-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RK1/bKgC8ndzYNJ+uqppqYeSUoGAigS+UVMAOzkibVytkCYGRonj/W8sHYEqRJL/ x6fzkNZEfHMXhxdJb7x18g== 0000912057-97-002189.txt : 19970130 0000912057-97-002189.hdr.sgml : 19970130 ACCESSION NUMBER: 0000912057-97-002189 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19970129 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN RE CORP CENTRAL INDEX KEY: 0000889217 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 133672116 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20663 FILM NUMBER: 97513726 BUSINESS ADDRESS: STREET 1: 555 COLLEGE RD EAST CITY: PRINCETON STATE: NJ ZIP: 08543-5241 BUSINESS PHONE: 6092438819 S-4 1 S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1997 REGISTRATION NO. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ AMERICAN RE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6719 13-3672116 (State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer of Incorporation or Organization) Classification Code Number) Identification Number)
------------------------ 555 COLLEGE ROAD EAST PRINCETON, NJ 08543 (609) 243-4200 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) ------------------------------ ROBERT K. BURGESS, ESQ. AMERICAN RE CORPORATION 555 COLLEGE ROAD EAST PRINCETON, NJ 08543 (609) 243-4200 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) ------------------------------ WITH A COPY TO: GARY I. HOROWITZ, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 455-2000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: / / ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE OFFERING PRICE FEE 7.45% Senior Notes due 2026, Series B............ $500,000,000 100% 500,000,000 $151,515.15
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION DATED JANUARY 29, 1997 PROSPECTUS AMERICAN RE CORPORATION [LOGO] OFFER TO EXCHANGE UP TO $500,000,000 OF ITS 7.45% SENIOR NOTES DUE 2026, SERIES B FOR ANY AND ALL OF ITS OUTSTANDING 7.45% SENIOR NOTES DUE 2026, SERIES A -------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED. ------------------------ American Re Corporation (the "Company"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (which together constitute the "Exchange Offer"), to exchange an aggregate of up to $500,000,000 principal amount of 7.45% Senior Notes due 2026, Series B (the "Exchange Notes"), of the Company for an identical face amount of the issued and outstanding 7.45% Senior Notes due 2026, Series A (the "Old Notes" and the Old Notes and the Exchange Notes, collectively, the "Notes"), of the Company from the holders thereof. As of the date of this Prospectus, there is $500,000,000 aggregate principal amount of the Old Notes outstanding. The terms of the Exchange Notes are identical in all material respects to the Old Notes, except that the Exchange Notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and therefore will not bear legends restricting their transfer and will not contain certain provisions providing for an increase in the interest rate on the Old Notes under certain circumstances relating to the Registration Rights Agreement (as defined herein), which provisions will terminate as to all of the Notes upon the consummation of the Exchange Offer. Interest on the Old Notes has accrued from the original date of issuance thereof, December 24, 1996 and will cease to accrue on the date the Exchange Notes are exchanged for the Old Notes. Interest on the Exchange Notes will accrue from the date the Exchange Notes are exchanged for the Old Notes and is payable in cash semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 1997. ------------------------ SEE "RISK FACTORS," BEGINNING ON PAGE 9, FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE EXCHANGE NOTES. --------------------- THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS ANY STATE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 1997. FOR NORTH CAROLINA PURCHASERS: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE NORTH CAROLINA COMMISSIONER RULED UPON THE ACCURACY OF THIS OFFERING CIRCULAR. ------------------------ The Old Notes were issued and sold on December 24, 1996 in a transaction not registered under the Securities Act in reliance upon an exemption from the registration requirements thereof. In general, the Old Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act. The Exchange Notes are being offered hereby in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement. Based on interpretations by the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters issued to third parties, the Company believes that the Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold or otherwise transferred by any holder thereof (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business, such holder has no arrangement with any person to participate in the distribution of such Exchange Notes and neither such holder nor any such other person is engaging in or intends to engage in a distribution of such Exchange Notes. However, the Company has not sought, and does not intend to seek, its own no-action letter, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer. Notwithstanding the foregoing, each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with any resale of Exchange Notes received in exchange for such Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities (other than Old Notes acquired directly from the Company). The Company has agreed that for a period of no greater than 180 days after the consummation of the Exchange Offer, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. The Old Notes are designated for trading in the Private Offerings, Resales and Trading through Automated Linkages ('PORTAL') market. There is no established trading market for the Exchange Notes. The Company does not currently intend to list the Exchange Notes on any securities exchange or to seek approval for quotation through any automated quotation system. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Notes. The certificates representing the Exchange Notes will be represented by a single, permanent global Exchange Note, in definitive, fully registered form without interest coupons (the 'Global Note') and will be deposited with the Trustee as custodian for The Depository Trust Company ('DTC') and registered in the name of a nominee of DTC. Ownership of beneficial interests in the Global Note will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee or participants therein. The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. The date for acceptance and exchange of the Old Notes (the "Exchange Date") will be the first business day following the Expiration Date (as defined herein). Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. The Company will not receive any proceeds from the Exchange Offer. The Exchange Offer will expire 5:00 p.m., New York City time, on , 1997, unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. 2 AVAILABLE INFORMATION The Company has filed with the Commission a Registration Statement on Form S-4 (together with all amendments, exhibits, schedules and supplements thereto, the "Registration Statement") under the Securities Act with respect to the Exchange Notes being offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement. For further information with respect to the Company and the Exchange Notes, reference is made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the Registration Statement, each such statement is qualified in all respects by the provisions in such exhibit. Copies of the Registration Statement may be examined without charge at the public reference facilities maintained by the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the web site (http://www.sec.gov.) maintained by the Commission and at the Commission's Regional Offices located at Seven World Trade Center, Suite 1300, New York, New York, 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of the Registration Statement can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of certain fees prescribed by the Commission. The Company is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, and other information with the Commission. Reports, and other information filed by the Company may be inspected and copied at the public reference facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained upon written request from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company pursuant to the Exchange Act are incorporated herein by reference in their entirety and are attached hereto as Annexes I through VII, respectively, without the schedules, exhibits and annexes appended thereto (except as described below): 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 10-K"). 2. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the "March 10-Q"). 3. The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 (the "June 10-Q"). 4. The Company's Current Report on Form 8-K dated August 13, 1996 (the "August 8-K"). 5. The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 (the "September 10-Q"). 6. The Company's Current Report on Form 8-K dated November 25, 1996 (the "November 8-K"). 7. The Company's Current Report on Form 8-K dated December 11, 1996 (the "December 8-K"), including the exhibit thereto. 3 All other documents filed by the Company pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the respective dates of the filing of such documents. Any statement contained herein or in a document all or a portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 4 THE EXCHANGE OFFER THE EXCHANGE OFFER........................... The Company is offering to exchange pursuant to the Exchange Offer up to $500,000,000 aggregate principal amount of its new 7.45% Senior Notes due 2026, Series B (the "Exchange Notes") for a like aggregate principal amount of its outstanding 7.45% Senior Notes due 2026, Series A (the "Old Notes"). The terms of the Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes are freely transferrable by holders of such Notes (each a "holder" or "Holder") other than as provided herein, and are not subject to any covenant regarding registration under the Securities Act. See "The Exchange Offer." INTEREST PAYMENTS............................ Interest on the Old Notes has accrued from the original date of issuance thereof, December 24, 1996, and will cease to accrue on the date the Exchange Notes are exchanged for the Old Notes. Interest on the Exchange Notes will accrue from the date the Exchange Notes are exchanged for Old Notes and is payable in cash semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 1997. MINIMUM CONDITION............................ The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. EXPIRATION DATE; WITHDRAWAL OF TENDER........ The Exchange Offer will expire 5:00 p.m., New York City time, on 1997, unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer--Withdrawal of Rights." EXCHANGE DATE................................ The date of acceptance for exchange of the Old Notes will be the first business day following the Expiration Date. CONDITIONS TO THE EXCHANGE OFFER............. The Exchange Offer is subject to certain customary conditions, which may be waived by the Company. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. See "The Exchange Offer--Certain Conditions to the Exchange Offer." The Company reserves the right to terminate or amend the Exchange Offer at any time prior to the Expiration Date upon the occurrence of any such condition.
5 PROCEDURES FOR TENDERING OLD NOTES........... Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Old Notes and any other required documentation to the Exchange Agent (as defined herein) at the address set forth herein. See "The Exchange Offer--Procedures for Tendering Old Notes" and "Plan of Distribution." USE OF PROCEEDS.............................. There will be no proceeds to the Company from the exchange of Notes pursuant to the Exchange Offer. FEDERAL INCOME TAX CONSEQUENCES.............. The exchange of Notes pursuant to the Exchange Offer will not be a taxable event for federal income tax purposes. See "United States Federal Income Tax Consequences." SPECIAL PROCEDURES FOR BENEFICIAL OWNERS.......................... Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such beneficial owner's own behalf, such beneficial owner must, prior to completing and executing the Letter of Transmittal and delivering the Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See "The Exchange Offer--Procedures for Tendering Old Notes." GUARANTEED DELIVERY PROCEDURES............... Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not entirely available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Old Notes." ACCEPTANCE OF OLD NOTES AND DELIVERY OF EXCHANGE................................... The Company will accept for exchange any and all Old Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date.
6 See "The Exchange Offer--Procedures for Tendering Old Notes." EFFECT ON HOLDERS OF OLD NOTES............... As a result of the making of, and upon acceptance for exchange of all validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the Company will have fulfilled a covenant contained in the Registration Rights Agreement (the "Registration Rights Agreement") dated as of December 24, 1996 among the Company, Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Brothers Inc, Smith Barney Inc. and UBS Securities LLC (the "Initial Purchasers") and, accordingly there will be no increase in the interest rate on the Old Notes pursuant to the terms of the Registration Rights Agreement, and the holders of the Old Notes will have no further registration or other rights under the Registration Rights Agreement. Holders of the Old Notes who do not tender their Old Notes in the Exchange Offer will continue to hold such Old Notes and will be entitled to all the rights and limitations applicable thereto under the Indenture between the Company and State Street Bank and Trust Company relating to the Old Notes and the Exchange Notes (the "Indenture") except for any such rights under the Registration Rights Agreement that by their terms terminate or cease to have further effectiveness as a result of the making of, and the acceptance for exchange of all validly tendered Old Notes pursuant to, the Exchange Offer. All untendered Old Notes will continue to be subject to the restrictions on transfer provided for in the Old Notes and in the Indenture. To the extent that Old Notes are tendered and accepted in the Exchange Offer the trading market for untendered Old Notes could be adversely affected. CONSEQUENCE OF FAILURE TO EXCHANGE........... Holders of Old Notes who do not exchange their Notes for Exchange Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the offer or sale of the Old Notes pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not
7 currently anticipate that it will register the Old Notes under the Securities Act. EXCHANGE AGENT............................... State Street Bank and Trust Company is serving as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. See "The Exchange Offer--Exchange Agent." TERMS OF THE EXCHANGE NOTES SECURITIES OFFERED........................... $500,000,000 principal amount of 7.45% Senior Notes due 2026, Series B. MATURITY DATE................................ December 15, 2026. INTEREST PAYMENT DATES....................... June 15 and December 15 of each year, commencing June 15, 1997. OPTIONAL REDEMPTION.......................... The Exchange Notes will be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semiannual basis, at the Treasury Yield (as defined) plus 15 basis points, together with accrued interest plus premium, and Liquidated Damages (as defined), if any, to the date of redemption. RANKING...................................... The Exchange Notes will be general, unsecured obligations of the Company and will rank PARI PASSU with all other senior indebtedness of the Company. CERTAIN COVENANTS............................ The Indenture governing the Notes and the Exchange Notes (the "Indenture")contains certain covenants, that will, among other things, limit the ability of the Company and its Principal Subsidiaries (as defined) to incur liens securing indebtedness ranking PARI PASSU with the Notes without equally and ratably securing the Notes, and to engage in mergers and consolidations. See "Description of the Notes." ABSENCE OF MARKET............................ The Exchange Notes are new securities for which there is currently no established market. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Notes. The Company does not intend to apply for a listing of the Exchange Notes on a securities exchange.
RISK FACTORS See "Risk Factors" for a discussion of certain factors that should be considered by Holders of the Old Notes prior to tendering Old Notes in the Exchange Offer. 8 RISK FACTORS HOLDERS OF OLD NOTES SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS BEFORE DECIDING TO TENDER OLD NOTES IN THE EXCHANGE OFFER. THE RISK FACTORS SET FORTH BELOW ARE GENERALLY APPLICABLE TO THE OLD NOTES AS WELL AS THE EXCHANGE NOTES. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Notes who do not exchange their Old Notes for new Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the offer or sale of the Old Notes pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, Old Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently intend to register the Old Notes under the Securities Act. Based on interpretations by the staff of the Commission, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold or otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Old Notes were acquired in the ordinary course of such Holders' business and such holders have no arrangement with any person to participate in the distribution of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes will be adversely affected. HOLDING COMPANY STRUCTURE The operations of the Company are conducted through its insurance/reinsurance subsidiaries. Except to the extent that the Company may itself be a creditor with recognized claims against its insurance/reinsurance subsidiaries, claims of creditors of such subsidiaries, including ceding companies (i.e., primary insurers) under reinsurance agreements, will have priority with respect to the assets and earnings of such subsidiaries of the Company, even though such subsidiary obligations do not constitute senior indebtedness of the Company. Liabilities of the Company's insurance/reinsurance subsidiaries, including loss reserves and unearned premium reserves, aggregated $7,249.3 million at September 30, 1996 and assets of such subsidiaries totaled $8,395.6 million as of such date. In addition, in the event of a default on the Company's debt or an insolvency, liquidation or other reorganization of the Company, creditors of the Company will have no right to proceed against the assets of its insurance/reinsurance subsidiaries or to cause their liquidation under Federal and state bankruptcy laws. If the Company's principal insurance/reinsurance subsidiary, American Re-Insurance Company ("American Re-Insurance"), were to be liquidated, such liquidation would be conducted under the Delaware Insurance Code (the "Delaware Code") by the Delaware Insurance Commissioner as the receiver with respect to such subsidiary's property and business. The Company is dependent on dividends and tax allocation payments from American Re-Insurance, and its other insurance/reinsurance subsidiaries to meet its debt obligations, including its obligations under the Notes. The payment of dividends to the Company by American Re-Insurance is subject to limitations imposed by the Delaware Code and other applicable state law. The aggregate amount available for payment of dividends by American Re-Insurance to the Company during 1996 without prior 9 approval of regulatory authorities is $110.0 million (of which $70.0 million has already been paid). Anticipated interest expense of the Company for 1996, including charges related to the interest payable to the holders of the Notes, on a pro forma basis after giving effect to this Offering and the application of the net proceeds therefrom, will be approximately $40.2 million (compared to actual interest expense of $40.5 million for the nine months ended September 30, 1996). FACTORS SPECIFIC TO THE REINSURANCE INDUSTRY AND THE COMPANY The property and casualty reinsurance industry has been highly cyclical. Demand for reinsurance is significantly influenced by underwriting results of primary property and casualty insurance companies and prevailing general economic and market conditions, all of which affect retention levels of primary insurance companies and reinsurance premium rates. The cyclical trends in the industry and the industry's profitability can also be affected significantly by volatile and unpredictable developments, including changes in what the Company believes to be the propensity of courts to grant large awards, natural disasters and other catastrophic events (such as hurricanes, windstorms, earthquakes, floods and fires), fluctuations in interest rates and other changes in the investment environment which affect market prices of the Company's investments and the income and returns on those investments, and inflationary pressures that may tend to affect the size of losses experienced by ceding primary insurance companies. The Company and its insurance/reinsurance subsidiaries are subject to regulation by state insurance authorities under the insurance statutes, including insurance holding company statutes, of various states, including Delaware, the domiciliary state of American Re-Insurance. Such statutes, among other things, limit the amount of dividends that can be paid by the insurance/reinsurance subsidiaries without prior regulatory approval, impose restrictions on the amount and type of investments the insurance/ reinsurance subsidiaries may have, prescribe solvency standards that must be met and maintained, require the insurance/reinsurance subsidiaries to maintain reserves for losses, loss adjustment expenses ("LAE") and unearned premiums and, in some states, limit the right of offset. Such insurance holding company statutes generally require prior notice or regulatory approval of changes of control of an insurer or its holding company. From time to time, various regulatory and legislative changes have been proposed in the insurance and reinsurance industry, which, if implemented, may have an effect on reinsurers, including the Company. These proposals include limitations on the right of offset by reinsurers and possible introduction of federal regulation of reinsurers. The Company is unable to predict whether any such proposal will be adopted, the form in which any such proposal would be adopted, or the effect, if any, the adoption of any such proposal would have on the Company or its insurance/reinsurance subsidiaries. The Company and its insurance/reinsurance subsidiaries are required to maintain reserves to cover their estimated ultimate liability for losses and LAE with respect to reported and unreported claims incurred as of the end of each accounting period (net of estimated related salvage and subrogation claims and reinsurance recoverables). These loss and LAE reserves are estimates involving claims adjustors' evaluations of reported claims and actuarial and statistical projections at a given time of what the insurance/reinsurance subsidiaries expect the ultimate settlement and administration of claims to cost based on facts and circumstances then known, predictions of future events, estimates of future trends in claims severity and other variable factors such as inflation and new concepts of liability. The inherent uncertainties of estimating loss reserves are exacerbated for reinsurers by the significant periods of time that often elapse between the occurrence of an insured loss, the reporting of the loss to the primary insurer and, ultimately, to the reinsurer, and the primary insurer's payment of that loss and subsequent indemnification by the reinsurer. As a consequence, actual losses and LAE paid may deviate, perhaps substantially, from estimates reflected in the reserves of the Company and its insurance/reinsurance subsidiaries, as reported in the Company's financial statements. To the extent reserves prove to be inadequate after taking into account available retrocessional coverage including 10 available stop loss protection, the Company would likely have to augment such reserves and incur a charge to earnings. Since the early 1980s, the Company's underwriting results have been adversely affected by claims developing from asbestos-related and environmental pollution coverage exposures. Significant uncertainties exist with respect to estimating the ultimate future amounts that may be needed for these types of claims, especially in view of changes in the legal and tort environment that affect the development of loss reserves. For asbestos-related claims, such uncertainties include estimations of the number and value of claims that may be reported and the maximum value of asbestos-related exposures written by its clients and thus the Company during expired coverage periods. For environmental pollution claims, such uncertainties include inconsistent coverage issue decisions reached in court cases in various jurisdictions, which include the existence of any insurance coverage at all, what underlying policies provide the coverage and whether the Company reinsures those policies, whether the releases of contaminants is one "occurrence" or more for determination of applicable coverage/policy limits, how pollution exclusions should be applied, whether clean-up costs constitute covered damage, and whether an insurer has a duty to defend. In addition, the lack of resolution to the Superfund legislation in Congress adds further uncertainty to environmental pollution claims costs. In connection with asbestos, environmental-related and other latent liabilities coverage exposures ("Latent Liability Exposures"), the Company strengthened its gross incurred but not reported ("IBNR") loss reserves in the fourth quarter of 1995 by $587.0 million. See "Results of Operations--Year Ended December 31, 1995 Compared with Year Ended December 31, 1994." Nevertheless, the uncertainties inherent in valuing asbestos-related and environmental pollution claims are not likely to be resolved in the near future. There can be no assurance that adverse developments from prior years will not continue in the future, particularly with respect to asbestos and environmental pollution exposures, or that such adverse developments will not have a material adverse effect on net income. The property and casualty reinsurance business is highly competitive. Competition with respect to the types of reinsurance in which the Company is engaged is based on many factors, including perceived overall financial strength of the reinsurer, ratings of the reinsurer by A.M. Best Company ("A.M. Best"), underwriting expertise, reputation and experience in the lines written, services offered and speed of claims payment. The Company competes for its business in the United States and international reinsurance markets with independent reinsurers, reinsurer subsidiaries or affiliates of insurers, the reinsurance departments of primary insurers and underwriting syndicates from the United States and abroad, some of which have greater financial resources than the Company. The Company also competes with providers of alternative forms of risk transfer, such as investment banks which offer capital market mechanisms for primary insurers to transfer insurance risks directly to investors. On January 29, 1996, A.M. Best affirmed its "A+ (Superior)" rating of American Re-Insurance, the second highest of A.M. Best's 15 qualitative ratings. American Re-Insurance has been rated "A+ (Superior)" since March 3, 1993. "A + (Superior)" is assigned by A.M. Best to those companies which in its opinion have demonstrated superior overall performance when compared to the standards established by A.M. Best and have demonstrated a very strong ability to meet their policyholder and other contractual obligations over a long period of time. According to A.M. Best, the objectives of its rating system are to evaluate the factors affecting overall performance of an insurance or reinsurance company and to provide A.M. Best's opinion of the company's relative financial strength and ability to meet its obligation to policyholders currently and in the future. On December 10, 1996, Standard & Poors Corporation ("S&P") raised American Re-Insurance's claims paying ability rating to "AAA." An "AAA" rating represents the highest of S&P's ratings. A rating of "AAA" is assigned by S&P to those companies which, in its opinion, have superior financial security on an absolute and relative basis and their capacity to meet policyholder obligations is overwhelming under a variety of economic and underwriting conditions. 11 There can be no assurance that American Re-Insurance will continue to be rated "A+ (Superior)" by A.M. Best or "AAA" by S&P. On December 13, 1996, Moody's Investors Service ("Moody's") raised American Re-Insurance's financial strength rating to "Aaa." An "Aaa" rating represents the highest of Moody's 19 qualitative ratings. A rating of "Aaa" is assigned by Moody's to those companies which in Moody's opinion offer exceptional financial security. Ratings have become increasingly important in establishing the competitive position of a reinsurer. Management believes that a reduction to below an "A" level in any of American Re-Insurance's ratings could have a material adverse effect on its financial condition, results of operations and cash flows. A.M. Best, S&P and Moody's ratings are not in any way a measure of protection offered to investors in the Notes and should not be relied upon with respect to making an investment in the Notes. Each of these rating agencies continually reviews its ratings and there can be no assurance that American Re-Insurance's ratings will be maintained at current levels in the future. FORWARD-LOOKING STATEMENTS This Prospectus contains certain forward-looking statements concerning the Company's operations, economic performance and financial condition, including, in particular the likelihood of the Company's success in developing and expanding its business. These statements are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect the Company's results. 12 THE COMPANY The Company is the holding company for American Re-Insurance, a reinsurance company that underwrites property and casualty reinsurance directly in the United States and international markets. American Re-Insurance was founded in 1917 as the first U.S.- owned reinsurance company. Based on statutory net premiums written of $1,611.5 million in 1995, American Re-Insurance, ranked as the third largest property and casualty reinsurer in the U.S. The Company had total assets of $8,395.6 million and stockholders' equity of $908.8 million at September 30, 1996. The Company is a wholly-owned subsidiary of Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft in Munchen, a company organized under the laws of Germany ("Munich Re"). Munich Re is the world's largest reinsurance company based on 1995 net premiums written, according to BUSINESS INSURANCE. American Re-Insurance provides reinsurance directly to primary insurance companies without the assistance of reinsurance brokers, positioning it as one of only five, major direct underwriters of property and casualty reinsurance in the U.S. The other major direct reinsurers are Employers Reinsurance Corporation, General Reinsurance Corporation, Swiss Reinsurance America Corporation, and Munich Re, which operates in the United States through its 50% owned affiliate Munich American Reinsurance Company ("Munich American Reinsurance"), and through its U.S. branch. The Company provides both treaty and facultative reinsurance and writes such reinsurance on both a pro rata and excess of loss basis. Under facultative reinsurance, the primary insurer cedes and the reinsurer assumes part or all of the risks insured by the primary insurer under a single primary insurance policy. Treaty reinsurance is a contractual arrangement, usually renewable annually, between a primary insurer and a reinsurer under which the primary insurer must cede and the reinsurer must assume a specified portion of a type or category of risks. In the case of pro rata reinsurance, the reinsurer, in return for a predetermined portion or share of the insurance premium charged by the primary insurer, indemnifies the primary insurer against a predetermined portion of the losses and LAE of the primary insurer under the covered primary policy or policies. In the case of excess of loss reinsurance, the reinsurer indemnifies the primary insurer against all or a specific portion of losses on underlying insurance policies in excess of a specified dollar amount, known as the "retention" or "attachment point," most often subject to a negotiated limit. Premiums payable to the reinsurer by the primary insurer for excess of loss coverage are not directly proportional to the premiums the primary insurer receives because the reinsurer does not assume a proportionate risk. 13 The following table sets forth the mix of the Company's business based on statutory gross premiums written for years ended December 31, 1992, 1993, 1994 and 1995 and the nine months ended September 30, 1996:
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------------ NINE MONTHS ENDED SEPTEMBER 30, 1992 1993 1994(1) 1995(1) 1996(1) --------------------- --------------------- --------------------- --------------------- ---------- (DOLLARS IN MILLIONS) Treaty Property Pro Rata............... $ 303.1 23.1% $ 320.0 19.5% $ 353.3 18.4% $ 419.4 20.9% $ 376.0 Excess of Loss......... 107.4 8.2 218.9 13.4 212.0 11.0 245.2 12.2 187.9 ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- Total................ 410.5 31.3 538.9 32.9 565.3 29.4 664.6 33.1 563.9 Treaty Casualty Pro Rata............... 235.5 17.9 345.1 21.1 410.8 21.4 374.5 18.6 411.1 Excess of Loss......... 245.8 18.7 245.3 15.0 360.9 18.8 320.2 16.0 250.8 ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- Total................ 481.3 36.6 590.4 36.1 771.7 40.2 694.7 34.6 661.9 Facultative Property Pro Rata............... 39.4 3.0 51.1 3.1 56.0 2.9 59.1 3.0 60.5 Excess of Loss......... 42.4 3.2 62.2 3.8 63.2 3.3 88.8 4.4 77.6 ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- Total................ 81.8 6.2 113.3 6.9 119.2 6.2 147.9 7.4 138.1 Facultative Casualty Pro Rata............... 0.6 0.1 1.7 0.0 0.6 0.0 0.2 0.0 3.8 Excess of Loss......... 339.1 25.8 393.3 24.1 466.3 24.2 499.2 24.9 422.5 ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- Total................ 339.7 25.9 395.0 24.1 466.9 24.2 499.4 24.9 426.3 ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- Total................ $ 1,313.3 100.0% $ 1,637.6 100.0% $ 1,923.1 100.0% $ 2,006.6 100.0% $ 1,790.2 ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- Treaty Property Pro Rata............... 21.0% Excess of Loss......... 10.5 --------- Total................ 31.5 Treaty Casualty Pro Rata............... 23.0 Excess of Loss......... 14.0 --------- Total................ 37.0 Facultative Property Pro Rata............... 3.4 Excess of Loss......... 4.3 --------- Total................ 7.7 Facultative Casualty Pro Rata............... 0.2 Excess of Loss......... 23.6 --------- Total................ 23.8 --------- Total................ 100.0% --------- ---------
- ------------------------ (1) The totals for the years ended December 31, 1994 and 1995 and for the nine months ended September 30, 1996 include premiums from primary business written by American Alternative Insurance Corporation, which was acquired by the Company in 1994. The premiums have been allocated to the Facultative Casualty Excess of Loss amount. The Company focuses its treaty marketing efforts on small- to medium-sized regional property and casualty insurers with annual gross premium writings of less than $500 million. These regional insurers generally require higher levels of reinsurance than larger, better capitalized primary insurers and tend to rely more heavily on the Company for their reinsurance needs. Such regional insurers also have greater need for the Company's high level of insurance skills and services. The Company markets its facultative business to large primary insurers, which comprise the largest segment of the commercial insurance market, and smaller regional primary insurers whose commercial insurance risks are more limited in volume and scope. The Company also markets to large commercial insurance buyers, such as major corporations and governmental entities, seeking alternatives to the primary insurance companies that traditionally service these insurance buyers. These buyers, and the captive insurance companies, risk retention groups, and other self insurance mechanisms they use, are referred to as the "alternative market". In 1995 and for the first nine months of 1996, approximately 18.0% and 14.9%, respectively, of the Company's total net premiums written represented alternative market business. The Company's business objective is to maximize profitability throughout the property and casualty underwriting cycle. The Company seeks to achieve this objective through a strategy of (i) marketing based upon client needs, referred to by the Company as the "whole account approach," (ii) capitalizing on its financial resources and position as a direct writer by emphasizing long-term client relationships, (iii) adjusting its mix of business to react to changing market conditions, (iv) maintaining a conservative investment portfolio and (v) utilizing prudent actuarial practices in pricing its business and establishing its loss reserves. 14 The Company has developed the whole account approach to develop and deliver products and services closely tailored to its clients' needs, and to integrate the marketing of its products and services with the underwriting of reinsurance risks. Each of the Company's clients is assigned a team of specialists including treaty, facultative and other services specialists, headed by a client relationship manager. In addition to underwriting insurance risks, the Company provides its clients with services including consulting in the areas of investment management, risk management, actuarial analysis, financial analysis, claims management, data processing, mergers and acquisitions due diligence review, reinsurance and insurance brokerage, captive and risk retention group management services and underwriting management services. The Company emphasizes long-term relationships with its clients, a strategy that management believes provides stability to the Company's sources of revenue during underwriting cycles. The Company believes that its close relationships with clients arising from the whole account approach, its direct underwriting, and the extensive services that it offers have led to long-term, stable relationships with clients based more on quality and variety of service than on price. The Company adjusts its mix of business as market conditions change and opportunities arise. In the protracted soft market that currently exists, the Company writes more excess of loss business and opportunistic pro-rata treaties in order to better control the relationship between premiums received and the risk exposure underwritten. The Company also adjusts its premiums written from period to period between the traditional and alternative markets, and domestic and international markets, based on opportunities presented. The Company follows a conservative investment strategy that emphasizes maintaining a high-quality fixed income portfolio that generates high current income. The Company's current investment strategy does not contemplate material additional investment in non-investment grade securities, commercial real estate or commercial mortgages. The Company's bond and short-term investment portfolio, which constitutes 91.1% of the total financial statement value of cash and investments, had an average S&P quality rating of "AA+" at September 30, 1996, which remains unchanged from December 31, 1995. The Company employs a staff of approximately 40 actuaries who are integrated into all of its major operating processes that include: account selection; risk evaluation; rating and pricing; return on equity modeling; consulting assistance to clients; and establishment of the Company's loss reserves. The Company believes this integration allows for a comprehensive, technical approach to pricing its business. Different actuarial units support the pricing for each of the Company's operating divisions. The Company also maintains a Reserve Analysis Unit, which is responsible for continuously monitoring the Company's loss reserve position. The Reserve Analysis Unit staff works together with the rating and pricing actuaries in evaluating the Company's loss reserve position relative to its pricing levels and mix of business (e.g., property versus casualty, excess of loss versus pro rata, low versus moderate versus high hazard and attachment point). The Company seeks to manage and diversify its risk through careful underwriting, active claims management, retrocessional arrangements and the selective commutation of certain reinsurance contracts. The Company's normal business practice is to retrocede a portion of most risks assumed and to purchase additional reinsurance for catastrophic events. In connection with the recent acquisition of the Company by Munich Re, Munich Re and the Company are contemplating various alternatives for integrating all or a portion of the operations of American Re-Insurance during 1997 with all or a portion of the operations of Munich American Reinsurance (50% of which is owned by Munich Re) and all or a portion of the operations of the United States branch of Munich Re. There can be no assurance that any such integration will occur on the timetable currently contemplated or at all, or as to the form that any such integration could take. Any plan for integration would be subject to, among other things, an analysis by Munich Re and the Company of the 15 accounting, operational and legal implications of such integration, the negotiation and execution of definitive agreements as to value and other matters, as well as a variety of other factors that are beyond the Company's control, including, without limitation, the consent of certain of the other shareholders of Munich American Reinsurance and application for and receipt of insurance and other regulatory approvals. There can be no assurance as to the impact of any such integration on the business conditions (financial or otherwise) or prospects of the Company. Munich American Reinsurance had statutory total admitted assets and policyholders' surplus of $1,422.3 million and $323.1 million, respectively, as of December 31, 1995 and $1,526.4 million and $348.3 million, respectively, as of September 30, 1996. Munich American Reinsurance had $413.5 million and $330.5 million of net written premiums for the year ended December 31, 1995 and the nine months ended September 30, 1996, respectively. The United States branch of Munich Re had total statutory admitted assets and statutory policyholders' surplus of $1,396.2 million and $532.8 million, respectively, as of December 31, 1995 and $1,459.7 million and $595.8 million, respectively, as of September 30, 1996. The United States branch of Munich Re had $299.8 million and $198.1 million of net written premiums for the year ended December 31, 1995 and the nine months ended September 30, 1996, respectively. The Company's principal executive offices are located at 555 College Road East, Princeton, New Jersey 08543, and its telephone number is (609) 243-4200. 16 CAPITALIZATION The following table sets forth the consolidated capitalization of the Company and its subsidiaries at September 30, 1996 and as adjusted to give effect to the sale of the Old Notes and the application of the net proceeds therefrom to defease the Company's 10 7/8% Senior Subordinated Debentures due 2004 (the "Subordinated Debentures").
