SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE
SECURITIES EXCHANGE ACT OF 1934
ACE Limited
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Cayman Islands 98-0091805
- ------------------------------------------ ---------------------------------
(State of Incorporation or Organization) (IRS Employer Identification No.)
The ACE Building
30 Woodbourne Avenue
Hamilton HM08, Bermuda
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(Address of Principal Executive Offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class of
securities pursuant to Section 12(b) securities pursuant to Section
12(b)of the Exchange Act and is 12(g) of the Exchange Act and is
effective pursuant to General effective pursuant to General
Instruction A(c), please check the Instruction A(d), please check
following box. [X] following box. [ ]
Securities Act registration statement file number to which this
form relates: Not applicable
------------------
(if applicable)
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
- ----------------------------------- ----------------------------------
Preference Share Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
---------------------
(Title of Class)
Page 1 of 67 Pages
(Exhibit Index at Page 8)
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Item 1. Description of Registrant's Securities to be Registered
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On May 7, 1999, the Board of Directors of ACE Limited (the
"Company") declared a dividend distribution of one Right for each
outstanding Ordinary Share, par value $0.041666667 per share ("Ordinary
Share"), of the Company to shareholders of record at the close of business
on June 1, 1999 (the "Record Date"). Except as described below, each Right,
when exercisable, entitles the registered holder to purchase from the
Company one one-thousandth of a Series A Junior Participating Preference
Share, par value $1.00 per share ("Preference Share"), at a price of $150
per one one-thousandth share (the "Exercise Price").
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The Bank of New
York, as Rights Agent.
Initially, the Rights will be attached to all Ordinary Share
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding
Ordinary Shares (the "Shares Acquisition Date") or (ii) 15 business days
(or such later date as may be determined by action of the Board of
Directors of the Company (the "Board of Directors") prior to the time that
any person becomes an Acquiring Person) following the commencement of (or a
public announcement of an intention to make) a tender or exchange offer if,
upon consummation thereof, such person or group would be the beneficial
owner of 15% or more of such outstanding Ordinary Shares (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced by the Ordinary Share certificates together with a copy of this
Summary of Shareholder Rights Plan and not by separate certificates.
The Rights Agreement also provides that, until the Distribution
Date, the Rights will be transferred with and only with the Ordinary
Shares. Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the transfer of any certificates for Ordinary
Shares, with or without a copy of this Summary of Shareholder Rights Plan,
will also constitute the transfer of the Rights associated with the
Ordinary Shares represented by such certificates. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of record of the
Ordinary Shares as of the close of business on the Distribution Date and,
thereafter, such separate Right Certificates alone will evidence the
Rights. Any Ordinary Shares issued after the Distribution Date will
generally be accompanied by Right Certificates only if such Ordinary Shares
are issued pursuant to the exercise of options or under any employee plan
or arrangement or upon the exercise, conversion or exchange of other
securities issued by the Company, or in other circumstances where the
issuance of accompanying Rights Certificates is deemed necessary or
appropriate by the Board of Directors.
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The Rights are not exercisable until the Distribution Date and
will expire at the earlier of June 1, 2009 (the "Final Expiration Date")
and (ii) the redemption of the Rights by the Company as described below.
If any person (other than the Company, its subsidiaries or any
person receiving newly-issued Ordinary Shares directly from the Company)
becomes the beneficial owner of 15% or more of the then outstanding
Ordinary Shares, each holder of a Right will thereafter have the right to
receive, upon exercise at the then current exercise price of the Right,
Ordinary Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise
price of the Right. The Rights Agreement contains an exemption for any
issuance of Ordinary Shares by the Company directly to any person (for
example, in a private placement or an acquisition by the Company in which
Ordinary Shares are used as consideration), even if that person would
become the beneficial owner of 15% or more of the Ordinary Shares, provided
that such person does not acquire any additional Ordinary Shares.
If, at any time following the Shares Acquisition Date, the Company
is acquired in a merger, amalgamation or other business combination
transaction or 50% or more of the Company's assets or earning power are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon exercise at the then current
exercise price of the Right, common stock of the acquiring or surviving
company having a value equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of
the events set forth in the preceding two paragraphs (the "Triggering
Events"), any Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will
immediately become null and void.
The Exercise Price payable, and the number of Preference Shares or
other securities or property issuable, upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution, among other
circumstances, in the event of a stock dividend on, or a subdivision,
split, combination, consolidation or reclassification of, the Preference
Shares or the Ordinary Shares, or a reverse split of the outstanding
Preference Shares or Ordinary Shares.
With certain exceptions, no adjustment in the Exercise Price will
be required until cumulative adjustments require an adjustment of at least
1% in the Exercise Price. The Company will not be required to issue
fractional Preference Shares or Ordinary Shares (other than fractions in
multiples of one-thousandths of a Preference Share) and, in lieu thereof,
an adjustment in cash may be made based on the market price of the
Preference Shares or Ordinary Shares on the last trading date prior to the
date of exercise.
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The Preference Shares constitute a new series of "other shares" of
the Company that is nonredeemable and that ranks junior to other series of
preference or preferred shares of the Company that may be issued in the
future. Each Preference Share will be entitled to a minimum preferential
quarterly dividend of $1.00 per share but will be entitled to an aggregate
dividend equal to 1,000 times the dividend declared per Ordinary Share. In
the event of liquidation, each Preference Share will be entitled to a
minimum preferential liquidation payment of $.01 per share but will be
entitled to an aggregate payment of 1,000 times the payment made per
Ordinary Share. Each Preference Shares will have 1,000 votes, voting
together with the Ordinary Shares and other capital stock of the Company.
Finally, in the event of any merger, consolidation, amalgamation or other
transaction in which Ordinary Shares are exchanged, each Preference Share
will be entitled to receive 1,000 times the amount received per Ordinary
Share. These rights are protected by customary antidilution provisions.
Because of the nature of the Preference Shares' dividend, liquidation and
voting rights, the value of the one one-thousandth of a Preference Share
purchasable upon the exercise of each Right should approximate the value of
one Ordinary Share.
At any time after the date of the Rights Agreement until the time
that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which may (at the option of the Company) be paid
in cash, Ordinary Shares or other consideration deemed appropriate by the
Board of Directors. Upon the effectiveness of any action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Board of Directors of the Company is generally responsible for
administering, interpreting and making all decisions and taking all actions
with respect to the Rights Agreement, including, without limitation, the
decision to redeem or exchange the Rights or to amend the Rights Agreement.
The provisions of the Rights Agreement may be amended by the
Company, except that any amendment adopted after the time that a person
becomes an Acquiring Person may not adversely affect the interests of
holders of Rights.
As of March 31, 1999, there were 193,864,482 Ordinary Shares
outstanding and 23,576,886 Ordinary Shares reserved for issuance under
employee benefit plans. Each outstanding Ordinary Share on June 1, 1999
will receive one Right. In addition, each Ordinary Share issued after the
Record Date but prior to the earliest of the Distribution Date, the
redemption of the Rights and the Final Expiration Date will receive one
Right,
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subject to adjustment as provided in the Rights Agreement. 500,000 Preference
Shares will be reserved for issuance in the event of exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on the Rights being redeemed or
a substantial number of Rights being acquired, and under certain
circumstances the Rights beneficially owned by such a person or group will
become void. The Rights should not interfere with any merger, amalgamation
or other business combination approved by the Board of Directors because,
if the Rights would become exercisable as a result of such merger,
amalgamation or business combination, the Board of Directors may, at its
option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights
at the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an exhibit to this Registration Statement on
Form 8-A. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
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Item 2. Exhibits
--------
Exhibit No. Exhibit
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99.1 Rights Agreement, dated as of May 7, 1999, between ACE
Limited and The Bank of New York, as Rights Agent, which
includes as Exhibit A thereto the Form of Designation,
Preferences and Rights of the Series A Junior
Participating Preference Shares, as Exhibit B thereto the
Form of Right Certificate and as Exhibit C thereto the
Summary of Shareholder Rights Plan.
