after the respective due dates and to institute suit
for the enforcement of those payments. The right of a holder of subordinated
debt securities to bring suit for the enforcement of any payments of principal
of, premium, if any, and interest on, subordinated debt securities on or after
the respective due dates may not be impaired or affected without the consent of
that holder.
The holders of a majority in principal amount of the subordinated debt
securities then outstanding may by notice to the trustee on behalf of all
holders of the subordinated debt securities waive any past defaults, except:
o a continuing default in payment of the principal of, premium, if any,
or interest on, or any sinking fund payment on, the subordinated debt
securities; and
o a continuing default in respect of a covenant or provision of the
subordinated indenture that cannot be amended or modified without the
consent of each holder of the subordinated debt securities affected.
We will periodically file statements with the trustee regarding our
compliance with covenants in the subordinated indenture.
Modifications and Amendments
Except as provided below, or more fully specified in the subordinated
indenture, the subordinated indenture may be amended or supplemented by us and
the trustee with the consent of holders of a majority in principal amount of the
outstanding subordinated debt securities. In addition, the record holders of a
majority in principal amount of the outstanding subordinated debt securities may
waive defaults under, or compliance with, the provisions of the subordinated
indenture.
However, some amendments or waivers require the consent of each holder of
any subordinated debt security affected. Without the consent of each holder, an
amendment or waiver may not:
o reduce the principal amount of the subordinated debt securities whose
holders must consent to an amendment, supplement or waiver;
o reduce the principal or change the fixed maturity of the principal of,
premium, if any, or mandatory sinking fund obligation, if any, of, the
subordinated debt securities or alter the provisions with respect to
the redemption of the subordinated debt securities;
16
o reduce the rate, or change the time for payment, of interest,
including default interest, on the subordinated debt securities;
o waive a default or event of default in the payment of principal of, or
interest or premium on, the subordinated debt securities, except a
rescission of acceleration of the subordinated debt securities by the
holders of a majority in aggregate principal amount of the
subordinated debt securities and a waiver of the payment default that
resulted from that acceleration;
o make the subordinated debt securities payable in currency other than
that stated in the subordinated debt securities;
o make any change in the provisions of the subordinated indenture
relating to waivers of past defaults or the rights of the holders of
subordinated debt securities to receive payments of principal of, or
interest or premium on, the subordinated debt securities;
o waive a redemption payment with respect to any subordinated debt
security;
o make any change in the right of any holders of subordinated debt
securities regarding waivers of defaults or impair or affect the right
of any holder of a subordinated debt security to receive payment of
principal, premium, if any, and interest on that security on or after
the due date expressed in that security or to bring suit for the
enforcement of any payment on or after the due date; or
o make any change in the above amendment and waiver provisions.
We and the trustee under the subordinated indenture may amend or supplement
the subordinated indenture or the subordinated debt securities without the
consent of any holder:
o to evidence the succession of another person to us, or successive
successions, and the assumption by the successors of our covenants,
agreements and obligations under the subordinated indenture;
o to add other covenants, restrictions or conditions for the protection
of the holders of subordinated debt securities;
o to add events of default;
o to provide for the issuance of subordinated debt securities in coupon
form and to provide for exchangeability of those subordinated debt
securities under the subordinated indenture in fully registered form;
o to provide for the issuance of, and to establish the form, terms and
conditions of, the subordinated debt securities;
o to evidence and provide for the acceptance of appointment by a
successor trustee;
o to cure any ambiguity or to correct or supplement any provision in the
subordinated indenture that may be defective or inconsistent with any
other provision contained in the subordinated indenture or in any
supplemental indenture, or to make any other provisions with respect
to matters or questions arising under the subordinated indenture, so
long as
17
the interests of holders of subordinated debt securities are not
adversely affected in any material respect under the subordinated
indenture;
o to make any change that does not adversely affect in any material
respect the interests of any holder; or
o to comply with the requirements of the SEC in order to effect or
maintain the qualification of the subordinated indenture under the
Trust Indenture Act of 1939, as amended.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is a summary. It summarizes
only those aspects of our capital stock which we believe will be most important
to your decision to invest in our capital stock. You should keep in mind,
however, that it is our Restated Certificate of Incorporation and our By-laws,
as amended, and the Delaware General Corporation Law, and not this summary,
which define your rights as a securityholder. There may be other provisions in
these documents which are also important to you. You should read these documents
for a full description of the terms of our capital stock. Our Restated
Certificate of Incorporation and our By-laws, as amended, are incorporated by
reference as exhibits to the Registration Statement that includes this
prospectus. See "Where You Can Find More Information" for information on how to
obtain copies of these documents.
