Filed Pursuant to Rule 424(b)(2)
Registration No. 333-70528
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 28, 2001)
6,000,000 SHARES
RENAISSANCERE HOLDINGS LTD.
8.10% SERIES A PREFERENCE SHARES
$25 PER SHARE
[RenaissanceRe logo]
------------------
We are selling 6,000,000 of our preference shares, par value $1.00 per
share.
Upon liquidation, dissolution or winding up, the holders of the
preference shares will be entitled to receive from our assets legally available
for distribution to shareholders a liquidation preference of $25 per share, plus
accrued and unpaid dividends, if any, to the date fixed for distribution.
Dividends on the preference shares will be cumulative from the date of original
issuance and will be payable when, as and if declared by our Board of Directors,
quarterly in arrears on the first day of March, June, September, and December of
each year, commencing March 1, 2002. Dividends on the preference shares will be
payable, when, as and if declared by our Board of Directors, in an amount per
share equal to 8.10% of the liquidation preference per annum (equivalent to
$2.025 per share).
On and after November 19, 2006, we may redeem the preference shares, in
whole or in part, at any time at a redemption price of $25 per share, plus
accrued and unpaid dividends to the date of redemption. We may not redeem the
preference shares before November 19, 2006, except that we may redeem the
preference shares before that date at a redemption price of $26 per share, plus
accrued and unpaid dividends to the date of redemption, if we submit a proposal
to our common shareholders concerning an amalgamation or submit any proposal for
any other matter that, as a result of any changes in Bermuda law, requires the
approval of the holders of our preference shares voting as a single class. The
preference shares have no stated maturity and will not be subject to any sinking
fund or mandatory redemption and will not be convertible into any of our other
securities.
There is currently no public market for the preference shares. We intend
to make application to list the preference shares on the New York Stock Exchange
under the symbol "RNRPRA." If this application is approved, trading in the
preference shares is expected to commence within a 30-day period after the
initial delivery of the preference shares.
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YOU ARE URGED TO CAREFULLY READ THE "RISK FACTORS" SECTION BEGINNING ON
PAGE 6 OF THE ACCOMPANYING PROSPECTUS, WHERE SPECIFIC RISKS ASSOCIATED WITH THE
PREFERENCE SHARES ARE DESCRIBED, ALONG WITH THE OTHER INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, BEFORE YOU MAKE YOUR
INVESTMENT DECISION.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
------------------
<Table>
<Caption>
PER SHARE TOTAL
--------- -----
Public Offering Price(1) $25.0000 $150,000,000
Underwriting Discount $ 0.7875 $ 4,725,000
Proceeds to RenaissanceRe Holdings Ltd. (before expenses) $24.2125 $145,275,000
</Table>
(1) Plus accrued dividends, if any, from the date of original issuance.
------------------
The underwriters expect to deliver the preference shares to purchasers on
or about November 19, 2001.
------------------
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
MORGAN STANLEY WACHOVIA SECURITIES
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
QUICK & REILLY, INC.
November 14, 2001
YOU SHOULD CAREFULLY READ THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DELIVERED WITH THIS PROSPECTUS SUPPLEMENT. YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY,
PREFERENCE SHARES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS ACCURATE ONLY AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR THE
DATE OF THE ACCOMPANYING PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR OF ANY SALE OF
PREFERENCE SHARES.
Except as expressly provided in an underwriting agreement, no offered
securities may be offered or sold in Bermuda and offers may only be accepted
from persons resident in Bermuda, for Bermuda exchange control purposes, where
such offers have been delivered outside of Bermuda. Persons resident in Bermuda,
for Bermuda exchange control purposes, may require the prior approval of the
Bermuda Monetary Authority in order to acquire any offered shares if the
transfer would result in Bermudians owning more than 20% of our outstanding
shares.
In this prospectus supplement, references to "RenaissanceRe," "we," "us"
and "our" refer to RenaissanceRe Holdings Ltd. and, unless the context otherwise
requires or as otherwise expressly stated, its subsidiaries. In this prospectus
supplement, references to "preference shares" mean our "8.10% Series A
Preference Shares." In this prospectus supplement, references to "dollar" and
"$" are to United States currency, and the terms "United States" and "U.S." mean
the United States of America, its states, its territories, its possessions and
all areas subject to its jurisdiction.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<Table>
<Caption>
PAGE
----
About This Prospectus Supplement............................ S-4
RenaissanceRe Holdings Ltd.................................. S-5
The Offering................................................ S-5
Use of Proceeds............................................. S-8
Ratio of Earnings To Combined Fixed Charges and Preference
Share Dividends........................................... S-8
Capitalization.............................................. S-9
Description of Series A Preference Shares................... S-10
Certain Tax Considerations.................................. S-15
Underwriting................................................ S-21
Legal Matters............................................... S-23
Experts..................................................... S-23
Where You Can Find More Information......................... S-23
PROSPECTUS
Where You Can Find More Information......................... 1
Incorporation of Certain Documents By Reference............. 1
About This Prospectus....................................... 2
RenaissanceRe Holdings Ltd. ................................ 3
The Capital Trust........................................... 3
Forward Looking Statements.................................. 4
Risk Factors................................................ 6
Use of Proceeds............................................. 6
Ratio of Earnings To Fixed Charges and Preferred Share
Dividends of RenaissanceRe................................ 6
General Description of the Offered Securities............... 6
Description of Our Capital Shares........................... 7
Description of the Depositary Shares........................ 17
Description of the Debt Securities.......................... 20
Covenants Applicable To the Senior Debt Securities.......... 26
Information Concerning the Trustee.......................... 34
Certain Provisions of Junior Subordinated Debt Securities
Issued to the Capital Trust............................... 34
Description of the Warrants To Purchase Common Shares or
Preference Shares......................................... 38
Description of the Warrants to Purchase Debt Securities..... 39
Description of the Trust Preferred Securities............... 40
Description of the Trust Preferred Securities Guarantee..... 52
Description of the Share Purchase Contracts and the Share
Purchase Units............................................ 56
Plan of Distribution........................................ 57
Legal Opinions.............................................. 59
Experts..................................................... 59
Enforcement of Civil Liabilities Under United States Federal
Securities Laws........................................... 59
</Table>
S-3
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering. The second part
is the accompanying prospectus, which gives more general information, some of
which may not apply to this offering. If the description of this offering varies
between this prospectus supplement and the accompanying prospectus, you should
rely on the information in this prospectus supplement. In addition, you should
review the risks of investing in our preference shares discussed in our Current
Report on Form 8-K filed with the Securities and Exchange Commission on April
23, 2001, which is incorporated by reference in this prospectus supplement,
prior to making an investment decision. We incorporate this and other important
information into this prospectus supplement and the accompanying prospectus by
reference. You may obtain the information incorporated by reference into this
prospectus supplement and the prospectus without charge by following the
instructions under "Where You Can Find More Information."
S-4
RENAISSANCERE HOLDINGS LTD.
RenaissanceRe Holdings Ltd. is a Bermuda company with its registered and
principal executive offices located at Renaissance House, 8-12 East Broadway,
Pembroke HM 19 Bermuda, telephone (441) 295-4513. Our principal business is
property catastrophe reinsurance, written on a worldwide basis through
Renaissance Reinsurance Ltd., a Bermuda company and wholly owned subsidiary.
Some of our coverages in Europe are provided through Renaissance Reinsurance of
Europe, a wholly owned subsidiary organized in Ireland. Based on gross premiums
written, we are one of the largest providers of property catastrophe reinsurance
coverage in the world.
THE OFFERING
The description of the terms of the preference shares in this section is a
summary of the terms of the preference shares. Because the following summary is
not complete, you should refer to the Certificate of Designation, Preferences
and Rights relating to the preference shares and our Amended and Restated Bye-
Laws for a complete description of the terms of the preference shares. You
should also refer to the sections entitled "Description of Series A Preference
Shares" in this prospectus supplement and "Description of Our Capital Shares" in
the accompanying prospectus.
Issuer........................ RenaissanceRe Holdings Ltd.
Securities Offered............ 6,000,000 8.10% Series A Preference Shares.
Dividends..................... Dividends on the preference shares will be
cumulative from the date of original issuance
and will be payable when, as and if declared by
our Board of Directors, quarterly in arrears on
the first day of March, June, September, and
December of each year (or, if this date is not
a business day, on the business day immediately
following this date), commencing March 1, 2002,
in an amount per share equal to 8.10% of the
liquidation preference per annum (equivalent to
$2.025 per share). See "Description of Series A
Preference Shares -- Dividend Rights" in this
prospectus supplement and "Description of Our
Capital Shares -- Dividends" in the
accompanying prospectus.
Liquidation Rights............ Upon liquidation, the holders of the preference
shares will be entitled to receive from our
assets legally available for distribution to
shareholders a liquidation preference of $25
per share, plus accrued and unpaid dividends,
if any, to the date of liquidation. See
"Description of Series A Preference
Shares -- Liquidation Preference" in this
prospectus supplement and "Description of Our
Capital Shares -- Liquidation, Dissolution or
Winding Up" in the accompanying prospectus.
Conversion.................... The preference shares are not convertible into
or exchangeable for any of our other
securities.
Redemption.................... On or after November 19, 2006, we may redeem
the preference shares, in whole or in part, at
any time, at a redemption price of $25 per
share, plus accrued and unpaid dividends, if
any, to the date of redemption, without
interest. At any time prior to November 19,
2006, if we submit to the holders of our common
shares a proposal for an amalgamation or submit
any proposal for any other matter that, as a
result of any changes in Bermuda law after the
date of this prospectus supplement, requires
for its validation or effectuation an
affirmative vote of the holders of
S-5
preference shares at the time outstanding,
voting separately as a single class, we have
the option to redeem all of the outstanding
preference shares at a redemption price of $26
per share, plus accrued and unpaid dividends,
if any, to the date of redemption, without
interest. In this prospectus supplement,
references to a "redemption" of the preference
shares mean a purchase of preference shares
pursuant to Section 42A of the Companies Act
1981 of Bermuda, and the terms "redeem" and
redeemable" are to be interpreted accordingly.
The preference shares have no stated maturity
and will not be subject to any sinking fund or
mandatory redemption. See "Description of the
Series A Preference Shares -- Redemption" in
this prospectus supplement and "Description of
Our Capital Shares -- Redemption" and
"Description of Our Capital
Shares -- Restrictions in Event of Default in
Dividends on Preference Shares" in the
accompanying prospectus.
Voting Rights................. Generally, the holders of the preference shares
will not have any voting rights. Whenever
dividends on the preference shares are in
arrears in an amount equivalent to dividends
for six full dividend periods (whether or not
consecutive), the Certificate of Designation
provides that holders of the preference shares
will have the right to elect two directors
until such dividend arrearage is eliminated. We
will use our best efforts to obtain the
election or appointment of these two directors,
including, if necessary, by using our best
efforts to increase the number of directors
constituting the Board of Directors and to
amend our Bye-laws. In addition, certain
transactions that would vary the rights of
holders of the preference shares cannot be made
without the approval in writing of the holders
of three-quarters of the preference shares or
the sanction of a resolution passed by a
majority of the votes cast at a separate
meeting of the holders of the preference
shares. See "Description of Series A Preference
Shares -- Voting Rights" in this prospectus
supplement, and "Description of Our Capital
Shares -- Voting Rights" in the accompanying
prospectus.
Ranking....................... The preference shares will rank senior to our
common shares with respect to payment of
dividends and amounts upon liquidation,
dissolution or winding up. See "Description of
Series A Preference Shares -- Dividend Rights"
and "Description of Series A Preference
Shares -- Liquidation Preference."
Limitations on Transfer and
Ownership..................... Our Bye-Laws and Certificate of Designation
provide that, with certain exceptions, no
person may own or control more than 9.9% of the
voting rights attached to all of our issued and
outstanding shares (including preference
shares) or vote any shares in excess of this
9.9% limit. Our Board of Directors, in its sole
and absolute discretion, may waive these
ownership and voting restrictions. See
"Description of the Series A Preference
Shares -- Limitations on Transfer and
Ownership" and "Certain Tax
Considerations -- Taxation of Shareholders" in
this prospec-
S-6
tus supplement and "Description of Our Capital
Shares -- Transfer of Shares" in the
accompanying prospectus.
NYSE Listing.................. We intend to make application to list the
preference shares on the New York Stock
Exchange. If this application is approved,
trading in the preference shares is expected to
commence within a 30-day period after the
initial delivery of the preference shares. See
"Underwriting."
Ratings....................... The preference shares have been assigned
ratings of Baa2 by Moody's Investors Service,
Inc. and BBB by Standard & Poor's Rating
Services. These ratings have been obtained with
the understanding that Moody's and Standard &
Poor's will continue to monitor our credit
rating and will make future adjustment to the
extent warranted. A rating reflects only the
view of Moody's and Standard & Poor's, as the
case may be, and is not a recommendation to
buy, sell, or hold the preference shares. There
is no assurance that any such rating will be
retained for any given period or time or that
it will not be revised downward or withdrawn
entirely by Moody's or Standard & Poor's, as
the case may be, if, in their respective
judgments, circumstances so warrant.
Use of Proceeds............... We intend to use the net proceeds for our
general corporate purposes and to repay
approximately $45 million of anticipated
borrowings under our revolving credit and term
loan facility.
S-7
USE OF PROCEEDS
We expect the net proceeds from this offering, after deducting the
underwriting discounts and commissions and estimated expenses payable by us,
will be approximately $144,975,000. We intend to use the net proceeds from this
offering for general corporate purposes and to repay approximately $45 million
of anticipated borrowings under our $310 million revolving credit and term loan
facility. The interest rate on these borrowings is expected to be approximately
2.6% per annum, and the final maturity date of amounts outstanding under this
facility is October 5, 2004. It is anticipated that the $45 million of proceeds
from the anticipated borrowings under our $310 million revolving credit and term
loan facility will be used as part of the capitalization of DaVinci Reinsurance
Ltd., a new Bermuda-based property catastrophe reinsurer.
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERENCE SHARE DIVIDENDS
For purposes of computing the following ratio, earnings consist of net
income before income tax expense plus fixed charges to the extent that these
charges are included in the determination of earnings. Fixed charges consist of
interest costs plus one-third of minimum rental payments under operating leases
(estimated by our management to be the interest factor of these rentals).
<Table>
<Caption>
NINE MONTHS
ENDED
SEPTEMBER 30, FISCAL YEAR ENDED DECEMBER 31,
--------------- ----------------------------------
2000 2001 1996 1997 1998 1999 2000
------ ------ ----- ----- ---- ---- ----
Ratio of Earnings to Combined Fixed
Charges and Preference Share
Dividends.............................. 5.93x 12.51x 24.43x 13.08x 5.07x 6.53x 6.25x
</Table>
S-8
CAPITALIZATION
The following table sets forth our consolidated capitalization at September
30, 2001 on a historical basis and pro forma as adjusted to give effect to the
estimated net proceeds from the offering of our common shares on October 15,
2001 and this offering of preference shares. This table should be read in
conjunction with our consolidated financial statements and related notes thereto
and "Management's Discussion and Analysis of Results of Operations and Financial
Condition", both of which can be found in each of our Annual Report on Form 10-K
for the year ended December 31, 2000 and our Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001, which are incorporated by reference.
<Table>
<Caption>
AT SEPTEMBER 30, 2001 (IN MILLIONS)
----------------------------------------------
PRO FORMA
AS ADJUSTED
PRO FORMA FOR ISSUANCE OF
AS ADJUSTED COMMON SHARES
FOR ISSUANCE OF AND
ACTUAL COMMON SHARES PREFERENCE SHARES
-------- --------------- -----------------
Cash and cash equivalents............................ $ 212.6 $ 212.6 $ 212.6
Bank loan(1)......................................... 33.5 33.5 33.5
7.0% Senior Notes due 2008........................... 150.0 150.0 150.0
RenaissanceRe obligated, mandatorily redeemable
capital securities of a subsidiary trust holding
solely junior subordinated debentures of
RenaissanceRe(2)................................... 87.6 87.6 87.6
Preference shareholders' equity...................... -- -- 150.0
Common shareholders' equity.......................... 816.9 1,049.4 1,049.4
-------- -------- --------
Total capitalization............................ $1,088.0 $1,320.5 $1,470.5
======== ======== ========
Ratio of debt to total capitalization(3)........ 16.9% 13.9% 12.5%
</Table>
- ---------------
(1) We have available for working capital purposes approximately $310 million
under a revolving credit and term loan agreement with a syndicate of
commercial banks.
(2) Reflects $87.6 million aggregate liquidation amount of the capital
securities issued by a subsidiary trust. The sole assets of the trust are
$87.6 million aggregate principal amount of 8.54% junior subordinated
debentures due March 1, 2027 issued by RenaissanceRe.
(3) For purposes of computing the ratio of debt to total capitalization, "debt"
consists of the bank loan and 7.0% Senior Notes due 2008 referenced above.
S-9
DESCRIPTION OF SERIES A PREFERENCE SHARES
The following description of our preference shares includes a summary of
certain provisions of our Amended and Restated Bye-Laws, as well as our
Certificate of Designation, Preferences and Rights, relating to the preference
shares. For a complete description of the terms and provisions of the preference
shares, you should refer to the accompanying prospectus, the Bye-Laws and the
Certificate of Designation, which are incorporated by reference herein. A copy
of the Certificate of Designation will be filed as an exhibit to the
registration statement of which this prospectus supplement is a part. A copy of
the Bye-Laws was filed as an exhibit to our Current Report on Form 8-K filed on
October 16, 2001, which is incorporated by reference into this prospectus
supplement and the accompanying prospectus. See "Certain Tax Considerations"
elsewhere in this prospectus supplement for a summary of certain material U.S.
federal and Bermuda tax consequences applicable to the holders of preference
shares.
GENERAL
On November 14, 2001, a Special Committee of the Board of Directors
approved the Certificate of Designation setting forth the specific rights,
preferences, limitations and other terms of the preference shares.
When issued and paid for as contemplated by this prospectus supplement, the
preference shares will be duly authorized, validly issued and fully paid. The
holders of the preference shares will have no preemptive rights with respect to
any common shares of RenaissanceRe or any other securities convertible into or
carrying rights or options to purchase any such shares. The preference shares
will not be subject to any sinking fund or other obligation of RenaissanceRe to
redeem or retire the preference shares. Unless redeemed by RenaissanceRe, the
preference shares will have a perpetual term, with no maturity.
Our Board of Directors may from time to time create and issue preference
shares of other series without the approval of our shareholders and fix their
relative rights, preferences and limitations. At present, RenaissanceRe has no
issued shares which are senior to or in parity with respect to payment of
dividends and distribution of assets in liquidation with the preference shares.
The alteration of the rights attached to the preference shares requires the
approval of the holders of three-quarters of the preference shares. See "Voting
Rights."
DIVIDEND RIGHTS
Holders of the preference shares will be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
payment of dividends, cumulative preferential cash dividends in an amount per
share equal to 8.10% of the liquidation preference per annum (equivalent to
$2.025 per share). Such dividends will begin to accrue and will be cumulative
from the date of original issuance and will be payable quarterly, when, as and
if declared by the Board of Directors, in arrears on the first day of March,
June, September, and December of each year or, if such date is not a business
day, on the business day immediately after such date. The first dividend, which
will be payable on March 1, 2002, will represent the period from the original
issue date up to February 28, 2002. The dividend for such partial dividend
period and any other dividend payable on the preference shares for any other
partial dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Dividends will be payable to holders of
record as they appear in our Register of Members at the close of business on the
applicable record date, which will be one day prior to the dividend payment date
as long as all of the preference shares remain in book-entry form. If all of the
preference shares are not in book-entry form, the record date will be 15 days
prior to the dividend payment date.
No dividends on preference shares will be declared by the Board of
Directors or paid or set apart for payment by RenaissanceRe at any time during
which the terms and provisions of any of our agreements, including any agreement
relating to our indebtedness, prohibit a declaration, payment or setting apart
for payment of a dividend or provide that such a declaration, payment or setting
apart for payment would constitute a breach or a default. No dividends on the
preference shares will be declared or paid or set apart for payment if
prohibited by law. Dividends on the preference shares will accrue and will be
fully
S-10
cumulative, whether or not there are funds legally available for the payment of
such dividends and whether or not the dividends are declared. Holders of the
preference shares will not be entitled to any dividends in excess of full
cumulative dividends as described above. No interest or sum of money in lieu of
interest will be payable on any dividend payment or on any payment on preference
shares which is in arrears.
If there is any change in the law, regulation, or official directive (or in
the interpretation of a law, regulation or official directive by any Bermuda
governmental authority or court of competent jurisdiction) that adversely
affects the rights of the holders of the preference shares, holders can pursue
all remedies and actions legally available to them. Because RenaissanceRe is a
Bermuda company and is subject to the laws, regulations, official directives and
interpretations of the Bermuda government and its relevant political
subdivisions and courts of competent jurisdiction, there can be no assurance,
however, that the enforcement of such rights would be successful.
If any preference shares are outstanding, no dividends or other
distributions may be declared or paid or set apart for payment on any class or
series of capital shares ranking on a parity with the preference shares with
respect to the payment of dividends and amounts upon liquidation, dissolution or
winding up, as further described in the Certificate of Designation (the "Parity
Shares") for any period unless either (i) full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payments on the preference shares for all
dividend periods terminating on or prior to the dividend payment date on such
Parity Shares, or (ii) all dividends declared upon the preference shares and any
class or series of Parity Shares are declared pro rata so that the amount of
dividends declared per share on the preference shares and any class or series of
Parity Shares will in all cases bear to each other the same ratio that accrued
and unpaid dividends per share on the preference shares and such class or series
of Parity Shares bear to each other.
If any preference shares are outstanding, unless full cumulative dividends
on the preference shares and any Parity Shares have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than those paid in common shares or other
capital shares ranking junior to the preference shares as to dividends and as to
the distribution of assets upon any liquidation, dissolution or winding up
(together with the common shares, "Fully Junior Shares")) may be declared or
paid or set apart for payment upon, and no other distribution may be declared or
paid or set apart for payment upon, the common shares or any other capital
shares ranking junior to the preference shares as to dividends or as to the
distribution of assets upon any liquidation, dissolution or winding up of
RenaissanceRe (together with the common shares, the "Junior Shares"), nor will
any common shares or any other Junior Shares be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of common
shares made for purposes of an employee incentive or benefit plan of
RenaissanceRe or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund or the redemption of any common shares or
any other Junior Shares) by the Company (except by conversion into or exchange
for Fully Junior Shares).
Any dividend payment made on preference shares will first be credited
against the earliest accrued but unpaid dividend due with respect to preference
shares which remains payable.
CERTAIN RESTRICTIONS ON PAYMENT OF DIVIDENDS AND REDEMPTION OR PURCHASE OF
SHARES
Under Bermuda law, RenaissanceRe may not lawfully declare or pay a dividend
if there are reasonable grounds for believing that it is, or would after payment
of the dividend be, unable to pay its liabilities as they become due, or that
the realizable value of its assets would, after payment of the dividend, be less
than the aggregate value of its liabilities, issued share capital and share
premium accounts. In addition, the directors of RenaissanceRe are, as a matter
of prudence, required to ensure that any dividend declared or paid is not of an
amount that reduces its reserves to a level that is not sufficient to meet the
reserve requirements of its business. Under the Insurance Act 1978 of Bermuda,
dividends by a class 4 insurer, such as Renaissance Reinsurance, exceeding 25%
of statutory capital and surplus require an affidavit signed by two directors
and the principal representative of the insurer declaring that the insurer
S-11
will remain in compliance with the solvency margin and liquidity requirements of
the Insurance Act after payment of such dividend.
RenaissanceRe may not redeem or purchase its preference shares if there are
reasonable grounds for believing that it is, or after the purchase would be,
unable to pay its liabilities as they become due. Preference shares may not be
redeemed or purchased except out of the capital paid up thereon or out of the
funds of RenaissanceRe which would otherwise be available for dividend or
distribution or out of the proceeds of a fresh issue of shares made for the
purpose of the redemption or purchase. The premium, if any, payable on
redemption or purchase must be provided for out of the funds of RenaissanceRe
which would otherwise be available for dividend or distribution or out of
RenaissanceRe's share premium account before the preference shares are redeemed
or purchased.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the affairs of RenaissanceRe, the holders of preference shares will be entitled
to receive from the assets of RenaissanceRe legally available for distribution
to shareholders $25 per share plus all accrued but unpaid dividends (whether or
not earned or declared) to the date fixed for distribution before any
distribution is made to holders of common shares and any other class or series
of Junior Shares.
After payment of the full amount of the liquidating distributions to which
they are entitled the holders of preference shares will have no right or claim
to any of the remaining assets of RenaissanceRe. In the event that upon any such
voluntary or involuntary liquidation, dissolution or winding, up the available
assets of RenaissanceRe are insufficient to pay the amount of the liquidating
distributions on all outstanding preference shares and the corresponding amounts
payable on all classes or series of Parity Shares, then the holders of the
preference shares and all such classes or series of Parity Shares shall share
ratably in any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
preference shares and all classes or series of Parity Shares, the remaining
assets of RenaissanceRe will be distributed among the holders of common shares
or any other classes or series of Junior Shares, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation, amalgamation or merger of
RenaissanceRe with or into any other entity, the sale, lease or conveyance of
all or substantially all of the shares or the property or business of
RenaissanceRe or a statutory share exchange will not be deemed to constitute a
liquidation, dissolution or winding up.
REDEMPTION
References to a "redemption" of the preference shares mean a purchase of
shares pursuant to Section 42A of the Companies Act 1981 and the terms "redeem"
and "redeemable" are to be interpreted accordingly. Section 42A provides, among
other things, that if a company agrees to purchase its own shares pursuant to
Section 42A (including by way of delivering a notice of redemption as described
below) and fails to do so, a court may not order the company to purchase the
shares pursuant to Section 42A if doing so would render the company insolvent or
cause the breach of any statute, and a court may not in any event award damages
for any breach by the company of its agreement to purchase shares. A court may,
however, require a company to complete a share purchase under Section 42A to
which it has agreed if the purchase would not render the company insolvent.
The preference shares are not redeemable prior to November 19, 2006, except
as discussed below. On or after such date, RenaissanceRe, at its option upon not
less than 30 nor more than 60 days' written notice, may redeem the preference
shares in whole at any time or from time to time in part, for cash at a
redemption price of $25 per share plus all accrued and unpaid dividends, if any,
thereon to the date fixed for redemption without interest. Holders of the
preference shares to be redeemed upon surrender of certificates for such shares
at the place designated in the notice will be entitled to the redemption price
and any accrued and unpaid dividends payable upon the redemption following such
surrender.
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If fewer than all of the outstanding preference shares are to be redeemed,
the number of shares to be redeemed will be determined by RenaissanceRe and such
shares may be redeemed pro rata from the holders of record in proportion to the
number of such shares held by such holders (with adjustments to avoid redemption
of fractional shares), by lot or by any other method determined by RenaissanceRe
in its sole discretion to be equitable.
Unless full cumulative dividends on all preference shares and all Parity
Shares shall have been declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and the
then current dividend period, no preference shares or any Parity Shares may be
redeemed, purchased or otherwise acquired by RenaissanceRe unless all
outstanding preference shares and any Parity Shares are redeemed, provided that
RenaissanceRe may acquire fewer than all of the outstanding preference shares or
Parity Shares pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding preference shares and Parity Shares.
At any time prior to November 19, 2006, if we shall have submitted to the
holders of our common shares a proposal for an amalgamation or shall have
submitted any proposal for any other matter that, as a result of any changes in
Bermuda law after the date of this prospectus supplement, requires for its
validation or effectuation an affirmative vote of the holders of the preference
shares at the time outstanding, voting separately as a single class, we have the
option upon not less than 30 nor more than 60 days' written notice to redeem all
of the outstanding preference shares for cash at a redemption price of $26 per
share, plus all accrued and unpaid dividends, if any, to the date of redemption.
Prior to delivering notice of redemption as provided below, RenaissanceRe
will file with the corporate records of RenaissanceRe a certificate signed by an
officer of RenaissanceRe affirming its compliance with the redemption provisions
under the Companies Act relating to the preference shares, and stating that the
redemption will not render RenaissanceRe insolvent or cause it to breach any
provision of applicable Bermuda law or regulation. RenaissanceRe will mail a
copy of this certificate with the notice of any redemption.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of preference shares
to be redeemed at the address shown in the Register of Members of RenaissanceRe.