99.2 Form of Letter to Shareholders of ACE Limited.
99.3 Press Release by ACE Limited, dated May 7, 1999.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized.
ACE LIMITED
Date: May 7, 1999 By: /s/ Christopher Z. Marshall
-------------------------------------
Name: Christopher Z. Marshall
Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Exhibit Page
- ----------- ------- ----
99.1 Rights Agreement, dated as of May 7, 1999, between
ACE Limited and The Bank of New York, as Rights Agent,
which includes as Exhibit A thereto the Form of
Designation, Preferences and Rights of the Series A
Junior Participating Preference Shares, as Exhibit B
thereto the Form of Right Certificate and as Exhibit C
thereto the Summary of Shareholder Rights
Plan. 9
99.2 Form of Letter to Shareholders of ACE Limited. 65
99.3 Press Release by ACE Limited, dated May 7, 1999. 66
-8-
===============================================================================
RIGHTS AGREEMENT
between
ACE LIMITED
and
THE BANK OF NEW YORK
Rights Agent
Dated as of May 7, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................5
Section 3. Issuance of Right Certificates...................................6
Section 4. Form of Right Certificates.......................................8
Section 5. Countersignature and Registration................................9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...............................................9
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights.......................................................10
Section 8. Cancellation of Right Certificates..............................12
Section 9. Availability of Preference Shares...............................13
Section 10. Preference Shares Record Date...................................13
Section 11. Adjustment of Exercise Price, Number of Shares or Number
of Rights.......................................................14
Section 12. Certificate of Adjusted Exercise Price or Number
of Shares.......................................................21
Section 13. Consolidation, Merger, Amalgamation or Sale or Transfer of
Assets or Earning Power.........................................22
Section 14. Fractional Rights and Fractional Shares.........................24
Section 15. Rights of Action................................................25
Section 16. Agreement of Right Holders......................................26
Section 17. Right Certificate Holder Not Deemed a Shareholder...............26
Section 18. Concerning the Rights Agent.....................................27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......27
Section 20. Duties of Rights Agent..........................................28
Section 21. Change of Rights Agent..........................................30
Section 22. Issuance of New Right Certificates..............................31
Section 23. Redemption......................................................32
Section 24. Exchange........................................................33
Section 25. Notice of Certain Events........................................34
Section 26. Notices.........................................................35
Section 27. Supplements and Amendments......................................35
Section 28. Successors......................................................36
Section 29. Benefits of this Agreement......................................36
Section 30. Severability....................................................36
Section 31. Governing Law...................................................36
Section 32. Counterparts....................................................36
Section 33. Descriptive Headings............................................37
Section 34. Determinations and Actions by the Board of Directors............37
Exhibit A Form of Certificate of Designation, Preferences and Rights of the
Preference Shares
Exhibit B Form of Right Certificate
Exhibit C Summary of Shareholder Rights Plan
ii
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RIGHTS AGREEMENT
----------------
Rights Agreement, dated as of May 7, 1999 (this "Agreement"),
between ACE Limited, a Cayman Islands company (the "Company"), and The Bank
of New York, a New York banking corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one Preference Share purchase right (a "Right") for
each Ordinary Share (as hereinafter defined) of the Company outstanding as
of the close of business on June 1, 1999 (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a Preference Share
(as hereinafter defined), upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of
one Right with respect to each Ordinary Share that shall become outstanding
between the Record Date and the Expiration Date (as such term is
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more
of the Ordinary Shares of the Company then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary (as such term is hereinafter
defined) of the Company, or (iii) any employee benefit plan of the Company
or of any Subsidiary of the Company or any Person holding Ordinary Shares
for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of
(i) an acquisition of Ordinary Shares by the Company which, by reducing the
number of Ordinary Shares outstanding, increases the proportionate number
of Ordinary Shares beneficially owned by such Person to 15% or more of the
Ordinary Shares of the Company then outstanding, or (ii) the acquisition by
such Person of newly-issued Ordinary Shares directly from the Company (it
being understood that a purchase from an underwriter or other intermediary
is not deemed for purposes hereof to be a purchase directly from the
Company); provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the Ordinary Shares of the Company then outstanding
by reason of share purchases by the Company or the receipt of newly-issued
Ordinary Shares directly from the Company and shall, after such share
purchases or direct issuance by the Company, become the Beneficial Owner of
any additional Ordinary Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person"; and provided, further, that any
transferee from such Person who becomes the Beneficial Owner of 15% or more
of the Ordinary Shares of the Company then outstanding shall nevertheless
be deemed to be an "Acquiring Person". Notwithstanding the foregoing, if
the Board of Directors of the
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Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph, has become such inadvertently, and such Person divests as
promptly as practicable (and in any event within ten Business Days after
notification by the Company) a sufficient number of Ordinary Shares so that
such Person would no longer be an Acquiring Person, as defined pursuant to
the foregoing provisions of this paragraph, then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to have "beneficial ownership" of or "beneficially own" any
securities:
(a) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (i) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether written or
oral (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities, but only to the extent such securities are held for a period
consistent with such a bona fide public offering), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, (A)
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event (as such term is hereinafter defined) or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3(a) hereof ("Original Rights") or pursuant to
Section 11(i) or Section 22 hereof in connection with an adjustment made
with respect to Original Rights; (ii) the sole or shared right to vote or
dispose of (including any such right pursuant to any agreement, arrangement
or understanding, whether written or oral); provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or (iii) "beneficial ownership" (as determined pursuant to Rule
13d-3 (or any successor rule) of the General Rules and Regulations under
the Exchange Act); or
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(c) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding, whether written or oral (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the
proviso to clause (ii) of subparagraph (b) of this definition) or disposing
of any securities of the Company.
(d) which are directly, indirectly or constructively owned by such
Person or any of such Person's Affiliates or Associates, within the meaning
of Section 958 of the U.S.
Internal Revenue Code of 1986, as amended.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company,
shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, any "clearing agency", as defined in Section
3(a)(23)(A) of the Exchange Act, which is holding securities solely in its
capacity as a clearing agency, shall not be deemed to be the Beneficial
Owner of such securities.
"Board of Directors" and "Board of Directors of the Company" each
shall mean the members of the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.
"close of business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
"Company" shall have the meaning set forth in the preamble hereto.
"current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
"Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
"Dollars" or "$" shall mean U.S. dollars.
"equivalent Preference Shares" shall have the meaning set forth in
Section 11(b) hereof.
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"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934,
as amended.
"Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
"Exercise Price" shall have the meaning set forth in Section 4(a)
hereof.
"Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
"Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
"Nasdaq" shall have the meaning set forth in Section 11(d)(i) hereof.
"NYSE" shall have the meaning set forth in Section 11(d)(i) hereof.
"Ordinary Shares" when used with reference to the Company shall
mean the Ordinary Shares, par value $0.041666667 per share (as such shares
may be constituted or designated, or as such par value may be changed, from
time to time during the term of this Agreement), of the Company. "Ordinary
Shares" when used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest voting power
of such other Person or the equity securities or other equity interest
having power to control or direct the management of such other Person.
"Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include
any successor (by merger, amalgamation or otherwise) of such entity.
"Preference Shares" shall mean Series A Junior Participating
Preference Shares, par value $1.00 per share, of the Company having the
rights, preferences and limitations set forth in the Form of Certificate of
Designation, Preferences and Rights of the Preference Shares attached to
this Agreement as Exhibit A.
"Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
"Record Date" shall have the meaning set forth in the preamble hereto.
"Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
"Right" shall have the meaning set forth in the preamble hereto.
"Rights Agent" shall have the meaning set forth in the preamble hereto.
"Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.
"Securities Act" shall mean the U.S. Securities Act of 1933, as
amended.
"Shareholder" shall mean a member of the Company.
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"Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
"Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
"Summary of Shareholder Rights Plan" shall have the meaning set
forth in Section 3(b) hereof.
"Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
"Triggering Event" shall mean any event described in Section
11(a)(ii) or Section 13(a) hereof.