Our Restated Certificate of Incorporation authorizes us to issue 20,000,000
shares of common stock, par value of $0.10 per share, and 1,000,000 shares of
preferred stock, par value of $0.10 per share. As of September 19, 2005, there
were 12,792,257 shares of common stock outstanding and we had no preferred stock
issued or outstanding.
The particular terms of the common stock or preferred stock offered by any
prospectus supplement and the extent to which the general provisions described
below may apply to such common stock or preferred stock will be outlined in the
applicable prospectus supplement.
Common Stock
Voting Rights. Each holder of our common stock is entitled to one vote for
each share held of record on all matters submitted to a vote of our
stockholders. Our stockholders do not have the right to cumulate their votes in
the election of directors. The quorum required at a stockholders' meeting for
consideration of any matter is a majority of the shares entitled to vote on that
matter, represented in person or by proxy. If a quorum is present, directors are
elected if they receive a plurality of the votes present at the meeting and
entitled to vote. Except as otherwise provided in our Restated Certificate of
Incorporation, all other matters can be approved by the affirmative vote of a
majority of the shares represented at a meeting and entitled to vote on the
matter. See "--Voting Rights with Respect to Extraordinary Corporate
Transactions" below for information on when our Restated Certificate of
Incorporation requires a different stockholder vote.
Dividends. Subject to the prior rights of the holders of shares of
preferred stock that may be issued and outstanding, none of which are currently
outstanding, the holders of common stock are entitled to receive dividends as
and when declared by our board of directors. The issuance of dividends will
depend upon, among other factors deemed relevant by our board of directors, our
financial condition, results of operations, cash requirements, future prospects,
changes in tax or other applicable laws relating to the treatment of dividends
and regulatory restrictions on the payment of dividends that apply under
applicable insurance laws. Dividends may be paid in cash, stock or other form.
Each such dividend shall
18
be payable to holders of record as they appear on our stock books on such record
dates as shall be fixed by the board of directors.
Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the Company, the holders of our common stock will share equally in
the assets remaining after creditors and preferred stockholders are paid.
Other Rights. Holders of shares of our common stock have no redemption or
conversion rights and no preemptive or other rights to subscribe for our
securities.
The transfer agent and registrar for our common stock is LaSalle Bank, N.A.
Our common stock is listed on The NASDAQ Stock Market(R) under the symbol
"NAVG."
Preferred Stock
General. Our board of directors may authorize the issuance of preferred
stock in series and will specify the dividend and liquidation preferences,
redemption prices and conversion rights of each series. When we issue preferred
stock, all shares will be fully paid and non-assessable. The holders of our
preferred stock will not have preemptive rights.
Rank. With respect to dividend rights and rights on liquidation, winding up
and dissolution, each series of our preferred stock will rank:
o senior to all classes of our common stock and to all equity securities
issued by us that specifically provide that they will rank junior to
our preferred stock;
o equal with all our equity securities that specifically provide that
they will rank equally with our preferred stock; and
o junior to all our equity securities that specifically provide that
they will rank senior to our preferred stock.
As used in any amendment to our Restated Certificate of Incorporation for
these purposes, the term "equity securities" will not include any debt
securities convertible or exchangeable for equity securities.