Each notice will state, as appropriate: (i) the redemption date; (ii) the number
of preference shares to be redeemed; (iii) the redemption price; (iv) the place
or places where certificates for preference shares are to be surrendered for
payment of the redemption price; and (v) that where applicable, dividends on the
preference shares to be redeemed will cease to accrue on such redemption date.
If fewer than all preference shares are to be redeemed the notice mailed to each
such holder thereof will also specify the number of preference shares to be
redeemed from such holder. If notice of redemption of any preference shares has
been given and if the funds necessary for such redemption have been set apart by
RenaissanceRe in trust for the benefit of the holders of preference shares so
called for redemption, then from and after the redemption date dividends will
cease to accrue on the preference shares being redeemed, the preference shares
will no longer be deemed to be outstanding and all rights of the holders of such
shares will terminate, except the right to receive the redemption price.
The holders of the preference shares at the close of business on a dividend
record date will be entitled to receive the dividend payable with respect to
such preference shares on the corresponding dividend payment date
notwithstanding the redemption thereof between the dividend record date and the
corresponding dividend payment date or a default in the payment of the dividend
due. Except as described above, RenaissanceRe will make no payment or allowance
for unpaid dividends, whether or not in arrears, on the preference shares which
have been called for redemption.
VOTING RIGHTS
Generally, the preference shares have no voting rights. Whenever dividends
payable on the preference shares are in arrears (whether or not such dividends
have been earned or declared) in an aggregate amount equivalent to dividends for
six full dividend periods (whether or not consecutive), the holders of
preference shares, voting as a single class, will have the right to elect two
directors to Board of Directors.
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We will use our best efforts to obtain the election or appointment of these two
directors, including, if necessary, by using our best efforts to increase the
number of directors constituting the Board of Directors and to amend our
Bye-laws. Whenever all arrearages in dividends on the preference shares have
been paid and dividends for the current quarterly dividend period are paid or
declared and set apart for payment, then the right of holders of the preference
shares to be represented by directors will cease (but subject always to the same
provision for the vesting of such rights in the case of any future arrearages in
an amount equivalent to dividends for six full dividend periods), and the terms
of office of the additional directors elected or appointed to the Board of
Directors will terminate.
Without the written consent of the holders of at least 75% of the
preference shares at the time outstanding or the sanction of a resolution passed
by a majority of the votes cast at a separate meeting of the holders of the
preference shares, we may not take any action which would vary the rights
attached to the preference shares. The holders of the preference shares will
have a right to vote on any amalgamation as provided in Section 106(3) of the
Companies Act and to vote separately as a class as provided in Section 106(4) of
the Companies Act if the amalgamation contains a provision which would
constitute a variation of the rights attaching to the preference shares.
Notwithstanding the foregoing, holders of the preference shares are not entitled
to vote on any sale of all or substantially all of the assets of RenaissanceRe,
and the issuance of any capital stock that is senior to or in parity with the
preference shares with respect to payment of dividends and distribution of
assets in liquidation will not be deemed a variation of the rights of the
preference shares.
CONVERSION
The preference shares are not convertible or exchangeable for any other
securities of RenaissanceRe.
LIMITATIONS ON TRANSFER AND OWNERSHIP
The Bye-Laws provide that, subject to waiver by the Board of Directors, no
person (except certain specified investors) may own or control, or exercise
voting rights with respect to, more than 9.9% of the voting rights attached to
all of our issued and outstanding shares. The Board of Directors may in its sole
discretion make any determination as to whether ownership or control will be
deemed to be in excess of 9.9%, and pursuant to such determination,
RenaissanceRe may decline to register any transfer of its shares resulting in
such ownership or control. In the event we become aware of such ownership, we
may reduce the voting rights with respect to any of our shares (including any
preference shares) owned or controlled by such person to the extent necessary to
limit the voting power held by such person to 9.9% in the aggregate. The voting
rights with respect to all such shares held by such person in excess of the 9.9%
limitation will be allocated to all other holders of common shares, pro rata
based on the number of the common shares held by all such other holders, subject
only to the further limitation that no shareholder allocated such voting rights
may exceed the 9.9% limitation as a result of such allocation. For these
purposes, references to ownership or control of shares of RenaissanceRe mean
ownership within the meaning of Section 958 of the Internal Revenue Code, as
amended, and Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
MARKET FOR THE PREFERENCE SHARES
Prior to this offering, there has not been an established public market for
the preference shares. We intend to have the preference shares listed for
quotation on the New York Stock Exchange. An active or any trading market may
not develop or be maintained. In addition to factors related to RenaissanceRe
and the preference shares, the market price of the preference shares will be
determined by such factors as relative demand for and supply of the preference
shares in the market, general market and economic conditions and other factors
beyond the control of RenaissanceRe. We cannot predict at what price the
preference shares will trade, and the price may be less than its liquidation
value at any point in time.
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CERTAIN TAX CONSIDERATIONS
The following discussion of our taxation and Renaissance Reinsurance and of
the taxation of our shareholders is based (i) upon the opinion of Conyers Dill &
Pearman, Hamilton, Bermuda, with respect to the matters discussed under
"Taxation of RenaissanceRe Holdings Ltd., Renaissance Reinsurance And
Glencoe -- Bermuda" and "Taxation of Shareholders -- Bermuda Taxation" and (ii)
upon the opinion of Willkie Farr & Gallagher, New York, New York, with respect
to the matters discussed under "Taxation of RenaissanceRe Holdings Ltd.,
Renaissance Reinsurance And Glencoe -- Bermuda" and "Taxation of
Shareholders -- United States Taxation of U.S. and non-U.S. Shareholders." The
opinions of these firms do not address, and do not include, opinions as to
whether we have, or Renaissance Reinsurance Ltd. or Glencoe Insurance Ltd. has,
a permanent establishment in the United States, any factual or accounting
matters, determinations or conclusions such as to whether we, Renaissance
Reinsurance or Glencoe is engaged in a U.S. trade or business, Related Person
Insurance Income (RPII) amounts and computations and components thereof (for
example, amounts or computations of income or expense items or reserves entering
into RPII computations) or facts relating to our business or activities,
Renaissance Reinsurance or Glencoe, all of which are matters and information
determined and provided by us. The following discussion is based upon current
law and describes the material U.S. federal and Bermuda tax consequences at the
date of this prospectus supplement and is for general information only. The tax
treatment of a holder of preference shares, or a person treated as a holder of
preference shares for U.S. federal income, state, local or non-U.S. tax purposes
may vary depending on the holder's particular tax situation. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could be retroactive and could affect the tax consequences to holders of
preference shares. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO
THEM OF OWNING PREFERENCE SHARES.
TAXATION OF RENAISSANCERE HOLDINGS LTD., RENAISSANCE REINSURANCE AND GLENCOE
BERMUDA
RenaissanceRe, Renaissance Reinsurance and Glencoe have each received from
the Minister of Finance of Bermuda an assurance under the Exempted Undertakings
Tax Protection Act 1966 of Bermuda, to the effect that in the event of there
being enacted in Bermuda any legislation imposing tax computed on profits or
income, or computed on any capital asset, gain or appreciation, or any tax in
the nature of estate duty or inheritance tax, then the imposition of any such
tax shall not be applicable to RenaissanceRe, Renaissance Reinsurance and
Glencoe or to any of our operations or the shares, debentures or other
obligations of RenaissanceRe, Renaissance Reinsurance or Glencoe until March 28,
2016. These assurances are subject to the proviso that they are not construed so
as to prevent the application of any tax or duty to such persons as are
ordinarily resident in Bermuda or to prevent the application of any tax payable
in accordance with the provisions of The Land Tax Act 1967 of Bermuda or
otherwise payable in relation to the land leased to Renaissance Reinsurance or
Glencoe. RenaissanceRe, Renaissance Reinsurance and Glencoe are required to pay
certain annual Bermuda government fees. Additionally, Renaissance Reinsurance
and Glencoe are required to pay certain insurance registration fees as an
insurer under the Insurance Act. Under current rates, RenaissanceRe pays a fixed
fee of $17,000 and Renaissance Reinsurance and Glencoe pay a fee of $32,000 and
$8,000 per year, respectively (which is the applicable annual Bermuda government
fee and the annual insurance registration fee for each company). Currently there
is no Bermuda withholding tax on dividends that may be paid by Renaissance
Reinsurance or Glencoe to RenaissanceRe.
UNITED STATES
We believe that, to date, RenaissanceRe, Renaissance Reinsurance and
Glencoe have operated and, in the future, will continue to operate their
businesses in a manner that will not cause any of them to be treated as being
engaged in a U.S. trade or business. On this basis, we do not expect
RenaissanceRe, Renaissance Reinsurance or Glencoe to be required to pay U.S.
corporate income tax. However, whether a
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corporation is engaged in a U.S. trade or business is considered a factual
question. Because there are no definitive standards provided by the Internal
Revenue Code, existing or proposed regulations thereunder or judicial precedent,
and as the determination is inherently factual and not a legal issue on which
counsel can opine, there is considerable uncertainty as to activities that
constitute being engaged in a U.S. trade or business. As a result, there can be
no assurance that the IRS could not successfully contend that RenaissanceRe,
Renaissance Reinsurance or Glencoe is engaged in such a trade or business.
If the IRS so contended, RenaissanceRe would be subject to U.S. corporate
income tax on that portion of its net income treated as effectively connected
with a U.S. trade or business, as well as the U.S. corporate branch profits tax,
or Renaissance Reinsurance or Glencoe, unless exempted from tax by the income
tax treaty between the United States and Bermuda, discussed below, would be
subject to U.S. corporate income tax on that portion of its net income treated
as effectively connected with a U.S. trade or business, as well as the U.S.
corporate branch profits tax. The U.S. corporate income tax is currently imposed
at the rate of 35% on net corporate profits and the U.S. corporate branch
profits tax is imposed at the rate of 30% on a corporation's after-tax profits
deemed distributed as a dividend.
Even though we will take the position that RenaissanceRe, Renaissance
Reinsurance and Glencoe are not engaged in U.S. trades or businesses,
Renaissance Reinsurance and Glencoe have filed and intend to continue to file
U.S. federal income tax returns to avoid having all deductions disallowed in the
event that either Renaissance Reinsurance or Glencoe were held to be engaged in
a U.S. trade or business. In addition, filing U.S. tax returns will allow
Renaissance Reinsurance and Glencoe to claim benefits under the income tax
treaty without penalty.
Even if the IRS were to contend successfully that Renaissance Reinsurance
or Glencoe was engaged in a U.S. trade or business, the United States-Bermuda
income tax treaty could preclude the United States from taxing Renaissance
Reinsurance or Glencoe on its net premium income except to the extent that such
income were attributable to a permanent establishment maintained by Renaissance
Reinsurance or Glencoe in the United States. Although we believe that neither
Renaissance Reinsurance nor Glencoe has a permanent establishment in the United
States, we cannot assure you that the IRS will not successfully contend that
either of them has such a permanent establishment and therefore is subject to
taxation. In addition, benefits of the income tax treaty are only available to
Renaissance Reinsurance and Glencoe if more than 50% of their shares is
beneficially owned, directly or indirectly, by individuals who are Bermuda
residents or U.S. citizens or residents. Although we believe we meet and we will
attempt to monitor compliance with this beneficial ownership test, there can be
no assurance that the beneficial ownership test will continue to be satisfied or
that we will be able to establish its satisfaction to the IRS. Furthermore,
income tax treaty benefits will also not be available if the income of
Renaissance Reinsurance or Glencoe is used in substantial part, directly or
indirectly, to make disproportionate distributions to, or to meet certain
liabilities to, persons who are neither residents of the United States or
Bermuda nor U.S. citizens. This limitation could apply if premiums paid for
ceded reinsurance by Renaissance Reinsurance or Glencoe to persons who are
neither residents of the United States or Bermuda nor U.S. citizens exceed 50%
of gross premiums received by Renaissance Reinsurance or Glencoe. We believe
that this limitation also will not apply, but there can be no assurance that
this will be so in the future. Finally, it should be noted that although the
income tax treaty (assuming the limitations previously discussed do not apply)
clearly applies to premium income, it is uncertain whether the income tax treaty
applies to other income such as investment income.
If Renaissance Reinsurance or Glencoe were considered to be engaged in a
U.S. trade or business and were held not to be entitled to the benefits of the
permanent establishment clause of the income tax treaty or RenaissanceRe were
considered to be engaged in a U.S. trade or business, and, thus, subject to U.S.
income taxation, our results of operations and cash flows could be materially
adversely affected.
Code section 842 requires that foreign insurance companies carrying on an
insurance business within the United States have a certain minimum amount of
effectively connected net investment income, determined in accordance with a
formula that depends, in part, on the amount of U.S. risk insured or reinsured
by Renaissance Reinsurance or Glencoe. If Renaissance Reinsurance or Glencoe is
considered to
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be engaged in the conduct of an insurance business in the United States and such
company (i) is not entitled to the benefits of the income tax treaty in general
(because we fail to satisfy one of the limitations on treaty benefits discussed
above) or (ii) is entitled to the benefits of the income tax treaty in general,
but the income tax treaty is interpreted to not apply to investment income, then
section 842 could subject a significant portion of the investment income of such
company to U.S. income tax.
The United States also imposes an excise tax on insurance and reinsurance
premiums paid to foreign insurers or reinsurers with respect to risks located in
the United States. Insurance and reinsurance premiums paid to foreign insurers
or reinsurers with respect to risks located outside the United States should not
be subject to this excise tax. The rate of tax currently applicable to
reinsurance premiums paid to foreign reinsurers such as Renaissance Reinsurance,
with respect to risks located in the United States, is 1% of gross premiums.
Congress has in the past, however, considered legislation that would increase
the excise tax rate on reinsurance premiums paid to foreign reinsurers to 4%.
Although no such legislation has to date been enacted, hearings on the subject
were held in 1993, and it is uncertain whether, or in what form, such
legislation may ultimately be enacted. The rate of tax currently applicable to
insurance premiums paid to foreign insurers such as Glencoe with respect to
risks located in the U.S. is 4% of gross premiums.
TAXATION OF SHAREHOLDERS
BERMUDA TAXATION
Currently, there is no Bermuda withholding tax on dividends paid by us.
UNITED STATES TAXATION OF U.S. AND NON-U.S. SHAREHOLDERS
Classification of Renaissance Reinsurance and Glencoe as
non-CFCs. Although Renaissance Reinsurance and Glencoe were classified as
"controlled foreign corporations" ("CFCs") in prior years, we believe that they
no longer meet the requirements for such classification. Further, our Amended
and Restated Bye-Laws contain certain "Excess Share" provisions, which are
designed to prevent any person (other than certain of our founding institutional
shareholders) from becoming a 10% shareholder, and, accordingly, reduce the
likelihood that we may be deemed to be a CFC in the future. However, there can
be no assurance that such provisions will operate as intended.
Each prospective investor should consult its own tax advisor to determine
whether its ownership interest in RenaissanceRe would cause it to become a 10%
shareholder of RenaissanceRe, Renaissance Reinsurance and Glencoe or of any
subsidiary that may be created by RenaissanceRe or Renaissance Reinsurance and
to determine the impact of such a classification of such investor.
Related Person Insurance Income ("RPII") Rules. Certain special subpart F
provisions of the Code will apply to persons who, through their ownership of our
preference and common shares, are indirect shareholders of Renaissance
Reinsurance or Glencoe if both (A) 25% or more of the value or voting power of
the shares of Renaissance Reinsurance or Glencoe is owned or deemed owned
(directly or indirectly through foreign entities) by U.S. persons, as is
expected to be the case after this offering; and (B)(i) 20% or more of either
the voting power or the value of the shares of Renaissance Reinsurance or
Glencoe is owned directly or indirectly by U.S. persons or persons related to
them who are insured or reinsured by Renaissance Reinsurance or Glencoe; and
(ii) Renaissance Reinsurance or Glencoe has RPII, determined on a gross basis,
equal to 20% or more of its gross insurance income. RPII is income (investment
income and premium income) from the direct or indirect insurance or reinsurance
of (i) the risk of any U.S. person who owns shares of Renaissance Reinsurance or
Glencoe (directly or indirectly through foreign entities) or (ii) the risk of a
person related to such a U.S. person.
Renaissance Reinsurance or Glencoe may be considered to indirectly reinsure
the risk of a holder of shares that is a U.S. person, and thus generate RPII, if
an unrelated company that insured such risk in the first instance reinsures the
risk with Renaissance Reinsurance or Glencoe.
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We do not expect Renaissance Reinsurance or Glencoe, respectively, to
knowingly enter into reinsurance or insurance arrangements where the ultimate
risk insured is that of a holder of shares that is a U.S. person or person
related to such a U.S. person. It is possible that Treasury Regulations might be
adopted clarifying that the indirect reinsurance described in the preceding
paragraph constitutes RPII only if the unrelated insurer is fronting for a
reinsurer that the insured (or a person related to the insured) owns shares in.
Absent adoption of such Treasury Regulations or other authority, there can be no
assurance that the IRS will not require a holder of shares that is a U.S. person
or person related to such a U.S. person to demonstrate that we have not
indirectly (albeit unknowingly) reinsured risks of such a shareholder. If the
IRS requires a shareholder that is a U.S. person or person related to such a
U.S. person to demonstrate that the risks reinsured by us were not risks of
related parties, while we will cooperate in providing information regarding our
shareholders and the insurance and reinsurance arrangements of Renaissance
Reinsurance and Glencoe, we may not be in a position to identify the names of
many of our shareholders or the names of the persons whose risks we indirectly
reinsure. Therefore, each prospective investor should consult with his own tax
advisor to evaluate the risk that the IRS would take this position and the tax
consequences that might arise.
Notwithstanding the foregoing discussion it is anticipated (although not
assured) that less than 20% of the gross insurance income of Renaissance
Reinsurance or Glencoe for any taxable year will constitute RPII. However, there
can be no assurance that the IRS will not assert that 20% or more of the income
of Renaissance Reinsurance or Glencoe constitutes RPII or that a taxpayer will
be able to meet its burden of proving otherwise. If 20% or more of the gross
insurance income of Renaissance Reinsurance or Glencoe for any taxable year
constitutes RPII and 20% or more of the voting power or value of the stock of
Renaissance Reinsurance or Glencoe is held, directly or indirectly, by U.S.
insureds or reinsureds or by persons related thereto, each direct and indirect
U.S. holder of our preference and common shares will be taxable currently on its
allocable share of the RPII of Renaissance Reinsurance or Glencoe. In that case,
RPII will be taxable to each U.S. holder of our preference and common shares
regardless of whether such holder is a U.S. Shareholder and regardless of
whether such holder is an insured or related to an insured. For this purpose,
all of the RPII of Renaissance Reinsurance or Glencoe would be allocated solely
to U.S. holders, but not in excess of a holder's ratable share, based on the
extent of its interest in RenaissanceRe, of the total income of Renaissance
Reinsurance or Glencoe.
Under proposed Treasury Regulations, RPII that is taxed to a U.S. holder
will increase such holder's tax basis in the shares to which it is allocable.
Dividends distributed by Renaissance Reinsurance or Glencoe to RenaissanceRe and
by RenaissanceRe to U.S. persons who are not U.S. Shareholders will, under such
regulations, be deemed to come first out of taxed RPII and to that extent will
not constitute income to the holder. This will be the result whether the
dividend is distributed in the same year in which the RPII is taxed or a later
year. The untaxed dividend will decrease the holder's tax basis in such holder's
preference shares as well.
Computation of RPII. In an effort to determine how much RPII Renaissance
Reinsurance and Glencoe have earned in each fiscal year, we monitor the
percentage of gross premiums that are received by Renaissance Reinsurance and
Glencoe from U.S. persons and persons related to U.S. persons. Beyond that, we
will use our reasonable best efforts to secure such additional information
relevant to determining the amount of such income that is RPII as we believe
advisable, but there can be no assurance that such information will be
sufficient to enable a holder of preference shares to clearly establish such
amount. For any year that we determine that the gross RPII of Renaissance
Reinsurance or Glencoe is 20% or more of our gross insurance income for the
year, we may also seek information from our shareholders as to whether
beneficial owners of our preference and common shares at the end of the year are
U.S. persons, so that RPII may be apportioned among such persons. To the extent
we are unable to determine whether a beneficial owner of shares is a U.S.
person, we may assume that such owner is not a U.S. person for purposes of
apportioning RPII, thereby increasing the per share RPII amount for all known
U.S. holders of our preference and common shares.
Disposition of Preference Shares by U.S. Persons Generally. U.S. persons
will, upon the sale or exchange of preference shares, generally recognize gain
or loss for federal income tax purposes equal to the
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excess of the amount realized upon such sale or exchange over such person's
federal income tax basis for the shares disposed of. Different rules would apply
if Renaissance Reinsurance or Glencoe were classified as CFC's.
Section 953(c)(7)of the Code generally provides that Section 1248 also will
apply to the sale or exchange by a U.S. shareholder of shares in a foreign
corporation is characterized as a CFC under the RPII rules if the foreign
corporation would be taxed as an insurance company if it were a domestic
corporation, regardless of whether the U.S. shareholder is a 10% U.S.
Shareholder or whether the corporation qualifies for either the RPII 20%
ownership exception or the RPII 20% gross income exception. Although existing
Treasury Department regulations do not address the question, proposed Treasury
regulations issued in April 1991 create some ambiguity as to whether Section
1248 and the requirement to file Form 5471 would apply when the foreign
corporation (such as RenaissanceRe Holdings Ltd.) has a foreign insurance
subsidiary that is a CFC for RPII purposes and that would be taxed as an
insurance company if it were a domestic corporation. We believe that Section
1248 and the requirement to file Form 5471 will not apply to a less than 10%
U.S. Shareholder because we are not directly engaged in the insurance business.
There can be no assurance, however, that the Internal Revenue Service will
interpret the regulations in this manner or that the Treasury Department will
not amend the regulations to provide that Section 1248 and the requirement to
file Form 5471 will apply to dispositions of our preference shares or common
shares.
If the Internal Revenue Service or U.S. Treasury Department were to make
Section 1248 and the Form 5471 filing requirement applicable to the sale of our
preference shares or common shares, we would notify shareholders that Section
1248 of the Code and the requirement to file Form 5471 will apply to
dispositions of our preference shares or common shares. Thereafter, we will send
a notice after the end of each calendar year to all persons who were
shareholders during the year notifying them that Section 1248 and the
requirement to file Form 5471 apply to dispositions of our preference shares or
common shares by U.S. shareholders. We will attach to this notice a copy of Form
5471 completed with all RenaissanceRe Holdings Ltd. information and instructions
for completing the shareholder information.
Redemption of Preference Shares. A redemption of preference shares will be
treated under Section 302 of the Internal Revenue Code as a dividend if we have
sufficient earnings and profits, unless the redemption satisfies the test set
forth in Section 302(b) enabling the redemption to be treated as a sale or
exchange, subject to the discussion herein relating to the potential application
of the "related person insurance income" and "passive foreign investment
company" rules. The redemption will satisfy this test only if it (1) is
"substantially disproportionate," (2) constitutes a "complete termination of the
holder's stock interest" in us or (3) is "not essentially equivalent to a
dividend," each within the meaning of Section 302(b). In determining whether any
of these tests are met, shares considered to be owned by the U.S. Holder by
reason of certain constructive ownership rules set forth in the Internal Revenue
Code, as well as shares actually owned, must generally be taken into account.
Because the determination as to whether any of the alternative tests of Section
302(b) of the Internal Revenue Code is satisfied with respect to a particular
holder of preference shares will depend on the facts and circumstances as of the
time the determination is made, U.S. Holders are advised to consult their own
tax advisors to determine their tax treatment in light of their own particular
investment circumstances.
Passive Foreign Investment Companies. Sections 1291 through 1297 of the
Code contain special rules applicable with respect to foreign corporations that
are "passive foreign investment companies" ("PFICs"). In general, a foreign
corporation will be a PFIC if 75% or more of its income constitutes passive
income or 50% or more of its assets produce passive income. If we were to be
characterized as a PFIC, U.S. holders of preference shares would be subject to a
penalty tax at the time of their sale of (or receipt of an "excess distribution"
with respect to) its shares. In general, a U.S. holder of preference shares
receives an "excess distribution" if the amount of the distribution is more than
125% of the average distribution with respect to the preference shares during
the three preceding taxable years (or the taxpayer's holding period if it is
less than three years). In general, the penalty tax is equivalent to an interest
charge on taxes that are deemed due during the taxpayer's holding period but not
paid, computed by assuming that the excess distribution or gain (in the case of
a sale) with respect to the preference
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shares was received ratably throughout the holding period. The interest charge
is equal to the applicable rate imposed on underpayments of U.S. federal income
tax for such period.
The Code contains an express exception for income "derived in the active
conduct of an insurance business by a corporation which is predominantly engaged
in an insurance business." This exception is intended to ensure that income
derived by a bona fide insurance company is not treated as passive income,
except to the extent such income is attributable to financial reserves in excess
of the reasonable needs of the insurance business. In our view, RenaissanceRe,
Renaissance Reinsurance and Glencoe, taken together, are predominantly engaged
in an insurance business and do not have financial reserves in excess of the
reasonable needs of their insurance business. The Code contains a look-through
rule which states that, for purposes of determining whether a foreign
corporation is a PFIC, such foreign corporation shall be treated as if it
"received directly its proportionate share of the income" and as if it "held its
proportionate share of the assets" of any other corporation in which it owns at
least 25% of the stock. Under the look-through rule, RenaissanceRe would be
deemed to own the assets and to have received the income of Renaissance
Reinsurance and Glencoe directly for the purposes of determining whether we
qualify for the insurance exception described above.
Other. Dividends paid by RenaissanceRe to U.S. corporate shareholders will
not be eligible for the dividends received deduction provided by section 243 of
the Code.
Except as discussed below with respect to backup withholding, dividends
paid by us will not be subject to a U.S. withholding tax.
Persons who are not citizens of or domiciled in the United States will not
be subject to U.S. estate tax with respect to preference shares.
Information reporting to the IRS by paying agents and custodians located in
the United States will be required with respect to payments of dividends on the
preference shares to U.S. persons. In addition, a holder of preference shares
may be subject to backup withholding at the rate of 30.5% (which rate is
scheduled to be reduced periodically through 2006) with respect to dividends
paid to such persons, unless such corporation comes within certain other exempt
categories and, when required, demonstrates this fact, or provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. The backup withholding tax is not an additional tax and may
be credited against a holder's regular U.S. federal income tax liability.
Subject to certain exceptions, persons that are not U.S. persons will be
subject to U.S. federal income tax on dividend distributions with respect to,
and gain realized from the sale or exchange of, preference shares if such
dividends or gains are effectively connected with the conduct of a U.S. trade or
business.
S-20
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc. are acting as representatives to the underwriters named below. Subject to
the terms and conditions stated in the underwriting agreement dated the date of
this prospectus supplement, each underwriter named below has agreed to purchase,
and we have agreed to sell to that underwriter, the number of preference shares
set forth opposite the underwriter's name.