"U.S." shall mean the United States of America.
Any determination or interpretation required in connection with
any of the definitions contained in this Section 1 shall be made by the
Board of Directors of the Company in their good faith judgment, which
determination shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable upon ten (10) days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of
any such co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth
day after the Shares Acquisition Date or (ii) the close of business on the
fifteenth Business Day (or such later date as may be determined by action
of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company or any entity holding
Ordinary Shares for or pursuant to the terms of any such plan) of, or of
the first public announcement of the intention of any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any entity holding
Ordinary Shares for or pursuant to the terms of any such plan) to commence,
a tender or exchange offer the consummation of which would result in any
Person becoming the Beneficial Owner of Ordinary Shares aggregating 15% or
more of the then outstanding Ordinary Shares (including any such date which
is after the date of this Agreement and
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prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Ordinary Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying Ordinary Shares (including a
transfer to the Company). The Company shall give the Rights Agent prompt
written notice of the Distribution Date.
As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will, after receipt of written
notice of the Distribution Date from the Company, countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, send, at the expense of the Company) by first-class, insured,
postage-prepaid mail, to each record holder of Ordinary Shares as of the
close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a "Right Certificate"), evidencing an
aggregate number of Rights equal to one Right for each Ordinary Share so
held. As of the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Shareholder Rights Plan, in
substantially the form of Exhibit C hereto (the "Summary of Shareholder
Rights Plan"), to each record holder of Ordinary Shares as of the close of
business on the Record Date (other than any Acquiring Person or any
Associate or Affiliate of any Acquiring Person), at the address of such
holder shown on the records of the Company. With respect to certificates
for Ordinary Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof, together with the Summary
of Shareholder Rights Plan, and registered holders of Ordinary Shares shall
also be the registered holders of the associated Rights. Until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the transfer of any certificate for Ordinary Shares
outstanding on the Record Date, with or without a copy of the Summary of
Shareholder Rights Plan, shall also constitute the transfer of the Rights
associated with the Ordinary Shares represented thereby.
(c) Rights shall be issued in respect of all Ordinary Shares which
are issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date.
Certificates representing both Ordinary Shares and Rights in accordance
with this Section 3 which are executed and delivered (whether the Ordinary
Shares represented thereby are originally issued, delivered from the
Company's treasury or are presented for transfer) by the Company
(including, without limitation, certificates representing reacquired
Ordinary Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them a legend substantially
equivalent to the following:
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This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between ACE
Limited (the "Company") and The Bank of New York, dated as of May
7, 1999 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person
or by any subsequent holder, shall become null and void.
Until the Distribution Date, the Rights associated with the Ordinary Shares
shall be evidenced by the certificates representing the associated Ordinary
Shares alone, and the transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Ordinary Shares
represented thereby. If the Company purchases or acquires any Ordinary
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Ordinary Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated
with the Ordinary Shares which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preference Shares and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation promulgated pursuant thereto or with any rule or
regulation of any stock exchange or quotation service on which the Rights
may from time to time be listed, or to conform to usage. The Right
Certificates shall be in a machine printable format and in a form
reasonably satisfactory to the Rights Agent. Subject to the provisions of
Sections 11, 13 and 24 hereof, the Right Certificates shall show the date
of countersignature and shall entitle the holders thereof to purchase such
number of one one-thousandths of a Preference Share as shall be set forth
therein at the price per one one-thousandth of a Preference Share set forth
therein (the "Exercise Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Exercise Price thereof
shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or
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Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes an Acquiring Person, or (iii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding, whether written or
oral, regarding the transferred Rights or (B) a transfer which the Board of
Directors otherwise concludes in good faith is part of a plan, arrangement
or understanding, whether written or oral, which has as a primary purpose
or effect avoidance of Section 7(e) hereof, and any Right Certificate
issued pursuant to Section 6 or Section 11 hereof upon the transfer,
exchange, replacement or adjustment of any other Right Certificate referred
to in this sentence, shall contain (to the extent feasible and otherwise
reasonably identifiable as such) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented hereby may become
void in the circumstances specified in Section 7(e) of such
Agreement.
The Company shall instruct the Rights Agent in writing of the Rights which
should be so legended and shall supply the Rights Agent with such legended
Right Certificates. The provisions of Section 7(e) shall apply whether or
not any Right Certificate actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, any Vice-Chairman, the President, the Chief Financial Officer,
the General Counsel or any executive officer designated by the President,
either manually or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement
any such person was not such an officer.
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Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), 14 and 24
hereof, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Preference Shares (or, following a
Triggering Event, Ordinary Shares, other securities or property, as the
case may be) as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate contained in the
form of assignment on the reverse side of such Right Certificate and the
Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall, subject to Sections 4 and 7 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment by the holders of Right Certificates of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate, if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
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<PAGE>
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions
on exercisability set forth in Sections 11(a)(iii), 23(a) and 24(b) hereof)
in whole or in part at any time after the Distribution Date upon surrender
of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the
Exercise Price with respect to each surrendered Right for the total number
of Preference Shares (or other securities or property, as the case may be)
as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on June 1, 2009 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date") or (iii) the time at which all exercisable Rights
are exchanged by the Company as provided in Section 24 hereof (such
earliest date being herein referred to as the "Expiration Date").
(b) The Exercise Price for each one one-thousandth of a Preference
Share pursuant to the exercise of a Right shall initially be $150, shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the
reverse side of the Right Certificate duly executed, accompanied by payment
of the Exercise Price for the shares (or other securities or property, as
the case may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check, cashier's check or
money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the
Preference Shares (or make available, if the Rights Agent is the transfer
agent of the Preference Shares) certificates for the number of Preference
Shares to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the Preference Shares issuable upon exercise
of the Rights with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-thousandths
of a Preference Share as are to be purchased (in which case certificates
for the Preference Shares represented by such receipts shall be deposited
by the transfer agent therefor with the depositary agent) and the Company
shall direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash
referred to in clause (ii) above to or upon the order of the registered
holder of such Right Certificate. If the Company is obligated to issue
other securities (including Ordinary Shares) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the
Company
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<PAGE>
will make all arrangements necessary so that such other securities, cash
and/or property are available for distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes an Acquiring Person, or (iii) a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming an Acquiring Person and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding, whether written or
oral, regarding the transferred Rights or (B) a transfer which the Board of
Directors otherwise concludes in good faith is part of a plan, arrangement
or understanding (whether written or oral) which has as a primary purpose
or effect the avoidance of this Section 7(e), shall become null and void
without any further action, and any holder of such Rights shall thereupon
have no rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise, from and after the occurrence of
a Triggering Event. The Company shall use all reasonable efforts to ensure
that the provisions of Section 4(b) hereof and this Section 7(e) are
complied with, but shall have no liability to any holder of Rights with
respect to any determinations regarding an Acquiring Person or its
Affiliates, Associates or transferees hereunder or any failure to make any
such determination. The Rights Agent will endeavor to comply with the
provisions hereof to the extent it has received instructions from the
Company concerning such matters.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless the certificate
contained in the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise shall have been
completed and signed by the registered holder thereof and the Company shall
have been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner), Affiliates or Associates of
such Beneficial Owner or holder, or any other Person with which such holder
or any of such holder's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities of the Company as
the Company shall reasonably request.
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(g) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preference
Shares (and, following the occurrence of a Triggering Event, Ordinary
Shares and/or other securities) or any Preference Shares (and, following
the occurrence of a Triggering Event, Ordinary Shares and/or other
securities) held in its treasury (to the extent applicable law allows
shares to be held in treasury), the number of Preference Shares (and,
following the occurrence of a Triggering Event, Ordinary Shares and/or
other securities) that will be sufficient to permit the exercise in full of
all outstanding Rights.
(h) Notwithstanding any statement to the contrary contained in
this Agreement or in any Right Certificate, if either the Distribution Date
or the Shares Acquisition Date shall occur prior to the Record Date, the
provisions of this Agreement, including (without limitation) Sections 3 and
11(a)(ii), shall be applicable to the Rights upon their issuance to the
same extent such provisions would have been applicable if the Record Date
were the date of this Agreement.