SEPTEMBER 30, 1996 (IN MILLIONS) ------------------------ ACTUAL AS ADJUSTED ---------- ------------ Senior bank debt....................................................................... $ 75.0 $ 75.0 The Notes.............................................................................. -- $ 500.0 Subordinated Debentures................................................................ 450.0 -- ---------- ------------ Total Debt......................................................................... 525.0 575.0 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding as all of its assets Junior Subordinated Debentures.......................... 237.5 237.5 Stockholders' equity Common stock, par value $.01 per share; authorized: 125,000,000 shares; issued and outstanding: 47,293,014 shares at September 30, 1996................................. 0.5 0.5 Additional paid-in capital............................................................. 715.6 715.6 Retained earnings...................................................................... 218.0 184.0(1) Net unrealized appreciation of investments............................................. 12.5 12.5 Net unrealized loss on foreign exchange................................................ (37.8) (37.8) ---------- ------------ Total stockholders' equity......................................................... 908.8 874.8 ---------- ------------ Total capitalization............................................................... $ 1,671.3 $ 1,687.3 ---------- ------------ ---------- ------------
- ------------------------ (1) Reflects a one-time extraordinary loss of $35.7 (on an after-tax basis) million in connection with the defeasance by the Company in respect of the early extinguishment of the Subordinated Debentures. RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS ENDED YEAR ENDED SEPTEMBER DECEMBER 31, 30, -------------------- ------------ 1993 1994 1995 1995 1996 ---- ---- -------- ---- ---- Ratio of earnings to fixed charges......................................................... 3.1 2.9 (1.3)(2) 3.8 4.4 Pro forma ratio of earnings to fixed charges(1)............................................ -- -- (1.6)(2) 4.8 5.4
- ------------------------ (1) Pro forma for the issuance of the Old Notes and the application of the net proceeds therefrom to defease the Subordinated Debentures. (2) For the year ended December 31, 1995, earnings were insufficient to cover fixed charges by $94.9 million and pro forma earnings would have been insufficient to cover pro forma fixed charges by $94.9 million. Earnings consist of income before income taxes plus fixed charges, net of capitalized interest. Fixed charges consist of interest expense before reduction for capitalized interest and one-third of rental expense, which is considered to be representative of an interest factor. 17 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY Set forth below are five years and the most recent interim period of selected financial information which should be read in conjunction with the consolidated financial statements and notes of the Company incorporated by reference from the 1995 10-K and September 10-Q. Financial information is presented for American Re-Insurance for the year ended December 31, 1991, and the nine month period ended September 30, 1992, and for the Company for the three months ended December 31, 1992, and each of the years ended December 31, 1993, 1994 and 1995. The information (other than statutory data) for the year ended December 31, 1991, and the nine months ended September 30, 1992, was derived from the audited consolidated financial statements and related notes of American Re-Insurance. The information (other than statutory data) as of and for the three months ended December 31, 1992, and each of the years ended December 31, 1993, 1994 and 1995 was derived from the audited consolidated financial statements and related notes of the Company. The financial data for the nine months ended September 30, 1996 and 1995, respectively, have been derived from the Company's unaudited consolidated financial statements as of and for the nine month period then ended, which, in the opinion of the management of the Company, includes all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of results of operations and financial position for the periods and as of the dates presented. The results of operations for any interim period are not necessarily indicative of results of operations for the full year. The statutory data have been derived from statutory financial statements. Such statutory financial statements are prepared in accordance with statutory accounting principles, which differ from generally accepted accounting principles ("GAAP").
THE THE COMPANY AMERICAN RE-INSURANCE COMPANY ------------------------------------------ (PREDECESSOR COMPANY) -------------- COMBINED(1) NINE ------------------------------ -------------- MONTHS NINE MONTHS THREE MONTHS ENDED YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED SEPTEMBER DECEMBER 31, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, 30, -------------- -------------- -------------- -------------- ------------------------------- --------- 1991 1992 1992 1992 1993 1994 1995 1995 -------------- -------------- -------------- -------------- --------- --------- --------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) OPERATING DATA: Net premiums written............. $ 901.7 $ 741.7 $ 278.6 $ 1,020.4 $ 1,363.4 $ 1,553.3 $ 1,629.5 $ 1,238.2 Net premiums earned... 930.1 692.7 270.7 963.4 1,249.9 1,461.4 1,530.9 1,151.0 Losses and LAE(2)..... 677.6 472.0 201.3 673.3 796.9 1,011.0 1,340.2 771.2 Underwriting expenses............ 256.2 245.5 76.4 322.0 403.5 439.3 452.4 337.5 Underwriting gain (loss).............. (3.7) (24.8) (7.1) (31.9) 49.5 11.1 (261.7) 42.3 Net investment income.............. 220.7 165.3 42.0 207.3 165.1 188.7 222.6 166.0 Net realized capital gains (losses)...... 10.4 4.2 (2.1) 2.1 5.1 (0.2) 4.7 4.4 Interest expense...... -- -- 24.9 -- 66.1 60.0 60.7 47.7 Income (loss) before income taxes........ 202.8 128.9 (10.5) -- 144.0 120.7 (159.5) 149.7 Income taxes (benefits).......... 44.7 28.2 (7.0) -- 36.0 23.2 (76.6) 37.4 Income (loss) before distributions on preferred securities of subsidiary trust, extraordinary loss, and cumulative effect of accounting change.............. 158.1 100.7 (3.5) -- 108.0 97.5 (82.9) 112.3 1996 --------- OPERATING DATA: Net premiums written............. $ 1,432.8 Net premiums earned... 1,282.3 Losses and LAE(2)..... 820.8 Underwriting expenses............ 374.2 Underwriting gain (loss).............. 87.3 Net investment income.............. 186.0 Net realized capital gains (losses)...... 2.2 Interest expense...... 40.5 Income (loss) before income taxes........ 215.0 Income taxes (benefits).......... 60.3 Income (loss) before distributions on preferred securities of subsidiary trust, extraordinary loss, and cumulative effect of accounting change.............. 154.7
18
THE THE COMPANY AMERICAN RE-INSURANCE COMPANY ------------------------------------------ (PREDECESSOR COMPANY) -------------- COMBINED(1) NINE ------------------------------ -------------- MONTHS NINE MONTHS THREE MONTHS ENDED YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED SEPTEMBER DECEMBER 31, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, 30, -------------- -------------- -------------- -------------- ------------------------------- --------- 1991 1992 1992 1992 1993 1994 1995 1995 -------------- -------------- -------------- -------------- --------- --------- --------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Distributions on preferred securities of subsidiary trust............... -- -- -- -- -- -- (4.4) (1.1) Income (loss) before extraordinary loss and cumulative effect of accounting change.............. 158.1 100.7 (3.5) -- 108.0 97.5 (87.3) 111.2 Extraordinary loss, net of applicable income tax effect... -- -- -- -- (26.6) -- (0.3) (0.3) Cumulative effect of accounting change, net of applicable income tax effect... -- -- -- -- 17.8 -- -- -- Net income (loss) before preferred dividend............ 158.1 100.7 (3.5) -- 99.3 97.5 (87.6) 110.9 Paid-in-kind preferred dividends........... -- -- 2.5 -- 0.9 -- -- -- Net income (loss) available to common shareholders........ 158.1 100.7 (6.0) -- 98.4 97.5 (87.6) 110.9 EARNINGS (LOSS) PER SHARE: Income (loss) before extraordinary loss and cumulative effect of accounting change.............. -- -- $ (0.10) -- $ 2.24 $ 2.01 $ (1.85) $ 2.29 Extraordinary loss, net of tax.......... -- -- -- -- (0.55) -- (0.01) (0.01) Cumulative effect of accounting change, net of tax.......... -- -- -- -- 0.37 -- -- -- Paid-in-kind preferred dividend............ -- -- (0.08) -- (0.02) -- -- -- -------------- -------------- -------------- -------------- --------- --------- --------- --------- Net income (loss) per common share........ -- -- $ (0.18) -- $ 2.04 $ 2.01 $ (1.86) $ 2.28 DIVIDENDS DECLARED PER COMMON SHARE: Cash dividend per common share........ -- -- -- -- -- -- $ 0.32 $ 0.24 OTHER GAAP OPERATING DATA (3): Loss and LAE ratio.... 72.9% 68.1% 74.4% 69.9% 63.8% 69.2% 87.5% 67.0% Underwriting expense ratio............... 27.5 35.5 28.2 33.4 32.3 30.0 29.6 29.3 -------------- -------------- -------------- -------------- --------- --------- --------- --------- Combined ratio........ 100.4% 103.6% 102.6% 103.3% 96.1% 99.2% 117.1% 96.3% 1996 --------- Distributions on preferred securities of subsidiary trust............... (9.8) Income (loss) before extraordinary loss and cumulative effect of accounting change.............. 144.9 Extraordinary loss, net of applicable income tax effect... -- Cumulative effect of accounting change, net of applicable income tax effect... -- Net income (loss) before preferred dividend............ 144.9 Paid-in-kind preferred dividends........... -- Net income (loss) available to common shareholders........ 144.9 EARNINGS (LOSS) PER SHARE: Income (loss) before extraordinary loss and cumulative effect of accounting change.............. $ 2.96 Extraordinary loss, net of tax.......... -- Cumulative effect of accounting change, net of tax.......... -- Paid-in-kind preferred dividend............ -- --------- Net income (loss) per common share........ $ 2.96 DIVIDENDS DECLARED PER COMMON SHARE: Cash dividend per common share........ $ 0.30 OTHER GAAP OPERATING DATA (3): Loss and LAE ratio.... 64.0% Underwriting expense ratio............... 29.2 --------- Combined ratio........ 93.2%
19
THE THE COMPANY AMERICAN RE-INSURANCE COMPANY ------------------------------------------ (PREDECESSOR COMPANY) -------------- COMBINED(1) NINE ------------------------------ -------------- MONTHS NINE MONTHS THREE MONTHS ENDED YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED SEPTEMBER DECEMBER 31, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, 30, -------------- -------------- -------------- -------------- ------------------------------- --------- 1991 1992 1992 1992 1993 1994 1995 1995 -------------- -------------- -------------- -------------- --------- --------- --------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) STATUTORY DATA (4): Ratio of net premiums written to surplus............. 1.22x -- -- 1.15x 1.26x 1.39x 1.45x 1.32x Policyholder's surplus............. $ 735.7 -- -- $ 875.8 $ 1,079.3 $ 1,104.1 $ 1,109.6 $ 1,209.8 Loss and LAE ratio.... 73.0% -- -- 68.5% 64.8% 71.2% 88.9% 67.9% Underwriting expense ratio............... 29.7 -- -- 34.3 34.7 32.6 32.1 31.7 -------------- -------------- -------------- -------------- --------- --------- --------- --------- Combined ratio........ 102.7% -- -- 102.8% 99.5% 103.8% 121.0% 99.6% BALANCE SHEET DATA (AT END OF PERIOD): Total investments and cash................ $ 2,752.3 -- $ 2,833.8 -- $ 3,153.3 $ 3.308.9 $ 3,957.5 $ 3,783.4 Total assets.......... 3,812.5(5) -- 5,886.9 -- 6,231.4 6,677.9 7,814.4 7,286.8 Loss and LAE reserves............ 2,063.5(5) -- 3,523.9 -- 3,685.7 3,971.9 4,790.0 4,213.4 Senior bank debt...... -- -- 575.0 -- 275.0 200.0 75.0 -- Senior subordinated debt................ -- -- 450.0 -- 450.0 450.0 450.0 450.0 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding as all its assets Junior Subordinated Debentures.......... -- -- -- -- -- -- 237.5 237.5 Stockholders' equity.. 966.0 -- 386.3 -- 797.2 789.2 847.1 999.9 1996 --------- STATUTORY DATA (4): Ratio of net premiums written to surplus............. 1.54x Policyholder's surplus............. $ 1,182.7 Loss and LAE ratio.... 64.4% Underwriting expense ratio............... 30.3 --------- Combined ratio........ 94.7% BALANCE SHEET DATA (AT END OF PERIOD): Total investments and cash................ $ 4,075.4 Total assets.......... 8,395.6 Loss and LAE reserves............ 4,938.1 Senior bank debt...... 75.0 Senior subordinated debt................ 450.0 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding as all its assets Junior Subordinated Debentures.......... 237.5 Stockholders' equity.. 908.8
- ------------------------ (1) Represents the sum of American Re-Insurance's results for the nine months ended September 30, 1992 and American Re-Insurance's results for the three months ended December 31, 1992. The combined sum has been presented for comparison of significant operating data. (2) "LAE" means loss adjustment expenses. (3) GAAP loss and LAE ratio represents the sum of losses and LAE as a percentage of net premiums earned. GAAP underwriting expense ratio represents underwriting expenses as a percentage of net premiums earned. GAAP combined ratio represents the sum of the GAAP loss and LAE ratio and GAAP underwriting expense ratio. (4) Represents statutory data for the applicable period. Ratio of net premiums written to surplus represents statutory net premiums written for the period over statutory policyholders' surplus at the end of such period. Statutory loss and LAE ratio represents the sum of statutory losses and LAE as a percentage of statutory net premiums earned. Statutory underwriting expense ratio represents statutory underwriting expenses as a percentage of statutory net premiums written. Statutory combined ratio represents the sum of the statutory loss and LAE ratio and the statutory underwriting expense ratio. (5) Stated in accordance with the gross financial reporting requirements as prescribed by Financial Accounting Standard No. 113, "Accounting and Reporting for Reinsurance of Short-Duration and Long Duration Contracts." 20 RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1995 The Company's net premiums written increased 15.7% to $1,432.8 million for the nine months ended September 30, 1996, from $1,238.2 million for the same period in 1995. The increase in net premiums written was primarily attributable to increased writings in both treaty and facultative business. Total treaty net premiums written increased 14.8% to $1,020.5 million for the nine months ended September 30, 1996, from $888.6 million for the same period in 1995. In this connection, the Company's domestic operations treaty net premiums written increased 13.7% to $618.5 million for the nine months ended September 30, 1996, from $544.1 million for the same period in 1995. Total facultative net premiums written increased 17.9% to $412.3 million for the nine months ended September 30, 1996, from $349.6 million for the same period in 1995. Accounting for this increase was the Company's domestic operations large finite risk program of $79.6 million written in the third quarter of 1996. The Company's net premiums earned increased 11.4% to $1,282.3 million for the nine months ended September 30, 1996, from $1,151.0 million for the same period in 1995. The increase in net premiums earned was attributable to a 16.0% increase in total treaty net premiums earned to $937.5 million for the 1996 period from $808.5 million for the 1995 period, while facultative net premiums earned increased 0.7% to $344.8 million for the 1996 period, from $342.5 million for the 1995 period. The increase in net premiums earned was primarily attributable to the increase in net premiums written for the nine months ended September 30, 1996, as well as the timing of premiums earned on business in force. Net losses and LAE incurred increased 6.4% to $820.8 million for the nine months ended September 30, 1996, from $771.2 million for the same period in 1995. This increase was primarily attributable to the increase in the proportion of net earned premium exposures that relate to treaties, which contains a higher ultimate accident year loss ratio than facultative business, partially offset by a decrease in losses due to adverse development from claims covering asbestos, environmental-related and other Latent Liability Exposures. Due to the provision made for loss reserve strengthening for Latent Liability Exposures in the fourth quarter of 1995, the Company incurred no losses for Latent Liability Exposures in the nine-month period ended September 30, 1996, compared to $54.7 million for the same period in 1995. Underwriting expense, comprised of commission expense plus operating expense, increased 10.9% to $374.3 million for the nine months ended September 30, 1996, from $337.5 million for the same period in 1995. This increase was primarily due to an increase in commission expense of 14.1% to $274.6 million for the nine months ended September 30, 1996, from $240.7 million for the same period in 1995. This result was partially due to an increase in writings of pro rata treaty premiums. Operating expenses increased 2.9% to $99.6 million for the nine months ended September 30, 1996, from $96.8 million for the same period in 1995, due to an increase in overhead expenses. The Company experienced an underwriting gain (net premiums earned minus losses and LAE incurred and underwriting expenses) of $87.3 million for the nine months ended September 30, 1996, compared to $42.3 million for the same period in 1995. On a GAAP basis, the Company's loss ratio decreased to 64.0% for the nine months ended September 30, 1996, from 67.0% for the same period in 1995 (which included 4.8 points for adverse development for Latent Liability Exposures), while the underwriting expense ratio decreased to 29.2% for the nine months ended September 30, 1996, from 29.3% for the same period in 1995. The reduction in adverse loss development for Latent Liability Exposures in the 1996 period was partially offset by the increase in the proportion of net premiums earned that relates to treaties, which contains a higher accident year loss ratio than facultative business. As a result of the decrease in the loss ratio, the GAAP combined ratio for the nine months ended September 30, 1996, decreased to 93.2%, from 96.3% for the same period in 1995. 21 Pre-tax net investment income increased 12.0% to $186.0 million for the nine months ended September 30, 1996, from $166.0 million for the same period in 1995. This increase was primarily attributable to an increase in the invested asset base, in addition to a higher overall effective interest rate in the investment portfolio. The Company's after-tax net investment income increased by 10.5% to $137.6 million for the nine months ended September 30, 1996, from $124.5 million for the same period in 1995. The after-tax net investment income increase was less than the pre-tax net investment increase due to the Company's decision to continue to increase the percentage of taxable fixed maturity investments in its portfolio, based on the relative attractiveness of investment yields on highly rated taxable instruments, in addition to tax-planning considerations. The Company's interest expense decreased by 15.0% to $40.5 million for the nine months ended September 30, 1996, from $47.7 million for the same period in 1995. This decrease was primarily attributable to the lower level of senior bank debt outstanding during the nine months ended September 30, 1996, compared to the 1995 period, under the Company's revolving credit facility. The Company realized net capital gains of $2.2 million for the nine months ended September 30, 1996, compared to net capital gains of $4.4 million for the same period in 1995. This change was primarily due to net capital gains of $2.1 million realized on bond sales for the nine months ended September 30, 1996, compared to net capital gains of $3.4 million realized on bond sales for the same period in 1995. Other income increased by 34.0% to $35.1 million for the nine months ended September 30, 1996, from $26.2 million for the same period in 1995. The increase in the 1996 period was primarily attributable to an increase of $12.3 million in fee subsidiary revenue. Other expenses increased by 32.4% to $55.0 million for the nine months ended September 30, 1996 from $41.5 million for the same period in 1995. The increase in the 1996 period was attributable to an increase in fee subsidiary expenses of $15.4 million, partially offset by a decrease of $1.5 million in the provision for the allowance for doubtful accounts. Income before income taxes increased by 43.6% to $215.0 million for the nine months ended September 30, 1996, from $149.7 million for the same period in 1995. This increase was primarily attributable to increased underwriting gain and investment income. Federal and foreign income taxes increased by 61.3% to $60.3 million for the nine months ended September 30, 1996, from $37.4 million for the same period in 1995. This increase was due to the increase in income before income taxes, in addition to a decrease in tax-exempt investment income earned by the Company. The Company recognized an after-tax charge of $9.8 million for the nine months ended September 30, 1996, compared to $1.1 million for the same period in 1995, representing the Company's minority interest in the earnings of American Re Capital. The charge is due to the obligations incurred by American Re Capital ("American Re Capital"), a single-purpose, wholly-owned subsidiary trust in which the Company has a minority interest, on its 8 1/2% Cumulative Quarterly Income Preferred Securities ("QUIPS"), which were issued August 30, 1995. In the third quarter of 1995, the Company recognized an extraordinary non-cash after-tax loss of $0.3 million representing the write-off of capitalized financing fees for the Company's prepaid revolving bank credit agreement. There was no comparable charge for the Company in 1996. Net income to common stockholders increased by 30.7% to $144.9 million for the nine months ended September 30, 1996, from $110.9 million for the same period in 1995. Primary earnings per share to common stockholders increased by 29.8% to $2.96 per share for the nine months ended September 30, 1996, from $2.28 per share for the same period in 1995. There were 49.0 million weighted average shares and common stock equivalents outstanding during the nine months ended September 30, 1996, compared to 48.6 million outstanding during the same period in 1995. 22 YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994 The Company's net premiums written increased 4.9% to $1,629.5 million for the year ended December 31, 1995, from $1,553.3 million in 1994. Total treaty net premiums written increased 2.3% to $1,128.2 million for 1995, from $1,103.1 million for 1994, with increases in domestic operations' and international operations' treaty net premiums written, partially offset by a decline in Am-Re Managers, Inc. treaty net premiums written. Facultative net premiums written increased 11.4% to $501.3 million for 1995, from $450.2 million for 1994, primarily due to expansion of existing accounts. International net premiums written, which are included in the treaty and facultative amounts stated above, were $380.5 million or 23.4% of total net premiums written for 1995, compared to $309.3 million, or 19.9% of total net premiums written for 1994. The Company believes that the increase in international premium writings can be attributed to its continued success in implementing its direct whole account marketing approach, as well as increasing opportunities presented in the European market. The Company's net premiums earned increased 4.8% to $1,530.9 million for the year ended December 31, 1995, from $1,461.4 million in 1994. This increase in earned premiums was primarily attributable to the increase in premiums written for 1995, as well as the timing of premiums earned on business in force. Net losses and LAE incurred increased 32.6% to $1,340.2 million for the year ended December 31, 1995, from $1,011.0 million in 1994. This increase was primarily attributable to a $347.4 million charge for loss reserve strengthening, primarily due to increases in net Latent Liability Exposures in 1995. The year ended December 31, 1995 included $10.0 million of catastrophe losses for various Caribbean storms, compared to $66.1 million in catastrophe losses incurred in 1994 from the Northridge Earthquake. During the fourth quarter of 1995, the Company undertook and concluded a major initiative to reevaluate its reserves for Latent Liability Exposures. Factors considered in this process included: (i) the firming of case law in many jurisdictions with respect to coverage decisions on Latent Liability Exposures, which has affected settlement activity of the Company's clients, (ii) greater quantification of potential liabilities at the commercial risk level, which in turn allows for more accurate potential liability information for insurers and ultimately reinsurers, (iii) development of an enhanced claims information system at the Company, which allowed construction of a data base from which estimates with respect to Latent Liability Exposures and the related reinsurance and retrocessional coverage accruing to the benefit of the Company could be reasonably estimated, (iv) efforts taken by the insurance industry and insured parties to quantify exposure to environmental liability in light of Superfund reform initiatives in the United States Congress, and (v) the extensive due diligence consulting activities of AM-RE Consultants, Inc., which have allowed AM-RE Consultants, Inc. to gain knowledge of and evaluate actuarial modeling and reserving, and claims handling methodologies for Latent Liability Exposures. As a result of this reevaluation, the Company announced on January 29, 1996, that in the fourth quarter of 1995 it increased its IBNR loss reserves for Latent Liability Exposures, which relate primarily to accident years prior to 1986, by $587.0 million. Cessions to specific retrocessional arrangements, net of a reserve for uncollectible reinsurance for this reserve charge, were $119.0 million. As a result, the net increase to loss reserves for Latent Liability Exposures recognized by the Company at December 31, 1995, was $468.0 million. After cession, the net charge for loss reserve strengthening was $347.4 million, ($231.0 million, net of tax). Underwriting expense, comprised of commission expense plus operating expense, increased 3.0% to $452.4 million for the year ended December 31, 1995, from $439.3 million in 1994. Commission expense increased slightly to $322.4 million for the year ended December 31, 1995, from $321.5 million in 1994. Operating expenses increased 10.4% to $130.0 million in 1995 from $117.8 million in 1994, primarily due to increased overhead expense, in addition to $4.0 million of expense associated with an 23 ongoing information systems and processes reengineering effort the Company commenced in mid-1995. The Company experienced an underwriting loss (net premiums earned minus losses and LAE incurred and underwriting expenses) of $261.7 million for the year ended December 31, 1995, compared to an underwriting gain of $11.1 million in 1994. The change in the underwriting result was attributable to the charge for loss reserve strengthening recognized in 1995. On a GAAP basis, the Company's loss ratio increased to 87.5% in 1995 (inclusive of 20.4 points due to the charge for loss reserve strengthening and 0.6 points due to catastrophe losses), from 69.2% in 1994 (inclusive of 4.5 points from catastrophe losses), while the underwriting expense ratio decreased to 29.6% in 1995 from 30.0% in 1994. Primarily as a result of the loss reserve strengthening, the Company's 1995 GAAP combined ratio increased to 117.1% from 99.2% for 1994. Pre-tax net investment income increased 18.0% to $222.6 million for the year ended December 31, 1995, from $188.7 million in 1994. This increase was primarily attributable to the increase in invested assets, as well as a higher overall effective interest rate in the investment portfolio. The Company's after-tax net investment income increased by 14.2% to $166.8 million in 1995 from $146.0 million in 1994. The after-tax net investment income increase was less than the pre-tax net investment income increase due to the Company's decision to continue to increase the percentage of taxable fixed maturity investments in its portfolio, based on the relative attractiveness of investment yields on highly rated taxable instruments. The Company's interest expense decreased by 1.2% to $60.7 million for the year ended December 31, 1995, from $60.0 million in 1994. This increase was due to interest rate swap expense of $2.4 million for the year ended December 31, 1995, compared to interest rate swap recoveries of $3.1 million in 1994. The change in the impact of the interest rate swap was partially offset by a 39.4% decrease, or $5.0 million, in bank credit-related interest expense, due to the lower level of senior bank debt outstanding in 1995, and the subsequent retirement of the Company's revolving bank credit facility with proceeds received from the sale of the QUIPS in 1995. The Company realized net capital losses of $4.7 million for the year ended December 31, 1995, compared to net capital losses of $0.2 million in 1994. This change was primarily due to net capital gains of $4.3 million realized on bond sales in 1995, compared to net capital losses of $0.3 million realized on bond sales in 1994. Other income increased by 36.7% to $39.1 million for the year ended December 31, 1995, from $28.6 million in 1994. This increase was primarily attributable to an increase in fee subsidiary revenue. Other expenses increased to $103.4 million in 1995 from $47.5 million in 1994. The increase in the 1995 period was primarily due to a $9.6 million increase in subsidiary expenses, and a $34.5 million increase in the provision for the allowance of uncollectible reinsurance related to the charge for loss reserve strengthening in 1995. The Company incurred a loss before income taxes, distributions on preferred securities of subsidiary trust, and extraordinary loss of $159.5 million for the year ended December 31, 1995, compared to income of $120.7 million in 1994. Federal and foreign income tax benefits were $76.6 million for the year ended December 31, 1995, compared to tax expense of $23.2 million in 1994. The Company incurred an after-tax expense of $4.4 million for the year ended December 31, 1995, representing the Company's minority interest in the earnings of American Re Capital. The charge was due to the distributions paid on the QUIPS. There was no comparable charge for the Company in the 1994 period. In 1995, the Company recognized an extraordinary, non-cash after-tax loss of $0.3 million, representing the write-off of capitalized financing fees from the revolving bank credit agreement after the obligation was paid in full. There was no comparable charge for the Company in 1994. 24 The Company experienced a net loss to common stockholders of $87.6 million for the year ended December 31, 1995, compared to net income of $97.5 million in 1994. The net loss per share to common stockholders was $1.86 for the year ended December 31, 1995, compared to primary net income per share of $2.01 in 1994. There were 47.1 million weighted average shares outstanding during the year ended December 31, 1995, compared to 48.5 million share and share equivalents outstanding during the same period in 1994. Share equivalents were not included in the earnings per share calculations for the year ended December 31, 1995, as the effect would have been antidilutive. RECENT DEVELOPMENTS In connection with the acquisition by Munich Re of the Company, the Company will record a one-time charge to operating earnings of approximately of $36.1 million ($35.1 million on an after-tax basis), consisting primarily of financial advisory fees in the fourth quarter of 1996. In connection with the defeasance by the Company of the Subordinated Debentures, the Company will record a one-time extraordinary loss of approximately $34.0 million (on an after-tax basis) in respect of the early extinguishment of the Subordinated Debentures in the fourth quarter of 1996. 25 THE EXCHANGE OFFER GENERAL The Company hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the Exchange Offer), to exchange up to $500 million aggregate principal amount of Exchange Notes for a like aggregate principal amount of Old Notes properly tendered on or prior to the Expiration Date and not withdrawn as permitted pursuant to the procedures described below. The Exchange Offer is being made with respect to all of the Old Notes. As of the date of this Prospectus, $500,000,000 aggregate principal amount of the Old Notes is outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about , 1997, to all holders of Old Notes known to the Company. The Company's obligation to accept Old Notes for exchange pursuant to the Exchange Offer is subject to certain conditions set forth under "Certain Conditions to the Exchange Offer" below. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. PURPOSE OF THE EXCHANGE OFFER The Old Notes were issued on December 24, 1996 in a transaction exempt from the registration requirements of the Securities Act. Accordingly, the Old Notes may not be reoffered, resold, or otherwise transferred unless so registered or unless an applicable exemption from the registration and prospectus delivery requirements of the Securities Act is available. In connection with the issuance and sale of the Old Notes, the Company entered into the Registration Rights Agreement, which requires the Company to file with the Commission a registration statement relating to the Exchange Offer not later than 45 days after the closing of the sale of the Old Notes (the "Closing Date") and to use its best efforts to cause the registration relating to the Exchange Offer to become effective under the Securities Act not later than 180 days after the Closing Date, and the Exchange Offer to be consummated within 10 business days of the effectiveness of the Registration Statement (or if obligated to file the Shelf Registration Statement, the Company will use its best efforts to file the Shelf Registration Statement with the Commission on or prior to the earliest to occur of 90 days after the date on which the Company is notified by the Commission or otherwise determines that it is not required to file the Exchange Offer Registration Statement or permitted to consummate the Exchange Offer or prior to 45 days after the Closing Date). A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement. The Exchange Offer is being made by the Company to satisfy its obligations with respect to the Registration Rights Agreement. The term "Holder," with respect to the Exchange Offer, means any person in whose name Old Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder, or any person whose Old Notes are held of record by The Depository Trust Company. Other than pursuant to the Registration Rights Agreement, the Company is not required to file any registration statement to register any outstanding Old Notes. Holders of Old Notes who do not tender their Old Notes or whose Old Notes are tendered but not accepted would have to rely on exemptions to registration requirements under the securities laws, including the Securities Act, if they wish to sell their Old Notes. The Company is making the Exchange Offer in reliance on the position of the Staff of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the Staff would make a similar determination with respect to the Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the Staff, the Company believes that the Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for 26 resale, resold and otherwise transferred by a Holder (other than any Holder who is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without further compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such Holder's business and that such Holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such Exchange Notes. See "--Resale of Exchange Notes." Each broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes are acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." TERMS OF THE EXCHANGE The Company hereby offers to exchange, subject to the conditions set forth herein and in the Letter of Transmittal accompanying this Prospectus, $1,000 in principal amount of Exchange Notes for each $1,000 in principal amount of the Old Notes. The terms of the Exchange Notes are identical in all material respects to the terms of the Old Notes for which they may be exchanged pursuant to this Exchange Offer, except that the Exchange Notes will generally be freely transferable by holders thereof and will not be subject to any covenant regarding registration. The Exchange Notes will evidence the same indebtedness as the Old Notes and will be entitled to the benefits of the Indenture. See "Description of Exchange Notes." The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. The Company has not requested, and does not intend to request, an interpretation by the staff of the Commission with respect to whether the Exchange Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for sale, resold or otherwise transferred by a holder without compliance with the registration and prospectus delivery provisions of the Securities Act. Instead, based on an interpretation by the Staff of the Commission set forth in a series of no-action letters issued to third parties, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for sale, resold and otherwise transferred by any holder of such Exchange Notes (other than any such holder that is a broker-dealer or is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business and such holder has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes and neither such holder nor any other such person is engaging in or intends to engage in a distribution of such Exchange Notes. Since the Commission has not considered the Exchange Offer in the context of a no-action letter, there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer. Any holder who is an affiliate of the Company or who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes cannot rely on such interpretation by the staff of the Commission and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." Interest on the Old Notes has accrued from the original date of issuance thereof, December 24, 1996 and will cease to accrue on the date the Exchange Notes are exchanged for the Old Notes. Interest on the Exchange Notes will accrue from the date the Exchange Notes are exchanged for Old Notes and 27 is payable in cash semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 1997. Tendering holders of the Old Notes shall not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of the Old Notes pursuant to the Exchange Offer. EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1997, unless the Company in its sole discretion, has extended the period of time for which the Exchange Offer is open (such date, as it may be extended, is referred to herein as the "Expiration Date"). The Expiration Date will be at least 20 business days after the commencement of the Exchange Offer in accordance with Rule 14e-1(a) under the Exchange Act. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for exchange of any Old Notes, by giving oral or written notice to the Exchange Agent and by giving written notice of such extension to the holders thereof or by timely public announcement no later than 9:00 a.m. New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Old Notes previously tendered will remain subject to the Exchange Offer unless properly withdrawn. The Company expressly reserves the right to (i) terminate or amend the Exchange Offer and not to accept for exchange any Old Notes not theretofore accepted for exchange upon the occurrence of any of the events specified below under "Certain Conditions to the Exchange Offer" which have not been waived by the Company and (ii) amend the terms of the Exchange Offer in any manner which, in its good faith judgment, is advantageous to the Holders of the Old Notes, whether before or after any tender of the Notes. If any such termination or amendment occurs, the Company will notify the Exchange Agent and will either issue a press release or give oral or written notice to the holders of the Old Notes as promptly as practicable. For purposes of the Exchange Offer, a "business day" means any day other than Saturday, Sunday or a date on which banking institutions are required or authorized by New York State law to be closed, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. Unless the Company terminates the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date, the Company will exchange the Exchange Notes for the Old Notes on the Exchange Date. PROCEDURES FOR TENDERING OLD NOTES The tender to the Company of Old Notes by a holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. A holder of Old Notes may tender the same by (i) properly completing and signing the Letter of Transmittal or a facsimile thereof (all references in this Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates representing the Old Notes being tendered and any required signature guarantees and any other document required by the Letter of Transmittal, to the Exchange Agent at its address set forth below on or prior to the Expiration Date (or complying with the procedure for book-entry transfer described below) or (ii) complying with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT 28 TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO OLD NOTES OR LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY. If tendered Old Notes are registered in the name of the signer of the Letter of Transmittal and the Exchange Notes to be issued in exchange therefor are to be issued (and any untendered Old Notes are to be reissued) in the name of the registered holder (which term, for the purposes described herein, shall include any participant in The Depository Trust Company (also referred to as a "book-entry transfer facility") whose name appears on a security listing as the owner of Old Notes), the signature of such signer need not be guaranteed. In any other case, the tendered Old Notes must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Company and duly executed by the registered holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a commercial bank or trust company located or having an office, branch, agency or correspondent in the United States, or by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. (any of the foregoing hereinafter referred to as an ("Eligible Institution"). If the Exchange Notes and/or Old Notes not exchanged are to be delivered to an address other than that of the the registered holder appearing on the note register of the Old Notes, the signature in the Letter of Transmittal must be guaranteed by an Eligible Institution. The Exchange Agent will make a request within two business days after the date of receipt of this Prospectus to establish accounts with respect to the Old Notes at the book-entry transfer facility for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in the book-entry transfer facility's system may make book-entry delivery of Old Notes by causing such book-entry transfer facility to transfer such Old Notes into the Exchange Agent's account with respect to the Old Notes in accordance with the book-entry transfer facility's procedures for such transfer. Although delivery of Old Notes may be effected through book-entry transfer into the Exchange Agent's account at the book-entry transfer facility, an appropriate Letter of Transmittal with any required signature guarantee an all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent at its address set forth below on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. If a holder desires to accept the Exchange Offer and time will not permit a Letter of Transmittal or Old Notes to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Exchange Agent has received at its address set forth below on or prior to the Expiration Date, a letter, telegram or facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) from an Eligible Institution setting forth the name and address of the tendering holder, the names in which the Old Notes are registered and, if possible, the certificate numbers of the Old Notes to be tendered, and stating that the tender is being made thereby and guaranteeing that within three business days after the Expiration Date, the Old Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the book-entry transfer facility), will be delivered by such Eligible Institution together with a properly completed and duly executed Letter of Transmittal (and any other required documents). Unless Old Notes being tendered by the above-described method are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents), the Company may, at its option, reject the tender. Copies of the notice of guaranteed delivery ("Notice of Guaranteed Delivery") which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Exchange Agent. A tender will be deemed to have been received as of the date when (i) the tendering holder's properly completed and duly signed Letter of Transmittal accompanied by the Old Notes (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the book-entry transfer facility) is received by the Exchange Agent, or (ii) a Notice of Guaranteed Delivery or letter, 29 telegram or facsimile transmission to similar effect (as provided above) from an Eligible Institution is received by the Exchange Agent. Issuances of Exchange Notes in exchange for Old Notes tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) by an Eligible Institution will be made only against deposit of the Letter of Transmittal (and any other required documents) and the tendered Old Notes. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Old Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Old Notes not properly tendered or not to accept any particular Old Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Old Notes either before or after the Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Old Notes in the Exchange Offer). The interpretation of the terms and conditions of the Exchange Offer (including the Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with a tender of Old Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If the Letter of Transmittal is signed by a person or persons other than the registered holder or holders of Old Notes, such Old Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders appear on the Old Notes. If the Letter of Transmittal or any Old Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. By tendering, each holder will represent to the Company that, among other things, the Exchange Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the holder, that neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company, or if it is an affiliate it will comply with the registration and prospectus requirements of the Securities Act to the extent applicable. Each broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL The Letter of Transmittal contains, among other things, the following terms and conditions, which are part of the Exchange Offer. The party tendering Old Notes for exchange (the "Transferor") exchanges, assigns and transfers the Old Notes to the Company and irrevocably constitutes and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact to cause the Old Notes to be assigned, transferred and exchanged. The Transferor represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Old Notes and to acquire Exchange Notes issuable upon the 30 exchange of such tendered Old Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Old Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The Transferor also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of tendered Old Notes or transfer ownership of such Old Notes on the account books maintained by a book-entry transfer facility. The Transferor further agrees that acceptance of any tendered Old Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of certain of its obligations under the Registration Rights Agreement. All authority conferred by the Transferor will survive the death or incapacity of the Transferor and every obligation of the Transferor shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of such Transferor. The Transferor certifies that it is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act and that it is acquiring the Exchange Notes offered hereby in the ordinary course of such Transferor's business and that such Transferor has no arrangement with any person to participate in the distribution of such Exchange Notes. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. Each Transferor which is a broker-dealer receiving Exchange Notes for its own account must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. By so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company will, for a period no greater than 180 days after consummation of the Exchange Offer, make available this Prospectus available to any broker-dealer for use in connection with any such resale. WITHDRAWAL RIGHTS Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal sent by telegram, facsimile transmission (receipt confirmed by telephone) or letter must be received by the Exchange Agent at the address set forth herein prior to the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Notes), (iii) specify the principal amount of Old Notes to be withdrawn, (iv) include a statement that such holder is withdrawing his election to have such Old Notes exchanged, (v) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered or as otherwise described above (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee under the Indenture register the transfer of such Old Notes into the name of the person withdrawing the tender and (vi) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. The Exchange Agent will return the properly withdrawn Old Notes promptly following receipt of notice of withdrawal. If Old Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Old Notes or otherwise comply with the book-entry transfer facility procedure. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company and such determination will be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are 31 not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer procedures described above, such Old Notes will be credited to an account with such book-entry transfer facility specified by the holder) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Old Notes" above at any time on or prior to the Expiration Date. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES One business day following the Expiration Date, assuming satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will accept all Old Notes properly tendered and will issue the Exchange Notes. See "--Certain Conditions to the Exchange Offer" below. For purposes of the Exchange Offer, the Company shall be deemed to have accepted properly tendered Old Notes for exchange when, as and if the Company has given oral or written notice thereof to the Exchange Agent. For each Old Note accepted for exchange, the holder of such Old Note will receive an Exchange Note having a principal amount equal to that of the surrendered Old Note. In all cases, issuance of Exchange Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or a timely book-entry confirmation of such Old Notes into the Exchange Agent's account at the book-entry transfer facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Old Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if Old Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer procedures described above, such non-exchanged Old Notes will be credited to an account maintained with such book-entry transfer facility) as promptly as practicable after the expiration of the Exchange Offer. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, or any extension of the Exchange Offer, the Company shall not be required to accept for exchange, or to issue Exchange Notes in exchange for, any Old Notes and may terminate or amend the Exchange Offer (by oral or written notice to the Exchange Agent or by a timely press release) if at any time before the acceptance of such Old Notes for exchange or the exchange of the Exchange Notes for such Old Notes, any of the following conditions exist: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency or regulatory authority or any injunction, order or decree is issued with respect to the Exchange Offer which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or have a material adverse effect on the contemplated benefits of the Exchange Offer to the Company; or (b) any change (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Company that is or may be adverse to the Company, or the Company shall have become aware of facts that have or may have adverse significance with respect to the value of the Old Notes or the Exchange Notes or that may materially impair the contemplated benefits of the Exchange Offer to the Company; 32 (c) any law, rule or regulation or applicable interpretations of the staff of the Commission is issued or promulgated which, in the good faith determination of the Company, do not permit the Company to effect the Exchange Offer; or (d) any governmental approval has not been obtained, which approval the Company, in its sole discretion, deems necessary for the consummation of the Exchange Offer; or (e) there shall have been proposed, adopted or enacted any law, statute, rule or regulation (or an amendment to any existing law, statute, rule or regulation) which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or have a material adverse effect on the contemplated benefits of the Exchange Offer to the Company; or (f) there shall occur a change in the current interpretation by the staff of the Commission which permits the Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes to be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement with any person to participate in the distribution of such Exchange Notes; or (g) there shall have occurred (i) any general suspension of, shortening of hours for, or limitation on prices for, trading in securities on any national securities exchange or in the over-the-counter market (whether or not mandatory), (ii) any limitation by any governmental agency or authority which may adversely affect the ability of the Company to complete the transactions contemplated by the Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks by Federal or state authorities in the United States (whether or not mandatory), (iv) a commencement of a war, armed hostilities or other international or national crisis directly or indirectly involving the United States, (v) any limitation (whether or not mandatory) by any governmental authority on, or other event having a reasonable likelihood of affecting, the extension of credit by banks or other leading institutions in the United States, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof. The Company expressly reserves the right to terminate the Exchange Offer and not accept for exchange any Old Notes upon the occurrence of any of the foregoing conditions (which represent all of the material conditions to the acceptance by the Company of properly tendered Old Notes). In addition, the Company may amend the Exchange Offer at any time prior to the Expiration Date if any of the conditions set forth above occurs. Moreover, regardless of whether any of such conditions has occurred, the Company may amend the Exchange Offer in any manner which, in its good faith judgment, is advantageous to holders of the Old Notes. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. If the Company waives or amends the foregoing conditions, it will, if required by law, extend the Exchange Offer for a minimum of five business days from the date that the Company first gives notice, by public announcement or otherwise, of such waiver or amendment, if the Exchange Offer would otherwise expire within such five business day period. Any determination by the Company concerning the events described above will be final and binding upon all parties. 33 In addition, the Company will not accept for exchange any Old Notes tendered, and no Exchange Notes will be issued in exchange for any such Old Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended. In any such event the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time. The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered for exchange. EXCHANGE AGENT State Street Bank and Trust Company has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addresses set forth below:
BY MAIL: BY HAND/OVERNIGHT COURIER: (INSURED OR REGISTERED RECOMMENDED) State Street Bank and Trust Company State Street Bank and Trust Company Two International Place Two International Place Fourth Floor Fourth Floor Boston, Massachusetts Boston, Massachusetts Attention: Corporate Trust Operations Attention: Corporate Trust Operations Nancy Bowker Nancy Bowker
BY FACSIMILE: (617) 664-5371 (For Eligible Institutions Only) Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent at the address and telephone number set forth in the Letter of Transmittal. DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ON THE LETTER OF TRANSMITTAL, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN THE ONES SET FORTH ON THE LETTER OF TRANSMITTAL, WILL NOT CONSTITUTE A VALID DELIVERY. SOLICITATION OF TENDERS; FEES AND EXPENSES The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The Company will also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this and other related documents to the beneficial owners of the Old Notes and in handling or forwarding tenders for their customers. The estimated cash expenses to be incurred in connection with the Exchange Offer will be paid by the Company and are estimated in the aggregate to be approximately $ , which includes fees and expenses of the Exchange Agent, Trustee, registration fees, accounting, legal, printing and related fees and expenses. No person has been authorized to give any information or to make any representations in connection with the Exchange Offer other than those contained in this Prospectus. If given or made, such information or representations should not be relied upon as having been authorized by the Company. 34 Neither the delivery of this Prospectus nor any exchange made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the respective dates as of which information is given herein. The Exchange Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Old Notes in any jurisdiction in which the making of the Exchange Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Company may, at its discretion, take such action as it may deem necessary to make the Exchange Offer in any such jurisdiction and extend the Exchange Offer to holders of Old Notes in such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws of which require the Exchange Offer to be made by a licensed broker or dealer, the Exchange Offer is being made on behalf of the Company by one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. TRANSFER TAXES The Company will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Old Notes tendered, or if tendered Old Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. ACCOUNTING TREATMENT The Exchange Notes will be recorded at the carrying value of the Old Notes as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company upon the exchange of Exchange Notes for Old Notes. Expenses incurred in connection with the issuance of the Exchange Notes will be amortized over the term of the Exchange Notes. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Notes who do not exchange their Old Notes for Exchange Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon. Old Notes not exchanged pursuant to the Exchange Offer will continue to remain outstanding in accordance with their terms. In general, the Old Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Notes under the Securities Act. Participation in the Exchange Offer is voluntary, and holders of Old Notes should carefully consider whether to participate. Holders of the Old Notes are urged to consult their financial and tax advisors in making their own decision on what action to take. As a result of the making of, and upon acceptance for exchange of all validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the Company will have fulfilled a covenant contained in the Registration Rights Agreement. Holders of Old Notes who do not tender their Old Notes in the Exchange Offer will continue to hold such Old Notes and will be entitled to all the rights and limitations applicable thereto under the Indenture, except for any such rights under the Registration Rights Agreement that by their terms terminate or cease to have further effectiveness as a result of the making of this Exchange 35 Offer. All untendered Old Notes will continue to be subject to the restrictions on transfer set forth in the Indenture. To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered Old Notes could be adversely affected. The Company may in the future seek to acquire, subject to the terms of the Indenture, untendered Old Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company has no present plan to acquire any Old Notes which are not tendered in the Exchange Offer. RESALE OF EXCHANGE NOTES The Company is making the Exchange Offer in reliance on the position of the Staff of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the Staff would make a similar determination with respect to the Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the Staff, the Company believes that the Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by a Holder (other than any Holder who is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without further compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such Holder's business and that such Holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such Exchange Notes. However, any holder who is an "affiliate" of the Company or who has an arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offer, or any broker-dealer who purchased Old Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act (i) could not rely on the applicable interpretations of the Staff and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act. A broker-dealer who holds Old Notes that were acquired for its own account as a result of market-making or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Notes. Each such broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge in the Letter of Transmittal that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the Exchange Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdiction or an exemption from registration or qualification is available and is complied with. The Company has agreed, pursuant to the Registration Rights Agreement and subject to certain specified limitations therein, to register or qualify the Exchange Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any holder of the Exchange Notes reasonably requests in writing; PROVIDED, HOWEVER, that the Company shall not be required to register or qualify to transact business where it is not now so qualified or to take action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Prospectus, in any jurisdiction where it is not now so subject. Such registration or qualification may require the imposition of restrictions or conditions (including suitability requirements for offerees or purchasers) in connection with the offer or sale of any Exchange Notes. 36 DESCRIPTION OF THE EXCHANGE NOTES The Old Notes were issued and the Exchange Notes offered hereby will be issued under an Indenture dated as of December 24, 1996 (the "Indenture") between the Company and State Street Bank and Trust Company. The terms of the Exchange Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Exchange Notes are subject to all such terms, and holders of the Exchange Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the Indenture describes the material terms of the Indenture but does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. The definitions of certain terms used in the following summary are set forth below under "Certain Definitions." The Indenture is an exhibit to the Registration Statement of which this Prospectus is a part. On December 24, 1996, the Company issued $500,000,000 aggregate principal amount of Old Notes under the Indenture. The terms of the Exchange Notes are identical in all material respects to the Old Notes, except for certain transfer restrictions and registration and other rights relating to the exchange of the Old Notes for Exchange Notes. The Trustee will authenticate and deliver Exchange Notes for original issue only in exchange for a like principal amount of Old Notes. Any Old Notes that remain outstanding after the consummation of the Exchange Offer, together with the Exchange Notes, will be treated as a single class of securities under the Indenture. Accordingly, all references herein to specified percentages in aggregate principal amount of the outstanding Exchange Notes shall be deemed to mean, at any time after the Exchange Offer is consummated, such percentage in aggregate principal amount of the Old Notes and Exchange Notes then outstanding. PRINCIPAL, MATURITY AND INTEREST The Notes will be unsecured obligations of the Company and will rank on a parity with all other unsecured and unsubordinated debt of the Company and will be limited in aggregate principal amount to $500 million and will mature on December 15, 2026. Interest on the Notes will accrue at the rate of 7.45% per annum. Interest on the Old Notes has accrued from the original date of issuance thereof, December 24, 1996, and will cease to accrue on the date the Exchange Notes are exchanged for the Old Notes. Interest on the Exchange Notes will accrue from the date the Exchange Notes are exchanged for Old Notes and is payable in cash semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 1997. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, interest, premium and Liquidated Damages, if any, on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; PROVIDED that all payments with respect to Global Notes and definitive notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Unless otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. Except as described below under "--Book-Entry, Delivery and Form," the Notes will be issued in denominations of $1,000 and integral multiples thereof. No service charge will be made for any transfer or exchange of such Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company will not be required pursuant to the Indenture to repurchase the Notes, in whole or in part, with the proceeds of any sale, transfer or other disposition of any shares of capital stock of any Subsidiary. Furthermore, the Indenture will not provide for any restrictions on the Company's use of any such proceeds. The Indenture will not contain any provisions that would restrict the Company from incurring, assuming or becoming liable with respect to any indebtedness or other obligations or from paying 37 dividends or making other distributions on its capital stock or purchasing or redeeming its capital stock. The Indenture will not contain any financial ratios or specified levels of net worth or liquidity to which the Company must adhere. In addition, the Indenture will not contain any provisions that would provide protection to Holders of the Notes against a sudden and dramatic decline in credit quality of the Company resulting from any takeover, recapitalization or similar restructuring or from other highly leveraged transactions. OPTIONAL REDEMPTION The Notes will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of such Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semiannual basis, at the Treasury Yield plus 15 basis points, together with accrued interest, and Liquidated Damages, if any, to the date of redemption. SETTLEMENT AND PAYMENT Settlement for the Notes and payments by the Company in respect of the Notes (including principal, interest, premium and Liquidated Damages, if any) will be made in immediately available funds. The Notes are expected to be eligible to trade in the DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in the Notes will, therefore, be required by DTC to be settled in immediately available funds. No assurance can be given as to the effect, if any, of such settlement arrangements on trading activity in the Notes. Because of time zone differences, the securities account of the Euroclear System ("Euroclear") and Cedel, S.A. ("CEDEL") participants (each, a "Member Organization") purchasing an interest in a Global Note from a Participant (as defined herein) that is not a Member Organization will be credited during the securities settlement processing day (which must be a business day for Euroclear or CEDEL, as the case may be) immediately following the DTC settlement date. Transactions in interests in a Global Note settled during any securities settlement processing day will be reported to the relevant Member Organization on the same day. DTC has advised the Company that cash received in Euroclear or CEDEL as a result of sales of interests in a Global Note by or through a Member Organization to a Participant that is not a Member Organization will be received with value on the DTC settlement date, but will not be available in the relevant Euroclear or CEDEL cash account until the business day for Euroclear and CEDEL following settlement in DTC. COVENANTS LIMITATION ON LIENS The Indenture will provide that the Company will not, and will not permit any Principal Subsidiary to, create or suffer to exist any Lien to secure any Indebtedness of the Company or upon any shares of equity interests or evidences of Indebtedness issued by any Principal Subsidiary and owned by the Company or any Principal Subsidiary (whether such shares or evidences of Indebtedness were owned as of the date of the Indenture or thereafter issued or acquired), without making, or causing such Principal Subsidiary to make, effective provision to secure all of the Notes issued under the Indenture and then outstanding by such Lien, equally and ratably with any and all other such Indebtedness thereby secured, so long as such other Indebtedness is so secured, unless, after giving effect thereto, the sum of the principal amount of Indebtedness secured by all Liens incurred after the date of the Indenture does not exceed (other than the Liens permitted by clause (i) through (xviii) in the following sentence (collectively "Permitted Liens")) 10% of Consolidated Net Tangible Assets of the Company. The foregoing restrictions shall not apply to Indebtedness secured by Liens existing on the date of the Indenture or to: (i) Liens on property of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Principal Subsidiary or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or substantially as 38 an entirety to the Company or a Principal Subsidiary, provided that no such Lien as a result of such merger, consolidation, sale, lease or other disposition is extended to other property owned by the Company or such Principal Subsidiary immediately prior thereto; (ii) Liens on property or shares of equity interests or evidences of indebtedness of a corporation existing at the time such corporation becomes a Principal Subsidiary; (iii) Liens securing Indebtedness of a Principal Subsidiary to the Company or to another Principal Subsidiary; (iv) Liens on any property created, assumed or otherwise brought into existence in contemplation of the sale or other disposition of the underlying property, whether directly or indirectly, by way of share disposition or otherwise, provided that the Company must have disposed of such property within 180 days after the creation of such Liens and that any Indebtedness secured by such Liens shall be without recourse to the Company or any Subsidiary; (v) Liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments; (vi) Liens to secure Indebtedness of joint ventures in which the Company or a Principal Subsidiary has an interest, to the extent such Liens are on property or assets of, or equity interests in, such joint ventures; (vii) Liens for taxes, fees, assessments or other governmental charges that are not delinquent or remain payable without penalty provided that no notice of lien has been filed or recorded under the Uniform Commercial Code; (viii) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business that are not delinquent or remain payable without penalty; (ix) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with (A) workers' compensation, unemployment insurance and other social security legislation and (B) insurance contracts, reinsurance contracts, retrocession agreements and other similar agreements incurred in the ordinary course of business (including, but not limited to, pledges or deposits made in connection with letters of credit issued in connection therewith); (x) Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively stayed; (xi) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount, and that do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Principal Subsidiaries; (xii) deposits made by any Principal Subsidiary, or other statutory Lien against the assets of any Principal Subsidiary, in each case made or incurred in favor of policyholders of such Principal Subsidiary in the ordinary course of business pursuant to insurance regulatory requirements; (xiii) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of setoff or similar rights and remedies, in each case as to deposit accounts or other funds maintained with a creditor depository institution; PROVIDED that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board, and (B) such deposit account is not intended by the Company or any Principal Subsidiary to provide collateral to the depository institution; (xiv) Liens arising from Uniform Commercial Code financing statements regarding leases; (xv) Liens or pledges or deposits of cash or securities made by any Principal Subsidiary as a condition to obtaining or maintaining any licenses issued to it by any applicable governmental authority; (xvi) Liens incurred in connection with that certain Equipment Trust 1993-1 dated as of December 30, 1993 between American Re-Insurance and Continental Bank, N.A.; (xvii) Liens incurred in the ordinary course of business on securities to secure repurchase and reverse repurchase obligations in respect of such securities; (xviii) Liens arising as a result of deposits made by the Company to defease the Subordinated Debentures; and (xix) extension, renewal, replacement or refunding of any Lien existing on the date of the Indenture or referred to in clauses (i) to (iii) or clause (xvi), provided that the principal amount of Indebtedness secured thereby and not otherwise authorized by clauses (i) to (iii) or clause (xvi) shall not exceed the principal amount of Indebtedness, plus any premium or fee payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding. 39 RESTRICTIONS ON MERGER AND SALE OF ASSETS The Indenture will provide that the Company will not consolidate with or merge with or into any other Person or sell, lease or otherwise transfer its property and assets as, or substantially as, an entirety to any Person, and the Company will not permit any Person to merge with or into or consolidate with the Company unless (i) either (A) the Company will be the resulting or surviving entity or (B) any successor or purchaser is a corporation, partnership, limited liability company or trust organized under the laws of the United States of America, any State or the District of Columbia, and any such successor or purchaser expressly assumes the Company's obligations on the Notes under a supplemental Indenture; (ii) immediately after giving effect to the transaction no Event of Default, and no event which after notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing; (iii) if, as a result of any such transaction, property or assets of the Company or any Principal Subsidiary would become subject to a Lien which would not be permitted by the limitation on Liens contained in the Indenture, the Company or, if applicable, the successor to the Company, as the case may be, shall take such steps as shall be necessary effectively to secure the Notes issued under the Indenture equally and ratably with Indebtedness secured by such Lien; and (iv) certain other conditions are met. Upon any consolidation or merger into any other Person or any conveyance, transfer or lease of the Company's assets substantially as an entirety to any Person, the successor Person shall succeed to, and be substituted for, the Company under the Indenture, and the Company, except in the case of a lease, shall be relieved of all obligations and covenants under the Indenture and the Notes to the extent it was the predecessor Person. Under the laws of the State of New York, which govern the Indenture, there is no established meaning of the phrase "substantially as an entirety" with regard to a company's assets or property, and the interpretation of such phrase is very fact-intensive. As a result, it may be difficult for Holders of the Notes to ascertain whether a viable claim exists under the Indenture with respect to any given transaction. EVENTS OF DEFAULT AND NOTICE THEREOF The Indenture will provide that each of the following constitutes an "Event of Default": (a) failure to pay principal of (or premium, if any, on) any Note when due; (b) failure to pay any interest or Liquidated Damages on any Note when due, and such failure shall continue for a period of 30 days; (c) failure to perform any other covenant or agreement of the Company under the Indenture, continued for 90 days after written notice as provided in the Indenture; (d) failure by the Company or any Principal Subsidiary to pay Indebtedness in an aggregate principal amount exceeding $20,000,000 at the later of final maturity or upon expiration of any applicable period of grace with respect to such principal amount, and such failure to pay shall not have been cured by the Company within 30 days after such failure, or (ii) acceleration of the maturity of any Indebtedness of the Company or any Principal Subsidiary, having an aggregate principal amount in excess of $20,000,000, if such Indebtedness is not discharged, or such acceleration is not annulled, within 15 days after written notice as provided in the Indenture; and (e) certain events of bankruptcy, insolvency or reorganization. The Holders of a majority in aggregate principal amount of the outstanding Notes shall have the right, subject to such provisions for indemnification of the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture or exercising any trust or power conferred on the Trustee with respect to the Notes. If an Event of Default (other than an Event of Default specified in clause (e) of the second preceding paragraph) with respect to Notes at the time outstanding shall occur and be continuing, either the Trustee or the Holders of at least 25% in principal amount of the Notes may, by a notice in writing to the Company (and to the Trustee if given by the Holders), declare the principal amount of all of the Notes to be due and payable immediately; PROVIDED, however, that under certain circumstances the Holders of a majority in aggregate principal amount of Notes may rescind or annul such declaration and its consequences. If an Event of Default specified in clause (e) of the second preceding paragraph occurs, the 40 Notes then outstanding automatically will become immediately payable without any declaration or other act on the part of the Trustee or any Holder. For information as to waiver of defaults, see "--Modification and Waiver" herein. No Holder of a Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes and the Holders of at least 25% in aggregate principal amount of the outstanding Notes shall have made written request, and offered reasonable indemnity to the Trustee, to institute such proceeding as trustee, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of (or premium or Liquidated Damages, if any) or interest, if any, on such Note on or after the respective due dates expressed in such Note. The Company will be required to furnish to the Trustee annually a statement by certain officers of the Company as to whether the Company is in default in the performance and observance of any of the terms, provisions and conditions of the Indenture. MODIFICATION AND WAIVER Modifications and amendments of the Indenture may be made by the Company and the Trustee, with the consent of the Holders of not less than a majority of principal amount of the outstanding Notes affected by the modification or amendment (including consents obtained in connection with a purchase of, or tender or exchange offer for, outstanding Notes); provided, however, that no such modification or amendment may, without the consent of the Holder of each such outstanding Note affected thereby: (a) change the Stated Maturity of the principal of (or premium, if any) or any installment of principal or interest, if any, on any such Note; (b) reduce the principal amount of (or premium, if any) or the interest rate, if any, on any such Note; (c) reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation; (d) waive a redemption payment with respect to any Note, (e) change the place or currency of payment of principal of (or premium or Liquidated Damages, if any) or the interest, if any, on any such Note; (f) impair the right to institute suit for the enforcement of any such payment on or with respect to any such Note on or after the Stated Maturity (or, in the case of redemption, on or after the Redemption Date); (g) reduce the percentage of the principal amount of outstanding Notes, the consent of the Holders of which is necessary to modify or amend the Indenture; or (h) modify the foregoing requirements or reduce the percentage of outstanding Notes necessary to waive compliance with certain provisions of the Indenture or for waiver of certain defaults. The Holders of at least a majority of the aggregate principal amount of the outstanding Notes may waive compliance by the Company with certain restrictive provisions of the Indenture and waive any past default under the Indenture, except a default in the payment of principal, premium, Liquidated Damages or interest or in the performance of certain covenants. From time to time, the Company and the Trustee, without the consent of the Holders, may amend the Indenture for certain specified purposes, including, without limitation, (i) curing ambiguities, defects or inconsistencies and (ii) other changes so long as any such change does not adversely affect the rights of any of the Holders in any material respect. Except in certain limited circumstances, the Company will be entitled to set any day as the record date for the purpose of determining the Holders of outstanding Notes entitled to give or take any direction, notice, consent, waiver or other action under the Indenture, in the manner and subject to the limitations provided in the Indenture. In certain limited circumstances, the Trustee will be entitled to set a record date for action by Holders. If a record date is set for any action to be taken by Holders, such action may be taken only by persons who are Holders of outstanding Notes on the record date. To be effective, such action must be taken by Holders of the requisite principal amount of such Notes within a specified period following the record date. For any particular record date, this period will be 180 days or such 41 shorter period as may be specified by the Company (or the Trustee, if it set the record date), and may be shortened or lengthened (but not beyond 180 days) from time to time. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have the obligations of the Company discharged with respect to the outstanding Notes ("defeasance"). Such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium and Liquidated Damages, if any, and interest on such Notes when such payments are due, or on the redemption date, as the case may be, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and (iv) the defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("covenant defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or an Event of Default with respect to the Notes. In the event covenant defeasance occurs, certain events (not including non-payment, bankruptcy and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either defeasance or covenant defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Liquidated Damages, if any, and interest on the outstanding Notes on the Stated Maturity or on the applicable optional redemption date, as the case may be, of such principal or installment of principal or interest and any mandatory redemption or analogous payments applicable to the outstanding Notes, (ii) in the case of defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (iii) in the case of covenant defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States to the effect that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as clause (e) under the first paragraph under "Events of Default" are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such defeasance or covenant defeasance shall not result in a breach of violation of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any Principal Subsidiary is a party or by which the Company or any Principal Subsidiary is bound; (vi) the Company shall have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company shall have delivered to the 42 Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance or the covenant defeasance, as the case may be, have been compiled with. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. TRANSFER AND EXCHANGE A Holder may transfer or exchange Notes in accordance with the Indenture. The registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of it for all purposes. BOOK-ENTRY, DELIVERY AND FORM Except as set forth below, Exchange Notes will be issued in registered, global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. The certificates representing the Exchange Notes will be represented by a single, permanent Global Exchange Note, in definitive, fully registered form without interest coupons. The Global Note will be deposited upon issuance with the Trustee as custodian for DTC, and registered in the name of DTC or its nominee for credit to an account of a direct or indirect participant in DTC as described below. Except as set forth below, the Global Note may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Note may not be exchanged for Notes in certificated form except in the limited circumstances described below. See "--Exchange of Book-Entry Notes for Certificated Notes." DEPOSITORY PROCEDURES DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book- entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the Initial Purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests and transfer of ownership interests of each actual purchaser of each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. 43 Euroclear and CEDEL will hold interests in the Global Note on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries, which are Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear, and Citibank, N.A., as operator of CEDEL. The depositaries, in turn, will hold such interests in the Global Note in customers' securities accounts in the depositaries' names on the books of DTC. All interests in the Global Note, including those held through Euroclear or CEDEL, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or CEDEL may also be subject to the procedures and requirements of such systems. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in the Global Note to such persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants and certain banks, the ability of a person having beneficial interests in the Global Note to pledge such interests to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. For certain other restrictions on the transferability of the Notes, see "--Exchange of Book-Entry Notes for Certificated Notes," "--Exchange of Certificated Notes for Book-Entry Notes." EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE. Payments in respect of the principal of and premium, if any, and interest on the Global Note registered in the name of DTC or its nominee will be payable by the Trustee to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the persons in whose names the Notes, including the Global Note, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for (i) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global Note, or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Note or (ii) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date, in amounts proportionate to their respective holdings in the principal amount of beneficial interests in the relevant security as shown on the records of DTC unless DTC has reason to believe it will not receive payment on such payment date. Payments by the Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes. Except for trades involving only Euroclear and CEDEL participants, interests in the Global Note are expected to be eligible to trade in DTC's Same-Day Funds Settlement System and secondary market trading activity in such interests will therefore settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its participants. See "--Same-Day Settlement and Payment." Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and CEDEL will be effected in the ordinary way in accordance with their respective rules and operating procedures. 44 Subject to compliance with the transfer restrictions applicable to the Notes described herein, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or CEDEL participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or CEDEL, as the case may be, by its respective depositary; however such cross-market transactions will require delivery of instructions to Euroclear or CEDEL, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and CEDEL participants may not deliver instructions directly to the depositaries for Euroclear or CEDEL. Because of time zone differences, the securities account of a Euroclear or CEDEL participant purchasing an interest in the Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or CEDEL participant, during the securities settlement processing day (which must be a business day for Euroclear and CEDEL) immediately following the settlement date of DTC. DTC has advised the Company that cash received in Euroclear or CEDEL as a result of sales of interests in the Global Note by or through a Euroclear or CEDEL participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or CEDEL cash account only as of the business day for Euroclear or CEDEL following DTC's settlement date. DTC has advised the Company that it will take any action permitted to be taken by a Holder of Notes only at the direction of one or more Participants to whose account with DTC interests in the Global Note are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Note for legended Notes in certificated form, and to distribute such Notes to its Participants. The information in this section concerning DTC, Euroclear and CEDEL and their book-entry systems has been obtained from sources that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures to facilitate transfers of interests in the Global Note among participants in DTC, Euroclear and CEDEL, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Trustee will have any responsibility for the performance by DTC, Euroclear or CEDEL or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES The Global Note is exchangeable for definitive Notes in registered certificated form if (i) DTC (x) notifies the Company that it is unwilling or unable to continue as depositary for the Global Note and the Company thereupon fails to appoint a successor depositary or (y) has ceased to be a clearing agency registered under the Exchange Act, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Notes in certificated form or (iii) there shall have occurred and be continuing an Event of Default or any event which after notice or lapse of time or both would be an Event of Default with respect to the Notes. In all cases, certificated Notes delivered in exchange for the Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures). 45 CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture with respect to any other capitalized terms used herein for which no definition is provided. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Consolidated Net Tangible Assets" of the Company means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities (excluding any indebtedness for money borrowed having a maturity of less than 12 months from the date of the most recent consolidated balance sheet of the Company but which by its terms is renewable or extendible beyond 12 months from such date at the option of the borrower) and (b) all goodwill, trade names, patents, unamortized debt discount and expense and any other like intangibles, all as set forth on the most recent consolidated balance sheet of the Company and computed in accordance with generally accepted accounting principles. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Holder" means a holder of any of the Notes. "Indebtedness" of any Person means (without duplication), with respect to any Person, (i) every obligation of such Person for money borrowed, (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, (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 and (iv) every obligation of the type referred to in clauses (i) through (iii) of another Person the payment of which such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise (but only, in the case of clause (iv), to the extent such Person has guaranteed or is responsible or liable for such obligations). The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Independent Investment Banker" means any of the Initial Purchasers and its successors. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, encumbrance, or other security arrangement of any kind or nature whatsoever on or with respect to such property or assets (including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. 46 "Principal Subsidiary" means American Re-Insurance, or any other Subsidiary of the Company which shall hereafter succeed by merger or otherwise to a major part of the business of one or more of the Principal Subsidiary. The decision as to whether a Subsidiary shall have succeeded to a major part of the Principal Subsidiary shall be made in good faith by the Board of Directors of the Company or a committee thereof by the adoption of a resolution so stating, and the Company shall within 30 days of the date of the adoption of such resolution deliver to the Trustee a copy thereof, certified by the Corporate Secretary or the Assistant Corporate Secretary of the Company. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of the Initial Purchasers and their respective successors; PROVIDED, HOWEVER, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer. "Stated Maturity," when used with respect to any Note or any installment of principal thereof or interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of principal or interest is due and payable. "Subsidiary" of any Person means (i) a corporation more than 50% of the combined voting power of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. 47 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES In the opinion of Simpson Thacher & Bartlett, New York, New York, the exchange of Old Notes for Exchange Notes will not constitute a taxable event to Holders for United States federal income tax purposes. Consequently, no gain or loss will be recognized by a Holder upon receipt of an Exchange Note, the holding period of the Exchange Note will include the holding period of the Old Note and the basis of the Exchange Note will be the same as the basis of the Old Note immediately before the exchange. The opinion of Simpson Thacher & Bartlett is based upon the provisions of the Internal Revenue Code of 1986, as amended, and the regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in federal income tax consequences different from those discussed above. PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTIONS. 48 PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. To the extent any such broker-dealer participates in the Exchange Offer and so notifies the Company, or causes the Company to be so notified in writing,the Company has agreed to make available for a period of no greater than 180 days after the consummation of the Exchange Offer this Prospectus as amended or supplemented, available to such broker-dealer for use in connection with any such resale, and will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. In addition, until , 1997 (90 days after the date of this Prospectus), all dealers effecting transactions in the New Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at prevailing market prices at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Company has agreed to pay all expenses incident to the Exchange Offer (other than commissions and concessions of any broker-dealers), subject to certain prescribed limitations, and will indemnify the holders of the Old Notes against certain liabilities, including certain liabilities that may arise under the Securities Act. By its acceptance of the Exchange Offer, any broker-dealer that receives Exchange Notes pursuant to the Exchange Offer hereby agrees to notify the Company prior to using the Prospectus in connection with the sale or transfer of Exchange Notes, and acknowledges and agrees that, upon receipt of notice from the Company of the happening of any event which makes any statement in the Prospectus untrue in any material respect or which requires the making of any changes in the Prospectus in order to make the statements therein not misleading or which may impose upon the Company disclosure obligations that may have a material adverse effect on the Company (which notice the Company agrees to deliver promptly to such broker-dealer), such broker-dealer will suspend use of the Prospectus until the Company has notified such broker-dealer that delivery of the Prospectus may resume and has furnished copies of any amendment or supplement to the Prospectus to such broker-dealer. 49 EXPERTS The financial statements of the Company and its consolidated subsidiaries as of December 31, 1995 and 1994 and for the years ended December 31, 1995, 1994 and 1993 and the three-month period ended December 31, 1992, and the related financial statement schedules incorporated in this Offering Circular by reference from the 1995 10-K have been audited by Deloitte & Touche LLP, independent auditors, except with respect to the financial statements of the Company and its consolidated subsidiaries for the three-month period ended December 31, 1992 and the related financial statement schedules, as stated in their reports which are based on the reports of other auditors. The reports of Deloitte & Touche LLP include an explanatory paragraph as to a change in the method of accounting in 1994, for debt and equity securities to conform with a new accounting pronouncement: Statement of Financial Accounting Standards No. 115. The explanatory paragraph also states that in 1993, the Company changed its method of accounting for certain reinsurance contracts to conform with two new accounting pronouncements: Emerging Issues Task Force Issue No. 93-6 and Statement of Financial Accounting Standards No. 113. Such financial statements of American Re and its consolidated subsidiaries are incorporated herein in reliance upon the report of Deloitte & Touche LLP given upon their authority as experts in accounting and auditing. LEGAL MATTERS Certain matters relating to the legality of the Notes will be passed upon on behalf of the Company by Robert K. Burgess, Senior Vice President, General Counsel and Secretary for the Company. 50 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE --------- Available Information........................... 3 Risk Factors.................................... 9 The Company..................................... 13 Capitalization.................................. 17 Ratio of Earnings to Fixed Charges.............. 17 Pro Forma Condensed Consolidated Financial Statement..................................... Selected Consolidated Financial Data of the Company....................................... 18 Results of Operations........................... 21 The Exchange Offer.............................. 26 Description of the Exchange Notes............... 37 United States Federal Income Tax Consequences... 48 Plan of Distribution............................ 49 Experts......................................... 50 Legal Matters................................... 50
------------------------ $500,000,000 [LOGO] AMERICAN RE CORPORATION ------------- PROSPECTUS ------------------------ OFFER TO EXCHANGE $500,000,000 OF ITS 7.45% SENIOR NOTES DUE 2026, SERIES B, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR $500,000,000 OF ITS OUTSTANDING 7.45% SENIOR NOTES DUE 2026, SERIES A. , 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. American Re Corporation ("American Re") is a Delaware corporation. Section 145 of the General Corporation Law of the State of Delaware ("GCL") provides that a Delaware corporation has the power to indemnify its officers and directors in certain circumstances. Subsection (a) of Section 145 of the GCL empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party 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 the corporation), against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director or officer acted in good faith in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action proceeding, provided that such director or officer had no cause to believe his conduct was unlawful. Subsection (b) of Section 145 empowers a corporation to indemnify any director or officer, or former director or officer, 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 to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred in connection with the defense or settlement of such action or suit provided that such director or officer acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such director or officer shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the Court of Chancery or the court in which such action was brought shall determine that despite the adjudication of liability such director or officer is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liability under Section 145. Under the Company's Restated Certificate of Incorporation (the "Charter") no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. The Charter and the Bylaws of the Company also provide for indemnification of the officers and directors of the Company to the full extent permitted by applicable law. American Re has placed in effect insurance coverage which purports (a) to insure it against certain costs of indemnification which may be incurred by it pursuant to the aforementioned Bylaw provisions or II-1 otherwise, and (b) to insure the officers and directors of the registrant and of its subsidiaries against certain liabilities incurred by them in the discharge of their functions as officers and directors except for liabilities arising from their own malfeasance. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. Set forth below is a list of the exhibits included as part of this Registration Statement.