<Table>
<Caption>
NUMBER OF
PREFERENCE
UNDERWRITER SHARES
- ----------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 1,157,500
Salomon Smith Barney Inc. .................................. 1,157,500
First Union Securities, Inc. ............................... 1,145,000
Morgan Stanley & Co. Incorporated........................... 1,145,000
Deutsche Bank Alex. Brown Inc. ............................. 300,000
Banc of America Securities LLC.............................. 300,000
Quick & Reilly, Inc. (Fleet)................................ 300,000
ABN Amro Incorporated....................................... 25,000
A.G. Edwards & Sons, Inc. .................................. 25,000
Bear, Stearns & Co., Inc. .................................. 25,000
Charles Schwab & Co., Inc. ................................. 25,000
CIBC World Markets Corp. ................................... 25,000
Fox, Pitt, Kelton........................................... 25,000
H&R Block Financial Advisors Inc. .......................... 25,000
HSBC Securities (USA) Inc. ................................. 25,000
Legg Mason Wood Walker, Incorporated........................ 25,000
Prudential Securities....................................... 25,000
Raymond James & Associates, Inc. ........................... 25,000
Dain Rauscher Incorporated.................................. 25,000
Tucker Anthony Incorporated................................. 25,000
US Bancorp Piper Jaffray Inc. .............................. 25,000
Wells Fargo Van Kasper, LLC................................. 25,000
Advest Inc. ................................................ 10,000
D.A. Davidson & Co. ........................................ 10,000
Gibraltar Securities Co. ................................... 10,000
Gruntal & Co., LLC.......................................... 10,000
J.J.B. Hilliard, W.L. Lyons, Inc. .......................... 10,000
Janney Montgomery Scott LLC................................. 10,000
Mesirow Financial, Inc. .................................... 10,000
Morgan Keegan & Company, Inc. .............................. 10,000
Robert W. Baird & Co. Incorporated.......................... 10,000
</Table>
S-21
<Table>
<Caption>
NUMBER OF
PREFERENCE
UNDERWRITER SHARES
- ----------- ----------
Southwest Securities, Inc. ................................. 10,000
Stifel, Nicolaus & Company, Incorporated.................... 10,000
Wedbush Morgan Securities, Inc. ............................ 10,000
---------
Total............................................. 6,000,000
=========
</Table>
The underwriting agreement provides that the obligations of the
underwriters to purchase the preference shares are subject to approval of legal
matters by counsel and to other conditions. The underwriters are obligated to
purchase all the preference shares if they purchase any of the preference
shares.
The underwriters propose to offer some of the preference shares directly to
the public at the public offering price set forth on the cover page of this
prospectus supplement and some of the preference shares to dealers at the public
offering price less a concession not to exceed $0.50 per share. The underwriters
may allow and dealers may reallow, a concession not to exceed $0.35 per share on
sales to other dealers. If all of the preference shares are not sold at the
initial offering price, the representatives may change the public offering price
and the other selling terms.
We have agreed that for a period of 90 days from the date of this
prospectus supplement, we will not, without the prior written consent of Merrill
Lynch and Salomon Smith Barney, dispose of or hedge any preference shares or any
securities convertible into or exchangeable for preference shares. Merrill Lynch
and Salomon Smith Barney in their sole discretion may release any of the
securities subject to these lock-up agreements at any time without notice.
We intend to make application to have our preference shares listed on the
New York Stock Exchange under the symbol "RNRPRA." The underwriters have
undertaken to sell preference shares to a minimum of 2,000 beneficial owners in
lots of 100 or more shares to meet the New York Stock Exchange distribution
requirements for trading.
The following table shows the underwriting discounts and commissions that
we are to pay to the underwriters in connection with this offering.
<Table>
Per share................................................... $ 0.7875
Total....................................................... $4,725,000
</Table>
If the underwriters create a short position in our preference shares in
connection with the offering, i.e., if the underwriters sell more preference
shares than are listed on the cover of this prospectus supplement, the
underwriters may reduce the short position by purchasing preference shares in
the open market. Purchases of the preference shares to stabilize its price or to
reduce a short term position may cause the price of the preference shares to be
higher than it might be in the absence of such purchases.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
underwriters repurchase preference shares originally sold by that syndicate
member in order to cover syndicate short positions or make stabilizing
purchases.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of preference shares. They may also cause the price
of preference shares to be higher than the price that would otherwise exist in
the open market in the absence of these transactions. The underwriters may
conduct these transactions on the New York Stock Exchange or in the
over-the-counter market, or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
We estimate that our total expenses of this offering will be $300,000.
S-22
In the ordinary course of their respective businesses, the underwriters and
their affiliates have engaged and may in future engage in investment and
commercial banking transactions with us and our affiliates. Affiliates of
certain of the underwriters are lenders under our revolving credit and term loan
facility.
First Union Securities, Inc., a subsidiary of Wachovia Corporation,
conducts its investment banking, institutional, and capital markets businesses
under the trade name of Wachovia Securities. Any references to "Wachovia
Securities" in this prospectus supplement, however, do not include Wachovia
Securities, Inc., a separate broker-dealer subsidiary of Wachovia Corporation
and sister affiliate of First Union Securities, Inc., which may or may not be
participating as a separate selling dealer in the distribution of the preference
shares.
This prospectus supplement and the accompanying prospectus in electronic
format may be made available on the websites maintained by one or more of the
underwriters. The representatives may agree to allocate a number of preference
shares to underwriters for sale to their online brokerage account holders. The
representatives will allocate preference shares to underwriters that may make
Internet distributions on the same basis as other allocations. In addition,
preference shares may be sold by the underwriters to securities dealers who
resell preference shares to online brokerage account holders.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribute to payments the underwriters may be required to make because of any
of those liabilities.
LEGAL MATTERS
Certain legal matters with respect to United States, New York and Delaware
law with respect to the validity of the offered securities will be passed upon
for us by Willkie Farr & Gallagher, New York, New York. Certain legal matters
with respect to Bermuda law will be passed upon for us by Conyers Dill &
Pearman, Hamilton, Bermuda. Certain legal matters will be passed upon for the
underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability
partnership including professional corporations, New York, New York. LeBoeuf,
Lamb, Greene & MacRae, L.L.P. renders certain legal services to us from time to
time.
EXPERTS
Ernst & Young, independent auditors, have audited our consolidated
financial statements (and schedules) included in our Annual Report on Form 10-K
for the year ended December 31, 2000, as set forth in their reports, which are
incorporated by reference in this prospectus supplement and the accompanying
prospectus. Our financial statements (and schedules) are incorporated by
reference in reliance on Ernst & Young's reports, given on their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act of 1933, as amended, relating to
the preference shares covered by this prospectus supplement. This prospectus
supplement and the accompanying prospectus are a part of the registration
statement, but the registration statement also contains additional information
and exhibits.
The Commission allows us to "incorporate by reference" the information set
forth in certain documents we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus supplement and
the accompanying prospectus. Any statement contained in a document which is
incorporated by reference in this prospectus supplement and the accompanying
prospectus is automatically updated and superseded if information contained in
this prospectus supplement and the accompanying prospectus, or information that
we later file with the Commission, modifies or replaces this information.
S-23
We file annual, quarterly and special reports and other information with
the Commission. All documents we subsequently file pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities and Exchange Act of 1934, as amended, prior
to the termination of this offering shall be deemed to be incorporated by
reference into this prospectus supplement and the accompanying prospectus. In
addition to the documents listed in the accompanying prospectus or subsequently
filed as described above, we incorporate by reference the following documents
filed prior to the date of this prospectus supplement:
- our Current Reports on Form 8-K filed October 3, 2001;
- our Current Report on Form 8-K filed October 10, 2001;
- our Current Report on Form 8-K filed October 16, 2001;
- our Current Report on Form 8-K filed October 24, 2001; and
- our Quarterly Report on Form 10-Q for the quarter ended September 30,
2001, filed on November 14, 2001.
To receive a free copy of any of the documents incorporated by reference in
this prospectus supplement and the accompanying prospectus (other than
exhibits), call or write us at the following address: RenaissanceRe Holdings
Ltd., Attn: Martin J. Merritt, Secretary, P.O. Box HM 2527, Hamilton, HMGX,
Bermuda (441) 299-7230.
S-24
PROSPECTUS
$450,000,000
RENAISSANCERE HOLDINGS LTD.
COMMON SHARES, PREFERENCE SHARES, DEBT SECURITIES, DEPOSITARY SHARES, WARRANTS
TO PURCHASE COMMON SHARES, WARRANTS TO PURCHASE PREFERENCE SHARES, WARRANTS TO
PURCHASE DEBT SECURITIES, SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS
RENAISSANCERE CAPITAL TRUST II
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED TO THE EXTENT PROVIDED IN THIS PROSPECTUS
BY
RENAISSANCERE HOLDINGS LTD.
We and the Capital Trust may offer and sell from time to time:
- common shares;
- preference shares;
- senior or subordinated debt securities;
- depositary shares representing preference shares, common shares or debt
securities;
- warrants to purchase common shares, preference shares or debt securities;
- preferred securities of the Capital Trust which we will guarantee; and
- share purchase contracts and share purchase units.
We will provide the specific terms and initial public offering prices of
these securities in supplements to this prospectus. You should read this
prospectus and any supplement carefully before you invest. We will not use this
prospectus to confirm sales of any securities unless it is attached to a
prospectus supplement.
We may sell these securities to or through underwriters and also to other
purchasers or through agents. The names of any underwriters or agents will be
stated in an accompanying prospectus supplement.
We may sell any combination of these securities in one or more offerings up
to a total dollar amount of $450,000,000.
Our common shares are traded on the New York Stock Exchange under the
symbol "RNR." On September 27, 2001, the closing price of the common shares, as
reported by the New York Stock Exchange, was $86.50 per share.
INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON
PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus may not be used to consummate sales of offered securities
unless accompanied by a prospectus supplement.
The date of this prospectus is September 28, 2001.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY SUPPLEMENT. NEITHER WE NOR RENAISSANCERE
CAPITAL TRUST II HAS AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. WE AND RENAISSANCERE CAPITAL TRUST II ARE OFFERING THESE SECURITIES
ONLY IN STATES WHERE THE OFFER IS PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
Except as expressly provided in an underwriting agreement, no offered
securities may be offered or sold in Bermuda (although offers may be made to
persons in Bermuda from outside Bermuda) and offers may only be accepted from
persons resident in Bermuda, for Bermuda exchange control purposes, where such
offers have been delivered outside of Bermuda. Persons resident in Bermuda, for
Bermuda exchange control purposes, may require the prior approval of the Bermuda
Monetary Authority in order to acquire any offered securities.
In this prospectus, references to "dollar" and "$" are to United States
currency, and the terms "United States" and "U.S." mean the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
WHERE YOU CAN FIND MORE INFORMATION......................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 1
ABOUT THIS PROSPECTUS....................................... 2
RENAISSANCERE HOLDINGS LTD.................................. 3
THE CAPITAL TRUST........................................... 3
FORWARD LOOKING STATEMENTS.................................. 4
RISK FACTORS................................................ 6
USE OF PROCEEDS............................................. 6
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE
DIVIDENDS OF RENAISSANCERE................................ 6
GENERAL DESCRIPTION OF THE OFFERED SECURITIES............... 6
DESCRIPTION OF OUR CAPITAL SHARES........................... 7
DESCRIPTION OF THE DEPOSITARY SHARES........................ 17
DESCRIPTION OF THE DEBT SECURITIES.......................... 20
COVENANTS APPLICABLE TO THE SENIOR DEBT SECURITIES.......... 26
INFORMATION CONCERNING THE TRUSTEE.......................... 34
CERTAIN PROVISIONS OF THE JUNIOR SUBORDINATED DEBT
SECURITIES ISSUED TO THE CAPITAL TRUST.................... 34
DESCRIPTION OF THE WARRANTS TO PURCHASE COMMON SHARES OR
PREFERENCE SHARES......................................... 38
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES..... 39
DESCRIPTION OF THE TRUST PREFERRED SECURITIES............... 40
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE..... 52
DESCRIPTION OF THE SHARE PURCHASE CONTRACTS AND THE SHARE
PURCHASE UNITS............................................ 56
PLAN OF DISTRIBUTION........................................ 57
LEGAL OPINIONS.............................................. 59
EXPERTS..................................................... 59
ENFORCEMENT OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL
SECURITIES LAWS........................................... 59
</Table>
i
WHERE YOU CAN FIND MORE INFORMATION
GENERAL
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended, relating to
the common shares, preference shares, debt securities, depositary shares,
warrants, share purchase contracts, share purchase units, trust preferred
securities and preferred securities guarantee described in this prospectus. This
prospectus is a part of the Registration Statement, but the Registration
Statement also contains additional information and exhibits.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended. Accordingly, we file annual, quarterly and current
reports, proxy statements and other reports with the Commission. You can read
and copy the Registration Statement and the reports that we file with the
Commission at the Commission's public reference rooms at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. Copies of such material can also be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
Our filings with the commission are also available from the Commission's
Web Site at http://www.sec.gov. Please call the Commission's toll-free telephone
number at 1-800-SEC-0330 if you need further information about the operation of
the Commission's public reference rooms. Our common shares are listed on the New
York Stock Exchange and our reports can also be inspected at the offices of the
NYSE, 20 Broad Street, 17th Floor, New York, New York 10005.
THE CAPITAL TRUST
There are no separate financial statements of the Capital Trust in this
prospectus. We do not believe the financial statements would be helpful to the
holders of the preferred securities of the Capital Trust because:
- We, a reporting company under the Exchange Act, will directly or
indirectly own all of the voting securities of the Capital Trust;
- The Capital Trust has no independent operations or proposals to engage in
any activity other than issuing securities representing undivided
beneficial interests in the assets of the Capital Trust and investing the
proceeds in subordinated debt securities issued by us; and
- The obligations of the Capital Trust under the preferred securities will
be fully and unconditionally guaranteed by us. See "Description of the
Trust Preferred Securities Guarantee."
The Capital Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Capital Trust will become subject to the
requirements upon the effectiveness of the registration statement that contains
this prospectus, although the Capital Trust intends to seek and expects to
receive an exemption from those requirements. If the Capital Trust did not
receive such an exemption, the expenses of operating the Capital Trust would
increase, as would the likelihood that we would exercise our option to dissolve
and liquidate the Capital Trust early.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. The Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this Prospectus. Any statement
contained in a document which is incorporated by reference in this Prospectus is
automatically updated and superseded if information contained in this
Prospectus, or information that we later file with the Commission, modifies or
replaces this information. All documents we subsequently file pursuant to
Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, prior to the termination of this offering, shall be
deemed to be incorporated by reference into this prospectus. We incorporate by
reference the following previously filed documents:
(1) Our Annual Report on Form 10-K for the year ended December 31,
2000, dated April 2, 2001 and our Quarterly Reports of Form 10-Q for the
Quarters ended March 31, 2001 and June 30, 2001. The subsequent event
disclosure included in the Company's Current Report on Form 8-K dated
September 18, 2001 should be read in conjunction with the Company's audited
financial statements (and schedules) included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000;
(2) The description of our common shares set forth in our registration
statement filed under the Exchange Act on Form 8-A on July 24, 1995,
including any amendment or report for the purpose of updating such
description;
(3) Our Current Reports on Form 8-K dated February 20, March 5, and
April 23, July 17 and September 18, 2001; and
(4) The portions of our Proxy Statement dated April 16, 2001 for our
2001 Annual Meeting of Stockholders that have been incorporated by
reference into our Annual Report on Form 10-K.
To receive a free copy of any of the documents incorporated by reference in
this Prospectus (other than exhibits) call or write us at the following address:
RenaissanceRe Holdings Ltd., Attn: Martin J. Merritt, Secretary, P.O. Box 2527,
Hamilton, HMGX, Bermuda, (441) 295-4513.
ABOUT THIS PROSPECTUS
This prospectus is part of registration statements that we and the Capital
Trust have filed with the Securities and Exchange Commission using a "shelf"
registration process, relating to the common shares, preference shares,
depositary shares, debt securities, warrants, share purchase contracts, share
purchase units, preferred securities and preferred securities guarantees
described in this prospectus. This means:
- we and the Capital Trust may issue any combination of securities covered
by this prospectus from time to time, up to a total initial offering
price of $450,000,000;
- we or the Capital Trust, as the case may be, will provide a prospectus
supplement each time these securities are offered pursuant to this
prospectus; and
- the prospectus supplement will provide specific information about the
terms of that offering and also may add, update or change information
contained in this prospectus.
This prospectus provides you with a general description of the securities we or
the Capital Trust may offer. This prospectus does not contain all of the
information set forth in the registration statement as permitted by the rules
and regulations of the Commission. For additional information regarding us, the
Capital Trust and the offered securities, please refer to the registration
statement. Each time we or the Capital Trust sells securities, we or the Capital
Trust will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
All references to "we," "our" or "RenaissanceRe" refer to RenaissanceRe Holdings
Ltd.
2
RENAISSANCERE HOLDINGS LTD.
OVERVIEW
RenaissanceRe Holdings Ltd., also referred to as "RenaissanceRe," is a
Bermuda company with its registered and principal executive offices located at
Renaissance House, 8-12 East Broadway, Pembroke HM 19 Bermuda, telephone (441)
295-4513. Our principal business is property catastrophe reinsurance, written on
a worldwide basis through Renaissance Reinsurance Ltd. ("Renaissance
Reinsurance"), a Bermuda company and wholly owned subsidiary. Some of our
coverages in Europe are provided through Renaissance Reinsurance of Europe, a
wholly owned subsidiary organized in Ireland. Based on gross premiums written,
we are one of the largest providers of property catastrophe reinsurance coverage
in the world.
We provide property catastrophe reinsurance coverage to insurance companies
and other reinsurers primarily on an excess of loss basis. Excess of loss
catastrophe coverage generally provides coverage for claims arising from large
natural catastrophes, such as earthquakes and hurricanes, in excess of a
specified loss. The coverages we provide also expose us to claims arising from
other natural and man-made catastrophes such as winter storms, freezes, floods,
fires and tornadoes.
Our results depend to a large extent on the frequency and severity of
catastrophic events, and the coverage offered to clients impacted thereby. In
addition, from time to time, we may consider opportunistic diversification into
new ventures, either through organic growth or the acquisition of other
companies or books of business. In evaluating such new ventures, we seek an
attractive return on equity, the ability to develop or capitalize on a
competitive advantage and opportunities that will not detract from our core
reinsurance operations. Accordingly, we regularly review strategic opportunities
and periodically engage in discussions regarding possible transactions.
OTHER INFORMATION
For further information regarding RenaissanceRe including financial
information, you should refer to our recent filings with the Securities and
Exchange Commission.
We were incorporated in June 1993. We conduct our operations through wholly
owned subsidiaries and joint ventures in Bermuda, the United States and Europe.
Our registered and principal executive offices are located at Renaissance House,
8-12 East Broadway, Pembroke HM 19 Bermuda, and our telephone number is (441)
295-4513.
THE CAPITAL TRUST
The Capital Trust is a statutory business trust created under Delaware law
pursuant to (1) a trust agreement executed by us, as sponsor of the Capital
Trust, and the Capital Trustees for the Capital Trust and (2) the filing of a
certificate of trust with the Delaware Secretary of State on January 5, 2001.
The trust agreement will be amended and restated in its entirety substantially
in the form filed as an exhibit to the registration statement of which this
prospectus forms a part. The restated trust agreement will be qualified as an
indenture under the Trust Indenture Act of 1939. The Capital Trust exists for
the exclusive purposes of:
- issuing and selling the preferred securities and common securities that
represent undivided beneficial interests in the assets of the Capital
Trust;
- using the gross proceeds from the sale of the preferred securities and
common securities to acquire a particular series of our junior
subordinated debt securities; and
- engaging in only those other activities necessary or incidental to the
issuance and sale of the preferred securities and common securities.
3
We will indirectly or directly own all of the common securities of the
Capital Trust. The common securities of the Capital Trust will rank equally, and
payments will be made thereon pro rata, with the preferred securities of the
Capital Trust, except that, if an event of default under the restated trust
agreement has occurred and is continuing, the rights of the holders of the
common securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the preferred securities. Unless otherwise disclosed in the
applicable prospectus supplement, we will, directly or indirectly, acquire
common securities in an aggregate liquidation amount equal to at least 3% of the
total capital of the Capital Trust. The Capital Trust is a legally separate
entity.
Unless otherwise disclosed in the related prospectus supplement, the
Capital Trust will have a term of approximately 55 years, but may dissolve
earlier as provided in the restated trust agreement of the Capital Trust. Unless
otherwise disclosed in the applicable prospectus supplement, the Capital Trust's
business and affairs will be conducted by the trustees (the "Capital Trustees")
appointed by us, as the direct or indirect holder of all of the common
securities. The holder of the common securities will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the Capital
Trustees of the Capital Trust. The duties and obligations of the Capital
Trustees of the Capital Trust will be governed by the restated trust agreement
of the Capital Trust.
Unless otherwise disclosed in the related prospectus supplement, two of the
Capital Trustees (the "Administrative Trustees") of the Capital Trust will be
persons who are employees or officers of or affiliated with us. One Capital
Trustee of the Capital Trust will be a financial institution (the "Property
Trustee") that is not affiliated with us and has a minimum amount of combined
capital and surplus of not less than $50,000,000, which shall act as property
trustee and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act, pursuant to the terms set forth in the
applicable prospectus supplement. In addition, one Capital Trustee of the
Capital Trust (which may be the Property Trustee, if it otherwise meets the
requirements of applicable law) will have its principal place of business or
reside in the State of Delaware (the "Delaware Trustee"). We will pay all fees
and expenses related to the Capital Trust and the offering of preferred
securities and common securities.
The office of the Delaware Trustee for the Capital Trust in the State of
Delaware is located at c/o Bankers Trust (Delaware), 1011 Centre Road, Suite
200, Wilmington, Delaware 19805-1266. The principal executive offices for the
Capital Trust is located at c/o Renaissance U.S. Holdings Inc., 319 W. Franklin
Street, Suite 104, Richmond, Virginia 23220. The telephone number of the Capital
Trust is (804) 344-3600.
FORWARD LOOKING STATEMENTS
We caution readers regarding certain forward-looking statements contained
herein. Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which, with respect to
future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, us. In particular, statements using verbs such as "expect,"
"anticipate," "intends," "believe" or words of similar impact generally involve
forward-looking statements. In light of the risks and uncertainties inherent in
all future projections, the inclusion of forward-looking statements in this
report should not be considered as a representation by us or any other person
that our objectives or plans will be achieved.
Numerous factors could cause our actual results to differ materially from
those in the forward-looking statements, including the following:
(1) the occurrence of catastrophic events with a frequency or severity
exceeding our estimates;
(2) a decrease in the level of demand for our reinsurance, insurance
or other business, or increased competition in the industry;
4
(3) the lowering or loss of one of the financial or claims-paying
ratings of ours or one or more of our subsidiaries;
(4) risks associated with implementing our business strategies;
(5) slower than anticipated growth in our fee-based operations;
(6) changes in economic conditions, including interest and currency
rate conditions which could affect our investment portfolio;
(7) uncertainties in our reserving process;
(8) failure of our reinsurers to honor their obligations;
(9) political risks in the countries in which we operate or in which
we insure risks;
(10) loss of services of any one of our key executive officers;
(11) the passage of federal or state legislation subjecting
Renaissance Reinsurance to supervision or regulation, including additional
tax regulation, in the United States or other jurisdictions in which we
operate;
(12) successful challenges by insurance regulators in the United
States to Renaissance Reinsurance's claim of exemption from insurance
regulation under current laws;
(13) a successful contention by the United States Internal Revenue
Service that our Bermuda subsidiaries, including Renaissance Reinsurance,
are subject to U.S. taxation; or
(14) actions of competitors, including industry consolidation and the
development of competing financial products.
The foregoing review of important factors should not be construed as
exhaustive. We undertake no obligation to release publicly the results of any
future revisions we may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
5
RISK FACTORS
Before you invest in our securities, you should carefully consider the
risks involved. Accordingly, you should carefully consider:
- the information contained in or incorporated by reference into this
prospectus;
- information contained in or incorporated by reference into any prospectus
supplements relating to specific offerings of securities;
- the risks described in our Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 23, 2001, which is
incorporated by reference in this prospectus; and
- other risks and other information that may be contained in, or
incorporated by reference from, other filings we make with the Securities
and Exchange Commission.
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of securities offered by RenaissanceRe or the Capital
Trust will be used for working capital, capital expenditures, acquisitions and
other general corporate purposes. Until we use the net proceeds in this manner,
we may temporarily use them to make short-term investments or reduce short-term
borrowings.
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED SHARE DIVIDENDS OF RENAISSANCERE
For purposes of computing the following ratios, earnings consist of net
income before income tax expense plus fixed charges to the extent that such
charges are included in the determination of earnings. Fixed charges consist of
interest costs plus one-third of minimum rental payments under operating leases
(estimated by management to be the interest factor of such rentals).
<Table>
<Caption>
SIX MONTHS
ENDED JUNE 30, FISCAL YEAR ENDED DECEMBER 31,
--------------- --------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ----- ---- ---- ---- ----- -----
Ratio of Earnings to Fixed Charges.............. 17.34x 5.34x 6.25x 6.53x 5.07x 13.08x 24.43x
Ratio of Earnings to Combined Fixed Charges and
Preference Share Dividends.................... 17.34x 5.34x 6.25x 6.53x 5.07x 13.08x 24.43x
</Table>
The Capital Trust had no operations during the periods set forth above.
After the periods presented above, on July 12, 2001, we issued $150,000,000
aggregate principal amount of our 7.0% Senior Notes due 2008.
GENERAL DESCRIPTION OF THE OFFERED SECURITIES
We may from time to time offer under this prospectus, separately or
together:
- common shares,
- preference shares,
- depositary shares, each representing a fraction of a share of common
shares or a particular series of preference shares,
- unsecured senior or subordinated debt securities,
- warrants to purchase common shares,
- warrants to purchase preference shares,
- warrants to purchase debt securities,
6
- share purchase contracts to purchase common shares, and
- share purchase units, each representing ownership of a share purchase
contract and, as security for the holder's obligation to purchase common
shares under the share purchase contract, any of (1) debt obligations of
third parties, including U.S. Treasury securities or (2) preferred
securities of the Capital Trust.
The Capital Trust may offer preferred securities representing undivided
beneficial interests in its assets, which will be fully and unconditionally
guaranteed to the extent described in this prospectus by us.
The aggregate initial offering price of these offered securities will not
exceed $450,000,000.
DESCRIPTION OF OUR CAPITAL SHARES
The following is a summary of certain provisions of our Memorandum of
Association and Bye-Laws. Because this summary is not complete, you should refer
to our Memorandum and Bye-Laws for complete information regarding the provisions
of the Memorandum and Bye-Laws, including the definitions of some of the terms
used below. Copies of the Memorandum and Bye-Laws are incorporated by reference
as exhibits to the registration statement of which this prospectus forms a part.
Whenever we refer to particular sections or defined terms of the Memorandum and
Bye-Laws, such sections or defined terms are incorporated herein by reference,
and the statement in connection with which such reference is made is qualified
in its entirety by such reference.
COMMON SHARES
Our common shares are listed on the New York Stock Exchange under the
symbol "RNR." The common shares currently issued and outstanding are fully paid
and nonassessable within the meaning of applicable Bermuda law. We have
authorized the issuance of 225,000,000 common shares. Approximately 19,863,000
shares were outstanding on June 30, 2001. Our common shares offered by a
prospectus supplement, upon issuance against full consideration, will be fully
paid and nonassessable within the meaning of applicable Bermuda law. There are
no provisions of Bermuda law or the Memorandum or the Bye-Laws which impose any
limitation on the rights of shareholders to hold or vote common shares by reason
of their not being residents of Bermuda.
A more detailed description of our common shares is set forth in our
registration statement filed under the Exchange Act on Form 8-A on July 24,
1995, including any amendment or report for the purpose of updating such
description.
Certain shares held by PT Investments Inc., one of our founding investors,
consist of our diluted voting class I common shares. Each holder of these
diluted voting common shares is entitled to a fixed voting interest in
RenaissanceRe of up to 9.9% of all outstanding voting rights attached to the
full voting common shares, taking into account the percentage interest in
RenaissanceRe represented by full voting common shares owned directly,
indirectly, or constructively by the holder within the meaning of Section 958 of
the Internal Revenue Code and applicable rules and regulations thereunder. The
diluted voting common shares are not listed on the New York Stock Exchange.
The diluted voting common shares are convertible into an equal number of
our full voting common shares on a one-for-one basis at the option of the holder
thereof upon two days prior written notice. We have agreed with PT Investments
that it is a condition to any transfer of the diluted voting common shares that,
immediately following the sale of these shares by PT Investments, they be
converted into full voting common shares.
PREFERENCE SHARES
The Bye-Laws divide our share capital into 225,000,000 common shares and
100,000,000 preference shares. No preference shares are currently outstanding.
From time to time, pursuant to the authority granted by the Bye-Laws, our Board
may create and issue one or more series of preference shares. The
7
preference shares, upon issuance against full consideration, will be fully paid
and nonassessable. The particular rights and preferences of the preference
shares offered by any prospectus supplement and the extent, if any, to which the
general provisions described below may apply to the offered preference shares,
will be described in the prospectus supplement.