Section 8. Cancellation of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company.
Section 9. Availability of Preference Shares. The Company
covenants and agrees that it will take all such action as may be necessary
to ensure that all Preference Shares (and, following the occurrence of a
Triggering Event, Ordinary Shares and/or other securities) delivered upon
exercise of Rights shall, at the time of entry of issuance in the share
register and delivery of the certificates for such Preference Shares (and,
following the occurrence of a Triggering Event, Ordinary Shares and/or
other securities), subject to payment of the Exercise Price, be duly and
validly authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preference Shares (or Ordinary Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts for the Preference Shares (or Ordinary Shares and/or
other securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or to deliver any certificates or depositary
receipts for Preference Shares (or Ordinary Shares and/or other securities,
as the case may be) upon the exercise of any
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Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until
it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preference Shares Record Date. Each person in whose
name any certificate for Preference Shares (or Ordinary Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the
shares or securities represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Exercise Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preference Shares (or
Ordinary Shares and/or other securities, as the case may be) transfer
books/share register of the Company are closed, such person shall be deemed
to have become the record holder of such shares or securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preference Shares (or Ordinary Shares and/or other securities, as the case
may be) transfer books/share register of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preference Shares (or
Ordinary Shares and/or other securities, as the case may be) for which the
Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) If the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preference Shares payable in
Preference Shares, (B) subdivide the outstanding Preference Shares, (C)
combine the outstanding Preference Shares into a smaller number of
Preference Shares or (D) issue any shares of its capital stock in a
reclassification of the Preference Shares (including any such
reclassification in connection with a consolidation, merger or amalgamation
in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Exercise Price in effect immediately prior to the record date for such
dividend or the effective date of such subdivision, combination or
reclassification, as applicable, and the number and kind of shares of
capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which he
would have owned upon such exercise and been entitled to receive as a
result of such dividend, subdivision, combination or reclassification if
such Right had been exercised immediately prior to such date and at a time
when the Preference Shares transfer books of the Company were open;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital
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<PAGE>
stock of the Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, if any
Person becomes an Acquiring Person, each holder of a Right, except as
provided below and in Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then current
Exercise Price multiplied by the number of one one-thousandths of a
Preference Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preference Shares, such number
of Ordinary Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Exercise Price by the number of one
one-thousandths of a Preference Share for which a Right is then exercisable
and (y) dividing that product by 50% of the then current per share market
price of the Company's Ordinary Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event. If any Person
shall become an Acquiring Person and the Rights shall then be outstanding,
the Company shall not take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.
(iii) In lieu of issuing Ordinary Shares of the Company
in accordance with Section 11(a)(ii) hereof, the Company may, in the sole
discretion of the Board of Directors, elect to, and, if the Board of
Directors has not exercised the exchange right contained in Section 24
hereof and there are not sufficient issued but not outstanding and
authorized but unissued Ordinary Shares to permit the exercise in full of
the Rights in accordance with Section 11(a)(ii), the Company shall, take
all such action as may be necessary to authorize, issue or pay, upon the
exercise of Rights, cash (including by way of a reduction of the Exercise
Price), property, or other securities or any combination of the foregoing,
having an aggregate value equal to the value of the Ordinary Shares of the
Company which otherwise would have been issuable pursuant to Section
11(a)(ii), which aggregate value shall be determined by a majority of the
Board of Directors. For purposes of the preceding sentence, the value of
the Ordinary Shares shall be determined pursuant to Section 11(d) hereof
and the value of any equity securities which a majority of the Board of
Directors determines to be an "ordinary share equivalent" (including the
Preference Shares, in such ratio as the Board of Directors shall determine)
shall be deemed to have the same value as the Ordinary Shares. Any such
election by the Board of Directors must be made and publicly announced
within 60 days following the date on which the event described in Section
11(a)(ii) shall have occurred. Following the occurrence of the event
described in Section 11(a)(ii), a majority of the Board of Directors then
in office may suspend the exercisability of the Rights for a period of up
to 60 days following the date on which the event described in Section
11(a)(ii) shall have occurred to the extent that such directors have not
determined whether to exercise the Company's right of election under this
Section 11(a)(iii). In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preference Shares
entitling them (for a period expiring within
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<PAGE>
45 calendar days after such record date) to subscribe for or purchase
Preference Shares (or shares having the same rights, privileges and
preferences as the Preference Shares ("equivalent Preference Shares")) or
securities convertible into Preference Shares or equivalent Preference
Shares at a price per Preference Share or equivalent Preference Share (or
having a conversion price per share, in the case of a security convertible
into Preference Shares or equivalent Preference Shares) less than the then
current per share market price of the Preference Shares (as defined in
Section 11(d)) on such record date, the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preference Shares outstanding on
such record date plus the number of Preference Shares which the aggregate
offering price of the total number of Preference Shares and/or equivalent
Preference Shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at
such current market price and the denominator of which shall be the number
of Preference Shares outstanding on such record date plus the number of
additional Preference Shares and/or equivalent Preference Shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent. Preference Shares owned by
or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and if such rights,
options or warrants are not so issued, the Exercise Price shall be adjusted
to be the Exercise Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preference Shares (including any such
distribution made in connection with a consolidation, merger or
amalgamation in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preference Shares) or
subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be
the then current per share market price of the Preference Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preference Share and the denominator
of which shall be such current per share market price of the Preference
Shares; provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock
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of the Company to be issued upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed; and if
such distribution is not so made, the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
under Section 11(a)(iii) hereof, the "current per share market price" of
any security (a "Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for the purpose of
any computation under Section 11(a)(iii) hereof, the "current per share
market price" of a Security on any date shall be deemed to be the average
of the daily closing prices per share of such Security for thirty (30)
consecutive Trading Days immediately following such date; provided,
however, that if the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares (other
than the Rights), or (B) any subdivision, combination or reclassification
of such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the "current per share market price" shall be appropriately adjusted
to reflect the current market price per share equivalent (ex-dividend) of
such Security. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on The New York Stock
Exchange, Inc. ("NYSE") or, if the Security is not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by any automated quotation system operated by The
Nasdaq Stock Market, Inc. ("Nasdaq") or such other system then in use, or,
if on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the
Board of Directors of the Company. If on any such date no market maker is
making a market in the Security, the fair value of such Security on such
date (as determined in good faith by the Board of Directors of the Company)
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preference Shares shall be
determined in accordance with the method set forth in Section 11(d)(i). If
the Preference Shares are not publicly traded, the "current per share
market price" of the Preference Shares shall be conclusively deemed to be
the
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current per share market price of the Ordinary Shares of the Company as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the
date hereof), multiplied by one thousand. If neither the Ordinary Shares of
the Company nor the Preference Shares are publicly held or so listed or
traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-millionth of
a Preference Share or one ten-thousandth of any other share or security, as
the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise
any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other
than Preference Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preference Shares contained in this
Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect
to the Preference Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths
of a Preference Share purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of one one-thousandths of a Preference Share (calculated to the
nearest ten- millionth of a Preference Share) obtained by (i) multiplying
(x) the number of one- thousandths of a share covered by a Right
immediately prior to this adjustment by (y) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
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(i) The Company may elect on or after the date of any adjustment
of the Exercise Price to adjust the number of Rights, in substitution for
any adjustment in the number of one-thousandths of a Preference Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one-thousandths of a Preference Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by dividing
the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment
of the Exercise Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Exercise Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights
to which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price
or the number of one-thousandths of a Preference Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Exercise Price and the number of
one-thousandths of a Preference Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below one one-thousandth of the then par value,
if any, of the Preference Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preference Shares at such adjusted
Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date of the Preference Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the
Preference Shares and other capital stock or securities of the Company, if
any, issuable
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upon such exercise on the basis of the Exercise Price in effect prior to
such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the
Preference Shares, issuance wholly for cash of any Preference Shares at
less than the current market price, issuance wholly for cash of Preference
Shares or securities which by their terms are convertible into or
exchangeable for Preference Shares, dividends on Preference Shares payable
in Preference Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of
its Preference Shares shall not be taxable to such Shareholders.