Dividends. Upon a decision of our board of directors, our preferred
stockholders will be entitled to receive cash dividends at such rates and on
such dates as are set forth in the prospectus supplement relating to their
series of preferred stock. This rate may be fixed or variable or both. We will
pay dividends to holders of record of our preferred stock as they appear on our
books on the record dates that are fixed by our board of directors. Dividends on
any series of preferred stock may be cumulative or noncumulative.
We may not declare or pay full dividends or set aside funds for the payment
of dividends on any series of our preferred stock unless we pay or set apart
funds for payment of dividends on the equity securities entitled to receive the
same dividends as our preferred stock. If full dividends are not paid, each
series of preferred stock shall share dividends pro rata with these other equity
securities.
Conversion and Exchange. The prospectus supplement for any series of our
preferred stock will state the terms, if any, on which shares of that series are
convertible into shares of another series of
19
preferred stock or common stock or exchangeable for another series of our
preferred stock, common stock or debt securities.
Redemption. A series of our preferred stock may be redeemed at any time, in
whole or in part, at our option or the option of a preferred stockholder. We may
have the right to redeem a series of our preferred stock without your consent
pursuant to a sinking fund or otherwise upon the terms and at the redemption
prices set forth in the prospectus supplement relating to such series.
In the event of partial redemptions of preferred stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by our board of directors, or by any
other method determined to be equitable by our board of directors.
On and after a redemption date, dividends will cease to accrue on shares of
our preferred stock called for redemption and all your rights as a holder of
these shares will end (except for the right to receive the redemption price)
unless we fail to properly pay the redemption price.
Liquidation Preference. If we are liquidated, dissolved or wound up, our
preferred stockholders will be entitled to receive distributions of our assets
that are available for stockholders in the amount set forth in the prospectus
supplement for each series of preferred stock, plus any accrued and unpaid
dividends. These distributions will be made before any distribution is made on
any securities ranking junior to our preferred stock with respect to
liquidation, including our common stock. If we are liquidated, dissolved or
wound up and the amounts payable on our preferred stock and on any other of our
securities ranking equally with respect to liquidation rights are not paid in
full, the preferred stockholders of such series and the holders of other equally
ranking securities will share ratably in any distribution of our assets in
proportion to the full liquidation preferences to which each is entitled. After
full payment of the liquidation preference to which they are entitled, our
preferred stockholders will not be entitled to any further participation in any
distribution of our assets.
Voting Rights. Our preferred stockholders will not have the right to vote
unless the board of directors states for a particular series of our preferred
stock that they have this right or except as required by law.
Transfer Agent and Registrar. We will describe the transfer agent and
registrar for each series of our preferred stock in the applicable prospectus
supplement.
Voting Rights with Respect to Extraordinary Corporate Transactions
Generally, under Delaware law, plans of merger, consolidation or exchange
and sales, leases, exchanges or other dispositions of all, or substantially all,
of a corporation's property and assets, other than in the usual and regular
course of business, must be approved by the affirmative vote of at least a
majority of all of the outstanding shares entitled to vote on the matter and at
least a majority of the outstanding shares of each class or series of shares, if
any, entitled to vote on the matter as a class. A corporation's certificate of
incorporation may provide for a greater vote. In order to approve any plan of
merger or consolidation or any sale, lease, exchange or disposition of all or
substantially all of our assets, our Restated Certificate of Incorporation
requires the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares entitled to vote on the matter, or if no vote is required by
Delaware law, 66-2/3% of the outstanding shares entitled to vote in the
election of directors generally, unless the transaction falls within two exempt
categories, in which case the Delaware law approval requirements discussed above
are effective. This supermajority vote requirement is not applicable to any
action between us and one of our wholly owned subsidiaries or certain affiliates
or to any action with a third party if it is approved by two-
20
thirds of the members of our board of directors prior to completion and such
approval remains in effect on the date of completion.