Because the following summary of the terms of preference shares is not
complete, you should refer to the Memorandum, the Bye-Laws and any applicable
Certificate of Designation, Preferences and Rights or other governing instrument
for complete information regarding the terms of the class or series of
preference shares described in a prospectus supplement. Whenever we refer to
particular sections or defined terms of the Memorandum, the Bye-Laws and an
applicable Certificate of Designation, Preferences and Rights or other governing
instrument, such sections or defined terms are incorporated herein by reference,
and the statement in connection with which such reference is made is qualified
in its entirety by such reference.
A prospectus supplement will specify the terms of a particular class or
series of preference shares as follows:
- the number of shares to be issued and sold and the distinctive
designation thereof;
- the dividend rights of the preference shares, whether dividends will be
cumulative and, if so, from which date or dates and the relative rights
or priority, if any, of payment of dividends on preference shares and any
limitations, restrictions or conditions on the payment of such dividends;
- the voting powers, if any, of the preference shares, equal to or greater
than one vote per share, which may include the right to vote, as a class
or with other classes of capital stock, to elect one or more of our
directors;
- the terms and conditions (including the price or prices, which may vary
under different conditions and at different redemption dates), if any,
upon which all or any part of the preference shares may be redeemed, at
whose option such a redemption may occur, and any limitations,
restrictions or conditions on such redemption;
- the terms, if any, upon which the preference shares will be convertible
into or exchangeable for our shares of any other class, classes or
series;
- the relative amounts, and the relative rights or priority, if any, of
payment in respect of preference shares, which the holders of the
preference shares will be entitled to receive upon our liquidation,
dissolution, winding up, merger or sale of assets;
- the terms, if any, of any purchase, retirement or sinking fund to be
provided for the preference shares;
- the restrictions, limitations and conditions, if any, upon the issuance
of our indebtedness so long as any preference shares are outstanding; and
- any other relative rights, preferences, limitations and powers not
inconsistent with applicable law, the Memorandum or the Bye-Laws.
Subject to the specification of the above terms of preference shares in a
supplement to this prospectus, we anticipate that the terms of such preference
shares will correspond to those set forth below.
DIVIDENDS
The holders of preference shares will be entitled to receive dividends, if
any, at the rate established in accordance with the Bye-Laws, payable on
specified dates each year for the respective dividend periods ending on such
dates ("dividend periods"), when and as declared by our Board of Directors. Such
dividends will accrue on each preference share from the first day of the
dividend period in which such share is issued or from such other date as the
Board may fix for such purpose. All dividends on preference shares will be
cumulative. If we do not pay or set apart for payment the dividend, or any part
thereof, on
8
the issued and outstanding preference shares for any dividend period, the
deficiency in the dividend on the preference shares must thereafter be fully
paid or declared and set apart for payment (without interest) before any
dividend may be paid or declared and set apart for payment on the common shares.
The holders of preference shares will not be entitled to participate in any
other or additional earnings or profits of ours, except for such premiums, if
any, as may be payable in case of our liquidation, dissolution or winding up.
Any dividend paid upon the preference shares at a time when any accrued
dividends for any prior dividend period are delinquent will be expressly
declared to be in whole or partial payment of the accrued dividends to the
extent thereof, beginning with the earliest dividend period for which dividends
are then wholly or partly delinquent, and will be so designated to each
shareholder to whom payment is made.
No dividends will be paid upon any shares of any class or series of
preference shares for a current dividend period unless there will have been paid
or declared and set apart for payment dividends required to be paid to the
holders of each other class or series of preference shares for all past dividend
periods of such other class or series. If any dividends are paid on any of the
preference shares with respect to any past dividend period at any time when less
than the total dividends then accumulated and payable for all past dividend
periods on all of the preference shares then outstanding are to be paid or
declared and set apart for payment, then the dividends being paid will be paid
on each class or series of preference shares in the proportions that the
dividends then accumulated and payable on each class or series for all past
dividend periods bear to the total dividends then accumulated and payable for
all past dividend periods on all outstanding preference shares.
LIQUIDATION, DISSOLUTION OR WINDING UP
In case of our voluntary or involuntary liquidation, dissolution or winding
up, the holders of each class or series of preference shares will be entitled to
receive out of our assets in money or money's worth the liquidation preference
with respect to that class or series of preference shares. These holders will
also receive an amount equal to all accrued but unpaid dividends thereon
(whether or not earned or declared), before any of our assets will be paid or
distributed to holders of common shares.
It is possible that, in case of our voluntary or involuntary liquidation,
dissolution or winding up, our assets could be insufficient to pay the holders
of all of the classes or series of preference shares then outstanding the full
amounts to which they may be entitled. In that circumstance, the holders of each
outstanding class or series of preference shares will share ratably in such
assets in proportion to the amounts which would be payable with respect to such
class or series if all amounts payable thereon were paid in full.
Our consolidation or merger with or into any other corporation, or a sale
of all or any part of our assets, will not be deemed to constitute a
liquidation, dissolution or winding up.
REDEMPTION
Except as otherwise provided with respect to a particular class or series
of preference shares, the following general redemption provisions will apply to
each class or series of preference shares.
On or prior to the date fixed for redemption of a particular class or
series of preference shares or any part thereof as specified in the notice of
redemption for such class or series, we will deposit adequate funds for such
redemption, in trust for the account of holders of such class or series, with a
bank or trust company that has an office in the United States, and that has, or
is an affiliate of a bank or trust company that has, capital and surplus of at
least $50,000,000. If the name and address of such bank or trust company and the
deposit of or intent to deposit the redemption funds in such trust account have
been stated in the redemption notice, then from and after the mailing of the
notice and the making of such deposit the shares of the class or series called
for redemption will no longer be deemed to be outstanding
9
for any purpose whatsoever, and all rights of the holders of such shares in or
with respect to us will cease and terminate except only the right of the holders
of the shares:
(1) to transfer such shares prior to the date fixed for redemption,
(2) to receive the redemption price of such shares, including accrued
but unpaid dividends to the date fixed for redemption, without interest,
upon surrender of the certificate or certificates representing the shares
to be redeemed, and
(3) on or before the close of business on the fifth day preceding the
date fixed for redemption to exercise privileges of conversion, if any, not
previously expired.
Any moneys so deposited by us which remain unclaimed by the holders of the
shares called for redemption and not converted will, at the end of six years
after the redemption date, be paid to us upon our request, after which repayment
the holders of the shares called for redemption can no longer look to such bank
or trust company for the payment of the redemption price but must look only to
us for the payment of any lawful claim for such moneys which holders of such
shares may still have. After such six-year period, the right of any shareholder
or other person to receive such payment may lapse through limitations imposed in
the manner and with the effect provided under the law of Bermuda. Any portion of
the moneys so deposited by us, in respect of preference shares called for
redemption that are converted into common shares, will be repaid to us upon our
request.
In case of redemption of only a part of a class or series of preference
shares, we will designate by lot, in such manner as the Board may determine, the
shares to be redeemed, or will effect such redemption pro rata.
CONVERSION RIGHTS
Except as otherwise provided with respect to a particular class or series
of preference shares and subject in each case to applicable Bermuda law, the
following general conversion provisions will apply to each class or series of
preference shares that is convertible into common shares.
All common shares issued upon conversion will be fully paid and
nonassessable, and will be free of all taxes, liens and charges with respect to
the issue thereof except taxes, if any, payable by reason of issuance in a name
other than that of the holder of the shares converted and except as otherwise
provided by applicable law or the Bye-Laws.
The number of common shares issuable upon conversion of a particular class
or series of preference shares at any time will be the quotient obtained by
dividing the aggregate conversion value of the shares of such class or series
surrendered for conversion, by the conversion price per share of common shares
then in effect for such class or series. We will not be required, however, upon
any such conversion, to issue any fractional share of common shares, but instead
we will pay to the holder who would otherwise be entitled to receive such
fractional share if issued, a sum in cash equal to the value of such fractional
share based on the last reported sale price per common share on the NYSE at the
date of determination. Preference shares will be deemed to have been converted
as of the close of business on the date of receipt at the office of the transfer
agent of the certificates, duly endorsed, together with written notice by the
holder of his election to convert the shares.
Except as otherwise provided with respect to a particular class or series
of preference shares and subject in each case to applicable Bermuda law, the
Memorandum and the Bye-Laws the basic conversion price per ordinary share for a
class or series of preference shares, as fixed by the Board, will be subject to
adjustment from time to time as follows:
- In case RenaissanceRe (1) pays a dividend or makes a distribution to all
holders of outstanding common shares as a class in common shares, (2)
subdivides or splits the outstanding common shares into a larger number
of shares or (3) combines the outstanding common shares into a smaller
number of shares, the basic conversion price per ordinary share in effect
immediately prior to that event will be adjusted retroactively so that
the holder of each outstanding share of each
10
class or series of preference shares which by its terms is convertible
into common shares will thereafter be entitled to receive upon the
conversion of such share the number of common shares which that holder
would have owned and been entitled to receive after the happening of any
of the events described above had such share of such class or series been
converted immediately prior to the happening of that event. An adjustment
made pursuant to this clause will become effective retroactively
immediately after such record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, split or combination. Such adjustments will be made
successively whenever any event described in this clause occurs.
- In case RenaissanceRe issues to all holders of common shares as a class
any rights or warrants enabling them to subscribe for or purchase common
shares at a price per share less than the current market price per common
share at the record date for determination of shareholders entitled to
receive such rights or warrants, the basic conversion price per ordinary
share in effect immediately prior thereto for each class or series of
preference shares which by its terms is convertible into common shares
will be adjusted retroactively by multiplying such basic conversion price
by a fraction, of which the numerator will be the sum of number of common
shares outstanding at such record date and the number of common shares
which the aggregate exercise price (before deduction of underwriting
discounts or commissions and other expenses of RenaissanceRe in
connection with the issue) of the total number of shares so offered for
subscription or purchase would purchase at such current market price per
share and of which the denominator will be the sum of the number of
common shares outstanding at such record date and the number of
additional common shares so offered for subscription or purchase. An
adjustment made pursuant to this clause will become effective
retroactively immediately after the record date for determination of
shareholders entitled to receive such rights or warrants. Such
adjustments will be made successively whenever any event described in
this clause occurs.
- In case RenaissanceRe distributes to all holders of common shares as a
class evidences of indebtedness or assets (other than cash dividends),
the basic conversion price per ordinary share in effect immediately prior
thereto for each class or series of preference shares which by its terms
is convertible into common shares will be adjusted retroactively by
multiplying such basic conversion price by a fraction, of which the
numerator will be the difference between the current market price per
ordinary share at the record date for determination of shareholders
entitled to receive such distribution and the fair value (as determined
by the Board) of the portion of the evidences of indebtedness or assets
(other than cash dividends) so distributed applicable to one common share
and of which the denominator will be the current market price per common
share. An adjustment made pursuant to this clause will become effective
retroactively immediately after such record date. Such adjustments will
be made successively whenever any event described in this clause occurs.
For the purpose of any computation under the last clause above, the current
market price per common share on any date will be deemed to be the average of
the high and low sales prices of the common shares, as reported in the New York
Stock Exchange -- Composite Transactions (or such other principal market
quotation as may then be applicable to the common shares) for each of the 30
consecutive trading days commencing 45 trading days before such date.
No adjustment will be made in the basic conversion price for any class or
series of preference shares in effect immediately prior to such computation if
the amount of such adjustment would be less than fifty cents. However, any
adjustments which by reason of the preceding sentence are not required to be
made will be carried forward and taken into account in any subsequent
adjustment. Notwithstanding anything to the contrary, any adjustment required
for purposes of making the computations described above will be made not later
than the earlier of (1) three years after the effective date described above for
such adjustment or (2) the date as of which such adjustment would result in an
increase or decrease of at least 3% in the aggregate number of common shares
issued and outstanding on the first date on which an event occurred which
required the making of a computation described above. All calculations will be
made to the nearest cent or to the nearest 1/100th of a share, as the case may
be.
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In the case of any capital reorganization or reclassification of common
shares, or if we amalgamate or consolidate with or merge into, or sell or
dispose of all or substantially all of our property and assets to, any other
corporation, proper provisions will be made as part of the terms of such capital
reorganization, reclassification, amalgamation, consolidation, merger or sale
that any shares of a particular class or series of preference shares at the time
outstanding will thereafter be convertible into the number of shares of stock or
other securities or property to which a holder of the number of common shares
deliverable upon conversion of such preference shares would have been entitled
upon such capital reorganization, reclassification, consolidation or merger.
No dividend adjustment with respect to any preference shares or common
shares will be made in connection with any conversion.
Whenever there is an issue of additional common shares requiring a change
in the conversion price as provided above, and whenever there occurs any other
event which results in a change in the existing conversion rights of the holders
of shares of a class or series of preference shares, we will file with our
transfer agent or agents, a statement signed by one of our executive officers,
describing specifically such issue of additional common shares or such other
event (and, in the case of a capital reorganization, reclassification,
amalgamation, consolidation or merger, the terms thereof) and the actual
conversion prices or basis of conversion as changed by such issue or event and
the change, if any, in the securities issuable upon conversion. Whenever we
issue to all holders of common shares as a class any rights or warrants enabling
them to subscribe for or purchase common shares, we will also file in like
manner a statement describing the same and the consideration they will receive.
The statement so filed will be open to inspection by any holder of record of
shares of any class or series of preference shares.
We will at all times have authorized and will at all times reserve and set
aside a sufficient number of duly authorized common shares for the conversion of
all shares of all then outstanding classes or series of preference shares which
are convertible into common shares.
REISSUANCE OF SHARES
Any preference shares retired by purchase, redemption, through conversion,
or through the operation of any sinking fund or redemption or purchase account,
will have the status of authorized but unissued preference shares, and may be
reissued as part of the same class or series or may be reclassified and reissued
by the Board in the same manner as any other authorized and unissued preference
shares.
VOTING RIGHTS
Except as indicated below or as otherwise required by applicable law, the
holders of preference shares will have no voting rights.
Whenever dividends payable on any class or series of preference shares are
in arrears in an aggregate amount equivalent to six full quarterly dividends on
all of the preference shares of that class or series then outstanding, the
holders of preference shares of that class or series will have the exclusive and
special right, voting separately as a class, to elect two directors of our
Board. We will use our best efforts to increase the number of directors
constituting the Board to the extent necessary to effectuate such right.
Whenever such special voting power of the holders of any class or series of
the preference shares has vested, such right may be exercised initially either
at an extraordinary meeting of the holders of such class or series of the
preference shares, or at any annual general meeting of shareholders, and
thereafter at annual general meetings of shareholders. The right of the holders
of any class or series of the preference shares voting separately as a class to
elect members of the Board will continue until such time as all dividends
accumulated on such class or series of the preference shares have been paid in
full, at which time that special right will terminate, subject to revesting in
the event of each and every subsequent default in an aggregate amount equivalent
to six full quarterly dividends.
At any time when such special voting power has vested in the holders of any
class or series of the preference shares as described in the preceding
paragraph, our President will, upon the written request of
12
the holders of record of at least 10% of such class or series of the preference
shares then outstanding addressed to our Secretary, call a special general
meeting of the holders of such class or series of the preference shares for the
purpose of electing directors. Such meeting will be held at the earliest
practicable date in such place as may be designated pursuant to the Bye-Laws (or
if there be no designation, at our principal office in Bermuda). If such meeting
shall not be called by our proper officers within 20 days after our Secretary
has been personally served with such request, or within 60 days after mailing
the same by registered or certified mail addressed to our Secretary at our
principal office, then the holders of record of at least 10% of such class or
series of the preference shares then outstanding may designate in writing one of
their number to call such meeting at our expense, and such meeting may be called
by such person so designated upon the notice required for annual general
meetings of shareholders and will be held in Bermuda, unless we otherwise
designate.
Any holder of such class or series of preference shares so designated will
have access to our register of members for the purpose of causing meetings of
shareholders to be called pursuant to these provisions. Notwithstanding the
foregoing, no such extraordinary meeting will be called during the period within
90 days immediately preceding the date fixed for the next annual general meeting
of shareholders.
At any annual or extraordinary meeting at which the holders of any class or
series of the preference shares have the special right, voting separately as a
class, to elect directors as described above, the presence, in person or by
proxy, of the holders of 50% of such class or series of the preference shares
will be required to constitute a quorum of such class or series for the election
of any director by the holders of such class or series, voting as a class. At
any such meeting or adjournment thereof the absence of a quorum of such class or
series of the preference shares will not prevent the election of directors other
than those to be elected by such class or series of the preference shares,
voting as a class, and the absence of a quorum for the election of such other
directors will not prevent the election of the directors to be elected by such
class or series of the preference shares, voting as a class.
During any period in which the holders of any class or series of the
preference shares have the right to vote as a class for directors as described
above, any vacancies in the Board will be filled by vote of a majority of the
Board pursuant to the Bye-Laws. During such period the directors so elected by
the holders of any class or series of the preference shares will continue in
office (1) until the next succeeding annual general meeting or until their
successors, if any, are elected by such holders and qualify or (2) unless
required by applicable law to continue in office for a longer period, until
termination of the right of the holders of such class or series of the
preference shares to vote as a class for directors, if earlier. If and to the
extent permitted by applicable law, immediately upon any termination of the
right of the holders of any class or series of the preference shares to vote as
a class for directors as provided herein, the term of office of the directors
then in office so elected by the holders of such class or series will terminate.
Whether or not we are being wound up, the rights attached to any class or
series of preference shares may only be varied with the consent in writing of
the holders of three-quarters of the issued shares of that class or series, or
with the sanction of a special resolution approved by at least a majority of the
votes cast by the holders of the shares of that class or series at a separate
general meeting in accordance with Section 47(7) of the Companies Act 1981 of
Bermuda. The rights attached to any class or series of preference shares will
not be deemed to be varied by the creation or issue of any shares or any
securities convertible into or evidencing the right to purchase shares ranking
prior to or equally with such class or series of the preference shares with
respect to the payment of dividends or of assets upon liquidation, dissolution
or winding up. Holders of preference shares are not entitled to vote on any
amalgamation, consolidation, merger or statutory share exchange, except to the
extent that such a transaction would vary the rights attached to any class or
series of preference shares, in which case any such variation is subject to the
approval process described above. Holders of preference shares are not entitled
to vote on any sale of all or substantially all of our assets.
On any item on which the holders of the preference shares are entitled to
vote, such holders will be entitled to one vote for each preference share held.
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RESTRICTIONS IN EVENT OF DEFAULT IN DIVIDENDS ON PREFERENCE SHARES
Unless we provide otherwise in a prospectus supplement, if at any time we
have failed to pay dividends in full on the preference shares, thereafter and
until dividends in full, including all accrued and unpaid dividends for all past
quarterly dividend periods on the preference shares outstanding, shall have been
declared and set apart in trust for payment or paid, or if at any time we have
failed to pay in full amounts payable with respect to any obligations to retire
preference shares, thereafter and until such amounts shall have been paid in
full or set apart in trust for payment:
(1) we may not redeem less than all of the preference shares at such
time outstanding unless we obtain the affirmative vote or consent of the
holders of at least 66 2/3% of the outstanding preference shares given in
person or by proxy, either in writing or by resolution adopted at an
extraordinary meeting called for the purpose, at which the holders of the
preference shares shall vote separately as a class, regardless of class or
series;
(2) we may not purchase any preference shares except in accordance
with a purchase offer made in writing to all holders of preference shares
of all classes or series upon such terms as the Board in its sole
discretion after consideration of the respective annual dividend rate and
other relative rights and preferences of the respective classes or series,
will determine (which determination will be final and conclusive) will
result in fair and equitable treatment among the respective classes or
series; provided that (a) we, to meet the requirements of any purchase,
retirement or sinking fund provisions with respect to any class or series,
may use shares of such class or series acquired by it prior to such failure
and then held by it as treasury stock and (b) nothing will prevent us from
completing the purchase or redemption of preference shares for which a
purchase contract was entered into for any purchase, retirement or sinking
fund purposes, or the notice of redemption of which was initially mailed,
prior to such failure; and
(3) we may not redeem, purchase or otherwise acquire, or permit any
subsidiary to purchase or acquire any shares of any other class of our
stock ranking junior to the preference shares as to dividends and upon
liquidation.
PREEMPTIVE RIGHTS
No holder of preference shares, solely by reason of such holding, has or
will have any preemptive right to subscribe to any additional issue of shares of
any class or series or to any security convertible into such shares.
TRANSFER AGENT
Our registrar and transfer agent for the common shares and the preference
shares is Mellon Investor Services, L.L.C.
TRANSFER OF SHARES
Our Bye-Laws contain various provisions affecting the transferability of
our shares. Under the Bye-Laws, the Board has absolute discretion to decline to
register a transfer of shares:
(1) unless the appropriate instrument of transfer is submitted along
with such evidence as the Board may reasonably require showing the right of
the transferor to make the transfer,
(2) unless all applicable consents and authorizations of any
governmental body or agency in Bermuda have been obtained, or
(3) if the Board determines that such transfer would result in a
person owning or controlling shares that constitute 9.9% or more of any
class or series of our issued shares.
The primary purpose for the restriction on a holder of our shares from
owning or exercising more than 9.9% of the total voting rights of all our
shareholders is to reduce the likelihood that we will be continue to be deemed a
"controlled foreign corporation" within the meaning of the Internal Revenue Code
for U.S. Federal tax purposes. This limit may also have the effect of deterring
purchases of large blocks of common shares or proposals to acquire us, even if
some or a majority of the shareholders might deem
14
these purchases or acquisition proposals to be in their best interests. With
respect to this issue, also see the provisions discussed below under
"Anti-Takeover Effects of Certain Bye-Laws Provisions."
If the Board refuses to register any transfer of shares, our Secretary
shall send notice of such refusal to the transferor and transferee within 10
days of the date on which the transfer was lodged with us.
Our Bermuda counsel has advised us that while the precise form of the
restrictions on transfers contained in the Bye-Laws is untested, as a matter of
general principle, restrictions on transfers are enforceable under Bermuda law
and are not uncommon. The transferor of such shares will be deemed to own such
shares for dividend, voting and reporting purposes until a transfer of such
shares has been registered on our register of members.
ANTI-TAKEOVER EFFECTS OF CERTAIN BYE-LAWS PROVISIONS
Our Bye-Laws contain certain provisions that make it more difficult to
acquire control of us by means of a tender offer, open market purchase, a proxy
fight or otherwise. These provisions are designed to encourage persons seeking
to acquire control of us to negotiate with our directors. We believe that, as a
general rule, the interests of our shareholders would be best served if any
change in control results from negotiations with our directors. Our directors
would negotiate based upon careful consideration of the proposed terms, such as
the price to be paid to shareholders, the form of consideration to be paid and
the anticipated tax effects of the transaction. However, these provisions could
have the effect of discouraging a prospective acquiror from making a tender
offer or otherwise attempting to obtain control of us. To the extent these
provisions discourage takeover attempts, they could deprive shareholders of
opportunities to realize takeover premiums for their shares or could depress the
market price of the shares.
In addition to those provisions of the Bye-Laws discussed above under
"Transfers of Shares," set forth below is a description of certain other
provisions of the Bye-Laws. Because the following description is intended as a
summary only and is therefore not complete, you should refer to the Bye-Laws,
which are incorporated by reference as an exhibit to the registration statement
of which this prospectus forms a part, for complete information regarding these
provisions.
BOARD OF DIRECTOR PROVISIONS
Our Bye-laws provide for a classified board, to which approximately
one-third of the Board is elected each year at our annual general meeting of
shareholders. Accordingly, our directors serve three-year terms rather than
one-year terms. Moreover, our Bye-laws provide that each director may be removed
by the shareholders only for cause upon the affirmative vote of the holders of
not less than 66 2/3% of the voting rights attached to all issued and
outstanding capital shares entitled to vote for the election of that director.
Further, our Bye-laws fix the size of the Board at eight directors (although the
incumbent Board may increase its size to eleven members). In addition,
shareholders may only nominate persons for election as director at an annual or
special general meeting of shareholders called for the purpose of electing
directors and only if, among other things, a satisfactory written notice signed
by not less than 20 shareholders holding in the aggregate not less than 10% of
our outstanding paid up share capital is timely submitted.
We believe that these Bye-law provisions enhance the likelihood of
continuity and stability in the composition of the Board and in the policies
formulated by the Board. We believe these provisions assist our Board to
represent more effectively the interests of all shareholders, including taking
action in response to demands or actions by a minority shareholder or group.
Our classified Board makes it more difficult for shareholders to change the
composition of our Board even if some or a majority of the shareholders believe
such a change would be desirable. Moreover, these Bye-law provisions may deter
changes in the composition of the Board or certain mergers, tender offers or
other future takeover attempts which some or a majority of holders of our
securities may deem to be in their best interest.
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RESTRICTIONS ON CERTAIN SHAREHOLDER ACTIONS
Our Bye-Laws restrict the ability of our shareholders to take certain
actions. These restrictions, among other things, limit the power of our
shareholders to:
- nominate persons to serve as directors;
- submit resolutions to the vote of shareholders at an annual or special
general meeting; and
- to requisition special general meetings.
Generally, the Bye-laws prohibit shareholders from taking these actions
unless certain requirements specified in the Bye-laws are met. These
requirements include the giving of written notice, specify information that must
be provided in connection with the notice or in relation to the requested
action, provide that action must be taken within specified time periods, and
require a minimum number of holders to act.
These requirements regulating shareholder nominations and proposals may
have the effect of deterring a contest for the election of directors or the
introduction of a shareholder proposal if the procedures summarized above are
not followed. They may also discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors or to introduce a
proposal. For a more complete description of these provisions, you should refer
to the Bye-Laws, which are incorporated by reference as an exhibit to the
registration statement of which this prospectus forms a part.
SUPERMAJORITY REQUIREMENTS FOR CERTAIN AMENDMENTS
Our Bye-laws require the affirmative vote of at least 66 2/3% of the voting
rights attached to all of our issued and outstanding capital shares to amend,
repeal or adopt any provision inconsistent with several provisions of the
Bye-laws. The provisions include, among others things, those relating to: the
size of our Board and its division into classes, the removal of directors, the
powers of shareholders to nominate directors, to call shareholder meetings and
to propose matters to be acted on at shareholder meetings. This supermajority
requirement could make it more difficult for shareholders to propose and adopt
changes to the Bye-Laws intended to facilitate the acquisition or exercise of
control over us.
AVAILABILITY OF SHARES FOR FUTURE ISSUANCES; SHAREHOLDER RIGHTS PLAN
We have available for issuance a large number of authorized but unissued
shares. Generally, these shares may be issued by action of our directors without
further action by shareholders (except as may be required by applicable stock
exchange requirements). The availability of these shares for issue could be
viewed as enabling the directors to make more difficult a change in our control.
For example, the directors could determine to issue warrants or rights to
acquire shares. In addition, we have authorized a sufficient amount of our
shares such that we could put in place a shareholder rights plan without further
action by shareholders. A shareholder rights plan could serve to dilute or deter
stock ownership of persons seeking to obtain control of us.
Our ability to take these actions makes it more difficult for a third party
to acquire us without negotiating with the Board, even if some or a majority of
the shareholders desired to pursue a proposed transaction. Moreover, these
powers could discourage or defeat unsolicited stock accumulation programs and
acquisition proposals.
INVESTORS' RIGHTS AGREEMENT
We have entered into an Investors' Rights Agreement, dated as of April 23,
2001, with PT Investments and its affiliate Kingsway PT Limited Partnership.
Pursuant to this agreement, PT Investments and Kingsway have been granted
certain information rights and PT Investments was granted certain observation
rights relating to our Board of Directors. In addition, PT Investments and
Kingsway were granted the right to request registrations of their common shares,
subject to certain limitations. We are required to bear most costs of
registering these securities. We do not intend to list the diluted voting shares
held by PT Investments on the NYSE.
16
DESCRIPTION OF THE DEPOSITARY SHARES
GENERAL
We may, at our option, elect to offer depositary shares, each representing
a fraction (to be set forth in the prospectus supplement relating to our common
shares or a particular series of preference shares) of a share of a common share
or a particular series of preference shares as described below. In the event we
elect to do so, depositary receipts evidencing depositary shares will be issued
to the public.