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ------ -------------------------------------------------------------------------- 3.1 Restated Certificate of Incorporation of the Company is incorporated by reference from the Company's Form S-1, Registration Statement No. 33-49110, Exhibit 3.1, as filed with the Securities and Exchange Commission on July 1, 1992. *3.2 By-laws of the Company, adopted on November 25, 1996. 3.3 Certificate of Amendment to the Restated Certificate of Incorporation of the Company is incorporated by reference from Amendment No. 2 to the Company's Form S-1, Registration Statement No. 33-54938, Exhibit 3.3, as filed with the Securities and Exchange Commission on January 25, 1993. *4.1 Indenture, dated as of December 24, 1996, among the Company and State Street Bank and Trust Company, as Trustee, relating to the 7.45% Senior Notes, due 2026. *4.2 Form of 7.45% Senior Notes, Series B, due 2026. *4.3 Form of 7.45% Senior Notes, Series A, due 2026. *4.4 Registration Rights Agreement, dated as of December 24, 1996, among the Company, Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette, Merrill Lynch & Co., J.P. Morgan & Co., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc, Smith Barney Inc. and UBS Securities. 5 Opinion of Robert K. Burgess, Senior Vice President, General Counsel and Secretary, dated February , 1997. *8 Tax Opinion of Simpson Thacher & Bartlett, dated as of January , 1997. *12 Computation of Ratio of Earnings to Fixed Charges. *21 List of subsidiaries. 23.1 Consent of Robert K. Burgess, Senior Vice President, General Counsel and Secretary. *23.2 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 8 hereto). *23.3 Consent of Deloitte & Touche LLP dated January 24, 1997 as to the financial statements of the Company and its consolidated subsidiaries dated January 29, 1996. *24 Powers of Attorney. *25 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of State Street Bank and Trust Company, as Trustee.
II-2
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ------ -------------------------------------------------------------------------- 28 Information from reports furnished to state regulatory authorities is incorporated by reference from the Company's Form 10-K, Exhibit 28, as filed with the Securities and Exchange Commission on March 29, 1996. *99.1 Form of Letter of Transmittal. *99.2 Form of Notice of Guaranteed Delivery. *99.3 Form of Guidelines For Certification of Taxpayer Identification Number on Substitute Form W-9
- ------------------------ * Filed herewith ITEM 22. UNDERTAKINGS. 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 reports 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 and Exchange Act of 1934) that are 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. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the questions whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The registrant hereby undertakes: (1) that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) that every prospectus: (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-3 (3) To be filed, 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 fact or event arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (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. (4) 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. (5) 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. (6) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subseqeuent to the effective date of the registration statement through the date of responding to the request. (7) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Princeton, on the 29th day of January, 1997. AMERICAN RE CORPORATION BY: /S/ ROBERT K. BURGESS ----------------------------------------- SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed on the 29th day of January by the following persons in the capacities indicated: /s/ JAMES R. FISHER Senior Vice President - ------------------------------ and Chief Financial and January 29, 1997 James R. Fisher Accounting Officer /s/ CLAUS HELBIG* - ------------------------------ Director January 29, 1997 Claus Helbig /s/ PAUL H. INDERBITZIN* Director, Chairman, Chief - ------------------------------ Executive Officer and January 29, 1997 Paul H. Inderbitzin President /s/ EDWARD B. JOBE* - ------------------------------ Director January 29, 1997 Edward B. Jobe /s/ HANS RATHNOW* - ------------------------------ Director January 29, 1997 Hans Rathnow /s/ HANS-JURGEN SCHINZLER* - ------------------------------ Director January 29, 1997 Hans-Jurgen Schinzler *By: /s/ ROBERT K. BURGESS ------------------------------------------ Senior Vice President, General Counsel and Secretary II-5 INDEX TO EXHIBITS
PAGE NUMBER IN SEQUENTIAL NUMBERING EXHIBIT NO. DESCRIPTION SYSTEM - ------------- ----------------------------------------------------------------------------------- --------------- 3.1 Restated Certificate of Incorporation of the Company is incorporated by reference from the Company's Form S-1, Registration Statement No. 33-49110, Exhibit 3.1, as filed with the Securities and Exchange Commission on July 1, 1992................ *3.2 By-laws of the Company, adopted on November 25, 1996............................... 3.3 Certificate of Amendment to the Restated Certificate of Incorporation of the Company is incorporated by reference from Amendment No. 2 to the Company's Form S-1, Registration Statement No. 33-54938, Exhibit 3.3, as filed with the Securities and Exchange Commission on January 25, 1993........................... *4.1 Indenture, dated as of December 24, 1996, among the Company and State Street Bank and Trust Company, as Trustee, relating to the 7.45% Senior Notes, due 2026...... *4.2 Form of 7.45% Senior Notes, Series B, due 2026..................................... *4.3 Form of 7.45% Senior Notes, Series A, due 2026..................................... *4.4 Registration Rights Agreement, dated as of December 24, 1996, among the Company, Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette, Merrill Lynch & Co., J.P. Morgan & Co., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc, Smith Barney Inc. and UBS Securities................................................... 5 Opinion of Robert K. Burgess, Senior Vice President, General Counsel and Secretary, dated February , 1997.......................................................... *8 Tax Opinion of Simpson Thacher & Bartlett, dated as of January , 1997........ *12 Computation of Ratio of Earnings to Fixed Charges.................................. *21 List of subsidiaries............................................................... 23.1 Consent of Robert K. Burgess, Senior Vice President, General Counsel and Secretary........................................................................ *23.2 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 8 hereto)................................................................ *23.3 Consent of Deloitte & Touche LLP dated January 24, 1997 as to the financial statements of the Company and its consolidated subsidiaries dated January 29, 1996............................................................................. *24 Powers of Attorney................................................................. *25 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of State Street Bank and Trust Company, as Trustee.......................
PAGE NUMBER IN SEQUENTIAL NUMBERING EXHIBIT NO. DESCRIPTION SYSTEM - ------------- ----------------------------------------------------------------------------------- --------------- 28 Information from reports furnished to state regulatory authorities is incorporated by reference from the Company's Form 10-K, Exhibit 28, as filed with the Securities and Exchange Commission on March 29, 1996............................. *99.1 Form of Letter of Transmittal...................................................... *99.2 Form of Notice of Guaranteed Delivery.............................................. *99.3 Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9..............................................................
- ------------------------ * Filed herewith EX-3.2 2 EXH 3.2 - BYLAWS OF AMRE Exhibit 3.2 ========================================= BY-LAWS OF AMERICAN RE CORPORATION ========================================= TABLE OF CONTENTS Section Page ARTICLE I OFFICES 1.01. Registered Office..................................................... 1 1.02. Other Offices......................................................... 1 ARTICLE II MEETINGS OF STOCKHOLDERS 2.01. Annual Meetings....................................................... 1 2.02. Special Meetings...................................................... 1 2.03. Notice of Meetings.................................................... 2 2.04. Waiver of Notice...................................................... 2 2.05. Adjournments.......................................................... 2 2.06. Quorum................................................................ 2 2.07. Voting................................................................ 3 2.08. Proxies............................................................... 3 2.09. Stockholders' Consent in Lieu of Meeting.............................. 3 ARTICLE III BOARD OF DIRECTORS 3.01. General Powers........................................................ 3 3.02. Number and Term of Office............................................. 3 3.03. Resignation........................................................... 4 3.04. Removal............................................................... 4 3.05. Vacancies............................................................. 4 3.06. Meetings.............................................................. 4 3.07. Committees of the Board............................................... 6 3.08. Committee Rules....................................................... 6 3.09. Directors' Consent in Lieu of Meeting................................. 6 3.10. Action by Means of Telephone or Similar Communications Equipment...... 6 (i) Section Page 3.11. Compensation.......................................................... 6 ARTICLE IV OFFICERS 4.01. Officers.............................................................. 7 4.02. Authority and Duties.................................................. 7 4.03. Term of Office, Resignation and Removal............................... 7 4.04. Vacancies............................................................. 7 4.05. The Chairman.......................................................... 7 4.06. The President......................................................... 8 4.07. Vice Presidents....................................................... 8 4.08. The Secretary......................................................... 8 4.09. Assistant Secretaries................................................. 8 4.10. The Treasurer......................................................... 8 4.11. Assistant Treasurers.................................................. 9 ARTICLE V CHECKS, DRAFTS, NOTES, AND PROXIES 5.01. Checks, Drafts and Notes.............................................. 9 5.02. Execution of Proxies.................................................. 9 ARTICLE VI SHARES AND TRANSFERS OF SHARES 6.01. Certificates Evidencing Shares........................................ 10 6.02. Stock Ledger.......................................................... 10 6.03. Transfers of Shares................................................... 10 6.04. Addresses of Stockholders............................................. 10 6.05. Lost, Destroyed and Mutilated Certificates............................ 10 6.06. Regulations........................................................... 11 6.07. Fixing Date for Determination of Stockholders of Record............... 11 (ii) Section Page ARTICLE VII SEAL 7.01. Seal.................................................................. 11 ARTICLE VIII FISCAL YEAR 8.01. Fiscal Year........................................................... 11 ARTICLE IX INDEMNIFICATION AND INSURANCE 9.01. Indemnification........................................................ 12 9.02. Insurance for Indemnification......................................... 14 ARTICLE X AMENDMENTS 10.01. Amendments........................................................... 14 (iii) BY-LAWS OF AMERICAN RE CORPORATION ARTICLE I OFFICES SECTION 1.01. Registered Office. The registered office of American Re Corporation (the "Corporation") in the State of Delaware shall be at the principal office of The Prentice-Hall Corporation System, Inc. in the City of Wilmington, County of New Castle, and the registered agent in charge thereof shall be The Prentice Hall Corporation. SECTION 1.02. Other Offices. The Corporation may also have an office or offices at any other place or places within or without the State of Delaware as the Board of Directors of the Corporation (the "Board") may from time to time determine or the business of the Corporation may from time to time require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 2.01. Annual Meetings. The annual meeting of stockholders of the Corporation for the election of directors of the Corporation ("Directors"), and for the transaction of such other business as may properly come before such meeting, shall be held at such place, date and time as shall be fixed by the Board and designated in the notice or waiver of notice of such annual meeting; provided, however, that no annual meeting of stockholders need be held if all actions, including the election of Directors, required by the General Corporation Law of the State of Delaware (the "General Corporation Law") to be taken at such annual meeting are taken by written consent in lieu of meeting pursuant to Section 2.09 hereof. SECTION 2.02. Special Meetings. Special meetings of stockholders for any purpose or purposes may be called by the Board or the Chairman of the Board, the President or the Secretary of the Corporation or by the recordholders of at least a majority of the shares of common stock of the Corporation issued and outstanding ("Shares") and entitled to vote thereat, to be held at such place, date and time as shall be designated in the notice or waiver of notice thereof. 2 SECTION 2.03. Notice of Meetings. (a) Except as otherwise provided by law, written notice of each annual or special meeting of stockholders stating the place, date and time of such meeting and, in the case of a special meeting, the purpose or purposes for which such meeting is to be held, shall be given personally or by first-class mail (airmail in the case of international communications) to each recordholder of Shares (a "Stockholder") entitled to vote thereat, not less than 10 nor more than 60 days before the date of such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the Stockholder at such Stockholder's address as it appears on the records of the Corporation. If, prior to the time of mailing, the Secretary of the Corporation (the "Secretary") shall have received from any Stockholder a written request that notices intended for such Stockholder are to be mailed to some address other than the address that appears on the records of the Corporation, notices intended for such Stockholder shall be mailed to the address designated in such request. (b) Notice of a special meeting of Stockholders may be given by the person or persons calling the meeting, or, upon the written request of such person or persons, such notice shall be given by the Secretary on behalf of such person or persons. If the person or persons calling a special meeting of Stockholders give notice thereof, such person or persons shall deliver a copy of such notice to the Secretary. Each request to the Secretary for the giving of notice of a special meeting of Stockholders shall state the purpose or purposes of such meeting. SECTION 2.04. Waiver of Notice. Notice of any annual or special meeting of Stockholders need not be given to any Stockholder who files a written waiver of notice with the Secretary, signed by the person entitled to notice, whether before or after such meeting. Neither the business to be transacted at, nor the purpose of, any meeting of Stockholders need be specified in any written waiver of notice thereof. Attendance of a Stockholder at a meeting, in person or by proxy, shall constitute a waiver of notice of such meeting, except when such Stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the grounds that the notice of such meeting was inadequate or improperly given. SECTION 2.05. Adjournments. Whenever a meeting of Stockholders, annual or special, is adjourned to another date, time or place, notice need not be given of the adjourned meeting if the date, time and place thereof are announced at the meeting at which the adjournment is taken. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Stockholder entitled to vote thereat. At the adjourned meeting, any business may be transacted which might have been transacted at the original meeting. SECTION 2.06. Quorum. Except as otherwise provided by law or the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), the 3 recordholders of a majority of the Shares entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at all meetings of Stockholders, whether annual or special. If, however, such quorum shall not be present in person or by proxy at any meeting of Stockholders, the Stockholders entitled to vote thereat may adjourn the meeting from time to time in accordance with Section 2.05 hereof until a quorum shall be present in person or by proxy. SECTION 2.07. Voting. Each Stockholder shall be entitled to one vote for each Share held of record by such Stockholder. Except as otherwise provided by law or the Certificate of Incorporation, when a quorum is present at any meeting of Stockholders, the vote of the recordholders of a majority of the Shares constituting such quorum shall decide any question brought before such meeting. SECTION 2.08. Proxies. Each Stockholder entitled to vote at a meeting of Stockholders or to express, in writing, consent to or dissent from any action of Stockholders without a meeting may authorize another person or persons to act for such Stockholder by proxy. Such proxy shall be filed with the Secretary before such meeting of Stockholders or such action of Stockholders without a meeting, at such time as the Board may require. No proxy shall be voted or acted upon more than three years from its date, unless the proxy provides for a longer period. SECTION 2.09. Stockholders' Consent in Lieu of Meeting. Any action required by the General Corporation Law to be taken at any annual or special meeting of Stockholders, and any action which may be taken at any annual or special meeting of Stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the recordholders of Shares having not less than the minimum number of votes necessary to authorize or take such action at a meeting at which the recordholders of all Shares entitled to vote thereon were present and voted. ARTICLE III BOARD OF DIRECTORS SECTION 3.01. General Powers. The business and affairs of the Corporation shall be managed by the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation or these By-laws directed or required to be exercised or done by Stockholders. SECTION 3.02. Number and Term of Office. The number of Directors shall be four or such other number as shall be fixed from time to time by the Board. Directors need 4 not be Stockholders. Directors shall be elected at the annual meeting of Stockholders or, if, in accordance with Section 2.01 hereof, no such annual meeting is held, by written consent in lieu of meeting pursuant to Section 2.09 hereof, and each Director shall hold office until his successor is elected and qualified, or until his earlier death or resignation or removal in the manner hereinafter provided. SECTION 3.03. Resignation. Any Director may resign at any time by giving written notice to the Board, the Chairman of the Board of the Corporation (the "Chairman") or the Secretary. Such resignation shall take effect at the time specified in such notice or, if the time be not specified, upon receipt thereof by the Board, the Chairman or the Secretary, as the case may be. Unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. SECTION 3.04. Removal. Any or all of the Directors may be removed, with or without cause, at any time by vote of the recordholders of a majority of the Shares then entitled to vote at an election of Directors, or by written consent of the recordholders of Shares pursuant to Section 2.09 hereof. SECTION 3.05. Vacancies. Vacancies occurring on the Board as a result of the removal of Directors without cause may be filled only by vote of the recordholders of a majority of the Shares then entitled to vote at an election of Directors, or by written consent of such recordholders pursuant to Section 2.09 hereof. Vacancies occurring on the Board for any other reason, including, without limitation, vacancies occurring as a result of the creation of new directorships that increase the number of Directors, may be filled by such vote or written consent or by vote of the Board or by written consent of the Directors pursuant to Section 3.08 hereof. If the number of Directors then in office is less than a quorum, such other vacancies may be filled by vote of a majority of the Directors then in office or by written consent of all such Directors pursuant to Section 3.08 hereof. Unless earlier removed pursuant to Section 3.04 hereof, each Director chosen in accordance with this Section 3.05 shall hold office until the next annual election of Directors by the Stockholders and until his successor shall be elected and qualified. SECTION 3.06. Meetings. (a) Annual Meetings. As soon as practicable after each annual election of Directors by the Stockholders, the Board shall meet for the purpose of organization and the transaction of other business, unless it shall have transacted all such business by written consent pursuant to Section 3.08 hereof. (b) Other Meetings. Other meetings of the Board shall be held at such times as the Chairman, the President of the Corporation (the "President"), the Secretary or a majority of the Board shall from time to time determine. 5 (c) Notice of Meetings. The Secretary shall give written notice to each Director of each meeting of the Board, which notice shall state the place, date, time and purpose of such meeting. Notice of each such meeting shall be given to each Director, if by mail, addressed to him at his residence or usual place of business, at least two days before the day on which such meeting is to be held, or shall be sent to him at such place by telecopy, telegraph, cable, or other form of recorded communication, or be delivered personally or by telephone not later than the day before the day on which such meeting is to be held. A written waiver of notice, signed by the Director entitled to notice, whether before or after the time of the meeting referred to in such waiver, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of any meeting of the Board need be specified in any written waiver of notice thereof. Attendance of a Director at a meeting of the Board shall constitute a waiver of notice of such meeting, except as provided by law. (d) Place of Meetings. The Board may hold its meetings at such place or places within or without the State of Delaware as the Board or the Chairman may from time to time determine, or as shall be designated in the respective notices or waivers of notice of such meetings. (e) Quorum and Manner of Acting. One-third of the total number of Directors then in office (but in no event less than two if the total number of directorships, including vacancies, is greater than one and in no event a number less than one-third of the total number of directorships, including vacancies) shall be present in person at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and the vote of a majority of those Directors present at any such meeting at which a quorum is present shall be necessary for the passage of any resolution or act of the Board, except as otherwise expressly required by law, the Certificate of Incorporation or these By-laws. In the absence of a quorum for any such meeting, a majority of the Directors present thereat may adjourn such meeting from time to time until a quorum shall be present. (f) Organization. At each meeting of the Board, one of the following shall act as chairman of the meeting and preside, in the following order of precedence: (i) the Chairman; (ii) the President; (iii) any Director chosen by a majority of the Directors present. The Secretary or, in the case of his absence, any person (who shall be an Assistant Secretary, if an Assistant Secretary is present) whom the chairman of the meeting shall appoint shall act as secretary of such meeting and keep the minutes thereof. 6 SECTION 3.07. Committees of the Board. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board, shall have an may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. SECTION 3.08. Committee Rules. Unless the Board otherwise provides, each committee designated by the Board may make alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article III of these by-laws. SECTION 3.09. Directors' Consent in Lieu of Meeting. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by all the members of the Board or such committee and such consent is filed with the minutes of the proceedings of the Board or such committee. SECTION 3.10. Action by Means of Telephone or Similar Communications Equipment. Any one or more members of the Board, or of any committee thereof, may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. SECTION 3.11. Compensation. Unless otherwise restricted by the Certificate of Incorporation, the Board may determine the compensation of Directors. In addition, as determined by the Board, Directors may be reimbursed by the Corporation for their expenses, if any, in the performance of their duties as Directors. No such compensation or reimbursement shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. 7 ARTICLE IV OFFICERS SECTION 4.01. Officers. The officers of the Corporation shall be the Chairman, the President, the Secretary and a Treasurer and may include one or more Vice Presidents and one or more Assistant Secretaries and one or more Assistant Treasurers. Any two or more offices may be held by the same person. SECTION 4.02. Authority and Duties. All officers shall have such authority and perform such duties in the management of the Corporation as may be provided in these By-laws or, to the extent not so provided, by resolution of the Board. SECTION 4.03. Term of Office, Resignation and Removal. (a) Each officer shall be appointed by the Board and shall hold office for such term as may be determined by the Board. Each officer shall hold office until his successor has been appointed and qualified or his earlier death or resignation or removal in the manner hereinafter provided. The Board may require any officer to give security for the faithful performance of his duties. (b) Any officer may resign at any time by giving written notice to the Board, the Chairman, the President or the Secretary. Such resignation shall take effect at the time specified in such notice or, if the time be not specified, upon receipt thereof by the Board, the Chairman, the President or the Secretary, as the case may be. Unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. (c) All officers and agents appointed by the Board shall be subject to removal, with or without cause, at any time by the Board or by the action of the recordholders of a majority of the Shares entitled to vote thereon. SECTION 4.04. Vacancies. Any vacancy occurring in any office of the Corporation, for any reason, shall be filled by action of the Board. Unless earlier removed pursuant to Section 4.03 hereof, any officer appointed by the Board to fill any such vacancy shall serve only until such time as the unexpired term of his predecessor expires unless reappointed by the Board. SECTION 4.05. The Chairman. The Chairman shall have the power to call special meetings of Stockholders, to call special meetings of the Board and, if present, to preside at all meetings of Stockholders and all meetings of the Board. The Chairman shall perform all duties incident to the office of Chairman of the Board and all such other duties as may from time to time be assigned to him by the Board or these By-laws. 8 SECTION 4.06. The President. The President shall be the chief executive officer of the Corporation and shall have general and active management and control of the business and affairs of the Corporation, subject to the control of the Board, and shall see that all orders and resolutions of the Board are carried into effect. The President shall perform all duties incident to the office of President and all such other duties as may from time to time be assigned to him by the Board or these By-laws. SECTION 4.07. Vice Presidents. Vice Presidents, if any, in order of their seniority or in any other order determined by the Board, shall generally assist the President and perform such other duties as the Board or the President shall prescribe, and in the absence or disability of the President, shall perform the duties and exercise the powers of the President. SECTION 4.08. The Secretary. The Secretary shall, to the extent practicable, attend all meetings of the Board and all meetings of Stockholders and shall record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform the same duties for any committee of the Board when so requested by such committee. He shall give or cause to be given notice of all meetings of Stockholders and of the Board, shall perform such other duties as may be prescribed by the Board, the Chairman or the President and shall act under the supervision of the Chairman. He shall keep in safe custody the seal of the Corporation and affix the same to any instrument that requires that the seal be affixed to it and which shall have been duly authorized for signature in the name of the Corporation and, when so affixed, the seal shall be attested by his signature or by the signature of the Treasurer of the Corporation (the "Treasurer") or an Assistant Secretary or Assistant Treasurer of the Corporation. He shall keep in safe custody the certificate books and stockholder records and such other books and records of the Corporation as the Board, the Chairman or the President may direct and shall perform all other duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board, the Chairman or the President. SECTION 4.09. Assistant Secretaries. Assistant Secretaries of the Corporation ("Assistant Secretaries"), if any, in order of their seniority or in any other order determined by the Board, shall generally assist the Secretary and perform such other duties as the Board or the Secretary shall prescribe, and, in the absence or disability of the Secretary, shall perform the duties and exercise the powers of the Secretary. SECTION 4.10. The Treasurer. The Treasurer shall have the care and custody of all the funds of the Corporation and shall deposit such funds in such banks or other depositories as the Board, or any officer or officers, or any officer and agent jointly, duly authorized by the Board, shall, from time to time, direct or approve. He shall disburse the funds of the Corporation under the direction of the Board and the President. He shall keep a full and accurate account of all moneys received and paid on account of the Corporation and 9 shall render a statement of his accounts whenever the Board, the Chairman or the President shall so request. He shall perform all other necessary actions and duties in connection with the administration of the financial affairs of the Corporation and shall generally perform all the duties usually appertaining to the office of treasurer of a corporation. When required by the Board, he shall give bonds for the faithful discharge of his duties in such sums and with such sureties as the Board shall approve. SECTION 4.11. Assistant Treasurers. Assistant Treasurers of the Corporation ("Assistant Treasurers"), if any, in order of their seniority or in any other order determined by the Board, shall generally assist the Treasurer and perform such other duties as the Board or the Treasurer shall prescribe, and, in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer. ARTICLE V CHECKS, DRAFTS, NOTES, AND PROXIES SECTION 5.01. Checks, Drafts and Notes. All checks, drafts and other orders for the payment of money, notes and other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall be determined, from time to time, by resolution of the Board. SECTION 5.02. Execution of Proxies. The Chairman or the President, or, in the absence or disability of both of them, any Vice President, may authorize, from time to time, the execution and issuance of proxies to vote shares of stock or other securities of other corporations held of record by the Corporation and the execution of consents to action taken or to be taken by any such corporation. All such proxies and consents, unless otherwise authorized by the Board, shall be signed in the name of the Corporation by the Chairman, the President or any Vice President. 10 ARTICLE VI SHARES AND TRANSFERS OF SHARES SECTION 6.01. Certificates Evidencing Shares. Shares shall be evidenced by certificates in such form or forms as shall be approved by the Board. Certificates shall be issued in consecutive order and shall be numbered in the order of their issue, and shall be signed by the Chairman, the President or any Vice President and by the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. If such a certificate is manually signed by one such officer, any other signature on the certificate may be a facsimile. In the event any such officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to hold such office or to be employed by the Corporation before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such officer had held such office on the date of issue. SECTION 6.02. Stock Ledger. A stock ledger in one or more counterparts shall be kept by the Secretary, in which shall be recorded the name and address of each person, firm or corporation owning the Shares evidenced by each certificate evidencing Shares issued by the Corporation, the number of Shares evidenced by each such certificate, the date of issuance thereof and, in the case of cancellation, the date of cancellation. Except as otherwise expressly required by law, the person in whose name Shares stand on the stock ledger of the Corporation shall be deemed the owner and recordholder thereof for all purposes. SECTION 6.03. Transfers of Shares. Registration of transfers of Shares shall be made only in the stock ledger of the Corporation upon request of the registered holder of such shares, or of his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, and upon the surrender of the certificate or certificates evidencing such Shares properly endorsed or accompanied by a stock power duly executed, together with such proof of the authenticity of signatures as the Corporation may reasonably require. SECTION 6.04. Addresses of Stockholders. Each Stockholder shall designate to the Secretary an address at which notices of meetings and all other corporate notices may be served or mailed to such Stockholder, and, if any Stockholder shall fail to so designate such an address, corporate notices may be served upon such Stockholder by mail directed to the mailing address, if any, as the same appears in the stock ledger of the Corporation or at the last known mailing address of such Stockholder. SECTION 6.05. Lost, Destroyed and Mutilated Certificates. Each recordholder of Shares shall promptly notify the Corporation of any loss, destruction or mutilation of any certificate or certificates evidencing any Share or Shares of which he is the recordholder. The Board may, in its discretion, cause the Corporation to issue a new 11 certificate in place of any certificate theretofore issued by it and alleged to have been mutilated, lost, stolen or destroyed, upon the surrender of the mutilated certificate or, in the case of loss, theft or destruction of the certificate, upon satisfactory proof of such loss, theft or destruction, and the Board may, in its discretion, require the recordholder of the Shares evidenced by the lost, stolen or destroyed certificate or his legal representative to give the Corporation a bond sufficient to indemnify the Corporation against any claim made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. SECTION 6.06. Regulations. The Board may make such other rules and regulations as it may deem expedient, not inconsistent with these By-laws, concerning the issue, transfer and registration of certificates evidencing Shares. SECTION 6.07. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or to express consent to, or to dissent from, corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other such action. A determination of the Stockholders entitled to notice of or to vote at a meeting of Stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. ARTICLE VII SEAL SECTION 7.01. Seal. The Board may approve and adopt a corporate seal, which shall be in the form of a circle and shall bear the full name of the Corporation, the year of its incorporation and the words "Corporate Seal Delaware". ARTICLE VIII FISCAL YEAR SECTION 8.01. Fiscal Year. The fiscal year of the Corporation shall end on the thirty-first day of December of each year unless changed by resolution of the Board. 12 ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 9.01. Indemnification. (a) The Corporation shall indemnify any person who was or is a party 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 the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) The Corporation shall 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 to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 9.01(a) and (b) of these By-laws, or in defense of any claim, 13 issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under Section 9.01(a) and (b) of these By-laws (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 9.01(a) and (b) of these By-laws. Such determination shall be made (i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders of the Corporation. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation pursuant to this Article IX. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, other Sections of this Article IX shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. (g) For purposes of this Article IX, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article IX with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (h) For purposes of this Article IX, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on 14 a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, such director, officer, employee or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article IX. (i) The indemnification and advancement of expenses provided by, or granted pursuant to, this Article IX shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 9.02. Insurance for Indemnification. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of Section 145 of the General Corporation Law. ARTICLE X AMENDMENTS SECTION 10.01. Amendments. Any By-law (including these By-laws) may be adopted, amended or repealed by the vote of the recordholders of a majority of the Shares then entitled to vote at an election of Directors or by written consent of Stockholders pursuant to Section 2.09 hereof, or by vote of the Board or by a written consent of Directors pursuant to Section 3.08 hereof. EX-4.1 3 EXH 4.1 - INDENTURE Exhibit 4.1 ================================================================================ AMERICAN RE CORPORATION 7.45% NOTES DUE 2026 ------------------- INDENTURE DATED AS OF DECEMBER 24, 1996 ------------------- ------------------- STATE STREET BANK AND TRUST COMPANY TRUSTEE ------------------- TABLE OF CONTENTS Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1 Section 1.01. Definitions....................................................1 Section 1.02. Other Definitions..............................................8 Section 1.03. Incorporation By Reference of Trust Indenture Act..............8 Section 1.04. Rules of Construction..........................................8 Section 1.05. Compliance Certificates and Opinions...........................9 Section 1.06. Form of Documents Delivered To Trustee.........................9 Section 1.07. Acts of Holders...............................................10 ARTICLE 2 THE NOTES 11 Section 2.01. Form and Dating...............................................11 Section 2.02. Execution, Authentication, Delivery and Dating................12 Section 2.03. Registrar and Paying Agent....................................13 Section 2.04. Paying Agent To Hold Money In Trust...........................13 Section 2.05. Holder Lists..................................................13 Section 2.06. Transfer and Exchange.........................................14 Section 2.07. Replacement Notes.............................................20 Section 2.08. Outstanding Notes.............................................20 Section 2.09. Treasury Notes................................................21 Section 2.10. Temporary Notes...............................................21 Section 2.11. Cancellation..................................................21 Section 2.12. Payment of Interest; Interest Rights Preserved................21 ARTICLE 3 REDEMPTION AND PREPAYMENT 22 Section 3.01. Applicability of Article......................................22 Section 3.02. Election to Redeem; Notice to Trustee.........................22 Section 3.03. Section by Trustee of Notes to Be Redeemed....................22 Section 3.04. Notice of Redemption..........................................23 Section 3.05. Deposit of Redemption Price...................................23 Section 3.06. Notes Payable on Redemption Date..............................24 Section 3.07. Notes Redeemed in Part........................................24 Section 3.08. Redemption....................................................24 Section 3.09. Mandatory Redemption..........................................24 ARTICLE 4 COVENANTS 25 Section 4.01. Payment of Principal, Premium and Interest....................25 Section 4.02. Maintenance of Office or Agency...............................25 Section 4.03. Money for Security Payments to Be Held In Trust...............25 i Section 4.04. Reports.......................................................27 Section 4.05. Statement as to Compliance; Notice of Default; Provision of Financial Statements......................................27 Section 4.06. Payment of Taxes and Other Claims.............................27 Section 4.07. Limitation on Liens...........................................28 Section 4.08. Corporate Existence. .........................................28 ARTICLE 5 SUCCESSORS 28 Section 5.01. Restrictions on Merger........................................28 Section 5.02. Successor Corporation Substituted.............................29 ARTICLE 6 DEFAULTS AND REMEDIES 29 Section 6.01. Events of Default and Notice Thereof..........................29 Section 6.02. Acceleration of Maturity; Rescission..........................30 Section 6.03. Other Remedies................................................30 Section 6.04. Waiver of Past Defaults.......................................31 Section 6.05. Control by Majority...........................................31 Section 6.06. Limitation on Suits...........................................31 Section 6.07. Rights of Holders of Notes to Receive Payment.................31 Section 6.08. Collection Suit by Trustee....................................31 Section 6.09. Trustee May File Proofs of Claim..............................32 Section 6.10. Priorities....................................................32 Section 6.11. Undertaking for Costs.........................................32 Section 6.12. Waiver of Stay, Extension of Usury Laws.......................33 ARTICLE 7 TRUSTEE 33 Section 7.01. Duties of Trustee.............................................33 Section 7.02. Rights of Trustee.............................................34 Section 7.03. Individual Rights of Trustee..................................34 Section 7.04. Trustee's Disclaimer..........................................35 Section 7.05. Notice of Defaults............................................35 Section 7.06. Reports by Trustee to Holders of the Notes....................35 Section 7.07. Compensation and Indemnity....................................35 Section 7.08. Replacement of Trustee........................................36 Section 7.09. Successor Trustee by Merger, etc..............................37 Section 7.10. Eligibility; Disqualification.................................37 Section 7.11. Preferential Collection of Claims Against the Company.........37 ARTICLE 8 DEFEASANCE AND COVENANT DEFEASANCE 37 Section 8.01. Option to Effect Defeasance or Covenant Defeasance............37 Section 8.02. Defeasance and Discharge......................................37 Section 8.03. Covenant Defeasance...........................................38 Section 8.04. Conditions to Defeasance or Covenant Defeasance...............38 ii Section 8.05. Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions...............40 Section 8.06. Reinstatement................................................40 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER 40 Section 9.01. Without Consent of Holders of Notes..........................40 Section 9.02. With Consent of Holders of Notes.............................41 Section 9.03. Compliance with TIA..........................................42 Section 9.04. Revocation and Effect of Consents............................42 Section 9.05. Notation on or Exchange of Notes.............................43 ARTICLE 10 SATISFACTION AND DISCHARGE 43 Section 10.01 satisfaction and discharge of indenture......................43 section 10.02 application of Trust money...................................44 ARTICLE 11 MISCELLANEOUS 44 Section 11.01. Conflict of Any Provision of Indenture with TIA..............44 Section 11.02. Notices......................................................44 Section 11.03. Communication by Holders of Notes with Other Holders of Notes.......................................................46 Section 11.04. Certificate and Opinion as to Conditions Precedent...........46 Section 11.05. Legal Holidays...............................................46 Section 11.06. Reserved.....................................................46 Section 11.07. No Recourse Against Others...................................46 Section 11.08. Governing Law................................................46 Section 11.09. No Adverse Interpretation of Other Agreements................47 Section 11.10. Successors and Assigns.......................................47 Section 11.11. Severability.................................................47 Section 11.12. Counterpart Originals........................................47 Section 11.13. Table of Contents, Headings, etc. ...........................47 iii EXHIBITS Exhibit A-1 FORM OF NOTE Exhibit B-1 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE Exhibit B-2 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE Exhibit B-3 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER OF DEFINITIVE NOTES Exhibit B-4 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE OR REGULATION S GLOBAL NOTE TO DEFINITIVE NOTE Exhibit B-5 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM DEFINITIVE NOTE TO RULE 144A GLOBAL NOTE OR REGULATION S GLOBAL NOTE iv CROSS-REFERENCE TABLE* Trust Indenture Indenture Section Act Section 310(a)(1)...................................................7.10 (a)(2)...................................................7.10 (a)(3)...................................................N.A. (a)(4)...................................................N.A. (a)(5)...................................................7.10 (b)......................................................7.10 (c)......................................................N.A. 311(a)......................................................7.11 (b)......................................................7.11 (c)......................................................N.A. 312(a)......................................................10.03 (b)......................................................10.03 (c)......................................................10.03 313(a)......................................................7.06 (b)(1)...................................................N.A. (b)(2)...................................................7.06; 7.07 (c)......................................................7.06; 10.02 (d)......................................................7.06 314(a)......................................................4.04; 10.02 (b)......................................................N.A. (c)(1)...................................................10.04 (c)(2)...................................................10.04 (c)(3)...................................................N.A. (d)......................................................N.A. (f)......................................................N.A. 315(a)......................................................7.01 (b)......................................................7.05; 10.02 (c)......................................................7.01 (d)......................................................7.01 (e)......................................................6.11 316(a)(last sentence).......................................2.09 (a)(1)(A)................................................6.05 (a)(1)(B)................................................6.04 (a)(2)...................................................N.A. (b)......................................................6.07 317(a)(1) ..................................................6.08 (a)(2)...................................................6.09 (b)......................................................2.04 318(a)......................................................10.01 (b)......................................................N.A. (c)......................................................10.