Voting Rights with Respect to Amendments to our Restated Certificate of
Incorporation and By-Laws
Generally, under Delaware law, a board of directors may propose amendments
to a corporation's certificate of incorporation. Proposed amendments must be
approved by the affirmative vote of the holders of a majority of the outstanding
shares entitled to vote, and a majority of each class of shares entitled to vote
on such amendment as a class, unless the corporation's certificate of
incorporation requires a larger percentage. Except for any amendment to the
provision relating to merger approval discussed above under "--Voting Rights
with Respect to Extraordinary Corporate Transactions," which requires the
approval of 66-2/3% of our outstanding shares, our Restated Certificate of
Incorporation does not require any larger stockholder vote percentage for an
amendment to its provisions.
Delaware law provides that the power to adopt, amend and repeal by-laws
shall be in the stockholders entitled to vote; provided that a corporation may,
in its certificate of incorporation, confer upon its directors the power to also
adopt, amend and repeal by-laws. Our Restated Certificate of Incorporation
authorizes our board of directors to make, alter, amend or repeal our By-laws.
Amendment of the By-laws by our stockholders requires the affirmative vote of
the holders of a majority of the outstanding shares entitled to vote.
Anti-takeover Provisions of our Restated Certificate of Incorporation and
By-laws and Applicable Law
Some provisions of our Restated Certificate of Incorporation and By-laws or
other applicable law may delay or make more difficult unsolicited acquisitions
or changes of control of our company. We believe that these provisions will
enable us to develop our business in a manner that will foster long-term growth
without disruption caused by the threat of a takeover not thought by our board
of directors to be in our best interest and the best interests of our
stockholders.
Those provisions could have the effect of discouraging third parties from
making proposals involving an unsolicited acquisition or change of control of
our company, although the proposals, if made, might be considered desirable by a
majority of our stockholders. Those provisions may also have the effect of
making it more difficult for third parties to cause the replacement of our
current management without the concurrence of our board of directors. Those
provisions include the provisions discussed above with respect to extraordinary
corporate transactions and amendments to our Restated Certificate of
Incorporation and By-laws as well as the following provisions.
Blank Check Preferred Stock. Our board of directors, without stockholder
approval, can issue preferred stock with voting and conversion rights that could
adversely affect the voting power or other rights of the holders of shares of
common stock. This right of issuance could be used as a method of preventing a
party from gaining control of us.
Removal of Directors; Special Meetings of the Stockholders. Our By-laws
provide that directors may be removed with or without cause and the subsequent
vacancy filled, by the affirmative vote of a majority of the outstanding shares
entitled to vote, at a special meeting called for that purpose. Special meetings
of our stockholders may only be called by our president or secretary or by
resolution of a majority of our board of directors. As a result, unless the
specified officers or board concurs, a stockholder may not be able to propose
removal of a director prior to his or her annual term expiring.
21
Similarly, a stockholder who wishes to present an issue to his or her fellow
stockholders may be required to wait for the annual meeting.
Delaware Section 203. We are subject to the provisions of Section 203 of
the Delaware General Corporation Law. Generally, Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" during the three years after the date the
person became an interested stockholder, unless the business combination is
approved in a prescribed manner. A "business combination" includes a merger,
asset sale or a transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person, who together with
affiliates and associates, owns (or, in certain cases, within the preceding
three years, did own) 15% or more of the corporation's outstanding voting stock.
Under Section 203, a business combination between us and an interested
stockholder is prohibited unless it satisfies one of the following conditions:
o before the stockholder became an interested stockholder, our board of
directors approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder;
o upon the completion of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock outstanding at the
time the transaction commenced, excluding, for purposes of determining
the number of shares outstanding, shares owned by persons who are
directors and officers; or
o the business combination is approved by our board of directors and
authorized at an annual or special meeting of stockholders by at least
66-2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
Insurance Holding Company Regulations on Change of Control. We are
regulated as an insurance holding company and are subject to state and foreign
laws that restrict the ability of any person to obtain control of an insurance
holding company without prior regulatory approval. Without this approval or an
exemption, no person or entity may acquire "control" of an insurance subsidiary
or merge with the holding company. "Control" is generally defined as the direct
or indirect power to direct or cause the direction of the management and
policies of a person and is usually presumed to exist if a person directly or
indirectly owns or controls 10% or more of the voting securities of another
person.