The shares of common shares or a class or series of preference shares
represented by depositary shares will be deposited under a deposit agreement
among us, a depositary selected by us and the holders of the depositary
receipts. The depositary will be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000. Subject to the terms of the deposit agreement, each owner of
a depositary share will be entitled, in proportion to the applicable fraction of
a common share or preference share represented by such depositary share, to all
the rights and preferences of the common shares or preference shares represented
thereby (including dividend, voting, redemption and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of the common shares or related
class or series of preference shares in accordance with the terms of the
offering described in the related prospectus supplement. If we issue depositary
shares we will file copies of the forms of deposit agreement and depositary
receipt as exhibits to the registration statement of which this prospectus forms
a part, and the following summary is qualified in its entirety by reference to
such exhibits.
Pending the preparation of definitive depositary receipts, the depositary
may, upon our written order, issue temporary depositary receipts substantially
identical to (and entitling the holders thereof to all the rights pertaining to)
the definitive depositary receipts but not in definitive form. Definitive
depositary receipts will be prepared thereafter without unreasonable delay, and
temporary depositary receipts will be exchangeable for definitive depositary
receipts without charge to the holder thereof.
The following description of the depositary shares sets forth the material
terms and provisions of the depositary shares to which any prospectus supplement
may relate. The particular terms of the depositary shares offered by any
prospectus supplement, and the extent to which the general provisions described
below may apply to the offered securities, will be described in the prospectus
supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other distributions
received in respect of the related common shares or class or series of
preference shares to the record holders of depositary shares relating to such
common shares or class or series of preference shares in proportion to the
number of such depositary shares owned by such holders.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled thereto, unless the depositary determines that it is not feasible to
make such distribution, in which case the depositary may, with our approval,
sell such property and distribute the net proceeds from such sale to such
holders.
WITHDRAWAL OF SHARES
Upon surrender of the depositary receipts at the corporate trust office of
the depositary (unless the related depositary shares have previously been called
for redemption), the holder of the depositary shares evidenced thereby is
entitled to delivery of the number of whole shares of the related common shares
or class or series of preference shares and any money or other property
represented by such depositary shares. Holders of depositary shares will be
entitled to receive whole shares of the related common shares or class or series
of preference shares on the basis set forth in the prospectus supplement for
such common shares
17
or class or series of preference shares, but holders of such whole common shares
or preference shares will not thereafter be entitled to exchange them for
depositary shares. If the depositary receipts delivered by the holder evidence a
number of depositary shares in excess of the number of depositary shares
representing the number of whole common shares or preference shares to be
withdrawn, the depositary will deliver to such holder at the same time a new
depositary receipt evidencing such excess number of depositary shares. In no
event will fractional common shares or preference shares be delivered upon
surrender of depositary receipts to the depositary.
REDEMPTION OF DEPOSITARY SHARES
Whenever we redeem common shares or preference shares held by the
depositary, the depositary will redeem as of the same redemption date the number
of depositary shares representing shares of common shares or the related class
or series of preference shares so redeemed. The redemption price per depositary
share will be equal to the applicable fraction of the redemption price per share
payable with respect to such class or series of the common shares or preference
shares. If less than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or pro rata as may be
determined by the depositary.
VOTING THE COMMON SHARES OR PREFERENCE SHARES
Upon receipt of notice of any meeting at which the holders of the common
shares or preference shares are entitled to vote, the depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary shares relating to such common shares or preference shares. Each
record holder of such depositary shares on the record date (which will be the
same date as the record date for the common shares or preference shares, as
applicable) will be entitled to instruct the depositary as to the exercise of
the voting rights pertaining to the amount of the class or series of preference
shares or common shares represented by such holder's depositary shares. The
depositary will endeavor, insofar as practicable, to vote the number of the
common shares or preference shares represented by such depositary shares in
accordance with such instructions, and we will agree to take all action which
the depositary deems necessary in order to enable the depositary to do so. The
depositary will abstain from voting common shares or preference shares to the
extent it does not receive specific instructions from the holders of depositary
shares representing such common shares or preference shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the holders of depositary receipts will not be
effective unless such amendment has been approved by the holders of depositary
receipts representing at least a majority (or, in the case of amendments
relating to or affecting rights to receive dividends or distributions or voting
or redemption rights, 66 2/3%, unless otherwise provided in the related
prospectus supplement) of the depositary shares then outstanding. The deposit
agreement may be terminated by us or the depositary only if (1) all outstanding
depositary shares have been redeemed, (2) there has been a final distribution in
respect of the common shares or the related class or series of preference shares
in connection with our liquidation, dissolution or winding up and such
distribution has been distributed to the holders of depositary receipts or (3)
upon the consent of holders of depositary receipts representing not less than
66 2/3% of the depositary shares outstanding.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the related
common shares or class or series of preference shares and any redemption of such
common shares or preference shares. Holders of depositary receipts will pay all
other transfer and other
18
taxes and governmental charges and such other charges as are expressly provided
in the deposit agreement to be for their accounts.
The depositary may refuse to effect any transfer of a depositary receipt or
any withdrawal of shares of common shares or a class or series of preference
shares evidenced thereby until all such taxes and charges with respect to such
depositary receipt or such common shares or preference shares are paid by the
holders thereof.
MISCELLANEOUS
The depositary will forward all reports and communications from us which
are delivered to the depositary and which we are required to furnish to the
holders of the common shares or preference shares.
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
obligations under the deposit agreement. Our obligations and the obligations the
depositary under the deposit agreement will be limited to performance in good
faith of their duties thereunder and neither we nor the depositary will be
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or class or series of preference shares unless satisfactory
indemnity is furnished. We and the depositary may rely on written advice of
counsel or accountants, or information provided by persons presenting preference
shares for deposit, holders of depositary shares or other persons believed to be
competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the depositary. Any such
resignation or removal of the depositary will take effect upon the appointment
of a successor depositary, which successor depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
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DESCRIPTION OF THE DEBT SECURITIES
The following description of our debt securities sets forth the material
terms and provisions of the debt securities to which any prospectus supplement
may relate. Our senior debt securities are to be issued under a senior indenture
between us and Bankers Trust Company, as trustee, the form of which is filed as
an exhibit to the registration statement of which this prospectus forms a part.
Our subordinated debt securities are to be issued under a subordinated indenture
between us and Bankers Trust Company, as trustee, the form of which is filed as
an exhibit to the registration statement of which this prospectus forms a part.
In addition, we may issue junior subordinated debt securities to the Capital
Trust in connection with the issuance of preferred securities and common
securities by the Capital Trust. These junior subordinated debt securities would
be issued under a separate junior subordinated indenture between us and Bankers
Trust Company, as trustee, the form of which is filed as an exhibit to the
registration statement of which this prospectus forms a part. The senior
indenture, the subordinated indenture and the junior subordinated indenture are
sometimes referred to herein collectively as the "indentures" and each
individually as an "indenture." The particular terms of the debt securities
offered by any prospectus supplement, and the extent to which the general
provisions described below may apply to the offered debt securities, will be
described in the prospectus supplement.
Because the following summaries of the material terms and provisions of the
indentures and the related debt securities are not complete, you should refer to
the forms of the indentures and the debt securities for complete information
regarding the terms and provisions of the indentures, including the definitions
of some of the terms used below, and the debt securities. Wherever we refer to
particular articles, sections or defined terms of an indenture, those articles,
sections or defined terms are incorporated herein by reference, and the
statement in connection with which such reference is made is qualified in its
entirety by such reference. Whenever we refer to particular articles, sections
or defined terms of an indenture, without specific reference to a indenture,
those articles, sections or defined terms are contained in all indentures. The
senior indenture and the subordinated indenture are substantially identical,
except for certain covenants of ours and provisions relating to subordination.
The subordinated indenture and the junior subordinated indenture are
substantially identical, except for certain rights and covenants of ours and
provisions relating to the issuance of securities to the Capital Trust.
GENERAL
The indentures do not limit the aggregate principal amount of the debt
securities which we may issue thereunder and provide that we may issue the debt
securities thereunder from time to time in one or more series. (Section 3.1) The
indentures do not limit the amount of other Indebtedness (as defined below) or
the debt securities, other than certain secured Indebtedness as described below,
which we or our subsidiaries may issue.
Unless otherwise provided in a prospectus supplement, our senior debt
securities will be unsecured obligations of ours and will rank equally with all
of our other unsecured and unsubordinated indebtedness. The subordinated debt
securities will be unsecured obligations of ours, subordinated in right of
payment to the prior payment in full of all Senior Indebtedness (which term
includes the senior debt securities) of ours as described below under
"Subordination of the Subordinated Debt Securities" and in the applicable
prospectus supplement.
Because we are a holding company, our rights and the rights of our
creditors (including the holders of our debt securities) and shareholders to
participate in any distribution of assets of any of our subsidiaries upon that
subsidiary's liquidation or reorganization or otherwise would be subject to the
prior claims of that subsidiary's creditors, except to the extent that we may
ourselves be a creditor with recognized claims against that subsidiary. The
rights of our creditors (including the holders of our debt securities) to
participate in the distribution of stock owned by us in certain of our
subsidiaries, including our insurance subsidiaries, may also be subject to
approval by certain insurance regulatory authorities having jurisdiction over
such subsidiaries.
20
In the event our junior subordinated debt securities are issued to the
Capital Trust in connection with the issuance of preferred securities and common
securities by the Capital Trust, such junior subordinated debt securities
subsequently may be distributed pro rata to the holders of such preferred
securities and common securities in connection with the dissolution of the
Capital Trust upon the occurrence of certain events. These events will be
described in the prospectus supplement relating to such preferred securities and
common securities. Only one series of our junior subordinated debt securities
will be issued to the Capital Trust in connection with the issuance of preferred
securities and common securities by the Capital Trust.
The prospectus supplement relating to the particular debt securities
offered thereby will describe the following terms of the offered debt
securities:
- the title of such debt securities and the series in which such debt
securities will be included, which may include medium-term notes;
- the aggregate principal amount of such debt securities and any limit upon
such principal amount;
- the date or dates, or the method or methods, if any, by which such date
or dates will be determined, on which the principal of such debt
securities will be payable;
- the rate or rates at which such debt securities will bear interest, if
any, which rate may be zero in the case of certain debt securities issued
at an issue price representing a discount from the principal amount
payable at maturity, or the method by which such rate or rates will be
determined (including, if applicable, any remarketing option or similar
method), and the date or dates from which such interest, if any, will
accrue or the method by which such date or dates will be determined;
- the date or dates on which interest, if any, on such debt securities will
be payable and any regular record dates applicable to the date or dates
on which interest will be so payable;
- the place or places where the principal of, any premium or interest on or
any additional amounts with respect to such debt securities will be
payable, any of such debt securities that are issued in registered form
may be surrendered for registration of transfer or exchange, and any such
debt securities may be surrendered for conversion or exchange;
- whether any of such debt securities are to be redeemable at our option
and, if so, the date or dates on which, the period or periods within
which, the price or prices at which and the other terms and conditions
upon which such debt securities may be redeemed, in whole or in part, at
our option;
- whether we will be obligated to redeem or purchase any of such debt
securities pursuant to any sinking fund or analogous provision or at the
option of any holder thereof and, if so, the date or dates on which, the
period or periods within which, the price or prices at which and the
other terms and conditions upon which such debt securities will be
redeemed or purchased, in whole or in part, pursuant to such obligation,
and any provisions for the remarketing of such debt securities so
redeemed or purchased;
- if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which any debt securities to be issued in registered
form will be issuable and, if other than a denomination of $5,000, the
denominations in which any debt securities to be issued in bearer form
will be issuable;
- whether the debt securities will be convertible into common shares and/or
exchangeable for other securities, whether or not issued by us, and, if
so, the terms and conditions upon which such debt securities will be so
convertible or exchangeable;
- if other than the principal amount, the portion of the principal amount
(or the method by which such portion will be determined) of such debt
securities that will be payable upon declaration of acceleration of the
maturity thereof;
21
- if other than United States dollars, the currency of payment, including
composite currencies, of the principal of, any premium or interest on or
any additional amounts with respect to any of such debt securities;
- whether the principal of, any premium or interest on or any additional
amounts with respect to such debt securities will be payable, at our
election or the election of a holder, in a currency other than that in
which such debt securities are stated to be payable and the date or dates
on which, the period or periods within which, and the other terms and
conditions upon which, such election may be made;
- any index, formula or other method used to determine the amount of
payments of principal of, any premium or interest on or any additional
amounts with respect to such debt securities;
- whether such debt securities are to be issued in the form of one or more
global securities and, if so, the identity of the depositary for such
global security or securities;
- whether such debt securities are the senior debt securities or
subordinated debt securities and, if the subordinated debt securities,
the specific subordination provisions applicable thereto;
- in the case of junior subordinated debt securities issued to the Capital
Trust, the terms and conditions of any obligation or right of ours or the
Capital Trust to convert or exchange such subordinated debt securities
into preferred securities of that trust;
- in the case of junior subordinated debt securities issued to the Capital
Trust, the form of restated trust agreement and, if applicable, the
agreement relating to our guarantee of the preferred securities of the
Capital Trust;
- in the case of the subordinated debt securities, the relative degree, if
any, to which such subordinated debt securities of the series will be
senior to or be subordinated to other series of the subordinated debt
securities or other indebtedness of ours in right of payment, whether
such other series of the subordinated debt securities or other
indebtedness are outstanding or not;
- any deletions from, modifications of or additions to the Events of
Default or covenants of ours with respect to such debt securities;
- whether the provisions described below under "Discharge, Defeasance and
Covenant Defeasance" will be applicable to such debt securities;
- whether any of such debt securities are to be issued upon the exercise of
warrants, and the time, manner and place for such debt securities to be
authenticated and delivered; and
- any other terms of such debt securities and any other deletions from or
modifications or additions to the applicable indenture in respect of such
debt securities. (Section 3.1)
We will have the ability under the indentures to "reopen" a previously
issued series of the debt securities and issue additional debt securities of
that series or establish additional terms of that series. We are also permitted
to issue debt securities with the same terms as previously issued debt
securities. (Section 3.1)
Unless otherwise provided in the related prospectus supplement, principal,
premium, interest and additional amounts, if any, with respect to any debt
securities will be payable at the office or agency maintained by us for such
purposes (initially the corporate trust office of the trustee). In the case of
debt securities issued in registered form, interest may be paid by check mailed
to the persons entitled thereto at their addresses appearing on the security
register or by transfer to an account maintained by the payee with a bank
located in the United States. Interest on debt securities issued in registered
form will be payable on any interest payment date to the persons in whose names
the debt securities are registered at the close of business on the regular
record date with respect to such interest payment date. Interest on such debt
securities which have a redemption date after a regular record date, and on or
before the following interest payment date, will also be payable to the persons
in whose names the debt securities are
22
so registered. All paying agents initially designated by us for the debt
securities will be named in the related prospectus supplement. We may at any
time designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts,
except that we will be required to maintain a paying agent in each place where
the principal of, any premium or interest on or any additional amounts with
respect to the debt securities are payable. (Sections 3.7, 10.2 and 11.6)
Unless otherwise provided in the related prospectus supplement, the debt
securities may be presented for transfer (duly endorsed or accompanied by a
written instrument of transfer, if so required by us or the security registrar)
or exchanged for other debt securities of the same series (containing identical
terms and provisions, in any authorized denominations, and of a like aggregate
principal amount) at the office or agency maintained by us for such purposes
(initially the corporate trust office of the trustee). Such transfer or exchange
will be made without service charge, but we may require payment of a sum
sufficient to cover any tax or other governmental charge and any other expenses
then payable. We will not be required to (1) issue, register the transfer of, or
exchange, the debt securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any such
debt securities and ending at the close of business on the day of such mailing
or (2) register the transfer of or exchange any debt security so selected for
redemption in whole or in part, except the unredeemed portion of any debt
security being redeemed in part. (Section 3.5) We have appointed the trustee as
security registrar. Any transfer agent (in addition to the security registrar)
initially designated by us for any debt securities will be named in the related
prospectus supplement. We may at any time designate additional transfer agents
or rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that we will be required to
maintain a transfer agent in each place where the principal of, any premium or
interest on or any additional amounts with respect to the debt securities are
payable. (Section 10.2)
Unless otherwise provided in the related prospectus supplement, the debt
securities will be issued only in fully registered form without coupons in
minimum denominations of $1,000 and any integral multiple thereof. (Section 3.2)
The debt securities may be represented in whole or in part by one or more global
debt securities registered in the name of a depositary or its nominee and, if so
represented, interests in such global debt security will be shown on, and
transfers thereof will be effected only through, records maintained by the
designated depositary and its participants as described below. Where the debt
securities of any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special United
States Federal income tax considerations, applicable to such debt securities and
to payment on and transfer and exchange of such debt securities will be
described in the related prospectus supplement.
The debt securities may be issued as original issue discount securities
(bearing no interest or bearing interest at a rate which at the time of issuance
is below market rates) to be sold at a substantial discount below their
principal amount. Special United States Federal income tax and other
considerations applicable to original issue discount securities will be
described in the related prospectus supplement.
If the purchase price of any debt securities is payable in one or more
foreign currencies or currency units or if any debt securities are denominated
in one or more foreign currencies or currency units or if the principal of, or
any premium or interest on, or any additional amounts with respect to, any debt
securities is payable in one or more foreign currencies or currency units, the
restrictions, elections, certain United States Federal income tax
considerations, specific terms and other information with respect to such debt
securities and such foreign currency or currency units will be set forth in the
related prospectus supplement.
We will comply with Section 14(e) under the Exchange Act, and any other
tender offer rules under the Exchange Act which may then be applicable, in
connection with any obligation of ours to purchase debt securities at the option
of the holders. Any such obligation applicable to a series of debt securities
will be described in the related prospectus supplement.
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Unless otherwise described in a prospectus supplement relating to any debt
securities, other than as described below under "-- Covenants Applicable to the
Senior Debt Securities -- Limitation on Liens on Stock of Designated
Subsidiaries," the indentures do not contain any provisions that would limit our
ability to incur indebtedness or that would afford holders of the debt
securities protection in the event of a sudden and significant decline in our
credit quality or a takeover, recapitalization or highly leveraged or similar
transaction involving us. Accordingly, we could in the future enter into
transactions that could increase the amount of indebtedness outstanding at that
time or otherwise affect our capital structure or credit rating. You should
refer to the prospectus supplement relating to a particular series of the debt
securities for information regarding to any deletions from, modifications of or
additions to the Events of Defaults described below or our covenants contained
in the indentures, including any addition of a covenant or other provisions
providing event risk or similar protection.
CONVERSION AND EXCHANGE
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common shares, preference shares or other securities,
whether or not issued by us, property or cash, or a combination of any of the
foregoing, will be set forth in the related prospectus supplement. Such terms
may include provisions for conversion or exchange, either mandatory, at the
option of the holder, or at our option, in which the securities, property or
cash to be received by the holders of the debt securities would be calculated
according to the factors and at such time as described in the related prospectus
supplement. Any such conversion or exchange will comply with applicable Bermuda
law, the Memorandum and the Bye-Laws.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities that will be deposited with, or on
behalf of, a depositary identified in the prospectus supplement relating to such
series.
The specific terms of the depositary arrangement with respect to a series
of the debt securities will be described in the prospectus supplement relating
to such series. We anticipate that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a global security, the depositary for such global
security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the debt securities represented by
such global security. Such accounts will be designated by the underwriters or
agents with respect to such debt securities or by us if such debt securities are
offered and sold directly by us. Ownership of beneficial interests in a global
security will be limited to persons that may hold interests through
participants. Ownership of beneficial interests in such global security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the depositary or its nominee (with respect to interests
of participants) and on the records of participants (with respect to interests
of persons other than participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of such global security, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the debt
securities represented by such global security for all purposes under the
applicable indenture. Except as described below, owners of beneficial interests
in a global security will not be entitled to have the debt securities of the
series represented by such global security registered in their names and will
not receive or be entitled to receive physical delivery of the debt securities
of that series in definitive form.
Principal of, any premium and interest on, and any additional amounts with
respect to, the debt securities registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as
the registered owner of the global security representing such debt securities.
None of the trustee, any paying agent, the security registrar or us will have
any responsibility or
24
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the global security for such debt
securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
We expect that the depositary for a series of the debt securities or its
nominee, upon receipt of any payment with respect to such debt securities, will
credit immediately participants' accounts with payments in amounts proportionate
to their respective beneficial interest in the principal amount of the global
security for such debt securities as shown on the records of such depositary or
its nominee. We also expect that payments by participants to owners of
beneficial interests in such global security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street name,"
and will be the responsibility of such participants.
The indentures provide that if:
(1) the depositary for a series of the debt securities notifies us
that it is unwilling or unable to continue as depositary or if such
depositary ceases to be eligible under the applicable indenture and a
successor depositary is not appointed by us within 90 days of written
notice,
(2) we determine that the debt securities of a particular series will
no longer be represented by global securities and executes and delivers to
the trustee a company order to such effect or
(3) an Event of Default with respect to a series of the debt
securities has occurred and is continuing, the global securities will be
exchanged for the debt securities of such series in definitive form of like
tenor and of an equal aggregate principal amount, in authorized
denominations.
Such definitive debt securities will be registered in such name or names as
the depositary shall instruct the trustee. (Section 3.5) It is expected that
such instructions may be based upon directions received by the depositary from
participants with respect to ownership of beneficial interests in global
securities.
PAYMENT OF ADDITIONAL AMOUNTS
We will make all payments of principal of and premium, if any, interest and
any other amounts on, or in respect of, the debt securities of any series
without withholding or deduction at source for, or on account of, any present or
future taxes, fees, duties, assessments or governmental charges of whatever
nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in
which we are organized (a "taxing jurisdiction") or any political subdivision or
taxing authority thereof or therein, unless such taxes, fees, duties,
assessments or governmental charges are required to be withheld or deducted by
(x) the laws (or any regulations or rulings promulgated thereunder) of a taxing
jurisdiction or any political subdivision or taxing authority thereof or therein
or (y) an official position regarding the application, administration,
interpretation or enforcement of any such laws, regulations or rulings
(including, without limitation, a holding by a court of competent jurisdiction
or by a taxing authority in a taxing jurisdiction or any political subdivision
thereof). If a withholding or deduction at source is required, we will, subject
to certain limitations and exceptions described below, pay to the holder of any
such debt security such additional amounts as may be necessary so that every net
payment of principal, premium, if any, interest or any other amount made to such
holder, after the withholding or deduction, will not be less than the amount
provided for in such debt security and the applicable indenture to be then due
and payable.
We will not be required to pay any additional amounts for or on account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever
nature which would not have been imposed but for the fact that such holder
(a) was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction other
than by reason of the mere ownership of, or receipt of payment under, such
debt security, (b) presented such debt security for payment in the relevant
taxing
25
jurisdiction or any political subdivision thereof, unless such debt
security could not have been presented for payment elsewhere, or (c)
presented such debt security for payment more than 30 days after the date
on which the payment in respect of such debt security became due and
payable or provided for, whichever is later, except to the extent that the
holder would have been entitled to such additional amounts if it had
presented such debt security for payment on any day within that 30-day
period;
(2) any estate, inheritance, gift, sale, transfer, personal property
or similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure by the holder or the beneficial owner
of such debt security to comply with any reasonable request by us addressed
to the holder within 90 days of such request (a) to provide information
concerning the nationality, residence or identity of the holder or such
beneficial owner or (b) to make any declaration or other similar claim or
satisfy any information or reporting requirement, which is required or
imposed by statute, treaty, regulation or administrative practice of the
relevant taxing jurisdiction or any political subdivision thereof as a
precondition to exemption from all or part of such tax, assessment or other
governmental charge; or
(4) any combination of items (1), (2) and (3).
In addition, we will not pay additional amounts with respect to any payment
of principal of, or premium, if any, interest or any other amounts on, any such
debt security to any holder who is a fiduciary or partnership or other than the
sole beneficial owner of such debt security to the extent such payment would be
required by the laws of the relevant taxing jurisdiction (or any political
subdivision or relevant taxing authority thereof or therein) to be included in
the income for tax purposes of a beneficiary or partner or settlor with respect
to such fiduciary or a member of such partnership or a beneficial owner who
would not have been entitled to such additional amounts had it been the holder
of the debt security. (Section 10.4)
COVENANTS APPLICABLE TO THE SENIOR DEBT SECURITIES
LIMITATION ON LIENS ON STOCK OF DESIGNATED SUBSIDIARIES
Under the senior indenture, we will covenant that, so long as any senior
debt securities are outstanding, we will not, nor will we permit any Subsidiary
to, create, assume, incur, guarantee or otherwise permit to exist any
Indebtedness secured by any mortgage, pledge, lien, security interest or other
encumbrance upon any shares of capital stock of any Designated Subsidiary
(whether such shares of stock are now owned or hereafter acquired) without
effectively providing concurrently that the senior debt securities (and, if we
so elect, any other Indebtedness of ours that is not subordinate to the senior
debt securities and with respect to which the governing instruments require, or
pursuant to which we are otherwise obligated, to provide such security) will be
secured equally and ratably with such Indebtedness for at least the time period
such other Indebtedness is so secured. (Section 10.5 of the senior indenture)
For purposes of the senior indenture, "capital stock" of any Person means
any and all shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
equity of such Person, including preferred stock, but excluding any debt
securities convertible into such equity. (Section 1.1 of the senior indenture)
The term "Designated Subsidiary" means any present or future consolidated
Subsidiary of ours, the consolidated net worth of which constitutes at least 10%
of our consolidated net worth. As of March 31, 2001, our only Designated
Subsidiary was Renaissance Reinsurance Ltd. (Section 1.1 of the senior
indenture)
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The term "Indebtedness" means, with respect to any Person:
(1) the principal of and any premium and interest on (a) indebtedness
of such Person for money borrowed and (b) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable;
(2) all Capitalized Lease Obligations of such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (1) through (3)
above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit);
(5) all obligations of the type referred to in clauses (1) through (4)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable as obligor,
guarantor or otherwise;
(6) all obligations of the type referred to in clauses (1) through (5)
of other Persons secured by any mortgage, pledge, lien, security interest
or other encumbrance on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured; and
(7) any amendments, modifications, refundings, renewals or extensions
of any indebtedness or obligation described as Indebtedness in clauses (1)
through (6) above. (Section 1.1)
LIMITATIONS ON DISPOSITION OF STOCK OF DESIGNATED SUBSIDIARIES
The senior indenture also provides that, so long as any senior debt
securities are outstanding and except in a transaction otherwise governed by
such indenture, we will not issue, sell, assign, transfer or otherwise dispose
of any shares of, securities convertible into, or warrants, rights or options to
subscribe for or purchase shares of, capital stock (other than preferred stock
having no voting rights of any kind) of any Designated Subsidiary, and will not
permit any Designated Subsidiary to issue (other than to us) any shares (other
than director's qualifying shares) of, or securities convertible into, or
warrants, rights or options to subscribe for or purchase shares of, capital
stock (other than preferred stock having no voting rights of any kind) of any
Designated Subsidiary, if, after giving effect to any such transaction and the
issuance of the maximum number of shares issuable upon the conversion or
exercise of all such convertible securities, warrants, rights or options, we
would own, directly or indirectly, less than 80% of the shares of capital stock
of such Designated Subsidiary (other than preferred stock having no voting
rights of any kind); provided, however, that (1) any issuance, sale, assignment,
transfer or other disposition permitted by us may only be made for at least a
fair market value consideration as determined by our Board pursuant to a
resolution adopted in good faith and (2) the foregoing will not prohibit any
such issuance or disposition of securities if required by any law or any
regulation or order of any governmental or insurance regulatory authority.
Notwithstanding the foregoing, (1) we may merge or consolidate any
Designated Subsidiary into or with another direct or indirect subsidiary of
ours, the shares of capital stock of which we own at least 70%, and (2) we may,
subject to the provisions described under "Consolidation, Amalgamation, Merger
and Sale of Assets" below, sell, assign, transfer or otherwise dispose of the
entire capital stock of any
27
Designated Subsidiary at one time for at least a fair market value consideration
as determined by our Board pursuant to a resolution adopted in good faith.
