EXECUTION COPY
[Exhibit 10.8]
JUNIOR SUBORDINATED INDENTURE
between
VALIDUS HOLDINGS, LTD.
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Trustee
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Dated as of June 15, 2006
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions............................................. 1 Section 1.2. Compliance Certificate and Opinions..................... 10 Section 1.3. Forms of Documents Delivered to Trustee................. 10 Section 1.4. Acts of Holders......................................... 11 Section 1.5. Notices, Etc. to Trustee and Company.................... 13 Section 1.6. Notice to Holders; Waiver............................... 13 Section 1.7. Effect of Headings and Table of Contents................ 13 Section 1.8. Successors and Assigns.................................. 13 Section 1.9. Separability Clause..................................... 14 Section 1.10. Benefits of Indenture................................... 14 Section 1.11. Governing Law........................................... 14 Section 1.12. Submission to Jurisdiction.............................. 14 Section 1.13. Non-Business Days....................................... 14
ARTICLE II
SECURITY FORMS
Section 2.1. Form of Security........................................ 15 Section 2.2. Restricted Legend....................................... 20 Section 2.3. Form of Trustee's Certificate of Authentication......... 22 Section 2.4. Temporary Securities.................................... 23 Section 2.5. Definitive Securities................................... 23
ARTICLE III
THE SECURITIES
Section 3.1. Payment of Principal and Interest....................... 23 Section 3.2. Denominations........................................... 25 Section 3.3. Execution, Authentication, Delivery and Dating.......... 25 Section 3.4. Global Securities....................................... 26 Section 3.5. Registration, Transfer and Exchange Generally........... 28 Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities........ 29 Section 3.7. Persons Deemed Owners................................... 30
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TABLE OF CONTENTS
(continued)
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---- Section 3.8. Cancellation............................................ 30 Section 3.9. Deferrals of Interest Payment Dates..................... 30 Section 3.10. Right of Set-Off........................................ 31 Section 3.11. Agreed Tax Treatment.................................... 31 Section 3.12. CUSIP Numbers........................................... 31
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture................. 32 Section 4.2. Application of Trust Money.............................. 33
ARTICLE V
REMEDIES
Section 5.1. Events of Default....................................... 33 Section 5.2. Acceleration of Maturity; Rescission and Annulment...... 34 Section 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee................................................. 35 Section 5.4. Trustee May File Proofs of Claim........................ 36 Section 5.5. Trustee May Enforce Claim Without Possession of
Securities.............................................. 36 Section 5.6. Application of Money Collected.......................... 36 Section 5.7. Limitation on Suits..................................... 37 Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest.................................... 38 Section 5.9. Restoration of Rights and Remedies...................... 38 Section 5.10. Rights and Remedies Cumulative.......................... 38 Section 5.11. Delay or Omission Not Waiver............................ 38 Section 5.12. Control by Holders...................................... 38 Section 5.13. Waiver of Past Defaults................................. 39 Section 5.14. Undertaking for Costs................................... 39 Section 5.15. Waiver of Usury, Stay or Extension Laws................. 40
ARTICLE VI
THE TRUSTEE
Section 6.1. Corporate Trustee Required.............................. 40 Section 6.2. Certain Duties and Responsibilities..................... 40
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TABLE OF CONTENTS
(continued)
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---- Section 6.3. Notice of Defaults...................................... 41 Section 6.4. Certain Rights of Trustee............................... 42 Section 6.5. May Hold Securities..................................... 43 Section 6.6. Compensation; Reimbursement; Indemnity.................. 44 Section 6.7. Resignation and Removal; Appointment of Successor....... 45 Section 6.8. Acceptance of Appointment by Successor.................. 45 Section 6.9. Merger, Conversion, Consolidation or Succession to
Business................................................ 46 Section 6.10. Not Responsible for Recitals or Issuance of Securities.. 46 Section 6.11. Appointment of Authenticating Agent..................... 46
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of
Holders................................................. 48 Section 7.2. Preservation of Information, Communications to Holders.. 48 Section 7.3. Reports by Company...................................... 48
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.... 49 Section 8.2. Successor Company Substituted........................... 49
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental
Indentureswithout Consent of Holders...... 50 Section 9.2. Supplemental Indentures with Consent of Holders......... 51 Section 9.3. Execution of Supplemental Indentures.................... 52 Section 9.4. Effect of Supplemental Indentures....................... 52 Section 9.5. Reference in Securities to Supplemental Indentures...... 52
ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.............. 52 Section 10.2. Money for Security Payments to be Held in Trust......... 52 Section 10.3. Statement as to Compliance.............................. 54 Section 10.4. Calculation Agent....................................... 54
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TABLE OF CONTENTS
(continued)
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---- Section 10.5. Additional Amounts...................................... 54 Section 10.6. Additional Covenants.................................... 55 Section 10.7. Waiver of Covenants..................................... 56 Section 10.8. Treatment of Securities................................. 56
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Optional Redemption..................................... 56 Section 11.2. Special Event Redemption................................ 56 Section 11.3. Election to Redeem; Notice to Trustee................... 57 Section 11.4. Selection of Securities to be Redeemed.................. 57 Section 11.5. Notice of Redemption.................................... 57 Section 11.6. Deposit of Redemption Price............................. 58 Section 11.7. Payment of Securities Called for Redemption............. 58