DESCRIPTION OF DEPOSITARY SHARES
The following description of the depositary shares and the terms of the
deposit agreement is a summary. It summarizes only those aspects of the
depositary shares and those portions of the deposit agreement that we believe
will be most important to your decision to invest in our depositary shares. You
should keep in mind, however, that it is the deposit agreement, and not this
summary, which defines your rights as a holder of depositary shares. There may
be other provisions in the deposit agreement that are also important to you. You
should read the deposit agreement for a full description of the terms of the
depositary shares. The form of the deposit agreement is filed as an exhibit to
the Registration Statement that includes this prospectus. See "Where You Can
Find More Information" for information on how to obtain a copy of the deposit
agreement.
The particular terms of the depositary shares offered by any prospectus
supplement and the extent to which the general provisions described below may
apply to such depositary shares will be outlined in the applicable prospectus
supplement.
22
General
We may choose to offer fractional interests in debt securities or
fractional shares of our common stock or preferred stock. If we decide to do so,
we will issue fractional interests in debt securities, common stock or preferred
stock, as the case may be, in the form of depositary shares. Each depositary
share would represent a fractional interest in a security of a particular series
of debt securities or a fraction of a share of common stock or of a particular
series of preferred stock, as the case may be, and would be evidenced by a
depositary receipt.
We will deposit the debt securities or shares of common stock or preferred
stock represented by depositary shares under a deposit agreement between us and
a depositary which we will name in the applicable prospectus supplement. Subject
to the terms of the deposit agreement, as an owner of a depositary share you
will be entitled, in proportion to the applicable fraction of a debt security or
share of common stock or preferred stock represented by the depositary share, to
all the rights and preferences of the debt security, common stock or preferred
stock, as the case may be, represented by the depositary share, including, as
the case may be, interest, dividend, voting, conversion, redemption, sinking
fund, repayment at maturity, subscription and liquidation rights.
Interest, Dividends and Other Distributions
The depositary will distribute all payments of interest, cash dividends or
other cash distributions received on the debt securities or preferred stock, as
the case may be, to you in proportion to the number of depositary shares that
you own.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to you in an equitable manner, unless the
depositary determines that it is not feasible to make a distribution. In that
case the depositary may sell the property and distribute the net proceeds from
the sale to you.
Redemption of Depositary Shares
If we redeem a debt security, common stock or series of preferred stock
represented by depositary shares, the depositary will redeem your depositary
shares from the proceeds received by the depositary resulting from the
redemption. The redemption price per depositary share will be equal to the
applicable fraction of the redemption price per debt security or share of common
stock or preferred stock, as the case may be, payable in relation to the
redeemed series of debt securities, common stock or preferred stock. Whenever we
redeem debt securities or shares of common stock or preferred stock held by the
depositary, the depositary will redeem as of the same redemption date the number
of depositary shares representing, as the case may be, fractional interests in
the debt securities or shares of common stock or preferred stock redeemed. If
fewer than all the depositary shares are to be redeemed, the depositary shares
to be redeemed will be selected by lot, proportionately or by any other
equitable method as the depositary may determine.
Exercise of Rights under the Indentures or Voting the Common Stock or Preferred
Stock
Upon receipt of notice of any meeting at which you are entitled to vote, or
of any request for instructions or directions from you as holder of fractional
interests in debt securities, common stock or preferred stock, the depositary
will mail to you the information contained in that notice. Each record holder of
the depositary shares on the record date will be entitled to instruct the
depositary how to give instructions or directions with respect to the debt
securities represented by that holder's depositary
23
shares or how to vote the amount of the common stock or preferred stock
represented by that holder's depositary shares. The record date for the
depositary shares will be the same date as the record date for the debt
securities, common stock or preferred stock, as the case may be. The depositary
will endeavor, to the extent practicable, to give instructions or directions
with respect to the debt securities or to vote the amount of the common stock or
preferred stock, as the case may be, represented by the depositary shares in
accordance with those instructions. We will agree to take all reasonable action
which the depositary may deem necessary to enable the depositary to do so. The
depositary will abstain from giving instructions or directions with respect to
your fractional interests in the debt securities or voting shares of the common
stock or preferred stock, as the case may be, if it does not receive specific
instructions from you.