(n) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 and 27 hereof,
take (nor will it permit any of its Subsidiaries to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
(o) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) combine, consolidate or amalgamate
with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(n)), or (iii) sell or transfer (or permit any of
its Subsidiaries to sell or transfer), in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11 (n)) if (x) at the
time of or immediately after such combination, consolidation, amalgamation,
merger or sale there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
combination, consolidation, amalgamation, merger or sale, the stockholders
of the Person who constitutes, or would constitute, the "Principal Party"
for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates and
Associates.
(p) If at any time after the date of this Agreement and prior to
the Distribution Date, the Company shall (i) declare or pay any dividend on
the Ordinary Shares payable in Ordinary Shares or (ii) effect a
subdivision, combination or consolidation of the Ordinary Shares (by
reclassification or otherwise than by payment of dividends in Ordinary
Shares) into a greater or lesser number of Ordinary Shares, then in any
such case (i) the number of one-thousandths of a Preference Share
purchasable after such event upon proper
19
<PAGE>
exercise of each Right shall be determined by multiplying the number of
one-thousandths of a Preference Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Ordinary
Shares outstanding immediately before such event and the denominator of
which is the number of Ordinary Shares outstanding immediately after such
event, and (ii) each Ordinary Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
Ordinary Share outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(p) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
(q) So long as the shares issuable upon the exercise of the Rights
may be listed on any national securities exchange or quotation service, the
Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange or quotation service upon official notice of
issuance upon such exercise.
(r) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Triggering Event, a
registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date. The Company
will also take such action with respect thereto as may be appropriate under
the blue sky laws of the various states. The Company may temporarily
suspend, for a period of time not to exceed 90 days, the exercisability of
the Rights in order to prepare and file such registration statement or in
order to comply with such blue sky laws. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended.
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Ordinary Shares or the Preference Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and may assume that no adjustment has been made unless and until
it shall have received such certificate.
Section 13. Consolidation, Merger, Amalgamation or Sale or Transfer
of Assets or Earning Power.
(a) If after the Shares Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge or amalgamate with and
into, any other Person, (y) any Person shall consolidate with the Company,
or merge or amalgamate with and into the
20
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Company and the Company shall be the continuing or surviving corporation of
such merger or amalgamation and, in connection with such merger or
amalgamation, all or part of the Ordinary Shares shall be changed into or
exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons other than the
Company or one or more of its wholly-owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (i) each holder of a
Right (except as otherwise provided herein) shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the then current
Exercise Price multiplied by the number of one-thousandths of a Preference
Share for which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of Preference Shares, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable
Ordinary Shares of the Principal Party (as hereinafter defined), free and
clear of all liens, rights of call or first refusal, encumbrances or other
adverse claims, as shall equal the result obtained by (A) multiplying the
then current Exercise Price by the number of one- thousandths of a
Preference Share for which a Right is then exercisable (or, if such Right
is not then exercisable for a number of one-thousandths of a Preference
Share, the number of such fractional shares for which it was exercisable
immediately prior to an event described under Section 11(a)(ii) hereof) and
dividing that product by (B) 50% of the then current per share market price
of the Ordinary Shares of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation,
merger, amalgamation, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, amalgamation, sale or transfer, or otherwise, all
the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Ordinary
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
its Ordinary Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which Ordinary Shares of the Company are converted
in such merger, amalgamation or consolidation, and if no securities are so
issued, the Person that is the continuing or surviving entity of such
merger, amalgamation or consolidation (including the Company if
applicable); and
(ii) in the case of any transaction described in (z) of
the first sentence in Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
21
<PAGE>
provided, however, that in any such case described in clauses (b)(i) and
(b)(ii): (1) if the Ordinary Shares of such Person are not at such time and
have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Ordinary Shares of which are and
have been so registered, "Principal Party" shall refer to such other
Person; (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Ordinary Shares of two or more of which are and
have been so registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Ordinary Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth in (1) and
(2) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all
of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such consolidation,
merger, amalgamation, sale or transfer unless the Principal Party shall
have sufficient Ordinary Shares authorized to permit the full exercise of
the Rights and prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section
13 and further providing that, as soon as practicable after the date of any
consolidation, merger, amalgamation or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on Form
10 under the Exchange Act; and
(iii) take such actions as may be necessary or
appropriate under the blue sky laws of the various states. The provisions
of this Section 13 shall similarly apply to successive mergers,
amalgamations or consolidations or sales or other transfers. If one of the
transactions described in Section 13(a) hereof shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii)
hereof, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) In no event shall the Rights Agent have any liability in respect
of any such Principal Party transactions, including, without limitation, the
propriety thereof. The Rights
22
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Agent may rely and be fully protected in relying upon a certificate of the
Company stating that the provisions of this Section 13 have been fulfilled.
Notwithstanding anything in this Agreement to the contrary, the prior
written consent of the Rights Agent must be obtained in connection with any
supplemental agreement which alters the rights or duties of the Rights
Agent.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there may be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on NYSE or, if the Rights are not listed or admitted
to trading on NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
Preference Shares (other than fractions which are integral multiples of one
one-thousandth of a Preference Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preference Shares (other
than fractions which are integral multiples of one one-thousandth of a
Preference Share). Fractions of Preference Shares in integral multiples of
one one-thousandth of a Preference Share may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preference Shares represented
by such depositary receipts. In lieu of fractional Preference Shares that
are not integral multiples of one one-thousandth of a Preference Share, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-thousandth of a
Preference Share. For the purposes of this Section 14(b), the current
market value of one
23
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one-thousandth of a Preference Share shall be one one-thousandth of the
closing price of a Preference Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of Ordinary Shares upon exercise
of the Rights or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of fractional Ordinary Shares, the Company may pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one Ordinary Share. For purposes of this
Section 14(c), the current market value of one Ordinary Share shall be the
closing price of one Ordinary Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Ordinary Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Ordinary Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Ordinary Shares),
may, in his own behalf and for his own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company to enforce,
or otherwise act in respect of, his right to exercise the Rights evidenced
by such Right Certificate in the manner provided in such Right Certificate
and in this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Ordinary Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with
appropriate forms and certificates fully executed;
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(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Ordinary Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Ordinary Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preference
Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights
of a Shareholder or any right to vote for the election of directors or upon
any matter submitted to Shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting Shareholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent such compensation as shall be agreed to in writing
between the Company and the Rights Agent for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of
this Agreement, including, without limitation, the costs and expenses of
defending against any claim (whether asserted by the Company, a holder of
Rights, or any other Person) of liability in the premises, including
reasonable attorney's fees and expenses.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this
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Agreement in reliance upon any Right Certificate or certificate for the
Preference Shares or Ordinary Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, opinion, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it
to be genuine and to be signed and executed by the proper person or
persons, or otherwise upon the advice of counsel as set forth in Section 20
hereof.
The provisions of this Section 18 shall survive the expiration of
the Rights and the termination of this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation or other entity into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation or other entity resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a party, or any corporation or other entity succeeding to all or
substantially all the stock transfer or corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto;
provided, that such corporation or other entity would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of
the predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations expressly imposed by this Agreement, and no
implied duties or obligations shall be read into this Agreement against the
Rights Agent upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel of its
selection (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and
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<PAGE>
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman
of the Board, any Vice-Chairman, the President, the Chief Financial
Officer, the General Counsel, any executive officer designated by the
President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for, and shall indemnify and hold harmless the
Company from and against, all losses, liabilities, costs, damages and
expenses (including attorneys' fees) arising out of, or in connection with,
the Rights Agent's gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 7(e) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section 3,
11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after the Rights Agent's actual
receipt of a certificate furnished pursuant to Section 12 describing a
change or adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of
any Preference Shares or Ordinary Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preference Shares
or Ordinary Shares will, when issued, be validly authorized and issued,
fully paid and nonassessable, nor shall the Rights Agent be responsible for
the legality of the terms hereof in its capacity as an administrative
agent.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other
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<PAGE>
acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, any Vice-Chairman, the President, the
Chief Financial Officer, the General Counsel, any executive officer
designated by the President, the Treasurer or the Secretary of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any
such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any officer
of the Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking
any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or its Subsidiaries or become pecuniarily
interested in any transaction in which the Company or its Subsidiaries may
be interested, or contract with or lend money to the Company or its
Subsidiaries or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or its Subsidiaries
or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting
with the Company.