(Section 10.6 of the senior indenture)
CONSOLIDATION, AMALGAMATION, MERGER AND SALE OF ASSETS
Each indenture provides that we may not (1) consolidate or amalgamate with
or merge into any Person or convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety to any Person, or (2) permit any
Person to consolidate or amalgamate with or merge into us, or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to us, unless (a) in the case of (1) above, such Person is a
corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia, Bermuda or any country
which is, on the date of the indenture, a member of the Organization of Economic
Cooperation and Development and will expressly assume, by supplemental indenture
satisfactory in form to the trustee, the due and punctual payment of the
principal of, any premium and interest on and any additional amounts with
respect to all of the debt securities issued thereunder, and the performance of
our obligations under such the indenture and the debt securities issued
thereunder, and provides for conversion or exchange rights in accordance with
the provisions of the debt securities of any series that are convertible or
exchangeable into common shares or other securities; (b) immediately after
giving effect to such transaction and treating any indebtedness which becomes an
obligation of ours or a Designated Subsidiary as a result of such transaction as
having been incurred by us or such subsidiary at the time of such transaction,
no Event of Default, and no event which after notice or lapse of time or both
would become an Event of Default, will have happened and be continuing; and (c)
certain other conditions are met. (Section 8.1)
EVENTS OF DEFAULT
Unless we provide other or substitute Events of Default in a prospectus
supplement, the following events will constitute an Event of Default under the
applicable indenture with respect to any series of debt securities issued
thereunder (whatever the reason for such Event of Default and whether it will be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any debt security of
such series, or any additional amounts payable with respect thereto, when
such interest becomes or such additional amounts become due and payable,
and continuance of such default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any
debt security of such series, or any additional amounts payable with
respect thereto, when such principal or premium becomes or such additional
amounts become due and payable either at maturity, upon any redemption, by
declaration of acceleration or otherwise;
(3) default in the performance, or breach, of any covenant or warranty
of ours contained in the applicable indenture for the benefit of such
series or in the debt securities of such series, and the continuance of
such default or breach for a period of 60 days after there has been given
written notice as provided in such indenture;
(4) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any of our Indebtedness for borrowed money (other
than Indebtedness which is non-recourse to us) happens and consists of
default in the payment of more than $100,000,000 in principal amount of
such Indebtedness when due (after giving effect to any applicable grace
period), and such default is not cured or such acceleration is not
rescinded or annulled within a period of 30 days after there has been given
written notice as provided in the applicable indenture;
(5) we shall fail within 60 days to pay, bond or otherwise discharge
any uninsured judgment or court order for the payment of money in excess of
$100,000,000, which is not stayed on appeal or is not otherwise being
appropriately contested in good faith; and
28
(6) certain events relating to our bankruptcy, insolvency or
reorganization.
If an Event of Default with respect to the debt securities of any series
(other than an Event of Default described in (6) of the preceding paragraph)
occurs and is continuing, either the trustee or the holders of at least 25% in
principal amount of the outstanding debt securities of such series by written
notice as provided in the applicable indenture may declare the principal amount
(or such lesser amount as may be provided for in the debt securities of such
series) of all outstanding debt securities of such series to be due and payable
immediately. At any time after a declaration of acceleration has been made, but
before a judgment or decree for payment of money has been obtained by the
trustee, and subject to applicable law and certain other provisions of the
applicable indenture, the holders of a majority in aggregate principal amount of
the debt securities of such series may, under certain circumstances, rescind and
annul such acceleration. An Event of Default described in (7) of the preceding
paragraph will cause the principal amount and accrued interest (or such lesser
amount as provided for in the debt securities of such series) to become
immediately due and payable without any declaration or other act by the trustee
or any holder. (Section 5.2)
Each indenture provides that, within 90 days after the occurrence of any
event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to the debt securities of any series (a "default"), the
trustee will transmit, in the manner set forth in such indenture, notice of such
default to the holders of the debt securities of such series unless such default
has been cured or waived; provided, however, that except in the case of a
default in the payment of principal of, or premium, if any, or interest, if any,
on, or additional amounts or any sinking fund or purchase fund installment with
respect to, any debt security of such series, the trustee may withhold such
notice if and so long as the Board, the executive committee or a trust committee
of directors and/or responsible officers of the trustee in good faith determine
that the withholding of such notice is in the best interest of the holders of
the debt securities of such series; and provided, further, that in the case of
any default of the character described in (5) of the second preceding paragraph,
no such notice to holders will be given until at least 30 days after the default
occurs. (Section 6.2)
If an Event of Default occurs and is continuing with respect to the debt
securities of any series, the trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of the debt securities of
such series by all appropriate judicial proceedings. (Section 5.3) Each
indenture provides that, subject to the duty of the trustee during any default
to act with the required standard of care, the trustee will be under no
obligation to exercise any of its rights or powers under such indenture at the
request or direction of any of the holders of the debt securities, unless such
holders shall have offered to the trustee reasonable indemnity. (Section 6.1)
Subject to such provisions for the indemnification of the trustee, and subject
to applicable law and certain other provisions of the applicable indenture, the
holders of a majority in aggregate principal amount of the outstanding debt
securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to debt
securities of such series. (Section 5.12)
MODIFICATION AND WAIVER
We and the trustee may modify or amend either indenture with the consent of
the holders of not less than a majority in aggregate principal amount of the
outstanding debt securities of each series affected thereby; provided, however,
that no such modification or amendment may, without the consent of the holder of
each outstanding the debt security affected thereby,
- change the stated maturity of the principal of, or any premium or
installment of interest on, or any additional amounts with respect to,
any debt security,
- reduce the principal amount of, or the rate (or modify the calculation of
such principal amount or rate) of interest on, or any additional amounts
with respect to, or any premium payable upon the redemption of, any debt
security,
29
- change our obligation to pay additional amounts with respect to any debt
security,
- change the redemption provisions of any debt security or adversely affect
the right of repayment at the option of any holder of any debt security,
- change the place of payment or the coin or currency in which the
principal of, any premium or interest on or any additional amounts with
respect to any debt security is payable,
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity of any debt security (or, in the case of
redemption, on or after the redemption date or, in the case of repayment
at the option of any holder, on or after the repayment date),
- reduce the percentage in principal amount of the outstanding debt
securities, the consent of whose holders is required in order to take
specific actions,
- reduce the requirements for quorum or voting by holders of debt
securities in Section 15.4 of each indenture,
- modify any of the provisions in the applicable indenture regarding the
waiver of past defaults and the waiver of certain covenants by the
holders of the debt securities except to increase any percentage vote
required or to provide that other provisions of such indenture cannot be
modified or waived without the consent of the holder of each debt
security affected thereby,
- make any change that adversely affects the right to convert or exchange
any debt security into or for our common shares or other debt securities
or other securities, cash or property in accordance with its terms,
- modify any of the provisions of the subordinated indenture relating to
the subordination of the subordinated debt securities in a manner adverse
to holders of the subordinated debt securities, or
- modify any of the above provisions. (Section 9.2)
In addition, no supplemental indenture may directly or indirectly modify or
eliminate the subordination provisions of the subordinated indenture in any
manner which might terminate or impair the subordination of the subordinated
debt securities to Senior Indebtedness without the prior written consent of the
holders of the Senior Indebtedness. (Section 9.7 of the subordinated indenture)
We and the trustee may modify or amend either indenture and debt securities
of any series without the consent of any holder in order to, among other things:
- provide for our successor pursuant to a consolidation, amalgamation,
merger or sale of assets;
- add to our covenants for the benefit of the holders of all or any series
of debt securities or to surrender any right or power conferred upon us
by the applicable indenture;
- provide for a successor trustee with respect to debt securities of all or
any series;
- cure any ambiguity or correct or supplement any provision in either
indenture which may be defective or inconsistent with any other
provision, or to make any other provisions with respect to matters or
questions arising under either indenture which will not adversely affect
the interests of the holders of debt securities of any series;
- change the conditions, limitations and restrictions on the authorized
amount, terms or purposes of issue, authentication and delivery of debt
securities under either indenture;
- add any additional Events of Default with respect to all or any series of
debt securities;
- provide for conversion or exchange rights of the holders of any series of
debt securities; or
- make any other change that does not materially adversely affect the
interests of the holders of any debt securities then outstanding under
the applicable indenture. (Section 9.1)
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The holders of at least a majority in aggregate principal amount of debt
securities of any series may, on behalf of the holders of all debt securities of
that series, waive compliance by us with certain restrictive provisions of the
applicable indenture. (Section 10.8) The holders of not less than a majority in
aggregate principal amount of the outstanding debt securities of any series may,
on behalf of the holders of all debt securities of that series, waive any past
default and its consequences under the applicable indenture with respect to debt
securities of that series, except a default (1) in the payment of principal of,
any premium or interest on or any additional amounts with respect to debt
securities of that series or (2) in respect of a covenant or provision of the
applicable indenture that cannot be modified or amended without the consent of
the holder of each debt security of any series. (Section 5.13)
Under each indenture, we are required to furnish the trustee annually a
statement as to performance by us of certain of our obligations under that
indenture and as to any default in such performance. We are also required to
deliver to the trustee, within five days after occurrence thereof, written
notice of any Event of Default or any event which after notice or lapse of time
or both would constitute an Event of Default. (Section 10.9)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We may discharge certain obligations to holders of any series of debt
securities that have not already been delivered to the trustee for cancellation
and that either have become due and payable or will become due and payable
within one year (or scheduled for redemption within one year) by depositing with
the trustee, in trust, funds in U.S. dollars or in the Foreign Currency in which
such debt securities are payable in an amount sufficient to pay the entire
indebtedness on such debt securities with respect to principal and any premium,
interest and additional amounts to the date of such deposit (if such debt
securities have become due and payable) or to the maturity thereof, as the case
may be. (Section 4.1)
Each indenture provides that, unless the provisions of Section 4.2 thereof
are made inapplicable to debt securities of or within any series pursuant to
Section 3.1 thereof, we may elect either (1) to defease and be discharged from
any and all obligations with respect to such debt securities (except for, among
other things, the obligation to pay additional amounts, if any, upon the
occurrence of certain events of taxation, assessment or governmental charge with
respect to payments on such debt securities and other obligations to register
the transfer or exchange of such debt securities, to replace temporary or
mutilated, destroyed, lost or stolen debt securities, to maintain an office or
agency with respect to such debt securities and to hold moneys for payment in
trust) ("defeasance") or (2) to be released from its obligations with respect to
such debt securities under certain covenants as described in the related
prospectus supplement, and any omission to comply with such obligations will not
constitute a default or an Event of Default with respect to such debt securities
("covenant defeasance"). Defeasance or covenant defeasance, as the case may be,
will be conditioned upon the irrevocable deposit by us with the Trustee, in
trust, of an amount in U.S. dollars or in the Foreign Currency in which such
debt securities are payable at stated maturity, or Government Obligations (as
defined below), or both, applicable to such debt securities which through the
scheduled payment of principal and interest in accordance with their terms will
provide money in an amount sufficient to pay the principal of, any premium and
interest on, and any additional amounts with respect to, such debt securities on
the scheduled due dates. (Section 4.2)
Such a trust may only be established if, among other things:
(1) the applicable defeasance or covenant defeasance does not result
in a breach or violation of, or constitute a default under or any material
agreement or instrument to which we are a party or by which we are bound,
(2) no Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to the debt securities
to be defeased will have occurred and be continuing on the date of
establishment of such a trust after giving effect to such establishment
and, with respect to defeasance only, no bankruptcy proceeding will have
occurred and be continuing at any time during the period ending on the 91st
day after such date,
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(3) with respect to registered securities and any bearer securities
for which the place of payment is within the United States, we have
delivered to the trustee an opinion of counsel (as specified in each
indenture) to the effect that the holders of such debt securities will not
recognize income, gain or loss for United States Federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to United States 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 or covenant defeasance had not occurred, and such opinion of
counsel, in the case of defeasance, must refer to and be based upon a
letter ruling of the Internal Revenue Service received by us, a Revenue
Ruling published by the Internal Revenue Service or a change in applicable
United States Federal income tax law occurring after the date of the
applicable indenture, and
(4) with respect to defeasance, we have delivered to the trustee an
officers' certificate as to solvency and the absence of intent of
preferring holders over our other creditors. (Section 4.2)
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the euro, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments. (Section 1.1)
"Government Obligations" means debt securities which are (1) direct
obligations of the United States of America or the government or the governments
which issued the Foreign Currency in which the debt securities of a particular
series are payable, for the payment of which its full faith and credit is
pledged or (2) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America or such government
or governments which issued the Foreign Currency in which the debt securities of
such series are payable, the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America
or such other government or governments, which, in the case of clauses (1) and
(2), are not callable or redeemable at the option of the issuer or issuers
thereof, and will also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of or any other amount with respect
to any such 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 with respect to the Government Obligation or the specific payment of
interest on or principal of or any other amount with respect to the Government
Obligation evidenced by such depository receipt. (Section 1.1)
If after we have deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to debt securities of any series,
(1) the holder of a debt security of that series is entitled to, and does, elect
pursuant to Section 3.1 of the applicable indenture or the terms of such debt
security to receive payment in a currency other than that in which such deposit
has been made in respect of such debt security, or (2) a Conversion Event (as
defined below) occurs in respect of the Foreign Currency in which such deposit
has been made, the indebtedness represented by such debt security will be deemed
to have been, and will be, fully discharged and satisfied through the payment of
the principal of, any premium and interest on, and any additional amounts with
respect to, such debt security as such debt security becomes due out of the
proceeds yielded by converting the amount or other properties so deposited in
respect of such debt security into the currency in which such debt security
becomes payable as a result of such election or such Conversion Event based on
(a) in the case of payments made pursuant to clause (1) above, the applicable
market exchange rate for such currency in effect on the second business day
prior to such payment date, or (b) with respect to a Conversion Event, the
applicable market exchange rate for such Foreign Currency in effect (as nearly
as feasible) at the time of the Conversion Event. (Section 4.2)
"Conversion Event" means the cessation of use of (1) a Foreign Currency
both by the government of the country or countries which issued such Foreign
Currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community or (2) any
currency unit or composite currency for the purposes for which it was
established. (Section 1.1)
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In the event we effect covenant defeasance with respect to any debt
securities and such debt securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to any covenant as to which there has been covenant defeasance, the amount in
such Foreign Currency in which such debt securities are payable, and Government
Obligations on deposit with the trustee, will be sufficient to pay amounts due
on such debt securities at the time of the stated maturity but may not be
sufficient to pay amounts due on such debt securities at the time of the
acceleration resulting from such Event of Default. However, we would remain
liable to make payment of such amounts due at the time of acceleration.
SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES
The subordinated debt securities will, to the extent set forth in the
subordinated indenture, be subordinate in right of payment to the prior payment
in full of all Senior Indebtedness. (Section 16.1 of the subordinated
indenture). In the event of:
(1) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to us or to our creditors, as
such, or to our assets, or
(2) any voluntary or involuntary liquidation, dissolution or other
winding up of ours, whether or not involving insolvency or bankruptcy, or
(3) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of ours, then and in any such event
the holders of Senior Indebtedness will be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior
Indebtedness, or provision will be made for such payment in cash, before
the holders of the subordinated debt securities are entitled to receive or
retain any payment on account of principal of, or any premium or interest
on, or any additional amounts with respect to, subordinated debt
securities, and to that end the holders of Senior Indebtedness will be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of ours
being subordinated to the payment of subordinated debt securities, which
may be payable or deliverable in respect of subordinated debt securities in
any such case, proceeding, dissolution, liquidation or other winding up
event. (Section 16.3 of the subordinated indenture)
By reason of such subordination, in the event of our liquidation or
insolvency, holders of Senior Indebtedness and holders of other obligations of
ours that are not subordinated to Senior Indebtedness may recover more, ratably,
than the holders of subordinated debt securities.
Subject to the payment in full of all Senior Indebtedness, the rights of
the holders of subordinated debt securities will be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of ours applicable to such Senior Indebtedness until the
principal of, any premium and interest on, and any additional amounts with
respect to, subordinated debt securities have been paid in full. (Section 16.4
of the subordinated indenture)
No payment of principal (including redemption and sinking fund payments) of
or any premium or interest on or any additional amounts with respect to the
subordinated debt securities, or payments to acquire such securities (other than
pursuant to their conversion), may be made (1) if any Senior Indebtedness of
ours is not paid when due and any applicable grace period with respect to such
default has ended and such default has not been cured or waived or ceased to
exist, or (2) if the maturity of any Senior Indebtedness of ours has been
accelerated because of a default. (Section 16.2 of the subordinated indenture)
The subordinated indenture does not limit or prohibit us from incurring
additional Senior Indebtedness, which may include Indebtedness that is senior to
subordinated debt securities, but
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subordinate to our other obligations. The senior debt securities will constitute
Senior Indebtedness under the subordinated indenture.
The term "Senior Indebtedness" means all Indebtedness of ours outstanding
at any time, except:
(1) the subordinated debt securities,
(2) Indebtedness as to which, by the terms of the instrument creating
or evidencing the same, it is provided that such Indebtedness is
subordinated to or ranks equally with the subordinated debt securities,
(3) Indebtedness of ours to an Affiliate of ours,
(4) interest accruing after the filing of a petition initiating any
bankruptcy, insolvency or other similar proceeding unless such interest is
an allowed claim enforceable against us in a proceeding under federal or
state bankruptcy laws,
(5) trade accounts payable, and
(6) any Indebtedness, including all other debt securities and
guarantees in respect of those debt securities, initially issued to (x) the
Capital Trust or (y) any trust, partnership or other entity affiliated with
us which is a financing vehicle of ours or any Affiliate of ours in
connection with an issuance by such entity of preferred securities or other
securities which are similar to the preferred securities described under
"Description of the Trust Preferred Securities" below.
Such Senior Indebtedness will continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
(Sections 1.1 and 16.8 of the subordinated indenture)
The subordinated indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of subordinated debt
securities, may be changed prior to such issuance. Any such change would be
described in the related prospectus supplement.
NEW YORK LAW TO GOVERN
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York applicable to agreements
made or instruments entered into and, in each case, performed in that state.
(Section 1.13)
INFORMATION CONCERNING THE TRUSTEE
We may from time to time borrow from, maintain deposit accounts with and
conduct other banking transactions with Bankers Trust Company and its affiliates
in the ordinary course of business.
Under each indenture, Bankers Trust Company is required to transmit annual
reports to all holders regarding its eligibility and qualifications as trustee
under the applicable indenture and related matters. (Section 7.3)
CERTAIN PROVISIONS OF THE JUNIOR SUBORDINATED DEBT
SECURITIES ISSUED TO THE CAPITAL TRUST
OPTION TO EXTEND INTEREST PAYMENT DATE
Unless provided otherwise in the related prospectus supplement, we will
have the right at any time and from time to time during the term of any series
of junior subordinated debt securities issued to the Capital Trust to defer
payment of interest for such number of consecutive interest payment periods as
may be specified in the related prospectus supplement (referred to as an
"extension period"), subject to the terms, conditions and covenants, if any,
specified in such prospectus supplement, provided that such
34
extension period may not extend beyond the stated maturity of such series of
junior subordinated debt securities. Certain United States Federal income tax
consequences and special considerations applicable to such junior subordinated
debt securities will be described in the related prospectus supplement. (Section
3.11 of the junior subordinated indenture).
OPTION TO EXTEND MATURITY DATE
Unless provided otherwise in the related prospectus supplement, we will
have the right to:
(1) change the stated maturity of the principal of the junior
subordinated debt securities of any series issued to the Capital Trust upon
the liquidation of the Capital Trust and the exchange of the junior
subordinated debt securities for the preferred securities of the Capital
Trust, or
(2) extend the stated maturity of the principal of the junior
subordinated debt securities of any series, provided that (1) we are not in
bankruptcy, otherwise insolvent or in liquidation, (2) we have not
defaulted on any payment on such junior subordinated debt securities and no
deferred interest payments have accrued,
(3) the Capital Trust is not in arrears on payments of distributions
on its preferred securities and no deferred distributions have accumulated,
(4) the junior subordinated debt securities of such series are rated
investment grade by Standard & Poor's Ratings Services, Moody's Investors
Service, Inc. or another nationally recognized statistical rating
organization, and
(5) the extended stated maturity is no later than the 49th anniversary
of the initial issuance of the preferred securities of the Capital Trust.
If we exercise our right to liquidate the Capital Trust and exchange the
junior subordinated debt securities for the preferred securities of the Capital
Trust as described above, any changed stated maturity of the principal of the
junior subordinated debt securities shall be no earlier than the date that is
five years after the initial issue date of the preferred securities and no later
than the date 30 years (plus an extended term of up to an additional 19 years if
the conditions described above are satisfied) after the initial issue date of
the preferred securities of the Capital Trust. (Section 3.14 of the junior
subordinated indenture)
REDEMPTION
Except as otherwise provided in the related prospectus supplement, in the
case of any series of subordinated debt securities issued to the Capital Trust,
if an Investment Company Event or a Tax Event (each, a "special event") shall
occur and be continuing, we may, at our option, redeem such series of junior
subordinated debt securities, in whole but not in part, at any time within 90
days of the occurrence of the special event, at a redemption price equal to 100%
of the principal amount of such junior subordinated debt securities then
outstanding plus accrued and unpaid interest to the date fixed for redemption.
(Section 11.8 of the junior subordinated indenture)
For purposes of the junior subordinated indenture, "Investment Company
Event" means, in respect of a Capital Trust, the receipt by the Capital Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in the
interpretation or application of law or regulation by any legislative body,
court or governmental agency or regulatory authority, the Capital Trust is or
will be considered an investment company that is required to be registered under
the Investment Company Act, which change becomes effective on or after the date
of original issuance of the preferred securities of the Capital Trust. (Section
1.1 of the junior subordinated indenture)
"Tax Event" means, in respect of the Capital Trust, the receipt by the
Capital Trust or us of an opinion of counsel experienced in such matters to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulation thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official
35
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of original issuance
of the preferred securities of the Capital Trust, there is more than an
insubstantial risk that (i) the Capital Trust is, or will be within 90 days of
the date of such opinion, subject to United States Federal income tax with
respect to income received or accrued on the corresponding series of
subordinated debt securities, (ii) interest payable by us on such junior
subordinated debt securities is not, or within 90 days of the date of such
opinion will not be, deductible by us, in whole or in part, for United States
Federal income tax purposes or (iii) the Capital Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges. (Section 1.1 of the junior
subordinated indenture)
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of junior subordinated debt
securities to be redeemed at its registered address. Unless we default in
payment of the redemption price, on and after the redemption date interest will
cease to accrue on the subordinated debt securities or portions thereof called
for redemption.
PAYMENT OF ADDITIONAL AMOUNTS
If junior subordinated debt securities issued to the Capital Trust in
connection with the issuance of preferred securities and common securities by
the Capital Trust provide for the payment by us of certain taxes, assessments or
other governmental charges imposed on the holder of any such debt security, we
will pay to the holder of any such debt security such additional amounts as
provided in the related junior subordinated indenture. (Section 10.4 of the
junior subordinated indenture)
CERTAIN COVENANTS
We will covenant, as to each series of our junior subordinated debt
securities issued to the Capital Trust in connection with the issuance of
preferred securities and common securities by the Capital Trust, that we will
not, and will not permit any of our Subsidiaries to, (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of our outstanding capital stock or (2)
make any payment of principal, or interest or premium, if any, on or repay,
repurchase or redeem any debt security of ours that ranks junior in interest to
the junior subordinated debt securities of such series or make any guarantee
payments with respect to any guarantee by us of the debt securities of any
Subsidiary of ours if such guarantee ranks junior in interest to the junior
subordinated debt securities of such series (other than (a) dividends or
distributions in our common shares, (b) redemptions or purchases of any rights
outstanding under a shareholder rights plan of ours, or the declaration of a
dividend of such rights or the issuance of shares under such plan in the future,
(c) payments under any preferred securities guarantee of ours and (d) purchases
of common shares related to the issuance of common shares under any of our
benefit plans for our directors, officers or employees) if at such time (i)
there shall have occurred any event of which we have actual knowledge that (A)
with the giving of notice or lapse of time or both, would constitute an Event of
Default under the applicable junior subordinated indenture and (B) in respect of
which we shall not have taken reasonable steps to cure, (ii) we shall be in
default with respect to our payment of obligations under the preferred
securities guarantee relating to such preferred securities or (iii) we shall
have given notice of our election to begin an Extension Period as provided in
the applicable junior subordinated indenture with respect to the junior
subordinated debt securities of such series and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be continuing.
(Section 10.10 of the junior subordinated indenture)
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In the event our junior subordinated debt securities are issued to the
Capital Trust in connection with the issuance of preferred securities and common
securities of the Capital Trust, for so long as such series of junior
subordinated debt securities remain outstanding, we will also covenant:
(1) to maintain directly or indirectly 100% ownership of the common
securities of the Capital Trust; provided, however, that any permitted
successor of ours under the applicable junior subordinated indenture may
succeed to our ownership of such common securities,
(2) not to voluntarily dissolve, wind-up or liquidate such trust,
except in connection with the distribution of our junior subordinated debt
securities to the holders of preferred securities and common securities in
liquidation of the Capital Trust, the redemption of all of the preferred
securities and common securities of the Capital Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the restated trust
agreement of the Capital Trust, and
(3) to use our reasonable efforts, consistent with the terms of the
related trust agreement, to cause the Capital Trust to remain classified as
a grantor trust for United States Federal income tax purposes. (Section
10.12 of the junior subordinated indenture)
EVENTS OF DEFAULT
If an Event of Default with respect to a series of junior subordinated debt
securities issued to the Capital Trust has occurred and is continuing and such
event is attributable to a default in the payment of interest or principal on
the related junior subordinated debt securities on the date such interest or
principal is otherwise payable, a holder of preferred securities of the Capital
Trust may institute a legal proceeding directly against us, which we refer to in
this prospectus as a "Direct Action," for enforcement of payment to such holder
of the principal of or interest on such related junior subordinated debt
securities having a principal amount equal to the aggregate liquidation amount
of the related preferred securities of such holder. We may not amend the
applicable junior subordinated indenture to remove the foregoing right to bring
a Direct Action without the prior written consent of the holders of all of the
preferred securities of such trust. If the right to bring a Direct Action is
removed, the Capital Trust may become subject to the reporting obligations under
the Exchange Act. We will have the right under the junior subordinated indenture
to set-off any payment made to such holder of preferred securities by us, in
connection with a Direct Action. (Section 3.12 of the junior subordinated
indenture) The holders of preferred securities will not be able to exercise
directly any other remedy available to the holders of the related junior
subordinated debt securities.
The holders of the preferred securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the junior subordinated debt securities unless there
shall have been an event of default under the applicable restated trust
agreement. See "Description of the Trust Preferred Securities -- Events of
Default; Notice." (Section 5.8 of the trust-issued subordinated indenture)
37
DESCRIPTION OF THE WARRANTS TO PURCHASE
COMMON SHARES OR PREFERENCE SHARES
The following statements with respect to the common share warrants and
preference share warrants are summaries of, and subject to, the detailed
provisions of a share warrant agreement to be entered into by us and a share
warrant agent to be selected at the time of issue. The share warrant agreement
may include or incorporate by reference standard warrant provisions
substantially in the form of the Standard Share Warrant Provisions filed as an
exhibit to the registration statement of which this prospectus forms a part. The
particular terms of any warrants offered by any prospectus supplement, and the
extent to which the general provisions described below may apply to the offered
securities, will be described in the prospectus supplement.
GENERAL
The share warrants, evidenced by share warrant certificates, may be issued
under the share warrant agreement independently or together with any other
securities offered by any prospectus supplement and may be attached to or
separate from such other offered securities. If share warrants are offered, the
related prospectus supplement will describe the designation and terms of the
share warrants, including without limitation the following:
- the offering price, if any;
- the designation and terms of the common shares or preference shares
purchasable upon exercise of the share warrants;
- if applicable, the date on and after which the share warrants and the
related offered securities will be separately transferable;
- the number of common shares or preference shares purchasable upon
exercise of one share warrant and the initial price at which such shares
may be purchased upon exercise;
- the date on which the right to exercise the share warrants shall commence
and the date on which such right shall expire;
- a discussion of certain United States Federal income tax considerations;
- the call provisions, if any;
- the currency, currencies or currency units in which the offering price,
if any, and exercise price are payable;
- the antidilution provisions of the share warrants; and
- any other terms of the share warrants.