Amendment and Termination of the Deposit Agreement
We and the depositary may amend the form of depositary receipt evidencing
the depositary shares and any provision of the deposit agreement at any time.
However, any amendment which materially and adversely alters the rights of the
holders of the depositary shares will not be effective unless the amendment has
been approved by the holders of at least a majority of the depositary shares
then outstanding.
The deposit agreement will terminate if:
o all outstanding depositary shares have been redeemed;
o if applicable, the debt securities and the preferred stock represented
by depository shares have been converted into or exchanged for our
common stock; or
o there has been a complete repayment or redemption of the debt
securities or a final distribution in respect of the common stock or
preferred stock, including in connection with our liquidation,
dissolution or winding-up, and the repayment, redemption or
distribution proceeds, as the case may be, have been distributed to
you.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of its
election to do so. We also may, at any time, remove the depositary. Any
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. We must appoint the successor
depositary within 60 days after delivery of the notice of resignation or
removal. The successor depositary must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the depositary in connection with the initial deposit of the debt securities or
preferred stock, as the case may be, and issuance of depositary receipts, all
withdrawals of depositary shares of debt securities or preferred stock, as the
case may be, by you and any repayment or redemption of the debt securities or
preferred stock, as the case may be. You will pay other transfer and other taxes
and governmental charges, as well as the other charges that are expressly
provided in the deposit agreement to be for your account.
24
Miscellaneous
The depositary will forward all reports and communications from us which
are delivered to the depositary and which we are required or otherwise determine
to furnish to holders of debt securities or preferred stock, as the case may be.
Neither we nor the depositary will be liable under the deposit agreement to
you other than for its gross negligence, willful misconduct or bad faith.
Neither we nor the depositary will be obligated to prosecute or defend any legal
proceedings relating to any depositary shares, debt securities, common stock or
preferred stock unless satisfactory indemnity is furnished. We and the
depositary may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting debt securities or shares of common
stock or preferred stock for deposit, you or other persons believed to be
competent and on documents which we and the depositary believe to be genuine.
PLAN OF DISTRIBUTION
We may sell any series of debt securities, common stock, preferred stock
and depositary shares being offered directly to one or more purchasers, through
agents, to or through underwriters or dealers, or through a combination of any
such methods of sale. The distribution of the securities may be effected from
time to time in one or more transactions at fixed prices, which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The prospectus supplement will
set forth the terms of the offering, including the names of any underwriters,
dealers or agents, the purchase price of such securities and the proceeds to us
and/or a trust from such sale, any underwriting discounts and commissions or
agency fees and other items constituting underwriters' or agents' compensation,
any initial public offering price and any discounts or concessions allowed or
paid to dealers or any securities exchange on which such securities may be
listed. Any initial public offering price, discounts or concessions allowed or
paid to dealers may be changed from time to time.
Any discounts, concessions or commissions received by underwriters or
agents and any profits on the resale of securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933. Unless
otherwise set forth in the applicable prospectus supplement, the obligations of
underwriters to purchase the offered securities will be subject to certain
conditions precedent, and such underwriters will be obligated to purchase all
such securities, if any are purchased. Unless otherwise indicated in the
applicable prospectus supplement, any agent will be acting on a best efforts
basis for the period of its appointment.
We may also offer and sell securities, if so indicated in the applicable
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms referred to as remarketing firms, acting as principals for
their own accounts or as agents for us. Any remarketing firm will be identified
and the terms of its agreement, if any, with us and its compensation will be
described in the applicable prospectus supplement. Remarketing firms may be
deemed to be underwriters under the Securities Act of 1933 in connection with
the securities they remarket.