(k) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its
28
<PAGE>
duties hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(l) In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action
taken or omitted by it in connection with its administration of this
Agreement if such acts or omissions are in reliance upon (i) the proper
execution of the certification concerning beneficial ownership appended to
the form of assignment and the form of election to purchase attached hereto
unless the Rights Agent shall have actual knowledge that, as executed, such
certification is untrue, or (ii) the non-execution of such certification
including, without limitation, any refusal to honor any otherwise
permissible assignment or election by reason of such non-execution.
(m) The Company agrees to give the Rights Agent prompt written
notice of any event or ownership of which the Company has knowledge which
would prohibit the exercise or transfer of the Right Certificates.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company. The
Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation, bank
or other entity organized and doing business under the laws of the United
States or of any other state of the United States, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and
which, at the time of its appointment as Rights Agent, (a) has a combined
capital and surplus of at least $50,000,000 or (b) is an affiliate of an
entity having a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Ordinary Shares or Preference Shares, and mail a
notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or
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<PAGE>
any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Exercise Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Ordinary Shares
following the Distribution Date and prior to the redemption or expiration
of the Rights, the Company (a) shall, with respect to Ordinary Shares so
issued or sold pursuant to the exercise of options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that
(i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The Company may, at its option, pay the Redemption
Price in cash, Ordinary Shares (based on the current per share market price
of the Ordinary Shares at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors. The redemption
of the Rights by the Board of Directors may be made effective at such time
on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. If redemption of the Rights is to be
effective as of a future date, the Rights shall continue to be exercisable,
subject to Section 7 hereof, until the effective date of the redemption,
provided that nothing contained herein shall preclude the Board of
Directors from subsequently causing the Rights to be redeemed at a date
earlier than the scheduled effective date of the redemption.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at the effective time of
such redemption established by the Board of Directors of the Company
pursuant to paragraph (a) of this Section 23), and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be
to receive
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<PAGE>
the Redemption Price. The Company shall promptly give public notice, with
simultaneous written notice to the Rights Agent, of any such redemption;
provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the redemption of the
Rights or, if later, the effectiveness of the redemption of the Rights
pursuant to the last sentence of paragraph (a), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Ordinary Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. The Company may,
at its option, discharge all of its obligations with respect to the Rights
by (i) issuing a press release announcing the manner of redemption of the
Rights, (ii) depositing with a bank or trust company having a capital and
surplus of at least $100,000,000, funds necessary for such redemption, in
trust, to be applied to the redemption of the Rights so called for
redemption and (iii) arranging for the mailing of the Redemption Price to
the registered holders of the Rights. Upon such action, all outstanding
Right Certificates shall be null and void without further action by the
Company. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23, in Section 24
hereof, or in connection with the purchase of Ordinary Shares prior to the
Distribution Date.
Section 24. Exchange.
(a) The Company may, at its option, at any time after a Triggering
Event, upon resolution of a majority of the Board of Directors, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Ordinary Shares at an exchange ratio of one Ordinary Share
per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being the "Exchange Ratio"). Notwithstanding the foregoing,
the Company shall not effect such an exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Ordinary Shares for or pursuant to the terms of any such
plan) becomes the Beneficial Owner of 50% or more of the then outstanding
Ordinary Shares.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of Ordinary
Shares equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice, with
simultaneous written notice to the Rights Agent, of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the
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<PAGE>
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange of the Ordinary Shares for Rights will be effected and,
in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preference Shares (or equivalent Preference
Shares, as such term is defined in Section 11(b) hereof) for Ordinary
Shares exchangeable for Rights, at the initial rate of one-thousandth of a
Preference Share (or equivalent Preference Share) for each Ordinary Share,
as appropriately adjusted to reflect adjustments in the Preference Shares
pursuant to the terms thereof, so that the fraction of a Preference Share
delivered in lieu of each Ordinary Share shall have the same voting rights
as one Ordinary Share.
(d) If there shall not be sufficient Ordinary Shares or Preference
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional Ordinary Shares or Preference Shares for issuance upon exchange
of the Rights.
(e) The Company shall not be required to issue fractions of
Ordinary Shares or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of such fractional Ordinary Shares, the Company
shall pay to the registered holders of the Right Certificates with regard
to which such fractional Ordinary Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a
whole Ordinary Share. For the purposes of this paragraph (e), the current
market value of a whole Ordinary Share shall be the closing price of a
Ordinary Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to
the holders of its Preference Shares or to make any other distribution to
the holders of its Preference Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Preference Shares rights or
warrants to subscribe for or to purchase any additional Preference Shares
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Preference Shares (other than a
reclassification involving only the subdivision of outstanding Preference
Shares), (iv) to effect any consolidation, merger or amalgamation into or
with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a
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<PAGE>
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the
Ordinary Shares payable in Ordinary Shares or to effect a subdivision,
combination or consolidation of the Ordinary Shares (by reclassification or
otherwise than by payment of dividends in Ordinary Shares), then, in each
such case, the Company shall give to each holder of a Right Certificate and
to the Rights Agent, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger, amalgamation, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Ordinary Shares and/or
Preference Shares, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of the
Preference Shares for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Ordinary Shares and/or Preference Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
ACE Limited
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08, Bermuda
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Stock Transfer Administration
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<PAGE>
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company. Notices or demands sent by mail shall be
deemed given or made three Business Days after the date on which they are
sent.
Section 27. Supplements and Amendments. Subject to the penultimate
sentence of this Section 27, the Company may from time to time, and the
Rights Agent shall, if so directed by the Company, supplement or amend any
provision of this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to amend, supplement, add or delete any
provision with respect to the Rights (including, without limitation,
amendments or supplements increasing the Exercise Price or extending the
Final Maturity Date) which the Company may deem necessary or desirable, any
such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent; provided, however, that from and after such
time as any Person becomes an Acquiring Person, this Agreement shall not be
amended in any manner which would adversely affect the interests of the
holders of Rights (other than an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person). Notwithstanding anything contained in
this Agreement to the contrary, no supplement or amendment shall be made
which (A) changes the Redemption Price or (B) changes the number of one
one-thousandths of a Preference Share for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Ordinary
Shares. Upon the delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section, the Rights Agent shall execute
such supplement or amendment. Notwithstanding any other provision hereof,
the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 27 which alters the Rights Agent's
rights or duties.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Ordinary Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Ordinary Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
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<PAGE>
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Determinations and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors or the Company or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including
a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, interpretations and determinations
(including, for purpose of clause (ii) below, all omissions with respect to
the foregoing) which are done or made by the Board of Directors in good
faith, shall (i) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Right Certificates and all other parties,
and (ii) not subject the Board of Directors to any liability to the holders
of the Right Certificates.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above written.