ARTICLE XII
SUBORDINATION OF SECURITIES
Section 12.1. Securities Subordinate to Senior Debt................... 59 Section 12.2. No Payment When Senior Debt in Default; Payment Over of
Proceeds Upon Dissolution, Etc.......................... 59 Section 12.3. Payment Permitted If No Default......................... 61 Section 12.4. Subrogation to Rights of Holders of Senior Debt......... 61 Section 12.5. Provisions Solely to Define Relative Rights............. 61 Section 12.6. Trustee to Effectuate Subordination..................... 62 Section 12.7. No Waiver of Subordination Provisions................... 62 Section 12.8. Notice to Trustee....................................... 62 Section 12.9. Reliance on Judicial Order or Certificate of Liquidating
Agent................................................... 63 Section 12.10. Trustee Not Fiduciary for Holders of Senior Debt........ 63 Section 12.11. Rights of Trustee as Holder of Senior Debt; Preservation
of Trustee's Rights..................................... 63 Section 12.12. Article Applicable to Paying Agents..................... 63
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SCHEDULES
Schedule A - Determination of LIBOR
Exhibit A - Form of Officer's Financial Certificate
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JUNIOR SUBORDINATED INDENTURE, dated as of June 15, 2006, between VALIDUS HOLDINGS, LTD., a company with limited liability organized under the laws of Bermuda (the "Company"), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association, as Trustee (in such capacity, the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated deferrable interest debentures designated "Junior Subordinated Deferrable Interest Debentures due 2036" (the "Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, this Indenture Witnesseth:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to
them in this Article I;
(b) the words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture;
(e) the words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
"Act" when used with respect to any Holder, has the meaning specified in Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.
"Additional Amounts" has the meaning specified in Section 10.5.
"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Depositary Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
"Applicable Insurance Regulatory Authority" means, when used with respect to any Regulated Insurance Company, (x) the insurance department or similar administrative authority or agency located in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is domiciled or (y) to the extent asserting regulatory jurisdiction over such Regulated Insurance Company, the insurance department, authority or agency in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is licensed, and shall include any Federal or national insurance regulatory department, authority or agency that may be created and that asserts insurance regulatory jurisdiction over such Regulated Insurance Company.
"Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
"Bankruptcy Code" means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.
"Board of Directors" means the board of directors of the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
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"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
"Calculation Agent" has the meaning specified in Section 10.4.
"Common Securities" has the meaning specified in the first recital of this Indenture.
"Common Shares" means the common shares, par value $0.10 per share, of the Company.
"Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 600 Travis, 50th Floor, Houston, Texas 77002, Attn: Worldwide Securities Services--Validus Holdings, Ltd.. Initially, all notices and correspondence shall be addressed to Mudassir Mohamed (telephone: 713-216-2826).
"Debt" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
"Defaulted Interest" has the meaning specified in Section 3.1.
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"Depositary" means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.
"Depositary Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
"Dollar" or "$" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation, or any successor thereto.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.9.
"GAAP" means United States generally accepted accounting principles, consistently applied, from time to time in effect.
"Global Security" means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
"Government Obligation" means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
"Holder" means a Person in whose name a Security is registered in the Securities Register.
"Indenture" means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
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"Insurance Business" means one or more aspects of the business of selling, issuing or underwriting insurance or reinsurance.
"Interest Payment Date" means March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2006, during the term of this Indenture, as such dates may be adjusted pursuant to Section 1.13.
"Investment Company Act" means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation (including any announced prospective change) or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Company is or, within ninety (90) days of the date of such opinion will be, considered an "investment company" that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Securities.
"LIBOR" has the meaning specified in Schedule A.
"LIBOR Business Day" has the meaning specified in Schedule A.
"LIBOR Determination Date" has the meaning specified in Schedule A.
"Maturity," when used with respect to any Security, means the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
"New York Court" has the meaning specified in Section 1.12.
"Notice of Default" means a written notice of the kind specified in Section 5.1(c).
"Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.
"Operative Documents" means the Indenture, the Purchase Agreement and the Securities.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.
"Optional Redemption Price" has the meaning set forth in Section 11.1.
"Original Issue Date" means the date of original issuance of each Security.
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"Outstanding" means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided, that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
and
(iii) Securities that have been paid or in substitution for or in lieu
of which other Securities have been authenticated and delivered pursuant to
the provisions of this Indenture, unless proof satisfactory to the Trustee
is presented that any such Securities are held by Holders in whose hands
such Securities are valid, binding and legal obligations of the Company;
provided, that, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be r ...