We may authorize underwriters, dealers or other persons acting as agents
for us to solicit offers by certain institutions to purchase securities from us,
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by us. The obligations of any purchaser under any
such contract will be subject to the conditions that the purchase of the offered
25
securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
In connection with the offering of securities, we may grant to the
underwriters an option to purchase additional securities to cover
over-allotments at the initial public offering price, with an additional
underwriting commission, as may be set forth in the accompanying prospectus
supplement. If we grant any over-allotment option, the terms of such
over-allotment option will be set forth in the prospectus supplement for such
securities.
The securities may be a new issue of securities that have no established
trading market. Any underwriters to whom securities are sold for public offering
and sale may make a market in such securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. Such securities may or may not be listed on a national securities
exchange. No assurance can be given as to the liquidity of or the existence of
trading markets for any securities.
We may indemnify agents, underwriters, dealers and remarketing firms
against certain liabilities, including liabilities under the Securities Act of
1933. Our agents, underwriters, dealers and remarketing firms, or their
affiliates, may be customers of, engage in transactions with or perform services
for us, in the ordinary course of business.
LEGAL OPINION
Unless we state otherwise in the applicable prospectus supplement, the
validity of the securities offered hereby will be passed upon for us by LeBoeuf,
Lamb, Greene & MacRae LLP, New York, New York, special counsel to us.
EXPERTS
The consolidated financial statements of The Navigators Group, Inc. as of
December 31, 2004 and 2003 and for each of the years in the three-year period
ended December 31, 2004 and all related financial statement schedules, and
management's assessment of the effectiveness of internal control over financial
reporting as of December 31, 2004 have been incorporated by reference herein in
reliance upon the reports of KPMG LLP, an independent registered public
accounting firm, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred with the Offerings described
in this Registration Statement. All amounts are estimated except the SEC
registration fee.
Registration Fee.................................................. $29,425
*Printing Costs for Registration Statement, prospectus and $75,000
related documents.............................................
*Accounting Fees and Expenses..................................... $175,000
*Legal Fees and Expenses.......................................... $200,000
*Trustees' Fees................................................... $10,000
*Rating Agencies' Fees............................................ $100,000
*NASD............................................................. $15,000
*Miscellaneous.................................................... $20,000
-------------
*Total....................................................... $624,425
=============
------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who is, or is threatened to
be made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Section 145 also provides that a Delaware corporation may indemnify any person
who was or is a party, or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation by
reason of the fact that such person is or was a director, officer, employee or
agent of such corporation or enterprise or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interest, except that no indemnification is
permitted without judicial approval if such person is adjudged to be liable to
the corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
Section 145 of the DGCL also provides, in general, that a corporation shall
have the power to purchase and maintain insurance on behalf of any person who is
or was a director or officer of the
II-1
corporation against any liability asserted against the person in any such
capacity, or arising out of the person's status as such, whether or not the
corporation would have the power to indemnify the person against such liability
under the provisions of the law.
Article Seventh of the Company's Restated Certificate of Incorporation, as
amended, provides that the Company shall indemnify all persons who it may
indemnify to the full extent allowable under the DGCL.
Article V, Section 10 of the Company's By-laws provides that the Company
shall indemnify any person who is a party to any action, suit, or proceeding by
reason of the fact that he, his testator or intestate, is or was a director,
officer or employee of the Company or of any company which he served as such at
the Company's request, against reasonable expenses (including attorneys' fees)
actually and necessarily incurred by him in connection with the defense of such
action, suit, or proceeding, or in connection with the appeal thereof, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such officer, director or employee is liable for negligence or
misconduct in the performance of his duties.
The Company's By-laws further provide that the indemnification described
therein is not exclusive, and shall not exclude any other rights to which those
seeking to be indemnified may be entitled under law.
In addition, the Company maintains directors' and officers' liability
insurance under which our directors and officers are insured against loss (as
defined in the policy) as a result of claims brought against them for their
wrongful acts in such capacities.
II-2
ITEM 16. EXHIBITS.