ACE LIMITED
By: /s/ Christopher Z. Marshall
------------------------------
Name: Christopher Z. Marshall
Title: Chief Financial Officer
THE BANK OF NEW YORK, as Rights Agent
By: /s/ John I. Sivertsen
---------------------------
Name: John I. Sivertsen
Title: Vice President
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Exhibit A
---------
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A JUNIOR PARTICIPATING PREFERENCE SHARES
OF
ACE LIMITED
Pursuant to Article 4(a)(II) of the Articles of Association of
the Company (the "Articles"), the Series A Junior Participating Preference
Shares shall have the designation, preferences and rights, and shall be
subject to the restrictions, as hereinafter appearing:
Section 1. Designation and Number. There shall be a series of
Shares of the Company which shall be designated as "Series A Junior
Participating Preference Shares," par value $1.00 per share (hereinafter
called "Series A Preference Shares"), and the number of shares constituting
such series shall be 500,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors of the Company; provided,
however, that no decrease shall reduce the number of Series A Preference
Shares to a number less than that of the shares then outstanding plus the
number of Series A Preference Shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities
issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any class or series of the Company's shares ranking prior and
superior to the Series A Preference Shares with respect to dividends, the
holders of Series A Preference Shares shall be entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds
legally available for such purpose, quarterly dividends payable in cash to
holders of record on the last business day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of any Series A Preference
Shares or any fractional portion thereof, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 and (b) subject to
the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in Ordinary Shares
(hereinafter defined) or a subdivision of the outstanding Ordinary Shares
(by reclassification or otherwise), declared on the Ordinary Shares, par
value $0.041666667 per share, of the Company (the "Ordinary Shares") since
the immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of
any Series A Preference Shares or any fractional portion thereof. If the
Company shall at any time following May 7, 1999 (i) declare any dividend on
Ordinary Shares payable in Ordinary Shares, (ii) subdivide the outstanding
Ordinary Shares or (iii) combine the outstanding Ordinary Shares into a
smaller number of shares, then in each such case the amount to which
holders of Series A Preference Shares
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<PAGE>
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying each such amount by a
fraction the numerator of which is the number of Ordinary Shares
outstanding immediately after such event and the denominator of which is
the number of Ordinary Shares that were outstanding immediately prior to
such event.
(B) The Company shall declare a dividend or distribution on the
Series A Preference Shares as provided in paragraph (A) above at the time
it declares a dividend or distribution on the Ordinary Shares (other than a
dividend payable in Ordinary Shares).
(C) No dividend or distribution (other than a dividend payable
in Ordinary Shares) shall be paid or payable to the holders of Ordinary
Shares unless, prior thereto, all accrued but unpaid dividends to the date
of such dividend or distribution shall have been paid to the holders of
Series A Preference Shares.
(D) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preference Shares from the Quarterly Dividend Payment
Date next preceding the date of issue of such Series A Preference Shares,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Series A
Preference Shares entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the Series A Preference Shares in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors of the Company may
fix a record date for the determination of holders of Series A Preference
Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of Series A Preference Shares
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each one one-thousandth of a Series A Preference Share shall entitle
the holder thereof to one vote on all matters submitted to a vote of
shareholders of the Company. If the Company shall at any time following May
7, 1999 (i) declare any dividend on Ordinary Shares payable in Ordinary
Shares, (ii) subdivide the outstanding Ordinary Shares or (iii) combine the
outstanding Ordinary Shares into a smaller number of shares, then in each
such case the number of votes per share to which holders of Series A
Preference Shares were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is
the number of Ordinary Shares outstanding immediately after such event and
the denominator of which is the number of Ordinary Shares that were
outstanding immediately prior to such event.
2
<PAGE>
(B) Except as otherwise provided herein, in the Articles or by
law, the holders of Series A Preference Shares and the holders of Ordinary
Shares and any other capital stock of the Company having general voting
rights shall vote together as one class on all matters submitted to a vote
of shareholders of the Company.
(C) (i) Whenever, at any time or times, dividends payable on any
Series A Preference Share or Shares shall be in arrears in an amount equal
to at least six full quarterly dividends (whether or not declared and
whether or not consecutive), the holders of record of the outstanding
Series A Preference Shares shall have the right, together with the holders
of record of the outstanding shares of every other class or series of
shares issued pursuant to Article 4(a)(II) of the Articles (all such other
classes or series, together with the Series A Preference Shares, being
referred to hereinafter as the "Preference Shares"), voting as a single
class regardless of class or series, to elect a total of two directors of
the Company. Such two directors shall be elected initially at an
extraordinary general meeting of shareholders of the Company or at the
Company's next annual general meeting of shareholders, and subsequently at
each annual general meeting of shareholders, as provided below. The term of
office of the two directors so elected shall end on the date of the annual
general meeting of shareholders following such election. At elections for
such directors, the holders of Series A Preference Shares shall be entitled
to cast one vote for each one one-thousandth of a Series A Preference Share
held.
(ii) Upon the vesting of such right of the holders of the
Preference Shares, the maximum authorized number of members of the Board of
Directors of the Company shall automatically be increased by two and the
two vacancies so created shall be filled by vote of the holders of the
outstanding Preference Shares as hereinafter set forth. An extraordinary
general meeting of the shareholders of the Company then entitled to vote
shall be called by the Chairman or the President or the Secretary of the
Company, if requested in writing by the holders of record of not less than
10% of the Preference Shares then outstanding. At such extraordinary
general meeting, or, if no such extraordinary general meeting shall have
been called, then at the next annual general meeting of shareholders, the
holders of the Preference Shares shall elect, voting as above provided, two
directors of the Company to fill the aforesaid vacancies created by the
automatic increase in the number of members of the Board of Directors of
the Company. The term of office of the two directors so elected shall end
on the date of the annual general meeting of shareholders following such
election. At any and all such general meetings for such election, the
holders of a majority of the outstanding Preference Shares shall be
necessary to constitute a quorum for such election, whether present in
person or by proxy, and such two directors shall be elected by the vote of
at least a plurality of shares held by such shareholders present or
represented at the meeting. Any director elected by holders of Preference
Shares pursuant to this Section may be removed at any annual or
extraordinary general meeting of shareholders, by vote of a majority of the
shareholders voting as a class who elected such director, with or without
cause. In case any vacancy shall occur among the directors elected by the
holders of the Preference Shares pursuant to this Section, such vacancy may
be filled by the remaining director so elected, or his successor then in
office, and the director so elected to fill such vacancy shall serve until
the next general meeting of shareholders at which directors are elected.
After the holders of the Preference Shares
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<PAGE>
shall have exercised their right to elect directors in any default period
and during the continuance of such period, the number of directors shall
not be further increased or decreased except by vote of the holders of
Preference Shares as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Preference
Shares.
(iii) The right of the holders of the Preference Shares,
voting separately as a class, to elect two members of the Board of
Directors of the Company as aforesaid shall continue until, and only until,
such time as all arrears in dividends (whether or not declared) on the
Preference Shares shall have been paid or declared and set apart for
payment, at which time such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the event of each and every
subsequent default of the character above-mentioned. Upon any termination
of the right of the holders of the Preference Shares as a class to vote for
directors as herein provided, the term of office of all directors then in
office elected by the holders of Preference Shares pursuant to this Section
shall terminate immediately. Whenever the term of office of the directors
elected by the holders of the Preference Shares pursuant to this Section
shall terminate and the special voting powers vested in the holders of the
Preference Shares pursuant to this Section shall have expired, the maximum
number of members of the Board of Directors of the Company shall be such
number as may be provided for in the Articles, irrespective of any increase
made pursuant to the provisions of this Section.
(D) Except as set forth herein or in the Articles, holders of
Series A Preference Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Ordinary Shares and other capital stock of the Company
as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preference Shares as provided in
Section 2 hereof are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on Series A
Preference Shares outstanding shall have been paid in full, the Company
shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preference
Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preference Shares, except dividends paid ratably on the Series A Preference
Shares and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
4
<PAGE>
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preference Shares, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preference Shares; or
(iv) purchase or otherwise acquire for consideration any
Series A Preference Shares, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective Series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Company shall not permit any direct or indirect
subsidiary of the Company to purchase or otherwise acquire for
consideration any shares of stock of the Company unless the Company could,
under paragraph (A) of this Section, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any Series A Preference Shares
purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
Shares of the Company and may be reissued as part of a new class or series
of Shares to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein and in the Articles, as amended from time to time.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary liquidation, dissolution or winding up of the Company, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to
the Series A Preference Shares unless, prior thereto, the holders of Series
A Preference Shares shall have received $.01 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders of Series A Preference Shares unless, prior thereto, the holders of
Ordinary Shares shall have received an amount per share (the "Ordinary
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set
forth in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Ordinary Shares) (such
number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series A Liquidation Preference and the Ordinary
Adjustment in respect of all outstanding Series A Preference Shares and
Ordinary Shares, respectively, holders of Series A Preference Shares and
holders of Ordinary Shares shall receive their ratable and proportionate
share of the remaining assets to be
5
<PAGE>
distributed in the ratio, on a per share basis, of the Adjustment Number to
one with respect to such Series A Preference Shares and Ordinary Shares, on
a per share basis, respectively.