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. v INDENTURE dated as of December __, 1996 between American Re Corporation, a Delaware corporation(the "Company"), and State Street Bank and Trust Company, a Massachusetts trust company (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 7.45% Notes due 2026 (the "Notes") ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Agent" means any Registrar, Paying Agent or co-registrar. "Agent Members " means members of, or participants in, the Depository. "Applicable Procedures" means applicable procedures of the Depository, Euroclear or Cedel Bank, as the case may be. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the board of directors of the Company or any duly authorized committee of such board. "Board Resolution " means a copy of a resolution certified by the Secretary or an Assistant Secretary of the 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 and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in The City of New York or the State of Delaware are authorized or obligated by law, regulation or executive order to close. "Capital Stock" of any Person means any and all shares, interests, participations, or other equivalents (however designated) of such Person's capital stock whether now outstanding or issued after the date hereof. "Code" means the Internal Revenue Code of 1986, as amended, or any successor thereto. "Company" means American Re Corporation, a Delaware corporation, and any successor thereto. "Company Request" or "Company Order" means a written request or order signed in the name of the Company (i) by its Chairman, a Vice Chairman, its President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee; 1 provided, however, that such written request or order may be signed by any two of the officers or directors listed in clause (i) above in lieu of being signed by one of such officers or directors listed in such clause (i) and one of the officers listed in clause (ii) above. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes. "Comparable Treasury Price " shall be determined by an Independent Investment Banker and means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Consolidated Net Tangible Assets" of the Company means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities (excluding any indebtedness for money borrowed having a maturity of less than 12 months from the date of the most recent consolidated balance sheet of the Company but which by its terms is renewable or extendible beyond 12 months from such date at the option of the borrower) and (b) all goodwill, trade names, patents, unamortized debt discount and expense and any other like intangibles, all as set forth on the most recent consolidated balance sheet of the Company and computed in accordance with generally accepted accounting principles. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Notes" means Notes that are in the form of the Notes attached hereto as Exhibit A, that do not include the information called for by footnotes 1 and 2 thereof. "Depository" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depository with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depository" shall mean or include such successor. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" means the offer that may be made by the Company pursuant to the Registration Rights Agreement to exchange Series B Notes for Series A Notes. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public 2 Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession. "Global Note" means, individually and collectively, the Regulation S Global Note and the Rule 144A Global Note. "Holder" means a holder of any of the Notes or a Person in whose name a Definitive Note is registered on the books of the Registrar, or in whose name a beneficial interest in a Global Note is recorded by the Trustee or the Note Custodian. "Indebtedness" of any Person means (without duplication), with respect to any Person, (i) every obligation of such Person for money borrowed, (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, (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 and (iv) every obligation of the type referred to in clauses (i) through (iii) of another Person the payment of which such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise (but only, in the case of clause (iv), to the extent such Person has guaranteed or is responsible or liable for such obligations). The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Independent Investment Banker" means any of the Initial Purchasers and its successors, selected by the Company. "Initial Purchasers" mean Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc., Smith Barney Inc. and UBS Securities LLC. "Interest Payment Date" means each June 15 and December 15. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, encumbrance, or other security arrangement of any kind or nature whatsoever on or with respect to such property or assets (including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Maturity" when used in respect to any Note means the date on which the principal of (and premium, if any) and interest on such Note becomes due and payable as therein or herein provided, whether at Stated Maturity or Redemption Date and whether by declaration of acceleration, call for redemption or otherwise. "Notes" mean the Series A Notes and the Series B Notes. 3 "Note Custodian" means custodian for the Depository of the Notes in global form, or any successor entity thereto. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering" means the Offering of the Notes by the Company. "Officers" Certificate" means a certificate signed by (i) the Chairman, a Vice Chairman, the President, a Vice President or the Treasurer of the Company and (ii) the Secretary or an Assistant Secretary of the Company and delivered to the Trustee; provided, however, that such certificate may be signed by two of the officers or directors listed in clause (i) above in lieu of being signed by one of such officers or directors listed in such clause (i) and one of the officers listed in clause (ii) above. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. Each such opinion shall include the statements provided for in TIA Section 314(e) to the extent applicable. "Outstanding" when used with respect to the Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes, or portions thereof, for whose payment, redemption or purchase 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 Notes; provided that, if such Notes are to redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (c) Notes, except to the extent provided in Sections 8.02 and 8.03, with respect to which the Company has effected defeasance or covenant defeasance as provided in Article Eight; and (d) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands the Notes are valid obligations of the Company; provided, however, that, in determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand, authorization, notice, direction, consent or waiver hereunder, Notes owned by the Company, or any other obligor upon the Notes 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, notice, direction, consent or waiver, only Notes which the Trustee knows to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or such obligor. "Permitted Liens" means (i) Liens on property of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Principal Subsidiary or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or substantially as an entirety to the Company or a Principal Subsidiary, provided that no such Lien as a result of such merger, consolidation, sale, lease or other disposition is extended to property owned by the Company or such Principal Subsidiary immediately prior thereto; (ii) Liens on property or shares of equity interests or evidences of indebtedness of a corporation existing at the time such corporation 4 becomes a Principal Subsidiary; (iii) Liens securing Indebtedness of a Principal Subsidiary to the Company or to another Principal Subsidiary; (iv) Liens on any property created, assumed or otherwise brought into existence in contemplation of the sale or other disposition of the underlying property, whether directly or indirectly, by way of share disposition or otherwise, provided that the Company must have disposed of such property within 180 days after the creation of such Liens and that any Indebtedness secured by such Liens shall be without recourse to the Company or any Subsidiary; (v) Liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments; (vi) Liens to secure Indebtedness of joint ventures in which the Company or a Principal Subsidiary has an interest, to the extent such Liens are on property or assets of, or equity interests in, such joint ventures; (vii) Liens for taxes, fees, assessments or other governmental charges that are not delinquent or remain payable without penalty provided that no notice of lien has been filed or recorded under the Uniform Commercial Code; (viii) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business that are not delinquent or remain payable without penalty; (ix) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with (A) workers' compensation, unemployment insurance and other social security legislation and (B) insurance contracts, reinsurance contracts, retrocession agreements and other similar agreements incurred in the ordinary course of business (including, but not limited to, pledges or deposits made in connection with letters of credit issued in connection therewith); (x) Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively stayed; (xi) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount, and that do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Principal Subsidiaries; (xii) deposits made by any Principal Subsidiary, or other statutory Lien against the assets of any Principal Subsidiary, in each case made or incurred in favor of policyholders of such Principal Subsidiary in the ordinary business pursuant to insurance regulatory requirements; (xiii) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of setoff or similar rights and remedies, in each case as to deposit accounts or other funds maintained with a creditor depository institution, provided that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board, and (B) such deposit account is not intended by the Company or any Principal Subsidiary to provide collateral to the depository institution; (xiv) Liens arising from Uniform Commercial Code financing statements regarding leases; (xv) Liens or pledges or deposits of cash or securities made by any Principal Subsidiary as a condition to obtaining or maintaining any licenses issued to it by any applicable government authority; (xvi) Liens incurred in connection with that certain Equipment Trust 1993-1 dated as of December 30, 1993 between American Re-Insurance and Continental Bank, N.A.; (xvii) Liens incurred in the ordinary course of business on securities to secure repurchase and reverse repurchase obligations in respect of such securities; (xviii) Liens arising as a result of deposits made by the Company to defease the Company's 10 7/8 % Senior Subordinated Notes due 2004; and (xix) extension, renewal, replacement or rebinding of any Lien existing on the date hereof or referred to in clauses (i) to (iii) or clause (xvi), provided that the principal amount of Indebtedness secured thereby and not otherwise authorized by clauses (i) to (iii) or clause (xvi) shall not exceed the principal amount of Indebtedness, plus any premium or fee payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding. 5 "Person" means any individual, corporation, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Principal Subsidiary" means American Re-Insurance, or any other Subsidiary of the Company which shall hereafter succeed by merger or otherwise to a major part of the business of the Principal Subsidiary. The decision as to whether a Subsidiary shall have succeeded to a major part of the Principal Subsidiary shall be made in good faith by the Board of Directors of the Company or a committee thereof by the adoption of a resolution so stating, and the Company shall within 30 days of the date of the adoption of such resolution deliver to the Trustee a copy thereof, certified by the Corporate Secretary or the Assistant Corporate Secretary of the Company. "Redemption Date ", when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture. "Redemption Price", when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by an Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issues (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of the Initial Purchasers and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer and notify the Trustee of the substitution. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of December 1996, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regular Record Date " for the interest payable on any Interest Payment Date means the June 1 or December 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a permanent global note that contains the paragraph referred to in footnote 1 and the additional schedule referred to in footnote 2 to the form of the Note attached hereto as Exhibit A, and that is deposited with and registered in the name of the Depository or its nominee, representing a series of Notes sold in reliance on Regulation S. "Responsible Officer", when used with respect to the Trustee, means any officer in the Corporate Trust Office of the Trustee and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Rule 144A " means Rule 144A promulgated under the Securities Act. 6 "Rule 144A Global Note" means a permanent global note that contains the paragraph referred to in footnote 1 and the additional schedule referred to in footnote 2 to the form of the Note attached hereto as Exhibit A, and that is deposited with and registered in the name of the Depository, representing a series of Notes sold in reliance on Rule 144A. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Series A Notes" means the 7.45% Senior Notes due 2026 issued pursuant to this Indenture. `Series B Notes" means the 7.45% Senior Notes due 2026 to be issued pursuant to this Indenture in connection with the Exchange Offer. "Special Record Date" means a date fixed by the Trustee for the payment of any Defaulted Interest pursuant to Section 2.12. "Stated Maturity," when used with respect to any Note or any installment of principal thereof or interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of principal or interest is due and payable. "Subsidiary" means any Person a majority of the equity ownership or the voting stock of which is at the time owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Transfer Restricted Securities" means securities that bear or are required to bear the legend set forth in Section 2.06 hereof. "Treasury Yield" shall be determined by an Independent Investment Banker and means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "U.S. Government Obligations" means Notes that are (x) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. 7 Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section "Act"................................................ 1.07 "Accredited Investors"............................... 2.01 "Cedel Bank"......................................... 2.01 "Covenant Defeasance"................................ 8.03 "DTC"................................................ 2.03 "Euroclear".......................................... 2.01 "Event of Default"................................... 6.01 "Defeasance"......................................... 8.02 "Paying Agent"....................................... 2.03 "QIB"................................................ 2.01 "Registrar".......................................... 2.03 "Rule 144 A Global Notes"............................ 2.01 SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company and any successor obligors upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; 8 (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time. SECTION 1.05. COMPLIANCE CERTIFICATES AND OPINIONS Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion (other than the certificates required by Section 4.05(a)) with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.06. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representation with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion 9 of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.07. ACTS OF HOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to TIA Section 315) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner which the Trustee deems sufficient. (c) The ownership of Notes shall be proved by a Register kept by the Registrar. (d) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of such Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), any such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not more than 30 days prior to the first solicitation of Holders generally in connection therewith and no later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Notes then Outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for this purpose the Notes then Outstanding shall be computed as of such record date; provided that no such request, demand, authorization, direction, notice, consent, waiver or other Act by the Holders on such recorded date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act by the Holder of any Note shall bind every future Holder of the same Note or the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything 10 done, suffered or omitted to be done by the Trustee, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Note. ARTICLE 2 THE NOTES SECTION 2.01. FORM AND DATING The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A attached hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof (subject to a minimum initial purchase requirement of $100,000 for Notes sold other than in reliance on Rule 144A or Regulation S). The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. (a) Global Notes. Notes offered and sold to qualified institutional buyers as defined in Rule 144A ("QIBs") in reliance on Rule 144A shall be issued initially in the form of one or more global notes in definitive, fully registered form without coupons, (the "Rule 144A Global Note"), which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Depository or a Note Custodian, and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided. Notes offered and sold in reliance on Regulation S shall be issued in the form of one or more global notes in definitive, fully registered form without coupons, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depository, and registered in the name of the Depository or the nominee of the Depository for the accounts of designated agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank, S.A. ("Cedel Bank"), duly executed by the Company and authenticated by the Trustee as hereinafter provided. Prior to the 41st day after the later of the commencement of the offering of the Notes and the date of issuance of the Notes, beneficial interests in the Regulation S Global Notes may be held only through Euroclear or Cedel Bank, unless delivery is made through a 144A Global Note. The "40-day restricted period" (as defined in Regulation S) shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depository, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100 % of the aggregate principal amount of the Regulation S Global Notes (except to the extent of any beneficial owners thereof who acquired an interest therein pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in one or more Rule 144A Global Notes, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Notes from time to time 11 endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "Management Regulations" and "Instructions to Participants" of Cedel Bank shall be applicable to interests in the Regulation S Global Notes that are held by the Agent Members through Euroclear or Cedel Bank. Except as set forth in Section 2.06 hereof, the Global Notes may be transferred, in whole and not in part, only to another nominee of the Depository or to a successor of the Depository or its nominee. (b) Book-Entry Provisions. This Section 2.01(b) shall apply only to the Rule 144A Global Notes and the Regulation S Global Notes deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Section 2.01(b), authenticate and deliver the Global Notes that (i) shall be registered in the name of the Depository or the nominee of the Depository and (ii) shall be delivered by the Trustee to the Depository or pursuant to the Depository's instructions or held by the Note Custodian. Agent Members shall have no rights either under this Indenture with respect to any Global Note held on their behalf by the Depository or by the Note Custodian or under such Global Note, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of an owner of a beneficial interest in any Global Note. (c) Definitive Notes. Notes issued in certificated form to a limited number of institutional investors that qualify as accredited investors as defined in Rule 510(a)(1), (2), (3) and (7) under the Securities Act, shall be substantially in the form of Exhibit A attached hereto (but without including the text referred to in footnote 1 thereto). SECTION 2.02. EXECUTION, AUTHENTICATION, DELIVERY AND DATING An Officer of the Company shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by an Officer of the Company, authenticate Series A Notes for original issue up to the aggregate principal amount of $500,000,000. The Trustee shall, upon a written order of the Company signed by an Officer of the Company authenticate 12 Series B Notes for original issue up to the aggregate principal amount of Series A Notes exchanged in the Exchange Offer or otherwise exchanged for Series A Notes pursuant to the terms of the Registration Rights Agreement. The aggregate principal amount of Notes outstanding at any time may not exceed $500,000,000 except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this lndenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depository with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent with respect to the Global Notes. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days 13 before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Notes. The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture and the procedures of the Depository therefor, which shall include restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Beneficial interests in a Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Note in accordance with the transfer restrictions set forth in the legend in subsection (g) of this Section 2.06. Transfers of beneficial interests in the Global Notes to Persons required to take delivery thereof in the form of an interest in another Global Note shall be permitted as follows: (i) Rule 144A Global Note to Regulation S Global Note. If, at any time, an owner of a beneficial interest in a Rule 144A Global Note deposited with the Depository (or the Note Custodian) wishes to transfer its interest in such Rule 144A Global Note to a Person who is required or permitted to take delivery thereof in the form of an interest in a Regulation S Global Note, such owner shall, subject to the Applicable Procedures, exchange or cause the exchange of such interest for an equivalent beneficial interest in a Regulation S Global Note as provided in this Section 2.06(a)(i). Upon receipt by the Trustee of (1) instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited a beneficial interest in the Regulation S Global Note in an amount equal to the beneficial interest in the applicable Rule 144A Global Note to be exchanged, (2) a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depository and the Euroclear or Cedel Bank account to be credited with such increase, and (3) a certificate in the form of Exhibit B-1 hereto given by the owner of such beneficial interest stating that the transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S, then the Trustee, as Registrar, shall instruct the Depository to reduce or cause to be reduced the aggregate principal amount at maturity of the applicable Rule 144A Global Note and to increase or cause to be increased the aggregate principal amount at maturity of the applicable Regulation S Global Note by the principal amount at maturity of the beneficial interest in the Rule 144A Global Note to be exchanged, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Regulation S Global Note equal to the reduction in the aggregate principal amount at maturity of the applicable Rule 144A Global Note, and to debit, or cause to be debited, from the account of the Person making such exchange or transfer the beneficial interest in the Rule 144A Global Note that is being exchanged or transferred. (ii) Regulation S Global Note to Rule 144A Global Note. If, at any time, an owner of a beneficial interest in a Regulation S Global Note deposited with the Depository or with the Note Custodian wishes to transfer its interest in such Regulation S Global Note to a Person who is required or permitted to take delivery thereof in the form of an interest in a Rule 144A Global Note, such owner shall, subject to the Applicable Procedures, exchange or cause the exchange of such interest for an equivalent beneficial interest in a Rule 144A Global Note as provided in this Section 2.06(a)(ii). Upon receipt by the Trustee of (1) instructions from Euroclear or Cedel Bank, if applicable, and the Depository, directing the Trustee to credit or cause to be credited a beneficial interest in the Rule 144A Global Note equal to the beneficial interest in the Regulation S Global Note to be exchanged, such instructions to contain information regarding the participant account with the Depository to be credited 14 with such increase, (2) a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depository and (3) a certificate in the form of Exhibit B-2 attached hereto given by the owner of such beneficial interest stating (A) if the transfer is pursuant to Rule 144A, that the Person transferring such interest in a Regulation S Global Note reasonably believes that the Person acquiring such interest in a Rule 144A Global Note is a QIB and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and any applicable blue sky or securities laws of any state of the United States, (B) that the transfer complies with the requirements of Rule 144A under the Securities Act and any applicable blue sky or securities laws of any state of the United States or (C) if the transfer is pursuant to any other exemption from the registration requirements of the Securities Act, that the transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the requirements of the exemption claimed, such statement to be supported by an Opinion of Counsel from the transferee or the transferor in form reasonably acceptable to the Company and to the Trustee, then the Trustee, as Registrar, shall instruct the Depository to reduce or cause to be reduced the aggregate principal amount at maturity of such Regulation S Global Note and to increase or cause to be increased the aggregate principal amount at maturity of the applicable Rule 144A Global Note by the principal amount at maturity of the beneficial interest in the Regulation S Global Note to be exchanged, and the Trustee, as Registrar, shall instruct the Depository, concurrently with such reduction, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the applicable Rule 144A Global Note equal to the reduction in the aggregate principal amount at maturity of such Regulation S Global Note and to debit or cause to be debited from the account of the Person making such transfer the beneficial interest in the Regulation S Global Note that is being transferred. (b) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented by a Holder to the Registrar with a request: (x) to register the transfer of the Definitive Notes; or (y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met; provided, however, that the Definitive Notes presented or surrendered for register of transfer or exchange: (i) shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing; and (ii) in the case of a Definitive Note that is a Transfer Restricted Security, such request shall be accompanied by the following additional information and documents, as applicable: (A) if such Transfer Restricted Security is being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification to that effect from such Holder (in substantially the form of Exhibit B-3 hereto); or (B) if such Transfer Restricted Security is being transferred to a QIB in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the 15 Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit B-3 hereto); or (C) if such Transfer Restricted Security is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit B-3 hereto) and an Opinion of Counsel from such Holder or the transferee reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act. (c) Transfer of a Beneficial Interest in a Global Note for a Definitive Note. (i) Any Person having a beneficial interest in a Global Note may upon request, subject to the Applicable Procedures, exchange such beneficial interest for a Definitive Note. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depository (or Euroclear or Cedel Bank, as applicable), from the Depository or its nominee on behalf of any Person having a beneficial interest in a Global Note, and, in the case of a Transfer Restricted Security, the following additional information and documents (all of which may be submitted by facsimile): (A) if such beneficial interest is being transferred to the Person designated by the Depository as being the beneficial owner, a certification to that effect from such Person (in substantially the form of Exhibit B-4 hereto); or (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B-4 hereto); or (C) if the Person transferring the beneficial interest in the Global Note is not the Initial Purchaser of such Global Note to be so transferred and the transfer is other than (i) to the Company, (ii) to a Person who the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A under the Securities Act, (iii) in an offshore transaction in accordance with Rule 903 or 904 (as applicable) under the Securities Act, or (iv) pursuant to an exemption from registration provided by Rule 144 (if available) under the Securities Act, any additional documentation or other evidence (including but not limited to a customary letter of representations from the transferee and an opinion of counsel) as the Company may, in its absolute discretion, require that the transfer is being made in compliance with an applicable exemption from registration, if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B-4 hereto) and an Opinion of Counsel from the transferee or transferor reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act, the Company shall execute and, the Trustee shall authenticate and deliver to the transferee a Definitive Note in the appropriate principal amount. Definitive Notes issued in exchange for a beneficial interest in a Global Note pursuant to this Section 2.06(d) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. 16 (d) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding any other provision of this Indenture (other than the provisions set forth in subsection (f) of this Section 2.06), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (e) Transfer and Exchange of a Definitive Note for a Beneficial Interest in a Global Note. A Definitive Note may not be exchanged for a beneficial interest in a Global Note except, subject to the Applicable Procedures, upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, and, in the case of a Transfer Restricted Security, the following additional information and documents (all of which may be submitted by facsimile): (i) if such beneficial interest is being transferred to the Person designated by the Depository as being the beneficial owner, a certification to that effect from such Person (in substantially the form of Exhibit B-5 hereto); (ii) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B-5 hereto); or (iii) if such beneficial interest is being transferred in reliance on any other exemption from the registration requirements of the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B-5 hereto) and an Opinion of Counsel from the transferee or the transferor reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act, the Trustee shall cancel such Definitive Note in accordance with Section 2.1 1 hereof and cause, or direct the Note Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Note Custodian, the aggregate principal amount of Notes represented by the applicable Global Note (e.g., the Rule 144A Global Note or the Regulation S Global Note, as the case may be) to be increased accordingly. If none of the applicable Global Notes are then outstanding, the Company shall execute and the Trustee shall authenticate a new applicable Global Note in the appropriate principal amount. (f) Authentication of Definitive Notes in Absence of Depository. If at any time: (i) the Depository for the Notes notifies the Company that the Depository is unwilling or unable to continue as Depository for the Global Notes and a successor Depository for the Global Notes is not appointed by the Company within 90 days after delivery of such notice; or (ii) the Company at its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes under this Indenture, then the Company shall execute, and the Trustee shall, upon receipt of an authentication order in accordance with Section 2.02 hereof, authenticate and deliver, Definitive Notes in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes. (g) Legends. 17 (i) Except as permitted by the following paragraphs (ii) and (iii), each Note certificate evidencing Global Notes and Definitive Notes (and all Notes issued in exchange therefor or substitution thereof) shall bear legends in substantially the following form: THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE PURCHASER (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO THE COMPANY OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT INVESTORS AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE NOTES. (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Note) pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act: (A) in the case of any Transfer Restricted Security that is a Definitive Note, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Note that does not bear the legend set forth in (i) above and rescind any restriction on the transfer of such Transfer Restricted Security upon receipt of a certification from the transferring holder substantially in the form of Exhibit B-3 hereto; and (B) in the case of any Transfer Restricted Security represented by a Global Note, such Transfer Restricted Security shall not be required to bear the legend set forth in (i) above, but shall continue to be subject to the provisions of Section 2.06(a) and (b) hereof; provided, however, that with respect to any request for an exchange of a Transfer Restricted Security that is represented by a Global Note for a Definitive Note that does not bear the legend set forth in (i) above, which request is made in reliance upon Rule 144, the Holder thereof shall certify in writing to the Registrar that such request is being made pursuant to Rule 144 (such certification to be substantially in the form of Exhibit B-3 hereto). (iii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Note) in reliance on any exemption from the registration requirements of the Securities Act (other than exemptions pursuant to Rule 144A or Rule 144 under the Securities Act) in which the Holder or the transferee provides an Opinion of Counsel to the Company 18 and the Registrar in form and substance reasonably acceptable to the Company and the Registrar (which Opinion of Counsel shall also state that the transfer restrictions contained in the legend are no longer applicable): (A) in the case of any Transfer Restricted Security that is a Definitive Note, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Note that does not bear the legend set forth in (i) above and rescind any restriction on the transfer of such Transfer Restricted Security; and (B) in the case of any Transfer Restricted Security represented by a Global Note, such Transfer Restricted Security shall not be required to bear the legend set forth in (i) above, but shall continue to be subject to the provisions of Section 2.06(a) and (b) hereof. (iv) Notwithstanding the foregoing, upon consummation of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an authentication. order in accordance with Section 2.02 hereof, the Trustee shall authenticate Series B Notes in exchange for Series A Notes accepted for exchange in the Exchange Offer, which Series B Notes shall not bear the legend set forth in (i) above, and the Registrar shall rescind any restriction on the transfer of such Series B Notes, in each case unless the Holder of such Series A Notes is either (A) a broker-dealer, (B) a Person participating in the distribution of the Series A Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of the Company. (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in Global Notes have been exchanged for Definitive Notes, redeemed, repurchased or canceled, all Global Notes shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee or the Note Custodian, at the direction of the Trustee, to reflect such reduction. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Definitive Notes and Global Notes at the Registrar's request. (ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.08 and 9.05 hereto). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Definitive Notes and Global Notes issued upon any registration of transfer or exchange of Definitive Notes or Global Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Definitive Notes or Global Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required: 19 (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.03 hereof and ending at the close of business on the day of selection; or (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes, and neither the Trustee, any Agent nor the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Definitive Notes and Global Notes in accordance with the provisions of Section 2.02 hereof. SECTION 2.07. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee shall authenticate a replacement if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for any expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because an Issuer or an Affiliate of an Issuer holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than an Issuer, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. 20 SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by an Issuer or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Company signed by an Officer of the Company. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of canceled Notes (subject to the record retention requirement of the Exchange Act in accordance with its standard disposition policies in effect from time to time). The Trustee shall deal with such canceled Notes in accordance with its customary procedures. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note is registered at the close of business on the Regular Record Date for such interest. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date and interest on such defaulted interest at the applicable interest rate borne by the Notes, to the extend lawful (such defaulted interest (and interest thereon) herein collectively called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, At its election in each case, as provided in Subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall give the Trustee at least 15 days' written notice (unless a shorter period is acceptable to the Trustee) of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the 21 aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held by the Trustee in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Subsection provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall not be more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date. In the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Registrar, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Default Interest shall be paid to the Persons in whose names the Notes are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Subsection (b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Subsection, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. ARTICLE 3 REDEMPTION AND PREPAYMENT SECTION 3.01. APPLICABILITY OF ARTICLE. Redemption of Notes at the election of the Company shall be made in accordance with Section 3.08 and this Article. SECTION 3.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes pursuant to Section 3.08 Shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by it (unless a shorter notice period shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed. SECTION 3.03. SECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Notes are to be redeemed, the particular Notes or portions thereof to be redeemed shall be selected not more than 60 days and not less than 30 days prior to the Redemption Date by the Trustee, from the Outstanding Notes not previously called for redemption, either pro rata, by lot or by any other method the Trustee shall deem fair and reasonable, and the amounts to be redeemed may be equal to $ 1,000 or any integral multiple thereof. 22 The Trustee shall promptly notify the Company and the Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principle amount of such Note which has been or is to be redeemed. SECTION 3.04. NOTICE OF REDEMPTION. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at his address appearing in the Register. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Notes are to be redeemed, the identification (and, in the case of a Note to be redeemed in part, the principal amount) of the particular Notes to be redeemed; (d) that on the Redemption Date the Redemption Price will become due and payable upon each such Note or portion thereof, and that (unless the Company shall default in payment of the Redemption Price) interest thereon shall cease to accrue on or after said date; (e) the places or places where such Notes are to be surrendered for payment of the Redemption Price; (f) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (g) the CUSIP number, if any, relating to such Notes, and (h) in the case of a Note to be redeemed in part, the principal amount of such Note to be redeemed and that after the Redemption Date upon surrender of such Note, new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued. Notice of Redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at its request, by the Trustee in the name and at the expense of the Company. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its owning Paying Agent, segregate and hold in trust as provided in Section 3.01) an amount of money in same day funds (or New York Clearing House funds if such deposit is made prior to the applicable Redemption Date) sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Notes or portions thereof which are to be redeemed on that date. 23 SECTION 3.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of Redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall by payable to the Holders of such Notes, registered as such on the relevant Regular Record Dates according to the terms and the provisions of Section 2.12. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal thereof (and premium, if any, thereon) shall, until paid, bear interest from the Redemption Date at the rate borne by such Note. SECTION 3.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 4.02 (with, if the Company, the Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company, the Registrar or the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge to such Holder, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. SECTION 3.08. REDEMPTION. (a) At the option of the Company, the Notes will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of such Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semiannual basis, at the Treasury Yield plus 15 basis points, together with accrued interest, and Liquidated Damages, if any, to the day of redemption, all as determined by an Independent Investment Banker, as set forth in a certificate attached to the notice delivered by the Company to the Trustee pursuant to Section 3.02. (b) Any redemption pursuant to this Section 3.08 shall be made pursuant to the provisions of Section 3.01 through 3.07 hereof. SECTION 3.09. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. 24 ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. Until otherwise designated by the Company, such office or agency in The City of New York shall be State Street Bank and Trust Company, N.A., an affiliate of the Trustee. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to time rescind such designation; provided, however, that no such designation or recession shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or recession and any change in the location of any such office or agency. SECTION 4.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (premium and Liquidated Damages, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (premium and Liquidated Damages, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Notes, it will, on or before each due date of the principal of (premium and Liquidated Damages, if any) or interest on any Notes, deposit with a Paying Agent a sum in same day funds (or New York Clearing House funds if such deposit is made prior to the date on which such deposit is required to be made) sufficient to pay the principal (premium and Liquidated Damages, if any) or interest so becoming due (or at the option of the Company, payment of interest and Liquidated Damages, if any, may be mailed by check to the Holders 25 of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments with respect to Global Notes and Definitive Notes, the holders of which have given wire transfer instructions to the Company shall receive such payments of interest and Liquidated Damages by wire transfer in same day funds) such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (a) hold all sums held by it for the payment of the principal of (premium and Liquidated Damages, if any) or interest on Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal (premium and Liquidated Damages, if any) or interest; (c) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (d) acknowledge, accept and agree to comply in all respects with the provisions of this Indenture relating to the duties, rights and obligations of such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (premium and Liquidated Damages, if any) or interest on any Note and remaining unclaimed for two years after such principal (premium and Liquidated Damages, if any) or interest has become due and payable shall be paid to the Company on Company Request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication any unclaimed balance of such money then remaining will be repaid to the Company. 26 SECTION 4.04. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders and to the Trustee (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information with the SEC for public availability (unless the SEC will not accept such a filing) and shall promptly make such information available to all securities analysts and prospective investors who request it in writing. The Company shall at all times comply with TIA ss. 314(a). (b) For so long as any Transfer Restricted Securities remain outstanding, the Company shall furnish to all Holders and prospective purchasers of the Notes designated by the Holders of Transfer Restricted Securities, promptly upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. SECTION 4.05. STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT; PROVISION OF FINANCIAL STATEMENTS. (a) The Company will deliver to the Trustee, within 120 days after the end of each fiscal year ending after the date hereof, a brief certificate of its principal executive officer, principal financial officer or principal accounting officer stating whether, to such officer's knowledge, the Company is in compliance with all covenants and conditions to be complied with by it under this Indenture. For purposes of this Section 4.05, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. (b) If a Default has occurred and is continuing, or if the Trustee, any Holder or the trustee for or the holder of any other evidence of Indebtedness of the Company (other than Indebtedness in the aggregate principal amount of less than $25,000,000) gives any notice or takes any other action with respect to a claimed default, the Company shall deliver to the Trustee an Officers' Certificate specifying such Default, notice or other action within 5 Business Days of its occurrence. SECTION 4.06. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon it or any Subsidiary or upon the income, profits or property of the Company or any of its Subsidiaries and (b) all material lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company or any of its Subsidiaries that could produce a material adverse effect on the consolidated financial condition of the Company; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and in respect of which appropriate reserves (in the good faith judgment of management of the Company) are being maintained in accordance with GAAP. 27 SECTION 4.07. LIMITATION ON LIENS. The Company shall not, and shall not permit any Principal Subsidiary to, create or suffer to exist any Lien to secure any Indebtedness of the Company or upon any shares of equity interests or evidences of Indebtedness issued by any Principal Subsidiary and owned by the Company or any Principal Subsidiary (whether such shares or evidences of Indebtedness were owned as of the date hereof or thereafter issued or acquired), without making, or causing such Principal Subsidiary to make, effective provision to secure all of the Notes issued hereunder and then outstanding by such Lien, equally and ratably with any and all other such Indebtedness thereby secured, so long as such other Indebtedness is so secured, unless, after giving effect thereto, the sum of the principal amount of Indebtedness secured by all Liens incurred after the date hereof does not exceed (other than Permitted Liens) 10% of Consolidated Net Tangible Assets of the Company. The foregoing restrictions shall not apply to Indebtedness secured by Liens existing on the date hereof or to Permitted Liens. SECTION 4.08. CORPORATE EXISTENCE. Subject to Article Five, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and that of each Subsidiary of the Company and the corporate rights (charter and statutory), corporate licenses and corporate franchises of the Company and its Subsidiaries, except where a failure to do so, singly or in the aggregate, is not likely to have a materially adverse effect upon the business, assets, financial conditions or results of operations of the Company and the Subsidiaries taken as a whole determined on a consolidated basis in accordance with generally accepted accounting principles; provided that the Company shall not be required to preserve any such existence (except of the Company), right, license or franchise if the Board of Directors of the Company, or of the Subsidiary concerned, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or such Subsidiary and that the loss thereof is not disadvantageous in any material respect to the Holders. ARTICLE 5 SUCCESSORS SECTION 5.01. RESTRICTIONS ON MERGER. The Company shall not consolidate with or merge with or into any other Person or sell, lease or otherwise transfer its property and assets as, or substantially as, an entirety to any Person, and the Company shall not permit any Person to merge with or into or consolidate with the Company unless (i) (A) the Company will be the resulting or surviving entity or (B) any successor or purchaser is a corporation, partnership, limited liability company or trust organized under the laws of the United States of America, any State or the District of Columbia, and any such successor or purchaser expressly assumes the Company's obligations on the Notes under a supplemental Indenture; (ii) immediately after giving effect to the transaction no Event of Default, and no event which after notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing; (iii) if, as a result of any such transaction, property or assets of the Company or any Principal Subsidiary would become subject to a Lien which would not be permitted by the limitation on Liens contained herein, the Company or, if applicable, the successor to the Company, as the case may be, shall take such steps as shall be necessary effectively to secure the Notes issued hereunder equally and ratably with Indebtedness secured by such Lien; and (iv) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture 28 comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger or any sale, assignment, transfer, lease or conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. When a successor assumes all the obligations of its predecessor under this Indenture and the Notes, the predecessor will be released from those obligations, provided that in the case of a transfer by lease, the predecessor corporation shall not be released from the payment of principal and interest on the Notes. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT AND NOTICE THEREOF. An "Event of Default" occurs if: (a) the Company fails to pay principal of (or premium if any, on) any Note when due; (b) the Company fails to pay any interest or Liquidated Damages, if any, on any Note when due, continued for 30 days; (c) the Company fails to perform any other covenant or agreement of the Company hereunder, continued for 90 days after written notice as provided herein; (d) (1) the Company or any Principal Subsidiary fails to pay Indebtedness in an aggregate principal amount exceeding $20,000,000 at the later of (i) final maturity or (ii) upon expiration of any applicable period of grace with respect to such principal amount, and such failure to pay shall not have been cured by the Company within 30 days after such failure, or (2) the acceleration of the maturity of any Indebtedness of the Company or any Principal Subsidiary, having an aggregate principal amount in excess of $20,000,000, if such Indebtedness is not discharged, or such acceleration is not annulled, within 15 days after written notice provided in accordance with Section 11.02 herein; (e) a decree or order is entered by a court having jurisdiction in the premises (i) for relief in respect of the Company or any Principal Subsidiary in an involuntary case or proceeding under Bankruptcy Law or (ii) adjudging the Company or any Principal Subsidiary a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Principal Subsidiary under Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Principal Subsidiary or of any substantial part of any of their properties, or ordering the winding up or liquidation of any of their affairs, and any such decree or order remains unstayed and in effect for a period of 60 consecutive days; or (f) the Company or any Principal Subsidiary institutes a voluntary case or proceeding under Bankruptcy Law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the Company or any Principal Subsidiary consents to the entry of a decree or order for relief in respect of the 29 Company or any Principal Subsidiary in any involuntary case or proceeding under Bankruptcy Law or to the institution of bankruptcy or insolvency proceedings against the Company or any Principal Subsidiary, or the Company or any Principal Subsidiary files a petition or answer or consent seeking reorganization or relief under Bankruptcy Law, or consents to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of any of the Company or any Principal Subsidiary or of any substantial part of its property, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due or takes corporate action in furtherance of any such action. SECTION 6.02. ACCELERATION OF MATURITY; RESCISSION. If an Event of Default (other than an Event of Default specified in Section 6.01(e) or 6.01(f) with respect to the Company or any Principal Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25 % of the principal amount of the Notes then Outstanding, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all the Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal shall become due and payable immediately. If an Event of Default specified in Section 6.01(e) or 6.01(f) with respect to the Company or any Principal Subsidiary occurs and is continuing, the amounts described above shall by such fact itself become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. After a declaration of acceleration, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of at least a majority in aggregate principal amount of the Notes Outstanding, by written notice to the Company and the Trustee, may annul such declaration if (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and premium, if any, on any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes and (iv) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes; and (b) all Events of Default, other than the non-payment of principal of the Notes which have become due solely by the declaration of acceleration, have been waived as provided in Section 6.04 or cured. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest and Liquidated Damages, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture - The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. 30 SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Notes; provided, however, that the Holders of at least a majority in aggregate principal amount of the Notes Outstanding may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in aggregate principal amount of the outstanding Notes shall have the right, subject to such provisions for indemnification of the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture or exercising any trust or power conferred on the Trustee with respect to the Notes. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. SECTION 6.06. LIMITATION ON SUITS. No Holder of a Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes unless also the Holders of at least 25 % in aggregate principal amount of the outstanding Notes shall have made written request, and offered reasonable indemnity to the Trustee, to institute such proceeding as trustee, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Notes Outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further 31 amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any, and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6. 10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its 32 discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. SECTION 6.12. WAIVER OF STAY, EXTENSION OF USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, provided, that the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. 33 (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. 34 SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the direction of the Company under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it 35 may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof, (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. 36 If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business (including the trust created by this Indenture) to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has, or is a wholly owned subsidiary of a bank holding company that has, a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE 8 DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at its option by Board Resolution, at any time, with respect to the Notes, elect to have either Section 8.02 or Section 8.03 be applied to all Outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 of the option applicable to this Section 8.02, the Company shall be deemed to have been discharged from its obligations with respect to all 37 Outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Notes, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in (A) and (B) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of Outstanding Notes to receive solely from the trust fund described in Section 8.04 and as more fully set forth in such Section, payments in respect of the principal of (and premium and Liquidated Damages, if any) and interest on such Notes when such payments are due, or on the Redemption Date, as the case may be, (B) the Company's obligations with respect to such Notes under Sections 2.10, 2.03, 2.07, 4.02 and 4.03, (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (D) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 with respect to the Notes. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 of the option applicable to this Section 8.03, the Company shall be released from its obligations under the covenants contained in Articles Five and in Sections 4.07 with respect to the Outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"), and the Notes shall thereafter be deemed to be not "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for financial accounting purposes). For this purpose, such covenant defeasance means that, with respect to the Outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a default or an event of Default under Section 6.01(c) or Section 6.01(h), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 of the option applicable to Section 8.03, Sections 6.01(c) through 6.01(d) shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The following shall be the conditions to application of either Section 8.02 or Section 8.03 to the Outstanding Notes: (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 who shall agree to comply with the provisions of this Article Eight applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Notes, (A) cash in U.S. Dollars in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, cash in U.S. Dollars in an amount, or (C) a combination thereof, in such 38 amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge (i) the principal of (and premium and Liquidated Damages, if any) and interest on the Outstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, of such principal or installment of principal of (premium and Liquidated Damages, if any) or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Notes on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Notes; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to the Notes; (2) In the case of an election under Section 8.02, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States stating that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (3) In the case of an election under Section 8.03, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States to the effect that the Holders of the Outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (4) No Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit or, insofar as Subsection 6.01(e) or 6.01(f) is concerned, at any time in the period ending on the 91st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period); (5) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which the Company is bound; (6) In the case of an election under either Section 8.02 or 8.03, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (7) in the case of an election under either Section 8.02 or 8.03, the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit made by the Company pursuant to its election under Section 8.02 or 8.03 was not made by the Company with the intent of preferring the Holders over other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and 39 (8) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States, each stating that all conditions precedent provided for relating to either the defeasance under Section 8.02 or the covenant defeasance under Section 8.03 (as the case may be) have been complied with as contemplated by this Section 8.04. SECTION 8.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last paragraph of Section 4.03, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 in respect of the Outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 8.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(l)), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or U.S. Government Obligations in accordance with Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03, as the case may be; provided, however, that,. if the Company makes any payment of principal of (or premium and Liquidated Damages, if any) or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: 40 (a) to cure any ambiguity, defect or inconsistency; (b) to provide for the assumption of the Company's obligations to the Holders of the Notes in the case of a merger or consolidation pursuant to Article Five hereof; (c) to make any change, including the addition of additional covenants and agreements, that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note in any material respect; or (d) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (e) to provide for the appointment of successor trustees meeting the requirements of Section 7.10. Upon the request of the Company accompanied by resolutions of the Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Holding Company and the Trustee may amend or supplement this Indenture and the Notes may be amended or supplemented with the consent of the Holders of at least a majority of the aggregate principal amount of the Notes Outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium or Liquidated Damages, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority of the aggregate principal amount of the Notes Outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes). Upon the request of the Company accompanied by resolutions of the Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. 41 After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (a) change the Stated Maturity of the principal of (or premium, if any) or any installment of principal or interest, if any on any such Note; (b) reduce the principal of amount of (or premium, if any) or the interest rate, if any, on any such Note; (c) reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation; (d) waive a redemption payment with respect to any such Note; (e) change the place or currency of payment of principal of (or premium or Liquidated Damages, if any) or the interest, if any, on any such Note; (f) impair the right to institute suit for the enforcement of any such payment on or with respect to any such Note on or after the Stated Maturity (or, in the case of redemption, on or after the Redemption Date); (g) reduce the percentage of the principal amount of Notes Outstanding, the consent of the Holders of which is necessary to modify or amend this Indenture; or (h) modify the foregoing requirements or reduce the percentage of Notes Outstanding necessary to waive compliance with waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, on the Notes; or (i) make any change in the foregoing amendment and waiver provisions. SECTION 9.03. COMPLIANCE WITH TIA. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. 42 SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. ARTICLE 10 SATISFACTION AND DISCHARGE SECTION 10.01 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall, upon Company Request, cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Notes herein expressly provided for) and the Trustee, on demand of and at the expense of the Company shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) either (1) all Notes theretofore authenticated and delivered (other than (i) Notes which have been replaced or paid as provided in Section 2.07 and (ii) Notes for whose payment money has theretofore been deposited in trust or seqregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.03, have been delivered to the Trustee for cancellation; or (2) all such Notes not theretofore delivered to the Trustee for cancellation: (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal (and premium and Liquidated Damages, if any) and interest to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that (i) all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with and (ii) such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, this Indenture or any other material 43 agreement or instrument to which the Company or any Principal Subsidiary is a party or by which the Company or any Principal Subsidiary is bound. Notwithstanding the satisfaction and discharge of this Indenture, the obligation of the Company to the Trustee under Section 7.07 and, if money shall have been deposited with the Trustee pursuant to subclause (2) of Subsection (a) of this Section, the obligations of the Trustee under Section 10.02 and the last paragraph of Section 4.03 shall survive. SECTION 10.02 APPLICATION OF TRUST MONEY Subject to the provisions of the last paragraph of Section 4.03, all money deposited with the Trustee pursuant to Section 10.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 10.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though on deposit had occurred pursuant to Section 10.01; provided that if the Company has made any payment of principal of, premium and Liquidated Damages, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 11 MISCELLANEOUS SECTION 11.01. CONFLICT OF ANY PROVISION OF INDENTURE WITH TIA. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 318, inclusive, of the TIA, or conflicts with any provision (an "incorporated provision") required by or deemed to be included in this Indenture by operation of such TIA Sections, such imposed duties or incorporated provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 11.02. NOTICES. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: American Re Corporation 555 College Road East Princeton, New Jersey 08543 44 Attention: Robert K. Burgess Senior Vice President General Counsel and Secretary Facsimile: (609) 243-4992 With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: Gary I. Horowitz, Esq. Facsimile: (212) 455-2502 If to the Trustee: State Street Bank & Trust Company Two International Place Fourth Floor Boston, MA 02110 Attention: Corporate Trust Department (American Re Corporation 7.45% Notes due 2026) Facsimile: (617) 664-5365 or 5371 The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. 45 SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 1.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 1.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 11.05. LEGAL HOLIDAYS. In any case where any Interest Payment Date, any date established for payment of Defaulted Interest pursuant to Section 2.12, or any Maturity with respect to any Note shall not be a Business Day, then (notwithstanding any other provisions of this Indenture or of the Notes) payment of interest or principle (and premium, if any) need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made in the Interest Payment Date or date established for payment of Defaulted Interest pursuant to Section 2.12 or Maturity, and no interest shall accrue with respect to such payment for the period from and after such Interest Payment Date or date established for payment of Defaulted Interest pursuant to Section 2.12 or Maturity, as the case may be, to the next succeeding Business Day. SECTION 11.06. RESERVED [Reserved] SECTION 11.07. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting any of the Notes waives and releases all such liability. SECTION 11.08. GOVERNING LAW. This Indenture and the Notes shall be governing by and construed in accordance with the laws of the State of New York. 46 SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.10. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its respective successors and assigns, whether so expressed or not. All covenants and agreements in this Indenture by the Trustee shall bind its respective successors and assigns, whether so expressed or not. SECTION 11.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 47 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed in New York, New York as of the day and year first above written. AMERICAN RE CORPORATION By:___________________________________ Name: Title: By:___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY By:___________________________________ Name: Title: 48 ================================================================================ EXHIBIT A (Face of Note) ================================================================================ 7.45% Senior Notes due 2026 No. 029163AB8 $ AMERICAN RE CORPORATION promises to pay to Cede & Co. or registered assigns, the principal sum of Two Hundred Million Dollars on December 15, 2026. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 Dated: December 24, 1996 AMERICAN RE CORPORATION By:___________________________________ Name: Title: (SEAL) This is one of the 7.45% Senior Notes referred to in the within-mentioned Indenture: STATE STREET BANK AND TRUST COMPANY as Trustee By:________________________________ Authorized Signature A-1-1 (Back of Senior Note) 7.45% Senior Notes due 2026 Unless and until it is exchanged in whole or in part for Senior Notes in definitive form, this Senior Note may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE SENIOR NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE PURCHASER (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) (4) TO THE COMPANY OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT INVESTORS AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SENIOR NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE SENIOR NOTES. A-1-2 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. American Re Corporation, a Delaware corporation (the "Company"); promises to pay interest on the principal amount of this Senior Note at 7.45% per annum from December 24, 1996 until December 15, 2026 and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company shall pay interest and Liquidated Damages, if any, semi-annually in arrears on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 15, 1996. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the per annum rate on the Senior Notes then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company shall make payments in respect of the Senior Notes represented by the Global Notes (including principal, premium, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by the Note Custodian or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Senior Notes at their respective addresses set forth in the register of Holders of Senior Notes; provided that all payments with respect to the Global Notes and Definitive Notes (the Holders of which have provided wire transfer instructions to the Company at least ten business days prior to the applicable payment date), will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. 3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust Company, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Senior Notes may be presented for registration of transfer and exchange at the offices of the Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Company issued the Senior Notes under an Indenture dated as of December 24, 1996 ("Indenture") between the Company and the Trustee. The terms of the Senior Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Senior Notes are senior unsecured obligations of the Company limited to $500,000,000 in aggregate principal amount. A-1-3 5. OPTIONAL REDEMPTION. (a) At the option of the Company, the Senior Notes will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of such Senior Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semiannual basis, at the Treasury Yield plus 15 basis points, together with accrued interest, and Liquidated Damages, if any, to the date of redemption. (b) Any redemption pursuant to this paragraph shall be made pursuant to the provisions of Section 3.01 through 3.08 of the Indenture. 6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes may be redeemed in part but only in whole multiples of $1,000. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 8. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof (subject to a minimum initial purchase requirement of $100,000 for Senior Notes sold to institutional investors that qualify as accredited investors as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other than in reliance on Rule 144A or Regulation S). The transfer of Senior Notes may be registered and Senior Notes may be exchanged as provided in Article 2 of the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, it need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 9. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. 10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes, and, subject to the terms of the Indenture, any existing default (other than a default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes) or compliance with any provision of the Indenture or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes. Without the consent of any Holder of a Senior Note, the Indenture or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Company's obligations to Holders of the Senior Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, A-1-4 to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA or to provide for the appointment of a successor trustee in compliance with the requirements of Section 7.10 of the Indenture. 11. DEFAULTS AND REMEDIES. An Event of Default occurs if: (i) the Company fails to pay principal of (or premium if any, on) any Senior Note when due; (ii) the Company fails to pay any interest or Liquidated Damages, if any, on any Senior Note when due, continued for 30 days; (iii) the Company fails to perform any other covenant or agreement of the Company hereunder, continued for 90 days after written notice as provided herein; (iv) the Company or any Principal Subsidiary fails to pay Indebtedness in an aggregate principal amount exceeding $20,000,000 (i) at the later of final maturity or upon expiration of any applicable period of grace with respect to such principal amount, and such failure to pay shall not have been cured by Company within 30 days after such failure, or (ii) acceleration of the maturity of any Indebtedness of the Company or any Principal Subsidiary, having an aggregate principal amount in excess of $20,000,000 if such Indebtedness is not discharged, or such acceleration is not annulled, within 15 days after written notice provided in accordance with Section 11.02 of the Indenture; (v) a decree or order is entered by a court having jurisdiction in the premises (i) for relief in respect of the Company or any Principal Subsidiary in an involuntary case or proceeding under Bankruptcy Law or (ii) adjudging the Company or any Principal Subsidiary a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Principal Subsidiary under Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Principal Subsidiary or of any substantial part of any of their properties, or ordering the winding up or liquidation of any of their affairs, and any such decree or order remains unstayed and in effect for a period of 60 consecutive days; or (vi) the Company or any Principal Subsidiary institutes a voluntary case or proceeding under Bankruptcy Law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the Company or any Principal Subsidiary consents to the entry of a decree or order for relief in respect of the Company or any Principal Subsidiary in any involuntary case or proceeding under Bankruptcy Law or to the institution of bankruptcy or insolvency proceedings against the Company or any Principal Subsidiary, or the Company or any Principal Subsidiary files a petition or answer or consent seeking reorganization or relief under Bankruptcy Law, or consents to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of any of the Company or any Principal Subsidiary or of any substantial part of its property, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due or takes corporate action in furtherance of any such action. If an Event of Default (other than an Event of Default specified in Section 6.01(e) or 6.01(f) of the Indenture with respect to the Company or any Principal Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% of the principal amount of the Outstanding Senior Notes, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all the Senior Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal shall become due and payable immediately. If an Event of Default specified in Section 6.01(e) or 6.01(f) of the Indenture with respect to the Company or any Principal Subsidiary occurs and is continuing, the amounts described above shall by such fact itself become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of not less than a majority in aggregate principal amount of the Senior Notes Outstanding by notice to the Trustee may on behalf of the Holders of all of the Senior Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes; provided, however, that the Holders of at least a majority in aggregate A-1-5 principal amount of the then Senior Notes Outstanding may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. If a Default has occurred and is continuing, or if the Trustee, any Holder or the trustee for or the holder of any other evidence of Indebtedness of the Company (other than Indebtedness in the aggregate principal amount of less than $20,000,000) gives any notice or takes any other action with respect to a claimed default, the Company is required to deliver to the Trustee an Officers' Certificate specifying such Default, notice or other action within 5 Business Days of its occurrence. 12. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, and may otherwise deal with the Company, as if it were not the Trustee. 13. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under these Senior Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting any of these Senior Notes waives and releases all such liability. 14. AUTHENTICATION. This Senior Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 15. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 16. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition to the rights provided to Holders of Senior Notes under the Indenture, Holders of Transfer Restricted Securities shall have all the rights set forth in the Registration Rights Agreement dated as of December 24, 1996, between the Company and the parties named on the signature pages thereof. 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company have caused CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: 555 College Road East Princeton, New Jersey 08543 Attention: President Facsimile: (609) 243-4992 A-1-6 ASSIGNMENT FORM To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________to transfer this Senior Note on the books of the Company. The Agent may substitute another to act for him. ________________________________________________________________________________ Date: _____________________________ Your Signature:__________________________ (Sign exactly as your name appears on the Senior Note) A-1-7 SCHEDULE OF EXCHANGES OF SENIOR NOTES The following exchanges of a part of this Global Note for other Notes have been made: Amount of Principal increase Amount of Amount of in Principal this Global decrease in Amount Note Principal of this Amount following Signature of Amount of such authorized officer Date of of this this Global decrease (or of Trustee of Note Exchange Global Note Note increase) Custodian - ----------- ------------ -------------- ------------ ------------------ A-1-8 EXHIBIT B-1 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE (Pursuant to Section 2.06(a)(i) of the Indenture) State Street Bank and Trust Company Corporate Trust Department Two International Place 4th Floor Boston, Massachusetts 02110 Re: 7.45% Notes due 2026 of American Re Corporation Reference is hereby made to the Indenture, dated as of December __, 1996 (the "Indenture"), among American Re Corporation (the "Company"), as Company and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to $__________ principal amount of Notes which are evidenced by one or more Rule 144A Global Notes (CUSIP No. ___________) and held with the Depository in the name of _________________________________________ (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Notes to a Person who will take delivery thereof in the form of an equal principal amount of Notes evidenced by one or more Regulation S Global Notes (CUSIP No. __________), which amount, immediately after such transfer, is to be held with the Depository through Euroclear or Cedel Bank or both (Common Code____________________________). In connection with such request and in respect of such Notes, the Transferor hereby certifies that such transfer has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with Rule 903 or Rule 904 under the United States Securities Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor hereby further certifies that: (1) The offer of the Notes was not made to a person in the United States; (2) either: (a) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed and believes that the transferee was outside the United States; or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; (3) no directed selling efforts have been made in contravention of the requirements of Rule 904(b) of Regulation S; B-1-1 (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) upon completion of the transaction, the beneficial interest being transferred as described above is to be held with the Depository through Euroclear or Cedel Bank or both (Common Code _____________). Upon giving effect to this request to exchange a beneficial interest in such Rule 144A Global Note or Accredited Institutional Investor Global Note for a beneficial interest in a Regulation S Global Note, the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Regulation S Global Notes pursuant to the Indenture and the Securities Act and, if such transfer occurs prior to the end of the 40-day restricted period associated with the initial offering of Notes, the additional restrictions applicable to transfers of interest in the Regulation S Global Note. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc., Smith Barney Inc. and UBS Securities LLC (collectively, the "Purchasers"), the initial purchasers of such Notes being transferred. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. _________________________________________ [Insert Name of Transferor] By:______________________________________ Name: Title: Dated: cc: American Re Corporation Goldman, Sachs & Co. B-1-2 EXHIBIT B-2 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE (Pursuant to Section 2.06(a)(ii) of the Indenture) State Street Bank and Trust Company Corporate Trust Department Two International Place 4th Floor Boston, Massachusetts 02110 Re: 7.45% Notes due 2026 of American Re Corporation Reference is hereby made to the Indenture, dated as of December __, 1996 (the "Indenture"), among American Re Corporation (the "Company"), as Company and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to $_____________ principal amount of Notes which are evidenced by one or more Regulation S Global Notes (CUSIP No. _____________) and held with the Depository through Euroclear or Cedel Bank or both (Common Code _______________________________) in the name of ________________________________ (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Notes to a Person who will take delivery thereof in the form of an equal principal amount of Notes evidenced by one or more Rule 144A Global Notes (CUSIP No. ____________), to be held with the Depository. In connection with such request and in respect of such Notes, the Transferor hereby certifies that: [CHECK ONE] |_| such transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A; or |_| such transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or |_| such transfer is being effected pursuant to an effective registration statement under the Securities Act; B-2-1 or |_| such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; and such Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. Upon giving effect to this request to exchange a beneficial interest in Regulation S Global Notes for a beneficial interest in Rule 144A Global Notes the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Rule 144A Global Notes pursuant to the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc., Smith Barney Inc. and UBS Securities LLC (collectively, the "Purchasers"), the initial purchasers of such Notes being transferred. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. _________________________________________ [Insert Name of Transferor] By:______________________________________ Name: Title: Dated: cc: American Re Corporation Goldman, Sachs & Co. B-2-2 EXHIBIT B-3 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER OF DEFINITIVE NOTES (Pursuant to Section 2.06(b) of the Indenture) State Street Bank and Trust Company Corporate Trust Department Two International Place 4th Floor Boston, Massachusetts 02110 Re: 7.45% Notes due 2026 of American Re Corporation Reference is hereby made to the Indenture, dated as of December __,1996 (the "Indenture"), among American Re Corporation (the "Company") and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to $__________ principal amount of Notes which are evidenced by one or more Definitive Notes (CUSIP No.: __________) and registered with the Registrar in the name of __________________________________________ (the "Transferor"). The Transferor has requested an exchange or transfer of such Definitive Note(s) in the form of an equal principal amount of Notes evidenced by one or more Definitive Notes (CUSIP No. ___________), to be delivered to the Transferor or, in the case of a transfer of such Notes, to such Person as the Transferor instructs the Trustee. In connection with such request and in respect of the Notes surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the Holder of such Surrendered Notes hereby certifies that: [CHECK ONE] |_| the Surrendered Notes are being acquired for the Transferor's own account, without transfer; or |_| the Surrendered Notes are being transferred to the Company; or |_| Surrendered Notes are being transferred pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Surrendered Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Surrendered Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A; or B-3-1 |_| the Surrendered Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act; or |_| the Surrendered Notes are being transferred pursuant to an effective registration statement under the Securities Act; or |_| such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; and the Surrendered Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc., Smith Barney Inc. and UBS Securities LLC (collectively, the "Purchasers"), the initial purchasers of such Notes being transferred. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ________________________________________ [Insert Name of Transferor] By:_____________________________________ Name: Title: Dated: cc: American Re Corporation Goldman, Sachs & Co. B-3-2 EXHIBIT B-4 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE OR REGULATION S GLOBAL NOTE TO DEFINITIVE NOTE (Pursuant to Section 2.06(c) of the Indenture) State Street Bank and Trust Company Corporate Trust Department Two International Place 4th Floor Boston, Massachusetts 02110 Re: 7.45% Notes due 2026 of American Re Corporation Reference is hereby made to the Indenture, dated as of December __, 1996 (the "Indenture"), among American Re Corporation (the "Company"), as Company and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to $_________ principal amount of Notes which are evidenced by one or more (check one) Rule 144A Global Notes (CUSIP No. __________) or Regulation S Global Notes (CUSIP No. __________) and held with the Depository through Euroclear or Cedel Bank or both in the name of __________________________________________ (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Notes to a Person who will take delivery thereof in the form of an equal principal amount of Notes evidenced by one or more Definitive Notes (CUSIP No. __________), to be registered with the Registrar in the name of - --------------------. In connection with such request and in respect of the Notes surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the Holder of such Surrendered Notes hereby certifies that: [CHECK ONE] |_| the Surrendered Notes are being transferred to the beneficial owner of such Notes; or |_| the Surrendered Notes are being transferred pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Surrendered Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Surrendered Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A; or B-4-1 |_| the Surrendered Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act; or |_| the Surrendered Notes are being transferred pursuant to an effective registration statement under the Securities Act; or |_| such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; and the Surrendered Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc., Smith Barney Inc. and UBS Securities LLC (collectively, the "Purchasers"), the initial purchasers of such Notes being transferred. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ________________________________________ [Insert Name of Transferor] By:_____________________________________ Name: Title: Dated: cc: American Re Corporation Goldman, Sachs & Co. B-4-2 EXHIBIT B-5 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM DEFINITIVE NOTE TO RULE 144A GLOBAL NOTE OR REGULATION S GLOBAL NOTE (Pursuant to Section 2.06(e) of the Indenture) State Street Bank and Trust Company Corporate Trust Department Two International Place 4th Floor Boston, Massachusetts 02110 Re: 7.45% Notes due 2026 of American Re Corporation Reference is hereby made to the Indenture, dated as of December __, 1996 (the "Indenture"), among American Re Corporation (the "Company") and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to $__________ principal amount of Notes which are evidenced by one or more Definitive Notes (CUSIP No. __________) and registered with the Registrar in the name of _________________________________________ (the "Transferor"). The Transferor has requested a transfer of such Definitive Notes to a Person who will take delivery thereof in the form of an equal beneficial interest in Global Notes evidenced by one or more (check one) Rule 144A Global Notes (CUSIP No. __________) or Regulation S Global Notes (CUSIP No. __________), which amount, immediately after such transfer, is to be held with the Depository through Euroclear or Cedel Bank or both (Common Code______________________________). In connection with such request and in respect of the Notes surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the Holder of such Surrendered Notes hereby certifies that: [CHECK ONE] |_| the Surrendered Notes are being transferred to the beneficial owner of such Notes; or |_| the Surrendered Notes are being transferred pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Surrendered Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Surrendered Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A; or B-5-1 |_| the Surrendered Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act; or |_| the Surrendered Notes are being transferred pursuant to an effective registration statement under the Securities Act; or |_| such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; or |_| such transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act, and accordingly the Transferor hereby further certifies that: (1) The offer of the Notes was not made to a person in the United States; (2) either: (a) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed and believes that the transferee was outside the United States; or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; (3) no directed selling efforts have been made in contravention of the requirements of Rule 904(b) of Regulation S; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) upon completion of the transaction, the beneficial interest being transferred as described above is to be held with the Depository through Euroclear or Cedel Bank or both (Common Code _____________). Upon giving effect to this request to exchange a Definitive Note for a beneficial interest in such Rule 144A Global Note or Regulation S Global Note, the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Global Notes pursuant to the Indenture and the Securities Act and, if such transfer occurs prior to the end of the 40-day restricted period B-5-2 associated with the initial offering of Notes, the additional restrictions applicable to transfers of interest in the Regulation S Global Note. and the Surrendered Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc., Smith Barney Inc. and UBS Securities LLC (collectively, the "Purchasers"), the initial purchasers of such Notes being transferred. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ________________________________________ [Insert Name of Transferor] By:_____________________________________ Name: Title: Dated: cc: American Re Corporation Goldman, Sachs & Co. B-5-3 EX-4.2 4 EXHIBIT 4.2 - FORM OF SERIES B NOTES ________________________________________________________________________________ EXHIBIT 4.2 (Face of Note) ________________________________________________________________________________ 7.45% Senior Notes due 2026, Series B No. $ AMERICAN RE CORPORATION promises to pay to Cede & Co. or registered assigns, the principal sum of _____ Million Dollars on December 15, 2026. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 Dated: February __, 1997 AMERICAN RE CORPORATION By: ------------------------------------- Name: Title: (SEAL) This is one of the 7.45% Senior Notes referred to in the within-mentioned Indenture: STATE STREET BANK AND TRUST COMPANY as Trustee By: -------------------------------------------- Authorized Signature (Back of Senior Note) 7.45% Senior Notes due 2026, Series B Unless and until it is exchanged in whole or in part for Senior Notes in definitive form, this Senior Note may be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. American Re Corporation, a Delaware corporation (the "Company"); promises to pay any interest on the principal amount of this Senior Note at 7.45% per annum from ______________, 1997 until December 15, 2026 and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company shall pay interest and Liquidated Damages, if any, semi-annually in arrears on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "INTEREST PAYMENT DATE"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; PROVIDED that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest Payment Date shall be June 15, 1997. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the per annum rate on the Senior Notes then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company shall make payments in respect of the Senior Notes represented by the Global Notes (including principal, premium, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by the Note Custodian or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Senior Notes at their respective addresses set forth in the register of Holders of Senior Notes; PROVIDED that all payments with respect to the Global Notes and Definitive Notes (the Holders of which have provided wire transfer instructions to the Company at least ten business days prior to the applicable payment date), will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. 3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust Company, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Senior Notes may be presented for registration of transfer and exchange at the offices of the Registrar. The Company may change any Paying 2 Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Company issued the Senior Notes under an Indenture dated as of December 24, 1996 ("INDENTURE") between the Company and the Trustee. The terms of the Senior Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Senior Notes are senior unsecured obligations of the Company limited to $500,000,000 in aggregate principal amount. 5. OPTIONAL REDEMPTION. (a) At the option of the Company, the Senior Notes will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of such Senior Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semiannual basis, at the Treasury Yield plus 15 basis points, together with accrued interest, and Liquidated Damages, if any, to the date of redemption. (b) Any redemption pursuant to this paragraph shall be made pursuant to the provisions of Section 3.01 through 3.08 of the Indenture. 6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes may be redeemed in part but only in whole multiples of $1,000. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 8. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof (subject to a minimum initial purchase requirement of $100,000 for Senior Notes sold to institutional investors that qualify as accredited investors as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other than in reliance on Rule 144A or Regulation S). The transfer of Senior Notes may be registered and Senior Notes may be exchanged as provided in Article 2 of the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, it need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 9. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. 10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in 3 principal amount of the then outstanding Senior Notes, and, subject to the terms of the Indenture, any existing default (other than a default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes) or compliance with any provision of the Indenture or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes. Without the consent of any Holder of a Senior Note, the Indenture or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Company's obligations to Holders of the Senior Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA or to provide for the appointment of a successor trustee in compliance with the requirements of Section 7.10 of the Indenture. 11. DEFAULTS AND REMEDIES. An Event of Default occurs if: (i) the Company fails to pay principal of (or premium if any, on) any Senior Note when due; (ii) the Company fails to pay any interest or Liquidated Damages, if any, on any Senior Note when due, continued for 30 days; (iii) the Company fails to perform any other covenant or agreement of the Company hereunder, continued for 90 days after written notice as provided herein; (iv) the Company or any Principal Subsidiary fails to pay Indebtedness in an aggregate principal amount exceeding $20,000,000 (i) at the later of final maturity or upon expiration of any applicable period of grace with respect to such principal amount, and such failure to pay shall not have been cured by Company within 30 days after such failure, or (ii) acceleration of the maturity of any Indebtedness of the Company or any Principal Subsidiary, having an aggregate principal amount in excess of $20,000,000 if such Indebtedness is not discharged, or such acceleration is not annulled, within 15 days after written notice provided in accordance with Section 11.02 of the Indenture; (v) a decree or order is entered by a court having jurisdiction in the premises (i) for relief in respect of the Company or any Principal Subsidiary in an involuntary case or proceeding under Bankruptcy Law or (ii) adjudging the Company or any Principal Subsidiary a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Principal Subsidiary under Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Principal Subsidiary or of any substantial part of any of their properties, or ordering the winding up or liquidation of any of their affairs, and any such decree or order remains unstayed and in effect for a period of 60 consecutive days; or (vi) the Company or any Principal Subsidiary institutes a voluntary case or proceeding under Bankruptcy Law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the Company or any Principal Subsidiary consents to the entry of a decree or order for relief in respect of the Company or any Principal Subsidiary in any involuntary case or proceeding under Bankruptcy Law or to the institution of bankruptcy or insolvency proceedings against the Company or any Principal Subsidiary, or the Company or any Principal Subsidiary files a petition or answer or consent seeking reorganization or relief under Bankruptcy Law, or consents to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of any of the Company or any Principal Subsidiary or of any substantial part of its property, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due or takes corporate action in furtherance of any such action. If an Event of Default (other than an Event of Default specified in Section 6.01(e) or 6.01(f) of the Indenture with respect to the Company or any Principal Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% of the principal amount of the Outstanding Senior Notes, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all the Senior Notes to be due and payable immediately, by 4 a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal shall become due and payable immediately. If an Event of Default specified in Section 6.01(e) or 6.01(f) of the Indenture with respect to the Company or any Principal Subsidiary occurs and is continuing, the amounts described above shall by such fact itself become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of not less than a majority in aggregate principal amount of the Senior Notes Outstanding by notice to the Trustee may on behalf of the Holders of all of the Senior Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes; PROVIDED, HOWEVER, that the Holders of at least a majority in aggregate principal amount of the then Senior Notes Outstanding may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. If a Default has occurred and is continuing, or if the Trustee, any Holder or the trustee for or the holder of any other evidence of Indebtedness of the Company (other than Indebtedness in the aggregate principal amount of less than $20,000,000) gives any notice or takes any other action with respect to a claimed default, the Company is required to deliver to the Trustee an Officers' Certificate specifying such Default, notice or other action within 5 Business Days of its occurrence. 12. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, and may otherwise deal with the Company, as if it were not the Trustee. 13. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under these Senior Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting any of these Senior Notes waives and releases all such liability. 14. AUTHENTICATION. This Senior Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 15. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: 555 College Road East Princeton, New Jersey 08543 Attention: President Facsimile: (609) 243-4992 5 ASSIGNMENT FORM To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint __________________________ to transfer this Senior Note on the books of the Company. The Agent may substitute another to act for him. ________________________________________________________________________________ Date:________________________________________ Your Signature:________________________________________ (Sign exactly as your name appears on the Senior Note) 6 SCHEDULE OF EXCHANGES OF SENIOR NOTES The following exchanges of a part of this Global Note for other Notes have been made: Amount of increase Principal Amount of Signature of Amount of decrease in Principal Amount this Global Note authorized officer in Principal Amount of this Amount of following such a decrease of Trustee of Date of Exchange of this Global Note this Global Note (or increase) Note Custodian - -------------------- -------------------- -------------------- -------------------------- -------------------- 7
EX-4.3 5 EXHIBIT 4.3 - FORM OF SERIES A NOTES ________________________________________________________________________________ EXHIBIT 4.3 (Face of Note) ________________________________________________________________________________ 7.45% Senior Notes due 2026, Series A No. $ AMERICAN RE CORPORATION promises to pay to Cede & Co. or registered assigns, the principal sum of _____ Million Dollars on December 15, 2026. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 Dated: December 24, 1996 AMERICAN RE CORPORATION By: -------------------------------- Name: Title: (SEAL) This is one of the 7.45% Senior Notes referred to in the within-mentioned Indenture: STATE STREET BANK AND TRUST COMPANY as Trustee By: ---------------------------------- Authorized Signature (Back of Senior Note) 7.45% Senior Notes due 2026, Series A Unless and until it is exchanged in whole or in part for Senior Notes in definitive form, this Senior Note may be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE SENIOR NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE PURCHASER (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) (4) TO THE COMPANY OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT INVESTORS AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SENIOR NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE SENIOR NOTES. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. American Re Corporation, a Delaware corporation (the Company"); promises to pay any interest on the principal amount of this Senior Note at 7.45% per annum from December 24, 1996 until December 15, 2026 and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company shall pay interest and Liquidated 2 Damages, if any, semi-annually in arrears on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "INTEREST PAYMENT DATE"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; PROVIDED that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest Payment Date shall be June 15, 1997. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the per annum rate on the Senior Notes then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company shall make payments in respect of the Senior Notes represented by the Global Notes (including principal, premium, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by the Note Custodian or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Senior Notes at their respective addresses set forth in the register of Holders of Senior Notes; PROVIDED that all payments with respect to the Global Notes and Definitive Notes (the Holders of which have provided wire transfer instructions to the Company at least ten business days prior to the applicable payment date), will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. 3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust Company, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Senior Notes may be presented for registration of transfer and exchange at the offices of the Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Company issued the Senior Notes under an Indenture dated as of December 24, 1996 ("INDENTURE") between the Company and the Trustee. The terms of the Senior Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Senior Notes are senior unsecured obligations of the Company limited to $500,000,000 in aggregate principal amount. 5. OPTIONAL REDEMPTION. (a) At the option of the Company, the Senior Notes will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of such Senior Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semiannual basis, at the Treasury Yield plus 15 basis points, together with accrued interest, and Liquidated Damages, if any, to the date of redemption. (b) Any redemption pursuant to this paragraph shall be made pursuant to the provisions of Section 3.01 through 3.08 of the Indenture. 3 6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes may be redeemed in part but only in whole multiples of $1,000. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 8. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof (subject to a minimum initial purchase requirement of $100,000 for Senior Notes sold to institutional investors that qualify as accredited investors as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other than in reliance on Rule 144A or Regulation S). The transfer of Senior Notes may be registered and Senior Notes may be exchanged as provided in Article 2 of the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, it need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 9. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. 10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes, and, subject to the terms of the Indenture, any existing default (other than a default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes) or compliance with any provision of the Indenture or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes. Without the consent of any Holder of a Senior Note, the Indenture or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Company's obligations to Holders of the Senior Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA or to provide for the appointment of a successor trustee in compliance with the requirements of Section 7.10 of the Indenture. 11. DEFAULTS AND REMEDIES. An Event of Default occurs if: (i) the Company fails to pay principal of (or premium if any, on) any Senior Note when due; (ii) the Company fails to pay any interest or Liquidated Damages, if any, on any Senior Note when due, continued for 30 days; (iii) the Company fails to perform any other covenant or agreement of the Company hereunder, continued for 90 days after written notice as provided herein; (iv) the Company or any Principal Subsidiary fails to pay Indebtedness in an aggregate principal amount exceeding $20,000,000 (i) at the later of final maturity or upon expiration of any applicable period of grace with respect to such principal amount, and such failure to pay shall not 4 have been cured by Company within 30 days after such failure, or (ii) acceleration of the maturity of any Indebtedness of the Company or any Principal Subsidiary, having an aggregate principal amount in excess of $20,000,000 if such Indebtedness is not discharged, or such acceleration is not annulled, within 15 days after written notice provided in accordance with Section 11.02 of the Indenture; (v) a decree or order is entered by a court having jurisdiction in the premises (i) for relief in respect of the Company or any Principal Subsidiary in an involuntary case or proceeding under Bankruptcy Law or (ii) adjudging the Company or any Principal Subsidiary a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Principal Subsidiary under Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Principal Subsidiary or of any substantial part of any of their properties, or ordering the winding up or liquidation of any of their affairs, and any such decree or order remains unstayed and in effect for a period of 60 consecutive days; or (vi) the Company or any Principal Subsidiary institutes a voluntary case or proceeding under Bankruptcy Law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the Company or any Principal Subsidiary consents to the entry of a decree or order for relief in respect of the Company or any Principal Subsidiary in any involuntary case or proceeding under Bankruptcy Law or to the institution of bankruptcy or insolvency proceedings against the Company or any Principal Subsidiary, or the Company or any Principal Subsidiary files a petition or answer or consent seeking reorganization or relief under Bankruptcy Law, or consents to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of any of the Company or any Principal Subsidiary or of any substantial part of its property, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due or takes corporate action in furtherance of any such action. If an Event of Default (other than an Event of Default specified in Section 6.01(e) or 6.01(f) of the Indenture with respect to the Company or any Principal Subsidiary occurs and is continuing, the Trustee or the Holders of at least 25% of the principal amount of the Outstanding Senior Notes, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all the Senior Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal shall become due and payable immediately. If an Event of Default specified in Section 6.01(e) or 6.01(f) of the Indenture with respect to the Company or any Principal Subsidiary occurs and is continuing, the amounts described above shall by such fact itself become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of not less than a majority in aggregate principal amount of the Senior Notes Outstanding by notice to the Trustee may on behalf of the Holders of all of the Senior Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Senior Notes; PROVIDED, HOWEVER, that the Holders of at least a majority in aggregate principal amount of the then Senior Notes Outstanding may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. If a Default has occurred and is continuing, or if the Trustee, any Holder or the trustee for or the holder of any other evidence of Indebtedness of the Company (other than Indebtedness in the aggregate principal amount of less than $20,000,000) gives any notice or takes any other action with respect to a claimed default, the Company is required to deliver to the Trustee an Officers' Certificate specifying such Default, notice or other action within 5 Business Days of its occurrence. 5 12. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, and may otherwise deal with the Company, as if it were not the Trustee. 13. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under these Senior Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting any of these Senior Notes waives and releases all such liability. 14. AUTHENTICATION. This Senior Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 15. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 16. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition to the rights provided to Holders of Senior Notes under the Indenture, Holders of Transfer Restricted Securities shall have the rights set forth in the Registration Rights Agreement dated as of December 24, 1996, between the Company and the parties named on the signature pages thereof. 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: 555 College Road East Princeton, New Jersey 08543 Attention: President Facsimile: (609) 243-4992 6 ASSIGNMENT FORM To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________ to transfer this Senior Note on the books of the Company. The Agent may substitute another to act for him. ________________________________________________________________________________ Date:___________________________________ Your Signature:__________________________________ (Sign exactly as your name appears on the Senior Note) 7 SCHEDULE OF EXCHANGES OF SENIOR NOTES The following exchanges of a part of this Global Note for other Notes have been made: Amount of increase Principal Amount of Signature of Amount of decrease in Principal Amount of this Global Note authorized officer in Principal Amount of this Amount of following such decrease of Trustee of Date of Exchange this Global Note this Global Note (or increase) Note Custodian - -------------------- -------------------- -------------------- ----------------------- ------------------
8 EX-4.4 6 EXH 4.4 - REG RIGHTS AGMT. Exhibit 4.4 ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of December 24, 1996 by and among American Re Corporation and Goldman, Sachs & Co. Donaldson, Lufkin & Jenrette Securities Corporation J.P. Morgan Securities Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated Morgan Stanley & Co. Incorporated Salomon Brothers Inc Smith Barney Inc. UBS Securities LLC ================================================================================ This Registration Rights Agreement (this "Agreement") is made and entered into as of December 24, 1996 by and among American Re Corporation (the "Company") and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc, Smith Barney Inc. and UBS Securities LLC (the "Purchasers"), who have agreed to purchase the 7.45% Senior Notes due 2026 of the Company (the "Senior Notes") under the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated December 19, 1996 (the "Purchase Agreement"), by and among the Company and the Purchasers. In order to induce the Purchasers to purchase the Senior Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Purchasers set forth in Section 2 of the Purchase Agreement. The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Closing Date: The date of this Agreement. Commission: The Securities and Exchange Commission. Consummate: A Registered Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Senior Notes that were tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Senior Notes, each Interest Payment Date. Effectiveness Target Date: As defined in Section 5. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Notes: The 7.45% Senior Notes due 2026 of the Company (referred to in the Indenture as the "Series B Notes") to be issued pursuant to the Indenture in the Exchange Offer. Exchange Offer: The offers made by the Company to the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held 1 by such Holders for Exchange Notes in an aggregate principal amount equal to the outstanding aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders, pursuant to the Exchange Offer Registration Statement. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Purchasers propose to sell the Senior Notes in the United States to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act, and to certain institutional "accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Act ("Accredited Institutions") and outside the United State to non- U.S. persons in reliance on Regulation S under the Act. Holders: As defined in Section 2(b) hereof. Indenture: The Indenture, dated as of December 24, 1996, among the Company and State Street Bank and Trust Company, as trustee (the "Trustee"), pursuant to which the Senior Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Interest Payment Date: As defined in the Indenture and the Notes. NASD: National Association of Securities Dealers, Inc. Notes: The Senior Notes and the Exchange Notes. Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. Prospectus: The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such prospectus. Purchasers: As defined in the preamble hereto. Record Holder: With respect to any Damages Payment Date relating to Notes, each Person who is a Holder of Notes on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. Registrar: Means the Registrar of the Notes as defined in the Indenture. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Company filed under the Exchange Act with the Commission relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. 2 Senior Notes: As defined in the preamble hereto. Shelf Filing Deadline: As defined in Section 4 hereof. Shelf Registration Statement: As defined in Section 4 hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Transfer Restricted Securities: Each Senior Note, until (i) the date on which such Senior Note has been exchanged by a person other than a broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a Senior Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Senior Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Senior Note is distributed to the public pursuant to Rule 144 under the Securities Act. Underwritten Registration or Underwritten Offering: A registration under the Act in which securities of the Company are sold to one or an underwriter for reoffering to the public. SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with), the Company shall (i) use its reasonable efforts to cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 45 days after the Closing Date, a Registration Statement under the Act relating to the Exchange Notes and the Exchange Offer, (ii) use its best efforts to cause such Registration Statement to become effective no later than 180 days after the Closing Date, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) within 10 business days of the effectiveness of such Registration Statement, commence the Exchange Offer. The Exchange Offer Registration Statement shall be on the appropriate form permitting registration of the Exchange Notes to be offered in exchange for the Transfer Restricted Securities. 3 (b) The Company shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Notes shall be included in the Exchange Offer Registration Statement. The Company shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter. (c) The Company shall indicate in a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement that any Broker-Dealer who holds Senior Notes that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from an Issuer), may exchange such Senior Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and may be required, therefore, to deliver a prospectus meeting the requirements of the Act in connection with any sales of the Exchange Notes received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission. The Company shall use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(b) below to the extent necessary to ensure that it is available for resales of Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities and to ensure that such Registration Statement conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of no greater than 180 days after the consummation of the Exchange Offer. The Company shall promptly provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request, at any time during such one year period in order to facilitate such sales. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Company is not required to file an Exchange Offer Registration Statement or permitted to Consummate the Exchange Offer, in either case, because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 business days of the Consummation of the Exchange Offer (A) that such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) that such Holder may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer 4 Registration Statement is not appropriate or available for such resales by such Holder, or (iii) if any Holder of Transfer Restricted Securities is a Broker-Dealer and owns Senior Notes that has or that have or are reasonably determined to have the status of an unsold allotment in an initial distribution and shall so notify the Company, then, the Company shall (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement") on or prior to the earliest to occur of (1) the 90th day after the date on which the Company is notified by the Commission or otherwise determines that it is not required to file the Exchange Offer Registration Statement or permitted to Consummate the Exchange Offer, (2) the 45th day after the date on which the Company receives notice from a Holder of Transfer Restricted Securities as contemplated by clauses (ii) or (iii) above, and (3) the 45th day after the Closing Date (such earliest date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 180th day after the Shelf Filing Deadline. The Company shall use its best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) hereof to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, until the third anniversary of the Closing Date or such shorter period that will terminate when all the Notes covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or become eligible for resale pursuant to Rule 144 without volume or other restrictions; provided that the Company may allow the Shelf Registration Statement to cease to be effective and usable for a period of up to four weeks during any 360-day period if (i) the Board of Directors of the Company determines in good faith that such action is in the best interests of the Company and the Company notifies the Holders within five days after the Board of Directors makes such determination or (ii) the prospectus contained in the Shelf Registration Statement contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made not misleading; provided, further that in the event that the Company causes the Shelf Registration Statement to cease to be effective pursuant to the preceding proviso, the Company will cause the effectiveness of the Shelf Registration Statement to be extended by the number of days during which such registration statement was not effective or usable. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 10 business days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such reasonably requested information. Each Holder as to which any Shelf 5 Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5. LIQUIDATED DAMAGES If (i) the Registration Statement required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) such Registration Statement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated within 30 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) subject the provisions of the last paragraph of Section 4(a), any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company hereby agrees to pay liquidated damages to each Holder of Transfer Restricted Securities with respect to the first 90-day period immediately following the occurrence of such Registration Default, in an amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 principal amount of Transfer Restricted Securities. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued Liquidated Damages will be paid by the Company in cash on each Damages Payment Date to the Holders of the Global Note or Notes and any holder of Definitive Notes (as defined in the Indenture) who has given wire transfer instructions to the Company at least ten business days prior to the Damages Payment Date by wire transfer of immediately available funds and to all other holders of Definitive Notes by mailing checks to their registered addresses. All obligations of the Company set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Security shall have been satisfied in full. 6 SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company shall comply with all of the following provisions: (i) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company's preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Act, if the resales are of Exchange Notes obtained by such Holder in exchange for Senior Notes acquired by such Holder directly from an Issuer. (ii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission stating (A) that the Company is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above and (B) that the Company has not entered into any arrangement or understanding with any Person to distribute the Exchange Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes received in the Exchange Offer. (b) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Notes by Broker-Dealers), the Company shall: (i) subject to the provisions of Section 4(a), use its best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted 7 Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) subject to the provisions of Section 4(a), prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) of the filing of the Prospectus or any prospectus supplement or post-effective amendment, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) furnish to each of the selling Holders and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review of such Holders and underwriter(s), if any; (v) subject to the execution of confidentiality agreements acceptable to the Company, make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such selling Holders or any of the underwriters, all financial and other records, pertinent corporate 8 documents and properties of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Holders, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (vi) if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (vii) upon request, furnish to each selling Holder and furnish to each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (viii) upon request, deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (ix) enter into such customary agreements (including an underwriting agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration Statement contemplated by this Agreement, all to such extent as may be reasonably requested by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and if the registration is an Underwritten Registration, the Company shall: (A) furnish to the Purchasers, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in secondary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of the effectiveness of the Shelf Registration Statement, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of the Company confirming, as of the date thereof, as to the matters set forth in Section 7(e) of the Purchase Agreement, such matters as may be required for counsel to deliver an opinion as is customary in such transactions and such other matters as such parties may reasonably request; 9 (2) an opinion, dated the date of the or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company, covering the matters set forth in paragraphs (b) and (c) of Section 7 of the Purchase Agreement and such other matters as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company's representatives of the independent public accountants for the Company and the Purchasers' representatives and the Purchasers' counsel in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a certain extent upon facts provided to such counsel by officers and other representatives of the Company and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) customary comfort letters, dated as of the date of effectiveness of the Shelf Registration Statement, from the Company's independent accountants, Deloitte & Touche, LLP in the customary form and covering matters of the type customarily covered in comfort letters by underwriters in connection with secondary underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 7(d) of the Purchase Agreement, without exception; (B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above. If at any time the representations and warranties of the Company contemplated in clause (A)(1) above cease to be true and correct, the Company shall so advise the Purchasers and the underwriters(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing; 10 (x) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s) may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by any Registration Statement; provided, however, that the Company shall not be required to register or qualify to transact business where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xi) shall issue, upon the request of any Holder of Senior Notes covered by the Shelf Registration Statement, Exchange Notes, having an aggregate principal amount equal to the aggregate principal amount of Senior Notes surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Notes, as the case may be; in return, the Senior Notes held by such Holder shall be surrendered to the Company for cancellation; (xii) cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xiii) use its reasonable efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (x) above; (xiv) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustees under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company; (xv) cooperate and assist in any filings required to be made with the NASD and use its reasonable best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; (xvi) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement; and 11 (xvii) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its reasonable best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(b)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(b)(i) and (iv) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(b)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(b)(i) and (iv) hereof or shall have received the Advice. SECTION 7. REGISTRATION EXPENSES (a) All expenses associated with and incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by the Purchasers or any Holder with the NASD and reasonable counsel fees and disbursements in connection therewith (and, if applicable, the fees and expenses of any "qualified independent underwriter" that may be required by the rules and regulations of the NASD)); (ii) all reasonable fees and disbursements of compliance with federal securities and state Blue Sky or securities laws (including all fees and expenses of one counsel to the underwriter(s) in connection with compliance with state Blue Sky or securities laws); (iii) all expenses of printing (including printing certificates for the Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company; (v) all fees and expenses of the Trustee under the Indenture to the extent provided in the Indenture and of any escrow agent, custodian or exchange agent required in connection with the consummation of the Exchange Offer; and (vi) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). 12 The Company shall, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. (b) Notwithstanding the foregoing, the Company shall not be liable for the fees and expenses of counsel to the Purchasers, holders of Transfer Restricted Securities or underwriters of Transfer Restricted Securities, except pursuant to Section 8 hereof and as follows: in connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company shall reimburse the Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the description of the plan of distribution with respect to the Exchange Notes contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements in an amount not to exceed $25,000 of not more than one counsel, as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) Indemnification by the Company. Upon any registration of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, pursuant to Sections 3 and 4 hereof, and in consideration of the agreements of the Purchasers contained herein, and as an inducement to the Purchasers to purchase the Notes, the Company shall and hereby agrees to, (i) indemnify and hold harmless each Holder of Transfer Restricted Securities and Broker-Dealer Transfer Restricted Securities, as applicable, to be included in such registration and each person who participates as a placement or sales agent or as an underwriter in any offering or sale of such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, against any losses, claims, damages or liabilities, joint or several, to which such Holder, agent or underwriter may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, were registered under the Act, or any preliminary, final or summary Prospectus contained therein or furnished by the Company to any such Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) reimburse such Holder, such agent and such underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, or preliminary, final or summary Prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such person expressly for use therein; and provided, further that Company shall not be liable under the indemnity agreement in this subsection (a) with respect to any preliminary prospectus to the extent that any such loss, claim, damage or liability of such person results from the fact that such person sold or transferred securities to a person as to whom it shall be established that there was not sent or given, at or prior to written confirmation of 13 such sale, a copy of the prospectus or of the prospectus as then amended or supplemented in any case where such delivery is required by the Act if the Company previously furnished copies thereof in the quantity requested in accordance with the applicable provisions of the underwriting agreement and the loss, claim, damage or liability of such person results from an untrue statement or omission of a material fact contained in the preliminary prospectus and corrected in the prospectus or the prospectus as amended or supplemented. (b) Indemnification by the Holders and any Agents and Underwriters. The Company may require, as a condition to including any Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, in any Registration Statement filed pursuant to Sections 3 and 4 hereof and to entering into any underwriting agreement, if any, with respect thereto, that the Company shall have received an undertaking reasonably satisfactory to it from the Holders of such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, and from each underwriter named in any such underwriting agreement, if any, severally and not jointly, to (i) indemnify and hold harmless the Company, and, in the case of a Shelf Registration Statement, all other Holders of Transfer Restricted Securities, against any losses, claims, damages or liabilities to which the Company, or such other Holders of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, or any preliminary, final or summary Prospectus contained therein or furnished by the Company to any such Holder, agent or underwriter, if any, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Holder or underwriter expressly for use therein, and (ii) reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no such Holder shall be required to undertake liability to any person under this Section 8(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Holder from the sale of such Holder's Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, pursuant to such registration. (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 8, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under the indemnification provisions of or contemplated by Section 8(a) or 8(b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the foregoing, any indemnified party shall have the 14 right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless the indemnified party shall have been advised by counsel that representation of the indemnified party by counsel provided by the indemnifying party would be inappropriate due to actual or potential conflicting interests between the indemnifying party and the indemnified party, including situations in which there are one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party; provided, however, that the indemnifying party shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for all indemnified parties, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding. The indemnifying party shall not be required to indemnify any indemnified party for any amount paid or payable by such indemnified party in the settlement of any action, proceeding or investigation without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Contribution. Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 8(a) or Section 8(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. It is understood that contribution under this subsection (d) is unavailable to indemnified parties to the same extent that indemnification is unavailable under the proviso at the end of subsection (a) above. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such Holder from the sale of any Transfer Restricted Securities (after deducting any fees, discounts and commissions applicable thereto) or Broker-Dealer Transfer Restricted Securities, as applicable, exceeds the amount of any damages which such Holder has otherwise been 15 required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Transfer Restricted Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' and any underwriters' obligations in this Section 8(d) to contribute shall be several in proportion to the principal amount of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, registered or underwritten, as the case may be, by them and not joint. (e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each Holder, agent and underwriter and each person, if any, who controls any Holder, agent or underwriter within the meaning of the Act; and the obligations of the Holders and any underwriters contemplated by this Section 8 shall be in addition to any liability which the respective Holder or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his consent, is named in any Registration Statement as about to become a director of the Company) and to each person, if any, who controls the Company within the meaning of the Act. SECTION 9. [Reserved]. SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11. SELECTION OF UNDERWRITERS The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may, subject to Section 10 and applicable law, sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Company. SECTION 12. MISCELLANEOUS (a) Remedies. The Company agrees that monetary damages (including the liquidated damages contemplated hereby) would not be adequate compensation for any loss incurred by reason of a breach 16 by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance in which a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not, on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Notes. The Company shall not take any action, or permit any change to occur, with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate the Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company: American Re Corporation 555 College Road East Princeton, NJ 08543 Attention: Robert K. Burgess, General Counsel With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: Gary I. Horowitz 17 All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustees at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement together with the Notes, the Indenture and the Purchase Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 18 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. American Re Corporation By:_______________________________ Name: Title: Goldman, Sachs & Co. Donaldson, Lufkin & Jenrette Securities Corporation Merrill Lynch, Pierce, Fenner & Smith Incorporated J.P. Morgan Securities Inc. Morgan Stanley & Co. Incorporated Salomon Brothers Inc Smith Barney Inc. UBS Securities LLC By:________________________________ (Goldman, Sachs & Co.) 19 EX-8 7 EXHIBIT 8 - TAX OPINION OF SIMPSON THACHER Exhibit 8 January 29, 1997 American Re Corporation 555 College Road East Princeton, N.J. 08543 Ladies and Gentlemen: We have acted as special counsel for American Re Corporation, a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the issuance by the Company of $500,000,000 aggregate principal amount of its 7.45% Senior Notes due 2026, Series B (the "Exchange Notes"), which are to be offered by the Company in exchange for $500,000,000 aggregate principal amount of its outstanding 7.45% Senior Notes due 2026 (the "Old Notes"). We have examined the Registration Statement and the Indenture dated as of December 24, 1996 (the "Indenture") between the Company and State Street Trust and Bank Company, as Trustee (the "Trustee"), which has been filed with the Commission as an Exhibit to the Registration Statement. In addition, we have examined, and have relied as to matters of fact upon, the originals or copies, certified or otherwise identified to our satisfaction, of American Re Corporation -2- January 29, 1997 such corporate records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such other and further investigations, as we have deemed relevant and necessary as a basis for the opinion hereinafter set forth. In such examination, we have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee. In addition, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such latter documents. Based upon the foregoing, and subject to the qualifications and limitations stated herein, we hereby advise you that the statements made in the Registration Statement under the caption "United States Federal Income Tax Consequences" is the opinion of this firm. We are members of the Bar of the State of New York and we do not express any opinion herein concerning any law other than the law of the State of New York and the federal law of the United States. This opinion is rendered to you solely in connection with the above-described transaction and may not be relied upon for any other purpose without our prior written consent. American Re Corporation -3- January 29, 1997 We hereby consent to the use of this opinion as an Exhibit to the Registration Statement. Very truly yours, /s/ SIMPSON THACHER & BARTLETT SIMPSON THACHER & BARTLETT EX-12 8 EXH 12 - COMP OF RATIO OF EARNINGS Exhibit 12 American Re Corporation Computation of Ratio of Earnings to Fixed Charges (Dollars in millions)