The common shares or preference shares issuable upon exercise of the share
warrants will, when issued in accordance with the share warrant agreement, be
fully paid and nonassessable.
EXERCISE OF STOCK WARRANTS
Stock warrants may be exercised by surrendering to the share warrant agent
the share warrant certificate with the form of election to purchase on the
reverse thereof duly completed and signed by the warrantholder, or its duly
authorized agent (such signature to be guaranteed by a bank or trust company, by
a broker or dealer which is a member of the National Association of Securities
Dealers, Inc. or by a member of a national securities exchange), indicating the
warrantholder's election to exercise all or a portion of the share warrants
evidenced by the certificate. Surrendered share warrant certificates shall be
accompanied by payment of the aggregate exercise price of the share warrants to
be exercised, as set forth in the related prospectus supplement, in lawful money
of the United States, unless otherwise provided in the related prospectus
supplement. Upon receipt thereof by the share warrant agent, the share warrant
agent will requisition from the transfer agent for the common shares or the
preference shares, as the case
38
may be, for issuance and delivery to or upon the written order of the exercising
warrantholder, a certificate representing the number of common shares or
preference shares purchased. If less than all of the share warrants evidenced by
any share warrant certificate are exercised, the share warrant agent shall
deliver to the exercising warrantholder a new share warrant certificate
representing the unexercised share warrants.
ANTIDILUTION AND OTHER PROVISIONS
The exercise price payable and the number of common shares or preference
shares purchasable upon the exercise of each share warrant and the number of
share warrants outstanding will be subject to adjustment in certain events,
including the issuance of a stock dividend to holders of common shares or
preference shares, respectively, or a combination, subdivision or
reclassification of common shares or preference shares, respectively. In lieu of
adjusting the number of common shares or preference shares purchasable upon
exercise of each share warrant, we may elect to adjust the number of share
warrants. No adjustment in the number of shares purchasable upon exercise of the
share warrants will be required until cumulative adjustments require an
adjustment of at least 1% thereof. We may, at our option, reduce the exercise
price at any time. No fractional shares will be issued upon exercise of share
warrants, but we will pay the cash value of any fractional shares otherwise
issuable. Notwithstanding the foregoing, in case of our consolidation, merger,
or sale or conveyance of our property as an entirety or substantially as an
entirety, the holder of each outstanding share warrant shall have the right to
the kind and amount of shares of stock and other securities and property
(including cash) receivable by a holder of the number of common shares or
preference shares into which such share warrants were exercisable immediately
prior thereto.
NO RIGHTS AS SHAREHOLDERS
Holders of share warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of our
directors or any other matter, or to exercise any rights whatsoever as our
shareholders.
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to the debt warrants are summaries
of, and subject to, the detailed provisions of a debt warrant agreement to be
entered into by us and a debt warrant agent to be selected at the time of issue.
The debt warrant agreement may include or incorporate by reference standard
warrant provisions substantially in the form of the Standard Debt Securities
Warrant Provisions filed as an exhibit to the registration statement of which
this prospectus forms a part. The particular terms of any warrants offered by
any prospectus supplement, and the extent to which the general provisions
described below may apply to the offered securities, will be described in the
prospectus supplement.
GENERAL
The debt warrants, evidenced by debt warrant certificates, may be issued
under the debt warrant agreement independently or together with any other
securities offered by any prospectus supplement and may be attached to or
separate from such other offered securities. If debt warrants are offered, the
related prospectus supplement will describe the designation and terms of the
debt warrants, including without limitation the following:
- the offering price, if any;
- the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise of the debt warrants;
- if applicable, the date on and after which the debt warrants and the
related offered securities will be separately transferable;
39
- the principal amount of debt securities purchasable upon exercise of one
debt warrant and the price at which such principal amount of debt
securities may be purchased upon exercise;
- the date on which the right to exercise the debt warrants shall commence
and the date on which such right shall expire;
- a discussion of certain United States Federal income tax considerations;
- whether the warrants represented by the debt warrant certificates will be
issued in registered or bearer form;
- the currency, currencies or currency units in which the offering price,
if any, and exercise price are payable;
- the antidilution provisions of the debt warrants; and
- any other terms of the debt warrants.
Warrantholders will not have any of the rights of holders of debt
securities, including the right to receive the payment of principal of, any
premium or interest on, or any additional amounts with respect to, the debt
securities or to enforce any of the covenants of the debt securities or the
applicable indenture except as otherwise provided in the applicable indenture.
EXERCISE OF DEBT WARRANTS
Debt warrants may be exercised by surrendering the debt warrant certificate
at the office of the debt warrant agent, with the form of election to purchase
on the reverse side of the debt warrant certificate properly completed and
executed (with signature(s) guaranteed by a bank or trust company, by a broker
or dealer which is a member of the National Association of Securities Dealers,
Inc. or by a member of a national securities exchange), and by payment in full
of the exercise price, as set forth in the related prospectus supplement. Upon
the exercise of debt warrants, we will issue the debt securities in authorized
denominations in accordance with the instructions of the exercising
warrantholder. If less than all of the debt warrants evidenced by the debt
warrant certificate are exercised, a new debt warrant certificate will be issued
for the remaining number of debt warrants.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Capital Trust will be governed by the terms of the restated trust
agreement. Under the restated trust agreement of the Capital Trust, the Capital
Trust may issue, from time to time, only one series of preferred securities. The
preferred securities will have the terms set forth in the restated trust
agreement or made a part of the restated trust agreement by the Trust Indenture
Act, and described in the related prospectus supplement. These terms will mirror
the terms of the junior subordinated debt securities purchased by the Capital
Trust using the proceeds from the sale of its preferred securities and its
common securities. The junior subordinated debt securities issued to the Capital
Trust will be guaranteed by us on a subordinated basis and are referred to as
the "corresponding junior subordinated debt securities" relating to the Capital
Trust. See "Use of Proceeds."
The following summary sets forth the material terms and provisions of the
restated trust agreement and the preferred securities to which any prospectus
supplement relates. Because this summary is not complete, you should refer to
the form of restated trust agreement and to the Trust Indenture Act for complete
information regarding the terms and provisions of that agreement and of the
preferred securities, including the definitions of some of the terms used below.
The form of restated trust agreement filed as an exhibit to the registration
statement of which this prospectus forms a part is incorporated by reference in
this summary. Whenever we refer to particular sections or defined terms of a
restated trust agreement, such sections or defined terms are incorporated herein
by reference, and the statements in connection with which such reference is made
is qualified in its entirety by such reference.
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ISSUANCE, STATUS AND GUARANTEE OF PREFERRED SECURITIES
Under the terms of the restated trust agreement for the Capital Trust, the
Administrative Trustees will issue the preferred securities on behalf of the
Capital Trust. The preferred securities will represent preferred beneficial
interests in the Capital Trust and the holders of the preferred securities will
be entitled to a preference in certain circumstances as regards distributions
and amounts payable on redemption or liquidation over the common securities of
the Capital Trust, as well as other benefits under the corresponding restated
trust agreement. The preferred securities of the Capital Trust will rank
equally, and payments will be made on the preferred securities pro rata, with
the common securities of the Capital Trust except as described under
"-- Subordination of Common Securities." The Property Trustee will hold legal
title to the corresponding junior subordinated debt securities in trust for the
benefit of the holders of the related preferred securities and common
securities. The common securities and the preferred securities of the Capital
Trust are collectively referred to as the "trust securities" of the Capital
Trust.
We will issue a guarantee agreement for the benefit of the holders of the
Capital Trust's preferred securities (the "preferred securities guarantee" for
those preferred securities). Under each preferred securities guarantee, we will
guarantee on a subordinated basis payment of distributions on the related
preferred securities and amounts payable on redemption or liquidation of such
preferred securities, but only to the extent that the Capital Trust has funds on
hand to make such payments. See "Description of the Trust Preferred Securities
Guarantee."
DISTRIBUTIONS
Distributions on the preferred securities will be cumulative, will
accumulate from the original issue date and will be payable on the dates as
specified in the related prospectus supplement. In the event that any date on
which distributions are payable on the preferred securities is not a Business
Day, payment of the distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional distributions
or other payment in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, payment of such distribution shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the date such payment was originally payable
(each date on which distributions are payable in accordance with the foregoing,
a "distribution date"). (Section 4.1) A "Business Day" is any day other than a
Saturday or a Sunday, or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to remain closed or a
day on which the corporate trust office of the Property Trustee or the trustee
for the corresponding junior subordinated debt securities is closed for
business. (Section 1.1)
Distributions on each preferred security will be payable at a rate
specified in the related prospectus supplement. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months unless otherwise specified in the related prospectus supplement.
Distributions to which holders of preferred securities are entitled will
accumulate additional distributions at the rate per annum if and as specified in
the related prospectus supplement. (Section 4.1) References to "distributions"
include any such additional distributions unless otherwise stated.
If provided in the applicable prospectus supplement, we have the right
under the subordinated indenture to defer the payment of interest at any time or
from time to time on any series of corresponding junior subordinated debt
securities for an Extension Period which will be specified in the related
prospectus supplement. No Extension Period may extend beyond the stated maturity
of the corresponding junior subordinated debt securities. See "Description of
the Debt Securities -- Option to Extend Interest Payment Date." As a consequence
of any such extension, distributions on the corresponding preferred securities
would be deferred (but would continue to accumulate additional distributions at
the rate per annum set forth in the prospectus supplement for such preferred
securities) by the Capital Trust which issued such preferred securities during
any such Extension Period. (Section 4.1)
The funds of the Capital Trust available for distribution to holders of its
preferred securities will be limited to payments under the corresponding junior
subordinated debt securities in which the Capital Trust
41
will invest the proceeds from the issuance and sale of its trust securities. If
we do not make interest payments on those corresponding junior subordinated debt
securities, the Property Trustee will not have funds available to pay
distributions on the related preferred securities. The payment of distributions
(if and to the extent the Capital Trust has funds legally available for the
payment of such distributions and cash sufficient to make such payments) is
guaranteed by us on a limited basis as set forth herein under "Description of
the Trust Preferred Securities Guarantee."
Distributions on the preferred securities will be payable to the holders
thereof as they appear on the register of the Capital Trust on the relevant
record dates. As long as the preferred securities remain in book-entry form, the
record dates will be fifteen (15) Business Days prior to the relevant
distribution dates. Subject to any applicable laws and regulations and the
provisions of the applicable restated trust agreement, each distribution payment
will be made as described under "Global Preferred Securities." In the event any
preferred securities are not in book-entry form, the relevant record date for
such preferred securities will be the date at least 15 days prior to the
relevant distribution date, as specified in the related prospectus supplement.
(Section 4.1)
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon any repayment or redemption, in whole or in
part, of any corresponding junior subordinated debt securities held by the
Capital Trust, whether at stated maturity, upon earlier redemption or otherwise,
the proceeds from such repayment or redemption shall simultaneously be applied
by the Property Trustee, upon not less than 30 nor more than 60 days notice to
holders of trust securities, to redeem, on a pro rata basis, preferred
securities and common securities having an aggregate stated liquidation amount
equal to the aggregate principal amount of the corresponding junior subordinated
debt securities so repaid or redeemed. The redemption price per trust security
will be equal to the stated liquidation amount thereof plus accumulated and
unpaid distributions thereon to the date of redemption, plus the related amount
of premium, if any, and any additional amounts paid by us upon the concurrent
repayment or redemption of the corresponding junior subordinated debt securities
(the "redemption price"). (Section 4.2) If less than all of any series of
corresponding junior subordinated debt securities are to be repaid or redeemed
on a redemption date, then the proceeds from such repayment or redemption shall
be allocated to the redemption pro rata of the related preferred securities and
the common securities. (Section 4.2)
We will have the right to redeem any series of corresponding junior
subordinated debt securities (1) at any time, in whole but not in part, upon the
occurrence of a Special Event and subject to the further conditions described
under "Description of the Debt Securities -- Redemption," or (2) as may be
otherwise specified in the applicable prospectus supplement.
Special Event Redemption or Distribution of Corresponding Junior
Subordinated Debt Securities. If a Special Event relating to the preferred
securities and common securities of the Capital Trust shall occur and be
continuing, we have the right to redeem the corresponding junior subordinated
debt securities, in whole but not in part, and thereby cause a mandatory
redemption of such preferred securities and common securities, in whole but not
in part, at the redemption price within 90 days following the occurrence of the
Special Event. At any time, we have the right to dissolve the Capital Trust and
after satisfaction of the liabilities of creditors of the Capital Trust as
provided by applicable law, cause such corresponding junior subordinated debt
securities to be distributed to the holders of such preferred securities and
common securities in liquidation of the Capital Trust. If we do not elect to
redeem the corresponding junior subordinated debt securities upon the occurrence
of a Special Event, the applicable preferred securities will remain outstanding,
and in the event a Tax Event has occurred and is continuing, Additional Sums may
be payable on the corresponding junior subordinated debt securities. "Additional
Sums" means the additional amounts as may be necessary in order that the amount
of distributions then due and payable by the Capital Trust on the outstanding
preferred securities and common securities of the Capital Trust shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which the Capital Trust has become subject as a result of a Tax
Event. (Section 1.1)
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Except with respect to certain other circumstances, on and after the date
on which junior subordinated debentures are distributed to holders of Trust
Preferred Securities in connection with the dissolution and liquidation of the
Capital Trust as a result of an early termination event:
(1) the trust securities will no longer be deemed to be outstanding,
(2) certificates representing a like amount of junior subordinated
debt will be issued to the holders of trust securities certificates, upon
surrender of such certificates to the administrative trustees or their
agent for exchange,
(3) we will use our reasonable efforts to have the junior subordinated
debt listed or traded on such stock exchange, interdealer quotation system
and/or other self-regulatory organization as the trust preferred securities
are then listed or traded,
(4) any trust securities certificates not so surrendered for exchange
will be deemed to represent a like amount of junior subordinated debt,
accruing interest at the rate provided for in the junior subordinated debt
from the last distribution date on which a distribution was made on such
trust securities certificates until such certificates are so surrendered
(and until such certificates are so surrendered, no payments of interest or
principal will be made to holders of trust securities certificates with
respect to such junior subordinated debt) and
(5) all rights of securityholders holding trust securities will cease,
except the right of such securityholders to receive junior subordinated
debt upon surrender of trust securities certificates. (Section 9.4(d))
An early termination event, within the meaning of this section, means (1)
the occurrence of our dissolution or bankruptcy event, (2) the direction of the
property trustee to dissolve the trust and exchange the trust securities for
junior subordinated debt, (3) the redemption of the trust securities in
connection with the redemption of all junior subordinated debt or (4) a court
order to dissolve the Capital Trust.
There can be no assurance as to the market prices for the preferred
securities or the corresponding junior subordinated debt securities that may be
distributed in exchange for preferred securities if a dissolution and
liquidation of the Capital Trust were to occur. Accordingly, the preferred
securities that you may purchase, or the corresponding junior subordinated debt
securities that you may receive on dissolution and liquidation of the Capital
Trust, may trade at a discount to the price that you paid to purchase the
preferred securities.
REDEMPTION PROCEDURES
Preferred securities redeemed on each redemption date shall be redeemed at
the redemption price with the applicable proceeds from the contemporaneous
redemption of the corresponding junior subordinated debt securities. Redemptions
of the preferred securities shall be made and the redemption price shall be
payable on each redemption date only to the extent that the Capital Trust has
funds on hand available for the payment of such redemption price. See also
"-- Subordination of Common Securities."
If the Capital Trust gives a notice of redemption (which notice will be
irrevocable) in respect of its preferred securities, then, by 12:00 noon, New
York City time, on the redemption date, to the extent funds are available, the
Property Trustee will deposit irrevocably with the depositary for the preferred
securities funds sufficient to pay the applicable redemption price and will give
the depositary irrevocable instructions and authority to pay the redemption
price to the holders of such preferred securities. If such preferred securities
are no longer in book-entry form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for such preferred
securities funds sufficient to pay the applicable redemption price and will give
such paying agent irrevocable instructions and authority to pay the redemption
price to the holders thereof upon surrender of their certificates evidencing
such preferred securities. Notwithstanding the foregoing, distributions payable
on or prior to the redemption date for any preferred securities called for
redemption shall be payable to the holders of such preferred securities on the
43
relevant record dates for the related distribution dates. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit, all
rights of the holders of such preferred securities so called for redemption will
cease, except the right of the holders of such preferred securities to receive
the redemption price, but without interest, and such preferred securities will
cease to be outstanding. In the event that any date on which any redemption
price is payable is not a Business Day, then payment of the redemption price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. In the event that payment of the
redemption price in respect of preferred securities called for redemption is
improperly withheld or refused and not paid either by the Capital Trust or by us
pursuant to the preferred securities guarantee as described under "Description
of the Trust Preferred Securities Guarantee," distributions on such preferred
securities will continue to accumulate at the then applicable rate, from the
redemption date originally established by the Capital Trust for such preferred
securities to the date such redemption price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the redemption price.
Subject to applicable law (including, without limitation, United States
Federal securities law), we or our subsidiaries may at any time and from time to
time purchase outstanding preferred securities by tender, in the open market or
by private agreement.
Payment of the redemption price on the preferred securities shall be made
to the applicable recordholders as they appear on the register for such
preferred securities on the relevant record date, which shall be fifteen (15)
Business Days prior to the relevant redemption date; provided, however, that in
the event that any preferred securities are not in book-entry form, the relevant
record date for such preferred securities shall be a date at least 15 days prior
to the redemption date, as specified in the applicable prospectus supplement.
If less than all of the preferred securities and common securities issued
by the Capital Trust are to be redeemed on a redemption date, then the aggregate
liquidation amount of such preferred securities and common securities to be
redeemed shall be allocated pro rata to the preferred securities and the common
securities based upon the relative liquidation amounts of such classes. The
particular preferred securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the redemption date by the Property Trustee
from the outstanding preferred securities not previously called for redemption,
or by such other method as the Property Trustee shall deem fair and appropriate.
The Property Trustee shall promptly notify the trust registrar in writing of the
preferred securities selected for redemption and, in the case of any preferred
securities selected for partial redemption, the liquidation amount thereof to be
redeemed. For all purposes of each restated trust agreement, unless the context
otherwise requires, all provisions relating to the redemption of preferred
securities shall relate, in the case of any preferred securities redeemed or to
be redeemed only in part, to the portion of the liquidation amount of preferred
securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of trust securities to be
redeemed at its registered address. Unless each we default in payment of the
redemption price on the corresponding junior subordinated debt securities, on
and after the redemption date interest will cease to accrue on such subordinated
debt securities or portions thereof (and distributions will cease to accrue on
the related preferred securities or portions thereof) called for redemption.
(Section 4.2)
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the Capital
Trust's preferred securities and common securities, as applicable, shall be made
pro rata based on the liquidation amount of such preferred securities and common
securities; provided, however, that if on any distribution date or redemption
date an event of default under the corresponding junior subordinated debt
securities shall have occurred and be
44
continuing, no payment of any distribution on, or redemption price of, any of
the Capital Trust's common securities, and no other payment on account of the
redemption, liquidation or other acquisition of such common securities, shall be
made unless payment in full in cash of all accumulated and unpaid distributions
on all of the Capital Trust's outstanding preferred securities for all
distribution periods terminating on or prior thereto, or in the case of payment
of the redemption price the full amount of such redemption price on all of the
Capital Trust's outstanding preferred securities then called for redemption,
shall have been made or provided for, and all funds available to the Property
Trustee shall first be applied to the payment in full in cash of all
distributions on, or redemption price of, the Capital Trust's preferred
securities then due and payable.
In the case of any Event of Default under the restated trust agreement
resulting from an event of default under the corresponding junior subordinated
debt securities, the holder of the Capital Trust's common securities will be
deemed to have waived any right to act with respect to any such Event of Default
under the applicable restated trust agreement until the effect of all such
Events of Default with respect to such preferred securities have been cured,
waived or otherwise eliminated. Until any such Events of Default under the
applicable restated trust agreement with respect to the preferred securities
have been so cured, waived or otherwise eliminated, the Property Trustee shall
act solely on behalf of the holders of such preferred securities and not on
behalf of the holder of the Capital Trust's common securities, and only the
holders of such preferred securities will have the right to direct the Property
Trustee to act on their behalf. (Section 4.3)
LIQUIDATION DISTRIBUTION UPON DISSOLUTION OF THE CAPITAL TRUST
Pursuant to the restated trust agreement, the Capital Trust shall
automatically dissolve upon expiration of its term and shall dissolve on the
first to occur of:
(1) certain events of our bankruptcy, dissolution or liquidation;
(2) the distribution to the holders of its trust securities of
corresponding junior subordinated debt securities having an aggregate
principal amount equal to the aggregate stated liquidation amount of the
trust securities, if we, as Depositor, have given written direction to the
Property Trustee to dissolve the Capital Trust (which direction is optional
and wholly within our discretion, as Depositor);
(3) the redemption of all of the Capital Trust's trust securities in
connection with the redemption of all the junior subordinated debt; or
(4) the entry of an order for the dissolution of the Capital Trust by
a court of competent jurisdiction. (Section 9.2)
If an early dissolution occurs as described in clause (1), (2) or (4) above
or upon the date designated for automatic dissolution of the Capital Trust, the
Capital Trust shall be liquidated by the Capital Trustees as expeditiously as
the Capital Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Capital Trust as provided by
applicable law, to the holders of such trust securities corresponding junior
subordinated debt securities having an aggregate principal amount equal to the
aggregate stated liquidation amount of the trust securities. However, if such
distribution is determined by the Property Trustee not to be practical, such
holders will be entitled to receive out of the assets of the Capital Trust
available for distribution to holders, after satisfaction of liabilities to
creditors of the Capital Trust as provided by applicable law, an amount equal
to, in the case of holders of preferred securities, the aggregate of the
liquidation amount plus accumulated and unpaid distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Capital Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Capital Trust on its
preferred securities shall be paid on a pro rata basis. Holders of the Capital
Trust's common securities will be entitled to receive distributions upon any
such liquidation pro rata with the holders of its preferred securities, except
that if an event of default under the corresponding junior subordinated debt
45
securities has occurred and is continuing, the preferred securities shall have a
priority over the common securities. (Section 9.4)
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
each restated trust agreement with respect to the applicable preferred
securities (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) the occurrence of an event of default in respect of the
corresponding junior subordinated debt securities (see "Description of the
Debt Securities -- Events of Default"); or
(2) default by the Property Trustee in the payment of any distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(3) default by the Property Trustee in the payment of any redemption
price of any trust security when it becomes due and payable; or
(4) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Capital Trustees in such restated trust
agreement (other than a covenant or warranty a default in the performance
of which or the breach of which is dealt with in clause (2) or (3) above),
and continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the defaulting
Capital Trustee or Trustees by the holders of at least 25% in aggregate
liquidation preference of the outstanding preferred securities of the
Capital Trust, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" under such restated trust agreement; or
(5) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the holder of the common
securities of the Capital Trust to appoint a successor Property Trustee
within 60 days thereof. (Section 1.1)
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Trust's preferred
securities, the Administrative Trustees and to us, as Depositor, unless such
Event of Default shall have been cured or waived. We, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under each restated trust agreement.
(Sections 8.15 and 8.16)
If an event of default under the corresponding junior subordinated debt
securities has occurred and is continuing, the preferred securities shall have a
preference over the common securities upon dissolution of the Capital Trust as
described above. See "-- Liquidation Distribution Upon Dissolution of Capital
Trust." The existence of an Event of Default under the restated trust agreement
does not entitle the holders of preferred securities to accelerate the maturity
thereof.
REMOVAL OF CAPITAL TRUSTEES
Unless an event of default under the corresponding junior subordinated debt
securities shall have occurred and be continuing, any Capital Trustee may be
removed at any time by the holder of the common securities. If an event of
default under the corresponding junior subordinated debt securities has occurred
and is continuing, the Property Trustee and the Delaware Trustee may be removed
at such time by the holders of a majority in liquidation amount of the
outstanding preferred securities. In no event will the holders of the preferred
securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
holder of the common securities. No resignation or removal of a Capital Trustee
and no appointment of a successor trustee shall be effective
46
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the applicable restated trust agreement. (Section 8.10)
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the property of the
Capital Trust may at the time be located, the holder of the common securities
and the Administrative Trustees shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or any
part of the property of the Capital Trust, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable restated trust agreement. In case an
event of default under the corresponding junior subordinated debt securities has
occurred and is continuing, the Property Trustee alone shall have power to make
such appointment. (Section 8.9)
MERGER OR CONSOLIDATION OF CAPITAL TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Capital Trustee shall
be a party shall be the successor of the Capital Trustee under each restated
trust agreement, provided such corporation shall be otherwise qualified and
eligible. (Section 8.12)
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE CAPITAL TRUST
The Capital Trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other entity, except
as described below or as described in "Liquidation Distribution Upon Dissolution
of the Capital Trust." The Capital Trust may, at our request, with the consent
of only the Administrative Trustees and without the consent of the holders of
the preferred securities, merge with or into, convert into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State, provided, that
(1) such successor entity either (a) expressly assumes all of the
obligations of the Capital Trust with respect to the preferred securities
or (b) substitutes for the preferred securities other securities having
substantially the same terms as the preferred securities so long as such
successor securities rank the same as the preferred securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise,
(2) we expressly appoint a trustee of such successor entity possessing
the same powers and duties as the Property Trustee as the holder of the
corresponding junior subordinated debt securities,
(3) the successor securities are listed or traded, or any successor
securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the preferred securities
are then listed or traded, if any,
(4) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the preferred securities
(including any successor securities) to be downgraded by any nationally
recognized statistical rating organization,
(5) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities
(including any successor securities) in any material respect,
(6) such successor entity has a purpose substantially identical to
that of the Capital Trust,
47
(7) prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, we have received an opinion
from independent counsel to the Capital Trust experienced in such matters
to the effect that (a) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the
preferred securities (including any successor securities) in any material
respect, and (b) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the
Capital Trust nor any successor entity will be required to register as an
"investment company" under the Investment Company Act, and
(8) we or any permitted successor or assignee own all of the common
securities of such successor entity and guarantee the obligations of such
successor entity under the successor securities at least to the extent
provided by the preferred securities guarantee.
Notwithstanding the foregoing, the Capital Trust shall not, except with the
consent of holders of 100% in liquidation amount of the preferred securities,
consolidate, amalgamate, merge with or into, convert into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, convert into, or replace it if such consolidation, amalgamation,
merger, replacement, conveyance, transfer or lease would cause the Capital Trust
or the successor entity to be classified as other than a grantor trust for
United States Federal income tax purposes. (Section 9.5)
VOTING AND PREEMPTIVE RIGHTS
Except as provided below and under "Description of the Trust Preferred
Securities Guarantee -- Amendments and Assignment" and as otherwise required by
law and the applicable restated trust agreement, the holders of the preferred
securities will have no voting rights. Holders of the preferred securities have
no preemptive or similar rights. (Section 6.1)
AMENDMENT OF RESTATED TRUST AGREEMENTS
Each restated trust agreement may be amended from time to time by us and
the Capital Trustees, without the consent of the holders of the trust
securities:
(1) to cure any ambiguity, correct or supplement any provisions in
such restated trust agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or
questions arising under such restated trust agreement, which shall not be
inconsistent with the other provisions of such restated trust agreement, or
(2) to modify, eliminate or add to any provisions of such restated
trust agreement to such extent as shall be necessary to ensure that the
Capital Trust will be classified for United States Federal income tax
purposes as a grantor trust at all times that any trust securities are
outstanding or to ensure that the Capital Trust will not be required to
register as an "investment company" under the Investment Company Act;
provided, however, that in the case of clause (1), such action shall not
adversely affect in any material respect the interests of any holder of trust
securities. Any such amendments of a restated trust agreement shall become
effective when notice thereof is given to the holders of trust securities of the
Capital Trust.