Exhibit Description
Number -----------
-------
1.1 Form of Underwriting Agreement relating to Debt Securities and
Preferred Stock.*
1.3 Form of Underwriting Agreement relating to Common Stock*.
3.1 Restated Certificate of Incorporation of The Navigators Group, Inc.
incorporated by reference to Exhibit 3 of our Form S-8 filed July 26,
2002 (File No. 333-97183).
3.2 Certificate of Amendment to the Restated Certificate of Incorporation
incorporated by reference to Exhibit 3 of our Form S-8 filed July 26,
2002 (File No. 333-97183).
3.3 By-laws of The Navigators Group, Inc., as amended, incorporated by
reference to Exhibit 3 of our Form S-1 (File No. 33-5667).
4.3 Form of Indenture for Senior Debt Securities, dated as of , 2005,
between The Navigators Group, Inc. and JPMorgan Chase Bank, N.A., as
Trustee.
4.4 Form of Indenture for Subordinated Debt Securities, dated as of ,
2005, between The Navigators Group, Inc. and JPMorgan Chase Bank,
N.A., as Trustee.
4.5 Form of Deposit Agreement.*
4.5 Form of Depositary Receipt (included in Exhibit 4.5).*
4.20 Form of Certificate of Designation, Preferences and Rights of
Preferred Stock of The Navigators Group, Inc.*
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae LLP.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG LLP.
23.2 Consent of LeBoeuf, Lamb, Greene & MacRae LLP (included in Exhibit
5.1).
24.1 Powers of Attorney (included in the signature page hereto).
25.1 Statement of Eligibility under the Trust Indenture Act of 1939 of
JPMorgan Chase Bank, N.A., as Trustee for the Senior Indenture for
the Senior Debt Securities.
25.2 Statement of Eligibility under the Trust Indenture Act of 1939 of
JPMorgan Chase Bank N.A., as Trustee for the Subordinated Indenture
for the Subordinated Debt Securities.
---------------
* To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant 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
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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) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in 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.
(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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934, that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the 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 the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by them is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post effective amendment that contains a
form of prospectus shall be deemed to be a
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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.
(e) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.
(f) The undersigned registrant 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 in accordance with the
rules and regulations prescribed by the SEC under Section 305(b)(2) of the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The Navigators
Group, Inc. 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 Rye Brook, State of New York, on this 23rd day
of September, 2005.
THE NAVIGATORS GROUP, INC.
By: /s/ Paul J. Malvasio
---------------------------------
Name: Paul J. Malvasio
Title: Executive Vice President and Chief
Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Paul J. Malvasio, Elliot S. Orol and Bradley D. Wiley as true and lawful
attorneys-in-fact, each acting alone, with full powers of substitution and
resubstitution, for such person and in such person's name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this Registration Statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Terence N. Deeks Chairman September 23, 2005
-------------------------------
Terence N. Deeks
/s/ Stanley A. Galanski Director, President and Chief September 23, 2005
------------------------------- Executive Officer (Principal
Stanley A. Galanski Executive Officer)
/s/ Paul J. Malvasio Executive Vice President and Chief September 23, 2005
------------------------------- Financial Officer
Paul J. Malvasio (Principal Financial Officer)
/s/ Salvatore A. Margarella Vice President and Treasurer September 23, 2005
------------------------------- (Principal Accounting Officer)
Salvatore A. Margarella
/s/ H. J. Mervyn Blakeney Director September 23, 2005
-------------------------------
H. J. Mervyn Blakeney
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SIGNATURE TITLE DATE
--------- ----- ----
/s/ Peter A. Cheney Director September 23, 2005
-------------------------------
Peter A. Cheney
/s/ Robert W. Eager, Jr. Director September 23, 2005
-------------------------------
Robert W. Eager, Jr.
/s/ Leandro S. Galban, Jr. Director September 23, 2005
-------------------------------
Leandro S. Galban, Jr.
/s/ John F. Kirby Director September 23, 2005
-------------------------------
John F. Kirby
/s/ Marc M. Tract Director September 23, 2005
-------------------------------
Marc M. Tract
/s/ Robert F. Wright Director September 23, 2005
-------------------------------
Robert F. Wright
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