Year ended Nine months ended December 31, September 30, 1993 1994 1995 1995 1996 ------------------------------------------------------------------- Income (loss) before income taxes 144.0 120.7 (159.4) 149.7 215.0 Earnings before fixed charges: Interest expense 66.1 60.0 60.7 47.7 40.5 Interest portion of rental expense 2.8 3.2 3.8 2.7 2.9 ------------------------------------------------------------------- Earnings before fixed charges 212.9 183.9 (94.9) 200.1 258.4 =================================================================== Fixed charges: Interest expense 66.1 60.0 60.7 47.7 40.5 Interest portion of rental expense 2.8 3.2 3.8 2.7 2.9 ------------------------------------------------------------------- Fixed charges 68.9 63.2 64.5 50.4 43.4 QUIPS interest - - 6.8 1.7 15.1 Paid-in-kind preferred dividend 0.9 - - - - ------------------------------------------------------------------- Total fixed charges 69.8 63.2 71.3 52.1 58.5 =================================================================== Ratio of earnings to fixed charges 3.1 2.9 (1.3) 3.8 4.4 =================================================================== Pro-forma (1) Year ended Nine months ended December 31, September 30, 1995 1995 1996 ------------------------------------------- Income (loss) before income taxes (145.8) 159.9 225.3 Earnings before fixed charges: Interest expense 47.1 37.5 30.2 Interest portion of rental expense 3.8 2.7 2.9 ------------------------------------------- Earnings before fixed charges (94.9) 200.1 258.4 =========================================== Fixed charges: Interest expense 47.1 37.5 30.2 Interest portion of rental expense 3.8 2.7 2.9 ------------------------------------------- Fixed charges 50.9 40.2 33.1 QUIPS interest 6.8 1.7 15.1 ------------------------------------------- Total fixed charges 57.7 41.9 48.2 =========================================== Pro-forma ratio of earnings to fixed charges (1.6) 4.8 5.4 ===========================================
(1) Pro-forma for the issuance of the Notes and the application of the net proceeds therefrom in the manner described under "Use of Proceeds". EX-21 9 EXH 21 - LIST OF SUBSIDIARIES EXHIBIT 21 AMERICAN RE CORPORATION and Subsidiaries
State/Country/Date Primary Name of Incorporation Business Activities - ---- ---------------- ------------------- American Re Corporation(1)........................... Delaware/1991 Holding Company American Re-Insurance Company........................ Delaware/1917 Reinsurance American Re Inversiones, S.A...................... Chile/1986 Holding Company American Re-Insurance Company (Chile) S.A....... Chile/1981 Reinsurance American Alternative Insurance Corporation........... New York/1923 Alternative Market Insurance American Re Asset Management, Inc.................... Delaware/1995 Investment Management AM-RE Managers, Inc.................................. Delaware/1988 Alternative Markets Becher + Carlson Risk Management Inc.............. California/1983 Risk Management Becher + Carlson Management, Ltd................ Bermuda/1981 Captive Management Becher + Carlson Brokerage, Ltd.............. Bermuda/1986 Brokerage AM-RE Managers (Bermuda) Ltd............... Bermuda/1990 Underwriting Management Becher + Carlson Insurance Services, Inc........ California/1981 Agency AM-RE Brokers, Inc........................... Delaware/1978 Reinsurance Brokerage Becher + Carlson Insurance Agency of Ohio....... Ohio/1994 Agency AM-RE Services, Inc.................................. Delaware/1980 Consulting Services AM-RE Consultants, Inc............................ Delaware/1994 Consulting Services American Re Holdings, Ltd............................ England/1988 Holding Company American Re Management, Ltd....................... England/1988 Underwriting Management American Re Managers International, Ltd........... England/1988 Representative Office American Re Management (Vienna) GmbH.............. Austria/1991 Representative Office ARB International, Ltd............................ England/1989 Lloyd's Brokerage Risk Management Partners, Ltd.(2)................. England/1994 Insurance Joint Venture Princeton Eagle Holding (Bermuda) Limited............ Bermuda/1994 Holding Company Princeton Eagle Insurance Company Limited......... Bermuda/1994 Rent-a-Captive Facility Princeton Eagle West Holding Inc..................... Delaware/1995 Holding Company Princeton Eagle West Insurance Company............ Bermuda/1995 Rent-a-Captive Facility The Princeton Excess and Surplus Lines Insurance Company................................. Delaware/1995 Surplus Lines Insurance
- ---------- (1) Indentations indicate subsidiaries. All ownership is 100% of common stock other than directors' qualifying shares or where local laws or customs in foreign jurisdictions require multiple shareholders (for example, American Re Managers International, Ltd. owns 1 share of American Re Management (Vienna) GmbH). (2) A joint venture 50% owned by American Re Holdings, Ltd. and 50% owned by Arthur J. Gallagher (UK) Ltd. EX-23.3 10 EXH 23.3 - CONSENT OF DELOITTE Exhibit 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of American Re Corporation and its subsidiaries on Form S-4, of our reports dated January 29, 1996, appearing in and incorporated by reference in the Annual Report on Form 10-K of American Re Corporation for the year ended December 31, 1995 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Parsippany, New Jersey January 24, 1997 EX-24 11 EXH 24 - POWERS OF ATTORNEY Exhibit 24 LIMITED POWER OF ATTORNEY WHEREAS, AMERICAN RE CORPORATION, a Delaware corporation (the "Company"), will file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4 (the "Registration Statement"), with such amendments (including post-effective amendments) as may be necessary or appropriate, together with any and all exhibits and other documents related thereto, in connection with the Company's offer to exchange up to $500 Million of its 7.45% Senior Notes due 2026, Series B, for any and all of its outstanding 7.45% Senior Notes due 2026, Series A; NOW, THEREFORE, the undersigned in his capacity as a director or officer, or both, as the case may be, of the Company does hereby appoint Robert K. Burgess, James R. Fisher and George T. O'Shaughnessy, Jr. his true and lawful attorneys-in-fact and with full power of substitution and resubstitution, (i) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, the Registration Statement including the exhibits thereto and any and all amendments thereto as said attorneys-in-fact or any of them shall deem necessary or appropriate, together with all instruments necessary or incidental in connection therewith, to file the same or cause the same to be filed with the Commission, and to appear before the Commission in connection with any matter relating thereto; and (ii) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, any application, statement, petition, notice, or other document, or any amendment thereto, or any exhibit filed in connection therewith, which is required to register or qualify the securities being offered under the securities or blue-sky laws of all states as may be necessary or appropriate to permit the offering and sale as contemplated by said Registration Statement. Said attorneys-in-fact shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable in connection with such Registration Statement or related securities or blue-sky filings, as fully and for all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of January, 1997. /s/ Claus Helbig ---------------------------- Claus Helbig LIMITED POWER OF ATTORNEY WHEREAS, AMERICAN RE CORPORATION, a Delaware corporation (the "Company"), will file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4 (the "Registration Statement"), with such amendments (including post-effective amendments) as may be necessary or appropriate, together with any and all exhibits and other documents related thereto, in connection with the Company's offer to exchange up to $500 Million of its 7.45% Senior Notes due 2026, Series B, for any and all of its outstanding 7.45% Senior Notes due 2026, Series A; NOW, THEREFORE, the undersigned in his capacity as a director or officer, or both, as the case may be, of the Company does hereby appoint Robert K. Burgess, James R. Fisher and George T. O'Shaughnessy, Jr. his true and lawful attorneys-in-fact and with full power of substitution and resubstitution, (i) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, the Registration Statement including the exhibits thereto and any and all amendments thereto as said attorneys-in-fact or any of them shall deem necessary or appropriate, together with all instruments necessary or incidental in connection therewith, to file the same or cause the same to be filed with the Commission, and to appear before the Commission in connection with any matter relating thereto; and (ii) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, any application, statement, petition, notice, or other document, or any amendment thereto, or any exhibit filed in connection therewith, which is required to register or qualify the securities being offered under the securities or blue-sky laws of all states as may be necessary or appropriate to permit the offering and sale as contemplated by said Registration Statement. Said attorneys-in-fact shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable in connection with such Registration Statement or related securities or blue-sky filings, as fully and for all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of January, 1997. /s/ Hans Rathnow ------------------------------ Hans Rathnow LIMITED POWER OF ATTORNEY WHEREAS, AMERICAN RE CORPORATION, a Delaware corporation (the "Company"), will file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4 (the "Registration Statement"), with such amendments (including post-effective amendments) as may be necessary or appropriate, together with any and all exhibits and other documents related thereto, in connection with the Company's offer to exchange up to $500 Million of its 7.45% Senior Notes due 2026, Series B, for any and all of its outstanding 7.45% Senior Notes due 2026, Series A; NOW, THEREFORE, the undersigned in his capacity as a director or officer, or both, as the case may be, of the Company does hereby appoint Robert K. Burgess, James R. Fisher and George T. O'Shaughnessy, Jr. his true and lawful attorneys-in-fact and with full power of substitution and resubstitution, (i) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, the Registration Statement including the exhibits thereto and any and all amendments thereto as said attorneys-in-fact or any of them shall deem necessary or appropriate, together with all instruments necessary or incidental in connection therewith, to file the same or cause the same to be filed with the Commission, and to appear before the Commission in connection with any matter relating thereto; and (ii) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, any application, statement, petition, notice, or other document, or any amendment thereto, or any exhibit filed in connection therewith, which is required to register or qualify the securities being offered under the securities or blue-sky laws of all states as may be necessary or appropriate to permit the offering and sale as contemplated by said Registration Statement. Said attorneys-in-fact shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable in connection with such Registration Statement or related securities or blue-sky filings, as fully and for all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of January, 1997. /s/ Hans-Jurgen Schinzler ------------------------------------ Hans-Jurgen Schinzler LIMITED POWER OF ATTORNEY WHEREAS, AMERICAN RE CORPORATION, a Delaware corporation (the "Company"), will file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4 (the "Registration Statement"), with such amendments (including post-effective amendments) as may be necessary or appropriate, together with any and all exhibits and other documents related thereto, in connection with the Company's offer to exchange up to $500 Million of its 7.45% Senior Notes due 2026, Series B, for any and all of its outstanding 7.45% Senior Notes due 2026, Series A; NOW, THEREFORE, the undersigned in his capacity as a director or officer, or both, as the case may be, of the Company does hereby appoint Robert K. Burgess, James R. Fisher and George T. O'Shaughnessy, Jr. his true and lawful attorneys-in-fact and with full power of substitution and resubstitution, (i) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, the Registration Statement including the exhibits thereto and any and all amendments thereto as said attorneys-in-fact or any of them shall deem necessary or appropriate, together with all instruments necessary or incidental in connection therewith, to file the same or cause the same to be filed with the Commission, and to appear before the Commission in connection with any matter relating thereto; and (ii) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, any application, statement, petition, notice, or other document, or any amendment thereto, or any exhibit filed in connection therewith, which is required to register or qualify the securities being offered under the securities or blue-sky laws of all states as may be necessary or appropriate to permit the offering and sale as contemplated by said Registration Statement. Said attorneys-in-fact shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable in connection with such Registration Statement or related securities or blue-sky filings, as fully and for all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of January, 1997. /s/ Paul H. Inderbitzin ------------------------------- Paul H. Inderbitzin LIMITED POWER OF ATTORNEY WHEREAS, AMERICAN RE CORPORATION, a Delaware corporation (the "Company"), will file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4 (the "Registration Statement"), with such amendments (including post-effective amendments) as may be necessary or appropriate, together with any and all exhibits and other documents related thereto, in connection with the Company's offer to exchange up to $500 Million of its 7.45% Senior Notes due 2026, Series B, for any and all of its outstanding 7.45% Senior Notes due 2026, Series A; NOW, THEREFORE, the undersigned in his capacity as a director or officer, or both, as the case may be, of the Company does hereby appoint Robert K. Burgess, James R. Fisher and George T. O'Shaughnessy, Jr. his true and lawful attorneys-in-fact and with full power of substitution and resubstitution, (i) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, the Registration Statement including the exhibits thereto and any and all amendments thereto as said attorneys-in-fact or any of them shall deem necessary or appropriate, together with all instruments necessary or incidental in connection therewith, to file the same or cause the same to be filed with the Commission, and to appear before the Commission in connection with any matter relating thereto; and (ii) to execute in his name, place, and stead, in his capacity as a director or officer, or both, as the case may be, of the Company, any application, statement, petition, notice, or other document, or any amendment thereto, or any exhibit filed in connection therewith, which is required to register or qualify the securities being offered under the securities or blue-sky laws of all states as may be necessary or appropriate to permit the offering and sale as contemplated by said Registration Statement. Said attorneys-in-fact shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable in connection with such Registration Statement or related securities or blue-sky filings, as fully and for all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of January, 1997. /s/ Edward B. Jobe ------------------------------- Edward B. Jobe EX-25 12 EXH 25 - STATEMENT OF ELIGIBILITY OF TRUSTEES Exhibit 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 --------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) __ STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) John R. Towers, Esq. Senior Vice President and Corporate Secretary 225 Franklin Street, Boston, Massachusetts 02110 (617)654-3253 (Name, address and telephone number of agent for service) --------------------- American Re Corporation (Exact name of obligor as specified in its charter) Delaware 13-3672116 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 555 College Road East Princeton, NJ 08543 (Address of principal executive offices) (Zip Code) -------------------- Senior Notes (Title of indenture securities) GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the Obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee or of its parent, State Street Boston Corporation. (See note on page 2.) Item 3. through Item 15. Not applicable. Item 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility. 1. A copy of the articles of association of the trustee as now in effect. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the articles of association. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in paragraph (1) or (2), above. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A copy of the existing by-laws of the trustee, or instruments corresponding thereto. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 5. A copy of each indenture referred to in Item 4. if the obligor is in default. Not applicable. 6. The consents of United States institutional trustees required by Section 321(b) of the Act. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 24th of January, 1997. STATE STREET BANK AND TRUST COMPANY By: /s/ Gerald R. Wheeler --------------------------------------- Gerald R. Wheeler Vice President 2 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by American Re Corporation of its Senior Notes, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ Gerald R. Wheeler --------------------------------------- Gerald R. Wheeler Vice President Dated: January 24, 1997 3 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company of Boston, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business June 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a). Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ............... 1,787,130 Interest-bearing balances ........................................ 7,756,486 Securities.......................................................... 8,430,910 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary .............................. 4,090,665 Loans and lease financing receivables: Loans and leases, net of unearned income ............ 4,426,059 Allowance for loan and lease losses ................. 70,088 Loans and leases, net of unearned income and allowances .......... 4,355,971 Assets held in trading accounts .................................... 880,647 Premises and fixed assets .......................................... 367,731 Other real estate owned ............................................ 1,067 Investments in unconsolidated subsidiaries ......................... 65,772 Customers' liability to this bank on acceptances outstanding ....... 33,530 Intangible assets .................................................. 68,505 Other assets........................................................ 1,002,465 ---------- Total assets ....................................................... 28,840,879 ========== LIABILITIES Deposits: In domestic offices............................................... 7,531,683 Noninterest-bearing ............................... 5,387,924 Interest-bearing .................................. 2,143,759 In foreign offices and Edge subsidiary ........................... 12,050,265 Noninterest-bearing ............................... 46,768 Interest-bearing .................................. 12,003,497 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary .............................. 5,337,231 Demand notes issued to the U.S. Treasury and Trading Liabilities ... 871,847 Other borrowed money ............................................... 794,349 Bank's liability on acceptances executed and outstanding ........... 33,530 Other liabilities .................................................. 665,616 ---------- Total liabilities .................................................. 27,284,521 ---------- EQUITY CAPITAL Common stock ....................................................... 29,931 Surplus ............................................................ 276,915 Undivided profits .................................................. 1,247,942 Cumulative foreign currency translation adjustments ................ 1,570 ---------- Total equity capital ............................................... 1,556,358 ---------- Total liabilities and equity capital ............................... 28,840,879 ========== 4 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Charles F. Kaye 5 EX-99.1 13 EXH 99.1 - FORM OF LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL FOR 7.45% SENIOR NOTES DUE 2026 OF AMERICAN RE CORPORATION THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997 (THE "EXPIRATION DATE") UNLESS EXTENDED BY AMERICAN RE CORPORATION. EXCHANGE AGENT: STATE STREET BANK AND TRUST COMPANY BY HAND: BY MAIL: State Street Bank and Trust Company (INSURED OR REGISTERED RECOMMENDED) Two International Place State Street Bank and Trust Company Fourth Floor Two International Place Boston, Massachusetts 02110 Fourth Floor Attention: Corporate Trust Operations Boston, Massachusetts 02110 Nancy Bowker Attention: Corporate Trust Operations Nancy Bowker BY OVERNIGHT EXPRESS: BY FACSIMILE: State Street Bank and Trust Company (617) 664-5371 Two International Place (For Eligible Institutions Only) Fourth Floor BY TELEPHONE: Boston, Massachusetts 02110 (617) 664-5602 Attention: Corporate Trust Operations Attn: Nancy Bowker Nancy Bowker
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. The undersigned acknowledges receipt of the Prospectus dated , 1997 (the "Prospectus") of American Re Corporation (the "Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which together describe the Company's offer (the "Exchange Offer") to exchange $1,000 in principal amount of its new 7.45% Senior Notes due 2026, Series B (the "Exchange Notes") for each $1,000 in principal amount of outstanding 7.45% Senior Notes due 2026, Series A (the "Old Notes"). The terms of the Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes are freely transferable by holders thereof (except as provided herein or in the Prospectus) and are not subject to any covenant regarding registration under the Securities Act of 1933, as amended (the "Securities Act"). The undersigned has checked the appropriate boxes below and signed this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT. List below the Old Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the Certificate Numbers and Principal Amounts should be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF OLD NOTES TENDERED HEREWITH AGGREGATE NAME(S) AND ADDRESS(ES) OF PRINCIPAL AMOUNT PRINCIPAL REGISTERED HOLDER(S) CERTIFICATE REPRESENTED AMOUNT (PLEASE FILL IN) NUMBER(S)* BY OLD NOTES* TENDERED** Total
* Need not be completed by book-entry holders. ** Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate principal amount represented by such Notes. See instruction 2. This Letter of Transmittal is to be used either if certificates representing Old Notes are to be forwarded herewith or if delivery of Old Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at The Depository Trust Company, pursuant to the procedures set forth in "The Exchange Offer--Procedures for Tendering Old Notes" in the Prospectus. Delivery of documents to the book-entry transfer facility does not constitute delivery to the Exchange Agent. Holders whose Old Notes are not immediately available or who cannot deliver their Old Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedure set forth in the Prospectus under the caption "The Exchange Offer-- Procedures for Tendering Old Notes." / / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution ______________________________________________ / / The Depository Trust Company Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ / / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) _______________________________________________ Name of Eligible Institution that Guaranteed Delivery ______________________ Date of Execution of Notice of Guaranteed Delivery _________________________ If Delivered by Book-Entry Transfer: Account Number _____________________________________________________________ / / CHECK HERE IF NEW NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN PERSON SIGNING THE LETTER OF TRANSMITTAL: Name _________________________________________________________________________ (Please Print) Address ______________________________________________________________________ (Including Zip Code) / / CHECK HERE IF NEW NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT FROM THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL: Address ______________________________________________________________________ (Including Zip Code) / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THIS PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name _______________________________________________________________________ Address ____________________________________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Old Notes that were acquired as result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Any holder who is an "affiliate" of the Company or who has an arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offer, or any broker-dealer who purchased Old Notes from the Company to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act must comply with the registration and prospectus delivery requirements under the Securities Act. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the above-described principal amount of the Old Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Old Notes tendered herewith, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Old Notes. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Exchange Agent acts as the agent of the Company, in connection with the Exchange Offer) to cause the Old Notes to be assigned, transferred and exchanged. The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Old Notes and to acquire Exchange Notes issuable upon the exchange of such tendered Old Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Old Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of tendered Old Notes or transfer ownership of such Old Notes on the account books maintained by the book-entry transfer facility. The undersigned further agrees that acceptance of any and all validly tendered Old Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement (as defined in the Prospectus) and that the Company shall have no further obligations or liabilities thereunder except as provided in the first paragraph of Section 2 of said agreement. The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption "The Exchange Offer--Certain Conditions to the Exchange Offer." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Company), as more particularly set forth in the Prospectus, the Company may not be required to exchange any of the Old Notes tendered hereby and, in such event, the Old Notes not exchanged will be returned to the undersigned at the address shown above. In addition, the Company may amend the Exchange Offer at any time prior to the Expiration Date if any of the conditions set forth under "The Exchange Offer--Certain Conditions to the Exchange Offer" occur. By tendering, each holder of Old Notes represents that the Exchange Notes acquired in the exchange will be obtained in the ordinary course of such holder's business, that such holder has no arrangement with any person to participate in the distribution of such Exchange Notes, that such holder is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act and that such holder is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes. Any holder of Notes using the Exchange Offer to participate in a distribution of the Exchange Notes (i) cannot rely on the position of the staff of the Securities and Exchange Commission (the "Commission") enunciated in its interpretive letter with respect to Exxon Capital Holdings Corporation (available April 13, 1989) or similar letters and (ii) must comply with the registration and prospectus requirements of the Securities Act in connection with a secondary resale transaction. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes, however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tendered Old Notes may be withdrawn at any time prior to the Expiration Date in accordance with the terms of this Letter of Transmittal. See Instruction 2. Certificates for all Exchange Notes delivered in exchange for tendered Old Notes and any Old Notes delivered herewith but not exchanged, and registered in the name of the undersigned, shall be delivered to the undersigned at the address shown below the signature of the undersigned. TENDER HOLDER(S) SIGN HERE (Complete accompanying substitute Form W-9) ________________________________________________________________________________ ________________________________________________________________________________ Signature(s) of Holder(s) Dated ___________________ Area Code and Telephone Number ___________________ (Must be signed by registered holder(s) exactly as name(s) appear(s) on certificate(s) for Old Notes. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth the full title of such person.) See Instruction 3. Name(s) ________________________________________________________________________ ________________________________________________________________________________ (Please Print) Capacity (full title) __________________________________________________________ Address ________________________________________________________________________ (Including Zip Code) Area Code and Telephone No. ____________________________________________________ Taxpayer Identification No. ____________________________________________________ GUARANTEE OF SIGNATURE(S) (IF REQUIRED--SEE INSTRUCTION 3) Authorized Signature ___________________________________________________________ Name ___________________________________________________________________________ Title __________________________________________________________________________ Address ________________________________________________________________________ Name of Firm ___________________________________________________________________ Area Code and Telephone No. ____________________________________________________ Dated __________________________________________________________________________ INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. A holder of Old Notes may tender the same by (i) properly completing and signing the Letter of Transmittal or a facsimile thereof (all references in the Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates representing the Old Notes being tendered and any required signature guarantees and any other document required by the Letter of Transmittal, to the Exchange Agent at its address set forth above on or prior to the Expiration Date (or complying with the procedure for book-entry transfer described below) or (ii) complying with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY. NO OLD NOTES OR LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY. If tendered Old Notes are registered in the name of the signer of the Letter of Transmittal and the Exchange Notes to be issued in exchange therefor are to be issued (and any untendered Old Notes are to be reissued) in the name of the registered holder (which term, for the purposes described herein, shall include any participant in The Depository Trust Company (also referred to as a "book-entry transfer facility") whose name appears on a security listing as the owner of Old Notes), the signature of such signer need not be guaranteed. In any other case, the tendered Old Notes must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Company and duly executed by the registered holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a bank, broker, dealer, credit union, savings association, clearing agency or other institution (each an "Eligible Institution") that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended. If the Exchange Notes and/or Old Notes not exchanged are to be delivered to an address other than that of the registered holder appearing on the note register for the Old Notes, the signature on the Letter of Transmittal must be guaranteed by an Eligible Institution. The Exchange Agent will make a request within two business days after the date of receipt of this Prospectus to establish accounts with respect to the Old Notes at the book-entry transfer facility for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in the book-entry transfer facility's system may make book-entry delivery of Old Notes by causing such book-entry transfer facility to transfer such Old Notes into the Exchange Agent's account with respect to the Old Notes in accordance with the book-entry transfer facility's procedures for such transfer. Although delivery of Old Notes may be effected through book-entry transfer into the Exchange Agent's account at the book-entry transfer facility, an appropriate Letter of Transmittal with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. If a holder desires to accept the Exchange Offer and time will not permit a Letter of Transmittal or Old Notes to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Exchange Agent has received on or prior to the Expiration Date, a letter, telegram or facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) from an Eligible Institution setting forth the name and address of the tendering holder, the names in which the Old Notes are registered and, if possible, the certificate numbers of the Old Notes to be tendered, and stating that the tender is being made thereby and guaranteeing that within three business days after the Expiration Date, the Old Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the book-entry transfer facility), will be delivered by such Eligible Institution together with a properly completed and duly executed Letter of Transmittal (and any other required documents). Unless Old Notes being tendered by the above-described method are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents), the Company may, at its option, reject the tender. Copies of the notice of guaranteed delivery ("Notice of Guaranteed Delivery") which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Exchange Agent. A tender will be deemed to have been received as of the date when (i) the tendering holder's properly completed and duly signed Letter of Transmittal accompanied by the Old Notes (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the book-entry transfer facility) is received by the Exchange Agent, or (ii) a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) from an Eligible Institution is received by the Exchange Agent. Issuances of Exchange Notes in exchange for Old Notes tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) by an Eligible Institution will be made only against deposit of the Letter of Transmittal (and any other required documents) and the tendered Old Notes. If the Letter of Transmittal is signed by a person or persons other than the registered holder or holders of Old Notes, such Old Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders appear on the Old Notes. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Old Notes for exchange. 2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of Old Notes evidenced by a submitted certificate is tendered, the tendering holder should fill in the principal amount tendered in the box entitled "Principal Amount Tendered." A newly issued certificate for the principal amount of Old Notes submitted but not tendered will be sent to such holder as soon as practicable after the Expiration Date. All Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise clearly indicated. For a withdrawal to be effective, a written notice of withdrawal sent by telegram, facsimile transmission (receipt confirmed by telephone) or letter must be received by the Exchange Agent at the address set forth herein prior to the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Notes), (iii) specify the principal amount of Notes to be withdrawn, (iv) include a statement that such holder is withdrawing his election to have such Old Notes exchanged, (v) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered or as otherwise described above (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee under the Indenture register the transfer of such Old Notes into the name of the person withdrawing the tender and (vi) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. The Exchange Agent will return the properly withdrawn Old Notes promptly following receipt of notice of withdrawal. If Old Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Old Notes or othewise comply with the book-entry transfer facility procedure. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company and such determination will be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the book-entry transfer facility pursuant to the book-entry transfer procedures described above, such Old Notes will be credited to an account with such book-entry transfer facility specified by the holder) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described under the caption "Procedures for Tendering Old Notes" in the Prospectus at any time on or prior to the Expiration Date. 3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the registered holder(s) of the Old Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Old Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If a number of Old Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of Old Notes. When this Letter of Transmittal is signed by the registered holder or holders (which term, for the purposes described herein, shall include the book-entry transfer facility whose name appears on a security listing as the owner of the Old Notes) of Old Notes listed and tendered hereby, no endorsements of certificates or separate written instruments of transfer or exchange are required. If this Letter of Transmittal is signed by a person other than the registered holder or holder of the Old Notes listed, such Old Notes must be endorsed or accompanied by separate written instruments of transfer or exchange in form satisfactory to the Company and duly executed by the registered holder, in either case signed exactly as the name or names of the registered holder or holders appear(s) on the Notes. If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority so to act must be submitted. Endorsements on certificates or signatures on separate written instruments of transfer or exchange required by this Instruction 3 must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal need not be guaranteed by an Eligible Institution, provided the Old Notes are tendered: (i) by a registered holder of such Old Notes, for the holder of such Old Notes; or (ii) for the account of an Eligible Institution. 4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any, applicable to the transfer and exchange of Old Notes to it or its order pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Old Notes tendered, or if tendered Old Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exception therefrom is not submitted herewith the amount of such transfer taxes will be billed directly to such tendering holder. Except as provided in this Instruction 4, it will not be necessary for transfer tax stamps to be affixed to the Notes listed in this Letter of Transmittal. 5. WAIVER OF CONDITIONS. The Company reserves the right to waive in its reasonable judgment, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. 6. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old Notes have been mutilated, lost, stolen or destroyed, should contact the Exchange Agent at the address indicated above for further instructions. 7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number set forth above. In addition, all questions relating to the Exchange Offer, as well as requests for assistance or additional copies of the Prospectus and this Letter of Transmittal, may be directed to American Re Corporation, 655 College Road East, Princeton, New Jersey 08543, attention: Investor Relations. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH CERTIFICATES FOR NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. EX-99.2 14 EXH 99.2 - FORM OF NOGD NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ALL OUTSTANDING 7.45% SENIOR NOTES DUE 2026, SERIES A IN EXCHANGE FOR NEW 7.45% SENIOR NOTES DUE 2026, SERIES B OF AMERICAN RE CORPORATION Registered holders of outstanding 7.45% Senior Notes due 2026, Series A (the "Old Notes") who wish to tender their Old Notes in exchange for a like principal amount of new 7.45% Senior Notes due 2026, Series B (the "Exchange Notes") and whose Old Notes are not immediately available or who cannot deliver their Notes and Letter of Transmittal (and any other documents required by the Letter of Transmittal) to State Street Bank and Trust Company (the "Exchange Agent") prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one substantially equivalent hereto. This Notice of Guaranteed Delivery may be delivered by hand or sent by facisimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) or mail to the Exchange Agent. See "The Exchange Offer--Procedure for Tendering Old Notes" in the Prospectus. THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: STATE STREET BANK AND TRUST COMPANY BY HAND: BY MAIL: State Street Bank and Trust Company (INSURED OR REGISTERED RECOMMENDED) Two International Place State Street Bank and Trust Company Fourth Floor Two International Place Boston, Massachusetts 02110 Fourth Floor Attention: Corporate Trust Operations Boston, Massachusetts 02110 Nancy Bowker Attention: Corporate Trust Operations Nancy Bowker BY OVERNIGHT EXPRESS: BY FACSIMILE: State Street Bank and Trust Company 617-664-5371 Two International Place (For Eligible Institutions Only) Fourth Floor BY TELEPHONE: Boston, Massachusetts 02110 617-664-5602 Attention: Corporate Trust Operations Att: Nancy Bowker Nancy Bowker
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution (as defined in the Prospectus), such signature guarantee must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signatures. Ladies and Gentlemen: The undersigned hereby tenders the principal amount of Notes indicated below, upon the terms and subject to the conditions contained in the prospectus dated , 1997 of American Re Corporation (the "Prospectus"), receipt of which is hereby acknowledged. DESCRIPTION OF SECURITIES TENDERED
NAME AND ADDRESS OF REGISTERED HOLDER AS IT CERTIFICATE NUMBER(S) PRINCIPAL AMOUNT APPEARS ON THE OLD NOTES OF OLD NOTES OF OLD NOTES NAME OF TENDERING HOLDER (PLEASE PRINT) TENDERED TENDERED - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- ---------------------
THE FOLLOWING GUARANTEE MUST BE COMPLETED GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to the Exchange Agent at one of its addresses set forth above, the certificates representing the Old Notes (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the book-entry transfer facility), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, and any other documents required by the Letter of Transmittal within three business days after the Expiration Date (as defined in the Prospectus and the Letter of Transmittal). Name of Firm: Address: (Authorized Signature) Title: (Zip Code) Name: Area Code and Telephone No.: (Please type or print) Date:
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. OLD NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.3 15 EXH 99.3 - FORM OF W-9 TAX GUIDELINES GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- ----------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 1. An individual The individual account 2. Two or more The actual owner of individuals (joint the account or, if account) combined funds, any one of the individuals(1) 3. Husband and wife The actual owner of (joint account) the account or, if joint funds, either person(1) 4. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 5. Adult and minor The adult or, if the (joint account) minor is the only contributor, the minor(1) 6. Account in the name The ward, minor, or of guardian or incompetent committee for a person(3) designated ward, minor, or incompetent person 7. a. The usual The revocable savings grantor-trustee(1) trust account (grantor is also trustee) b. So-called trust account that is The actual owner(1) not a legal or valid trust under State law - ----------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 8. Sole proprietorship The owner(4) account 9. A valid trust, The legal entity. estate, or pension (Do not furnish the trust identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account.)(5) 10. Corporate account The corporation 11. Religious, The organization charitable, or educational organization account 12. Partnership account The partnership held in the name of the business 13. Association, club, The organization or other tax-exempt organization 14. A broker or The broker or registered nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------- - --------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency, or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a nonexempt trust described in section 4947(a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to non-resident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041(a), 6045, and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1984, payers must generally withhold 20% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES. (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CIVIL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. -----END PRIVACY-ENHANCED MESSAGE-----