Each restated trust agreement may be amended by us and the Capital Trustees
with the consent of holders representing not less than a majority (based upon
liquidation amounts) of the outstanding trust securities, and receipt by the
Capital Trustees of an opinion of counsel to the effect that such amendment or
the exercise of any power granted to the Capital Trustees in accordance with
such amendment will not affect the Capital Trust's status as a grantor trust for
United States Federal income tax purposes or the Capital Trust's exemption from
status as an "investment company" under the Investment Company Act.
48
However, without the consent of each holder of trust securities, such restated
trust agreement may not be amended to:
(1) change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any distribution
required to be made in respect of the trust securities as of a specified
date, or
(2) restrict the right of a holder of trust securities to institute
suit for the enforcement of any such payment on or after such date.
(Section 10.2)
So long as any corresponding junior subordinated debt securities are held
by the Property Trustee, the Capital Trustees shall not:
(1) direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or executing any trust or power
conferred on the Property Trustee with respect to such corresponding junior
subordinated debt securities,
(2) waive any past default that is waivable under Section 5.13 of the
subordinated indenture (as described in "Description of the Debt
Securities -- Modification and Waiver"),
(3) exercise any right to rescind or annul a declaration that the
principal of all the subordinated debt securities shall be due and payable,
or
(4) consent to any amendment, modification or termination of the
subordinated indenture or such corresponding junior subordinated debt
securities, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of a majority
in aggregate liquidation amount of all outstanding preferred securities.
However, where a consent under the subordinated indenture would require the
consent of each holder of corresponding junior subordinated debt securities
affected thereby, no such consent shall be given by the Property Trustee without
the prior consent of each holder of the corresponding preferred securities. The
Capital Trustees shall not revoke any action previously authorized or approved
by a vote of the holders of the preferred securities except by subsequent vote
of the holders of the preferred securities. The Property Trustee shall notify
each holder of preferred securities of any notice of default with respect to the
corresponding junior subordinated debt securities. In addition to obtaining the
foregoing approvals of the holders of the preferred securities, prior to taking
any of the foregoing actions, the Capital Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Capital Trust will
not be classified as a corporation for United States Federal income tax purposes
on account of such action. (Section 6.1)
Any required approval or action of holders of preferred securities may be
given or taken at a meeting of holders of preferred securities convened for such
purpose or pursuant to written consent. The Property Trustee will cause a notice
of any meeting at which holders of preferred securities are entitled to vote to
be given to each holder of record of preferred securities in the manner set
forth in each restated trust agreement. (Sections 6.2, 6.3 and 6.6)
No vote or consent of the holders of preferred securities will be required
for the Capital Trust to redeem and cancel its preferred securities in
accordance with the applicable restated trust agreement.
Notwithstanding that holders of preferred securities are entitled to vote
or consent under any of the circumstances described above, any of the preferred
securities that are owned by us, the Capital Trustees or any affiliate of ours
or any Capital Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The preferred securities of the Capital Trust may be issued in whole or in
part in the form of one or more global preferred securities that will be
deposited with, or on behalf of, the depositary identified in the prospectus
supplement.
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The specific terms of the depositary arrangement with respect to the
preferred securities of the Capital Trust will be described in the related
prospectus supplement. We anticipate that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a global preferred security, and the deposit of such
global preferred security with or on behalf of the depositary, the depositary
for such global preferred security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate liquidation amounts
of the individual preferred securities represented by such global preferred
securities to the accounts of participants. Such accounts shall be designated by
the underwriters or agents with respect to such preferred securities or by us if
such preferred securities are offered and sold directly by us. Ownership of
beneficial interests in a global preferred security will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests in such global preferred security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the depositary or its nominee (with respect to interests of participants) and
the records of participants (with respect to interests of persons who hold
through participants). The laws of some states require that certain purchasers
of securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global preferred security.
So long as the depositary for a global preferred security, or its nominee,
is the registered owner of such global preferred security, such depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the preferred securities represented by such global preferred security for all
purposes under the restated trust agreement governing such preferred securities.
Except as provided below, owners of beneficial interests in a global preferred
security will not be entitled to have any of the individual preferred securities
represented by such global preferred security registered in their names, will
not receive or be entitled to receive physical delivery of any such preferred
securities in definitive form and will not be considered the owners or holders
thereof under the restated trust agreement.
Payments of any liquidation amount, premium or distributions in respect of
individual preferred securities registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as
the registered owner of the global preferred security representing such
preferred securities. None of RenaissanceRe, the Property Trustee, any paying
agent, or the securities registrar for such preferred securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the global
preferred security representing such preferred securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
We expect that the depositary or its nominee, upon receipt of any payment
in respect of a global preferred security representing the Capital Trust's
preferred securities, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interest in the
aggregate liquidation amount of such global preferred security for such
preferred securities as shown on the records of such depositary or its nominee.
We also expect that payments by participants to owners of beneficial interests
in such global preferred security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name" and will be the responsibility of such participants.
Unless otherwise specified in the applicable prospectus supplement, the
restated trust agreement of the Capital Trust will provide that (1) if we advise
the Capital Trustees in writing that the depositary is no longer willing or able
to act as depositary and we fail to appoint a qualified successor within 90
days, (2) we at our option advise the Capital Trustees in writing that we elect
to terminate the book-entry system through the depositary or (3) after the
occurrence of an event of default under the corresponding junior subordinated
debt securities, owners of preferred securities representing at least a majority
of liquidation amount of such preferred securities advise the Property Trustee
in writing that the continuation of a book-entry system through the depositary
is no longer in their best interests, then the global preferred securities will
be exchanged for preferred securities in definitive form in accordance with the
instructions of the depositary. It is expected that such instructions may be
based upon directions received by the
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depositary from participants with respect to ownership of beneficial interests
in global preferred securities. Individual preferred securities so issued will
be issued in authorized denominations.
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities shall be made to the
depositary, which shall credit the relevant accounts at the depositary on the
applicable distribution dates or, if the Capital Trust's preferred securities
are not held by the depositary, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
register of the Capital Trust. Unless otherwise specified in the applicable
prospectus supplement, the paying agent shall initially be the Property Trustee
and any copaying agent chosen by the Property Trustee and acceptable to us and
the Administrative Trustees. The paying agent shall be permitted to resign as
paying agent upon 30 days' written notice to us and the Property Trustee. In the
event the Property Trustee shall no longer be the paying agent, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the Administrative Trustees and us) to act as paying
agent. (Section 5.9)
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
Property Trustee will act as registrar and transfer agent for the preferred
securities.
Registration of transfers of preferred securities will be effected without
charge by or on behalf of the Capital Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Capital Trust will not be required to register or cause to be
registered the transfer of their preferred securities after such preferred
securities have been called for redemption. (Section 5.4)
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee undertakes to perform only those duties specifically
set forth in each restated trust agreement, provided that it must exercise the
same degree of care as a prudent person would exercise in the conduct of his or
her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the applicable restated
trust agreement at the request of any holder of preferred securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If in performing its duties under the restated trust
agreement, the Property Trustee is required to decide between alternative causes
of action, construe ambiguous provisions in the applicable restated trust
agreement or is unsure of the application of any provision of the applicable
restated trust agreement, and the matter is not one on which holders of
preferred securities are entitled under such restated trust agreement to vote,
then the Property Trustee shall take such action as is directed by us. If it is
not so directed, the Property Trustee shall take such action as it deems
advisable and in the best interests of the holders of the trust securities and
will have no liability except for its own bad faith, negligence or willful
misconduct.
ADMINISTRATIVE TRUSTEES
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Capital Trust in such a way that the Capital Trust
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act or classified as an association taxable as a
corporation for United States Federal income tax purposes and so that the
corresponding junior subordinated debt securities will be treated as our
indebtedness for United States Federal income tax purposes. In this connection,
we and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Capital Trust
or each restated trust agreement, that we and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the related preferred securities.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE
Concurrently with any issuance by the Capital Trust of its preferred
securities, we will execute and deliver a preferred securities guarantee for the
benefit of the holders from time to time of such preferred securities. Bankers
Trust Company will act as indenture trustee ("Guarantee Trustee") under the
preferred securities guarantee for the purposes of compliance with the Trust
Indenture Act, and the preferred securities guarantee will be qualified as an
indenture under the Trust Indenture Act.
The following summary sets forth the material terms and provisions of the
preferred securities guarantee. Because the following summary of certain
provisions of the preferred securities guarantees is not complete, you should
refer to the form of preferred securities guarantee and the Trust Indenture Act
for more complete information regarding the provisions of the preferred
securities guarantee, including the definitions of some of the terms used below.
The form of the preferred securities guarantee has been filed as an exhibit to
the registration statement of which this prospectus forms a part and is
incorporated by reference in this summary. Whenever we refer to particular
sections or defined terms of a preferred securities guarantee, such sections or
defined terms are incorporated herein by reference, and the statement in
connection with which such reference is made is qualified in its entirety by
such reference. Reference in this summary to preferred securities means the
Capital Trust's preferred securities to which a preferred securities guarantee
relates. The Guarantee Trustee will hold the preferred securities guarantee for
the benefit of the holders of the Capital Trust's preferred securities.
GENERAL
We will irrevocably agree to pay in full on a subordinated basis, to the
extent described herein, the Guarantee Payments (as defined below) (without
duplication of amounts theretofore paid by or on behalf of the Capital Trust) to
the holders of the preferred securities, as and when due, regardless of any
defense, right of setoff or counterclaim that the Capital Trust may have or
assert other than the defense of payment. The following payments with respect to
the preferred securities, to the extent not paid by or on behalf of the Capital
Trust (the "Guarantee Payments"), will be subject to the preferred securities
guarantee:
(1) any accrued and unpaid distributions required to be paid on such
preferred securities, to the extent that the Capital Trust has funds on
hand available for payment at such time,
(2) the redemption price, including all accrued and unpaid
distributions to the redemption date, with respect to any preferred
securities called for redemption, to the extent that the Capital Trust has
funds on hand available for payment at such time, and
(3) upon a voluntary or involuntary dissolution, winding up or
liquidation of the Capital Trust (unless the corresponding junior
subordinated debt securities are distributed to holders of such preferred
securities), the lesser of (a) the Liquidation Distribution, to the extent
the Capital Trust has funds available for payment at such time and (b) the
amount of assets of the Capital Trust remaining available for distribution
to holders of preferred securities.
Our obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by us to the holders of the applicable preferred
securities or by causing the Capital Trust to pay such amounts to such holders.
(Section 5.1)
Each preferred securities guarantee will be an irrevocable guarantee on a
subordinated basis of the Capital Trust's payment obligations under the
preferred securities, but will apply only to the extent that the Capital Trust
has funds sufficient to make such payments. (Section 5.1, 6.2) Each preferred
securities guarantee is, to that extent, a guarantee of payment and not a
guarantee of collection. (Section 5.5)
If we do not make interest payments on the corresponding junior
subordinated debt securities held by the Capital Trust, the Capital Trust will
not be able to pay distributions on the preferred securities and will not have
funds legally available for payment. Each preferred securities guarantee will
rank subordinate and junior in right of payment to all other Indebtedness of
ours (including all debt securities), except
52
those ranking equally or subordinate by their terms. See "-- Status of the
Preferred Securities Guarantees."
Because we are a holding company, our rights and the rights of our
creditors (including the holders of preferred securities who are creditors of
ours by virtue of the preferred securities guarantee) and shareholders, to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise would be subject to the
prior claims of the subsidiary's creditors, except to the extent that we may
ourselves be a creditor with recognized claims against the subsidiary. The right
of creditors of ours (including the holders of preferred securities who are
creditors of ours by virtue of the preferred securities guarantee) to
participate in the distribution of stock owned by us in certain of our
subsidiaries may also be subject to approval by certain insurance regulatory
authorities having jurisdiction over such subsidiaries. Except as otherwise
provided in the applicable prospectus supplement, the preferred securities
guarantees do not limit our ability to incur or issue other secured or unsecured
debt, whether under an indenture or otherwise.
Our obligations described herein and in any accompanying prospectus
supplement, through the applicable preferred securities guarantee, the
applicable restated trust agreement, the subordinated indenture and any
supplemental indentures thereto and the expense agreement described below, taken
together, constitute a full, irrevocable and unconditional guarantee by us of
payments due on the preferred securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Capital Trust's obligations under the preferred securities. See "The Capital
Trust," "Description of the Trust Preferred Securities," and "Description of the
Debt Securities."
STATUS OF THE PREFERRED SECURITIES GUARANTEES
Each preferred securities guarantee will constitute an unsecured obligation
of ours and will rank subordinate and junior in right of payment to all other
Indebtedness of ours, except those ranking equally or subordinate by their
terms. (Section 6.2)
Each preferred securities guarantee will rank equally with all other
similar preferred securities guarantees issued by us on behalf of holders of
preferred securities of any trust, partnership or other entity affiliated with
us which is a financing vehicle of ours. (Section 6.3). Each preferred
securities guarantee will constitute a guarantee of payment and not of
collection. This means that the guaranteed party may institute a legal
proceeding directly against us to enforce its rights under the preferred
securities guarantee without first instituting a legal proceeding against any
other person or entity (Section 5.4). Each preferred securities guarantee will
not be discharged except by payment of the Guarantee Payments in full to the
extent not paid by the Capital Trust or upon distribution to the holders of the
preferred securities of the corresponding junior subordinated debt securities.
None of the preferred securities guarantees places a limitation on the amount of
additional Indebtedness that may be incurred by us. We expect from time to time
to incur additional Indebtedness that will rank senior to the preferred
securities guarantees.
PAYMENT OF ADDITIONAL AMOUNTS
We will make all Guarantee Payments pursuant to the preferred securities
guarantee without withholding or deduction at source for, or on account of, any
present or future taxes, fees, duties, assessments or governmental charges of
whatever nature imposed or levied by or on behalf of Bermuda (a "taxing
jurisdiction") or any political subdivision or taxing authority thereof or
therein, unless such taxes, fees, duties, assessments or governmental charges
are required to be withheld or deducted by (x) the laws (or any regulations or
rulings promulgated thereunder) of a taxing jurisdiction or any political
subdivision or taxing authority thereof or therein or (y) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings (including, without limitation, a holding by a
court of competent jurisdiction or by a taxing authority in a taxing
jurisdiction or any political subdivision thereof). If a withholding or
deduction at source is required, we will, subject to certain
53
limitations and exceptions described below, pay to the holders of the related
preferred securities such additional amounts as may be necessary so that every
Guarantee Payment pursuant to the preferred securities guarantee made to such
holder, after such withholding or deduction, will not be less than the amount
provided for in such preferred securities guarantee to be then due and payable.
We will not be required to pay any additional amounts for or on account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever
nature which would not have been imposed but for the fact that such holder
(a) was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction other
than by reason of the mere ownership of preferred securities, or receipt of
payment under such preferred securities guarantee, (b) presented such
preferred security for payment in the relevant taxing jurisdiction or any
political subdivision thereof, unless such preferred security could not
have been presented for payment elsewhere, or (c) presented such preferred
security for payment more than 30 days after the date on which the payment
in respect of such preferred security became due and payable or provided
for, whichever is later, except to the extent that the holder would have
been entitled to such additional amounts if it had presented such preferred
security for payment on any day within that 30-day period;
(2) any estate, inheritance, gift, sale, transfer, personal property
or similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure by the holder or the beneficial owner
of such preferred security to comply with any reasonable request by us or
the Capital Trust addressed to the holder within 90 days of such request
(a) to provide information concerning the nationality, residence or
identity of the holder or such beneficial owner or (b) to make any
declaration or other similar claim or satisfy any information or reporting
requirement, which is required or imposed by statute, treaty, regulation or
administrative practice of the relevant taxing jurisdiction or any
political subdivision thereof as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; or
(4) any combination of items 1, 2 and 3. (Section 5.8)
In addition, we will not pay any additional amounts with respect to the
preferred securities guarantee to any holder who is a fiduciary or partnership
or other than the sole beneficial owner of such preferred security to the extent
such payment would be required by the laws of the relevant taxing jurisdiction
(or any political subdivision or relevant taxing authority thereof or therein)
to be included in the income for tax purposes of a beneficiary or partner or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner who would not have been entitled to such additional amounts had
it been the holder of the preferred securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related preferred securities (in which case no vote
will be required), no preferred securities guarantee may be amended without the
prior approval of the holders of not less than a majority of the aggregate
liquidation amount of such outstanding preferred securities. (Section 8.2). All
guarantees and agreements contained in each preferred securities guarantee shall
bind our successors, assigns, receivers, trustees and representatives and shall
inure to the benefit of the holders of the related preferred securities then
outstanding. (Section 8.1)
EVENTS OF DEFAULT
An event of default under the preferred securities guarantee will occur
upon the failure of ours to perform any of our payment obligations thereunder.
The holders of not less than a majority in aggregate liquidation amount of the
related preferred securities have the right to direct the time, method and place
54
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of such preferred securities guarantee or to direct the exercise of
any trust or power conferred upon the Guarantee Trustee under such preferred
securities guarantee. (Section 5.4)
If the Guarantee Trustee fails to enforce a preferred securities guarantee,
any holder of the preferred securities may institute a legal proceeding directly
against us to enforce its rights under such preferred securities guarantee
without first instituting a legal proceeding against the Capital Trust, the
Guarantee Trustee or any other person or entity. (Section 5.4)
We, as guarantor, are required to file annually with the Guarantee Trustee
a certificate as to whether or not we are in compliance with all the conditions
and covenants applicable to us under the preferred securities guarantee.
(Section 2.4)
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by us in performance of any preferred securities guarantee, undertakes
to perform only such duties as are specifically set forth in each preferred
securities guarantee and, after default with respect to any preferred securities
guarantee, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. (Section 3.1).
Subject to this provision, the Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by any preferred securities guarantee at
the request of any holder of any preferred securities unless it is offered
reasonable indemnity against the costs, expenses, and liabilities that might be
incurred thereby. (Section 3.2)
TERMINATION OF THE PREFERRED SECURITIES GUARANTEES
Each preferred securities guarantee will terminate and be of no further
force and effect upon (1) full payment of the redemption price of the related
preferred securities, (2) the distribution of the corresponding junior
subordinated debt securities to the holders of the related preferred securities
or (3) upon full payment of the amounts payable upon liquidation of the Capital
Trust. Each preferred securities guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of the related
preferred securities must restore payment of any sums paid with respect to such
preferred securities or such preferred securities guarantee. (Section 7.1)
NEW YORK LAW TO GOVERN
Each preferred securities guarantee will be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and performed in that state. (Section 8.5)
THE EXPENSE AGREEMENT
Pursuant to the expense agreement entered into by us under the restated
trust agreement, we will irrevocably and unconditionally guarantee to each
person or entity to whom the Capital Trust becomes indebted or liable, the full
payment of any costs, expenses or liabilities of the Capital Trust, other than
obligations of the Capital Trust to pay to the holders of the preferred
securities or other similar interests in the Capital Trust of the amounts due
such holders pursuant to the terms of the preferred securities or such other
similar interests, as the case may be.
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DESCRIPTION OF THE SHARE PURCHASE CONTRACTS
AND THE SHARE PURCHASE UNITS
We may issue share purchase contracts, representing contracts obligating
holders to purchase from us, and obligating us to sell to the holders, a
specified number of common shares at a future date or dates. The price per share
may be fixed at the time the share purchase contracts are issued or may be
determined by reference to a specific formula set forth in the share purchase
contracts. The share purchase contracts may be issued separately or as a part of
share purchase units consisting of a share purchase contract and, as security
for the holder's obligations to purchase the shares under the share purchase
contracts, either:
(1) senior debt securities or our subordinated debt securities,
(2) debt obligations of third parties, including U.S. Treasury
securities, or
(3) preferred securities of the Capital Trust.
The share purchase contracts may require us to make periodic payments to
the holders of the share purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The share purchase contracts may require
holders to secure their obligations in a specified manner and in certain
circumstances we may deliver newly issued prepaid share purchase contracts upon
release to a holder of any collateral securing such holder's obligations under
the original share purchase contract.
The applicable prospectus supplement will describe the terms of any share
purchase contracts or share purchase units and, if applicable, prepaid share
purchase contracts. The description in the prospectus supplement will not
purport to be complete and will be qualified in its entirety by reference to:
(1) the share purchase contracts,
(2) the collateral arrangements and depositary arrangements, if
applicable, relating to such share purchase contracts or share purchase
units, and
(3) if applicable, the prepaid share purchase contracts and the
document pursuant to which such prepaid share purchase contracts will be
issued.
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PLAN OF DISTRIBUTION
DISTRIBUTIONS BY RENAISSANCERE AND THE CAPITAL TRUST
We and/or the Capital Trust may sell offered securities in any one or more
of the following ways from time to time:
(1) through agents;
(2) to or through underwriters;
(3) through dealers; or
(4) directly to purchasers.
The prospectus supplement with respect to the offered securities will set
forth the terms of the offering of the offered securities, including the name or
names of any underwriters, dealers or agents; the purchase price of the offered
securities and the proceeds to us and/or the Capital Trust from such sale; any
underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation; any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchange on which such offered securities may be listed. Any
initial public offering price, discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The distribution of the offered securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
Offers to purchase offered securities may be solicited by agents designated
by us from time to time. Any such agent involved in the offer or sale of the
offered securities in respect of which this prospectus is delivered will be
named, and any commissions payable by us and/or the Capital Trust to such agent
will be set forth, in the applicable prospectus supplement. Unless otherwise
indicated in such prospectus supplement, any such agent will be acting on a
reasonable best efforts basis for the period of its appointment. Any such agent
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the offered securities so offered and sold.
If offered securities are sold by means of an underwritten offering, we
and/or the Capital Trust will execute an underwriting agreement with an
underwriter or underwriters, and the names of the specific managing underwriter
or underwriters, as well as any other underwriters, and the terms of the
transaction, including commissions, discounts and any other compensation of the
underwriters and dealers, if any, will be set forth in the prospectus supplement
which will be used by the underwriters to make resales of the offered
securities. If underwriters are utilized in the sale of the offered securities,
the offered securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices determined by the underwriters at the time of sale.
Our offered securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by the
managing underwriters. If any underwriter or underwriters are utilized in the
sale of the offered securities, unless otherwise indicated in the prospectus
supplement, the underwriting agreement will provide that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of offered securities will be obligated to
purchase all such offered securities of a series if any are purchased.
We and/or the Capital Trust may grant to the underwriters options to
purchase additional offered securities, to cover over-allotments, if any, at the
public offering price (with additional underwriting discounts or commissions),
as may be set forth in the prospectus supplement relating thereto. If we and/or
the Capital Trust grants any over-allotment option, the terms of such
over-allotment option will be set forth in the prospectus supplement relating to
such offered securities.
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If a dealer is utilized in the sales of offered securities in respect of
which this prospectus is delivered, we and/or the Capital Trust will sell such
offered securities to the dealer as principal. The dealer may then resell such
offered securities to the public at varying prices to be determined by such
dealer at the time of resale. Any such dealer may be deemed to be an
underwriter, as such term is defined in the Securities Act, of the offered
securities so offered and sold. The name of the dealer and the terms of the
transaction will be set forth in the related prospectus supplement.
Offers to purchase offered securities may be solicited directly by us
and/or the Capital Trust and the sale thereof may be made by us and/or the
Capital Trust directly to institutional investors or others, who may be deemed
to be underwriters within the meaning of the Securities Act with respect to any
resale thereof. The terms of any such sales will be described in the related
prospectus supplement.
Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for us and/or the Capital Trust. Any
remarketing firm will be identified and the terms of its agreements, if any,
with us and/or the Capital Trust and its compensation will be described in the
applicable prospectus supplement. Remarketing firms may be deemed to be
underwriters, as such term is defined in the Securities Act, in connection with
the offered securities remarketed thereby.
Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements entered into with us and/or the Capital Trust to
indemnification by us and/or the Capital Trust against certain civil
liabilities, including liabilities under the Securities Act that may arise from
any untrue statement or alleged untrue statement of a material fact or any
omission or alleged omission to state a material fact in this prospectus, any
supplement or amendment hereto, or in the registration statement of which this
prospectus forms a part, or to contribution with respect to payments which the
agents, underwriters or dealers may be required to make.
If so indicated in the prospectus supplement, we and/or the Capital Trust
will authorize underwriters or other persons acting as our and/or the Capital
Trust's agents to solicit offers by certain institutions to purchase offered
securities from us and/or the Capital Trust, pursuant to contracts providing for
payments and delivery on a future date. Institutions with which such contracts
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others,
but in all cases such institutions must be approved by us and/or the Capital
Trust. The obligations of any purchaser under any such contract will be subject
to the condition that the purchase of the offered securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
Disclosure in the prospectus supplement of our and/or the Capital Trust's
use of delayed delivery contracts will include the commission that underwriters
and agents soliciting purchases of the securities under delayed contracts will
be entitled to receive in addition to the date when we will demand payment and
delivery of the securities under the delayed delivery contracts. These delayed
delivery contracts will be subject only to the conditions that we describe in
the prospectus supplement.
Each series of offered securities will be a new issue and, other than the
full voting common shares, which are listed on the NYSE, will have no
established trading market. We and/or the Capital Trust may elect to list any
series of offered securities on an exchange, and in the case of the common
shares, on any additional exchange, but, unless otherwise specified in the
applicable prospectus supplement, neither we nor the Capital Trust shall be
obligated to do so. No assurance can be given as to the liquidity of the trading
market for any of the offered securities.
Underwriters, dealers, agents and remarketing firms may be customers of,
engage in transactions with, or perform services for, us and our subsidiaries in
the ordinary course of business.
58
LEGAL OPINIONS
Certain legal matters with respect to United States, New York and Delaware
law with respect to the validity of the offered securities will be passed upon
for us by Willkie Farr & Gallagher, New York, New York. Certain legal matters
with respect to Bermuda law will be passed upon for us by Conyers Dill &
Pearman, Hamilton, Bermuda. The description of United States tax laws will be
passed upon by Willkie Farr & Gallagher. Additional legal matters may be passed
on for any underwriters, dealers or agents by counsel which we will name in the
applicable prospectus supplement.
EXPERTS
Ernst & Young, independent auditors, have audited our consolidated
financial statements (and schedules) included in our Annual Report on Form 10-K
for the year ended December 31, 2000, as set forth in their reports, which are
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements (and schedules) are incorporated by
reference in reliance on Ernst & Young's reports, given on their authority as
experts in accounting and auditing.
ENFORCEMENT OF CIVIL LIABILITIES UNDER
UNITED STATES FEDERAL SECURITIES LAWS
We are a Bermuda company. In addition, certain of our directors and
officers as well as certain of the experts named in this prospectus, reside
outside the United States, and all or a substantial portion of our assets and
their assets are located outside the United States. Therefore, it may be
difficult for investors to effect service of process within the United States
upon those persons or to recover against us or those persons on judgments of
courts in the United States, including judgments based on civil liabilities
provisions of the United States federal securities laws.
We have been advised by Conyers Dill & Pearman, our Bermuda counsel, that
the United States and Bermuda do not currently have a treaty providing for
reciprocal recognition and enforcement of judgments in civil and commercial
matters. We also have been advised by Conyers Dill & Pearman that there is doubt
as to whether the courts of Bermuda would enforce (1) judgments of United States
courts based on the civil liability provisions of the United States federal
securities laws obtained in actions against us or our directors and officers,
and (2) original actions brought in Bermuda against us or our officers and
directors based solely upon the United States federal securities laws. A Bermuda
court may, however, impose civil liability on us or our directors or officers in
a suit brought in the Supreme Court of Bermuda provided that the facts alleged
constitute or give rise to a cause of action under Bermuda law. Certain remedies
available under the laws of U.S. jurisdictions, including certain remedies under
the U.S. federal securities laws, would not be allowed in Bermuda courts to the
extent that they are contrary to public policy.
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6,000,000 SHARES
RENAISSANCERE HOLDINGS LTD.
8.10% SERIES A PREFERENCE SHARES
$25 PER SHARE
[RENAISSANCERE LOGO]
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PROSPECTUS SUPPLEMENT
NOVEMBER 14, 2001
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MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
MORGAN STANLEY
WACHOVIA SECURITIES
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
QUICK & REILLY, INC.
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