(B) If, however, there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other classes or series of Preference
Shares, if any, which rank on a parity with the Series A Preference Shares,
then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation
preferences.
(C) If the Company shall at any time following May 7, 1999 (i)
declare any dividend on Ordinary Shares payable in Ordinary Shares, (ii)
subdivide the outstanding Ordinary Shares or (iii) combine the outstanding
Ordinary Shares into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator
of which is the number of Ordinary Shares outstanding immediately after
such event and the denominator of which is the number of Ordinary Shares
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, Amalgamation, etc. If the
Company shall enter into any consolidation, merger, amalgamation,
combination or other transaction in which the Ordinary Shares are exchanged
for or changed into other stock or securities, cash and/or any other
property, then in any such case the Series A Preference Shares shall at the
same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 1,000 times
the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
Ordinary Share is changed or exchanged. If the Company shall at any time
(i) declare any dividend on Ordinary Shares payable in Ordinary Shares,
(ii) subdivide the outstanding Ordinary Shares or (iii) combine the
outstanding Ordinary Shares into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect to
the exchange or change of Series A Preference Shares shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of Ordinary Shares outstanding immediately after such event and the
denominator of which is the number of Ordinary Shares that were outstanding
immediately prior to such event.
Section 8. Redemption. The Series A Preference Shares shall not be
redeemable by the Company. The preceding sentence shall not limit the ability
of the Company to purchase or otherwise deal in such shares of stock to the
extent permitted by law.
Section 9. Ranking. The Series A Preference Shares shall rank
junior to all other series of the Company's Preference Shares (whether with
or without par value) as to the payment of dividends and the distribution
of assets, unless the terms of any such series shall provide
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<PAGE>
Section 10. Amendment. This Certificate of Designation,
Preferences and Rights of Series A Junior Participating Preference Shares
of ACE Limited shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preference Shares so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding Series A
Preference Shares, voting separately as a class.
Section 11. Fractional Shares. Series A Preference Shares may be
issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Preference Shares.
Section 12. References to Shareholders. All references herein to
shareholders of the Company shall be deemed to be references to the members
thereof.
7
<PAGE>
Exhibit B
---------
Form of Right Certificate
Certificate No. R- ____Rights
NOT EXERCISABLE AFTER JUNE 1, 2009 OR EARLIER IF THE RIGHTS
EXPIRE UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*/
Right Certificate
ACE Limited
This certifies that __________________________, or registered
assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement, dated as of May 7, 1999 (the
"Rights Agreement"), between ACE Limited, a Cayman Islands, company (the
"Company"), and The Bank of New York, a New York banking corporation (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 p.m. (New York time) on June 1, 2009, or notice of redemption
or exchange at the office of the Rights Agent (or its successors as Rights
Agent) designated for such purpose, one one-thousandth of a fully paid
non-assessable Series A Junior Participating Preference Shares, par value
$1.00 per share (the "Preference Shares") of the Company at an exercise
price of $150 per one one-thousandth of a share (the "Exercise Price") upon
presentation and surrender of this Right Certificate with the appropriate
Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Right Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and
the Exercise Price per share set forth above, are the number and Exercise
Price as of
- -----------------------
*/ The portion of the legend in brackets shall be inserted only if applicable
- and shall replace the preceding sentence.
1
<PAGE>
________________, based on the Preference Shares as constituted at such
date. Capitalized terms not defined in this Right Certificate that are
defined in the Rights Agreement shall have the meanings ascribed to them in
the Rights Agreement.
Upon the occurrence of a Triggering Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement), (ii) under certain
circumstances specified in the Rights Agreement, a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a Person
who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void
and no holder hereof shall have any right with respect to such Rights from
and after the occurrence of any such Triggering Event.
As provided in the Rights Agreement, the Exercise Price and the
number and kind of Preference Shares or other securities which may be
purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under certain circumstances
specified in such Rights Agreement. Copies of the Rights Agreement are on
file at the principal corporate trust office of the Rights Agent and are
also available upon written request to the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office of the Rights Agent designated
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Preference Shares as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $.01 per Right at any time prior to (i) the time
any Person becomes an Acquiring Person and (ii) the Final Expiration Date.
No fractional Preference Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a Preference Share, which may
at the election of the Company be evidenced
2
<PAGE>
by depository receipts), but in lieu thereof a cash payment will be made,
as provided in the Rights Agreement.
No holder of this Right Certificate, in such holder's capacity
as such, shall be entitled to vote or receive dividends or be deemed for
any purpose the holder of Preference Shares or of any other securities of
the Company which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, in such holder's capacity as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors of the Company or upon any matter submitted to
shareholders of the Company at any general meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of general
meetings or other actions affecting shareholders of the Company (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory
of the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ____________________
ATTEST: (SEAL) ACE LIMITED
___________________________ By:_____________________
Name:______________________ Name:___________________
Title:_____________________ Title:__________________
Countersigned:
THE BANK OF NEW YORK
By:_________________________ Date:__________________
Authorized Signatory
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<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED________________________________________________
hereby sells, assigns and transfers unto_______________________________
____________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint Attorney, to
transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Date:_______________________
_______________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:_______________________
___________________________
Signature
4
<PAGE>
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
5
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Right Certificate.)
To: The Bank of New York
The undersigned hereby irrevocably elects to exercise____ Rights
represented by this Right Certificate to purchase the Preference Shares
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the
name of:
Please insert social security
or other identifying number:_________________________
_____________________________________________________
(Please print name and address)
_____________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________
_____________________________________________________
(Please print name and address)
Dated:____________________
_____________________________
Signature
Signature Guaranteed:
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<PAGE>
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement);
and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated:______________________
_________________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
7
<PAGE>
Exhibit C
---------
SUMMARY OF SHAREHOLDER RIGHTS PLAN
On May 7, 1999, the Board of Directors of ACE Limited (the
"Company") declared a dividend distribution of one Right for each
outstanding Ordinary Share, par value $0.041666667 per share ("Ordinary
Share"), of the Company to shareholders of record at the close of business
on June 1, 1999 (the "Record Date"). Except as described below, each Right,
when exercisable, entitles the registered holder to purchase from the
Company one one-thousandth of a Series A Junior Participating Preference
Share, par value $1.00 per share ("Preference Share"), at a price of $150
per one one-thousandth share (the "Exercise Price").
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The Bank of New
York, as Rights Agent.
Initially, the Rights will be attached to all Ordinary Share
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding
Ordinary Shares (the "Shares Acquisition Date") or (ii) 15 business days
(or such later date as may be determined by action of the Board of
Directors of the Company (the "Board of Directors") prior to the time that
any person becomes an Acquiring Person) following the commencement of (or a
public announcement of an intention to make) a tender or exchange offer if,
upon consummation thereof, such person or group would be the beneficial
owner of 15% or more of such outstanding Ordinary Shares (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced by the Ordinary Share certificates together with a copy of this
Summary of Shareholder Rights Plan and not by separate certificates.
The Rights Agreement also provides that, until the Distribution
Date, the Rights will be transferred with and only with the Ordinary
Shares. Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the transfer of any certificates for Ordinary
Shares, with or without a copy of this Summary of Shareholder Rights Plan,
will also constitute the transfer of the Rights associated with the
Ordinary Shares represented by such certificates. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of record of the
Ordinary Shares as of the close of business on the Distribution Date and,
thereafter, such separate Right Certificates alone will evidence the
Rights. Any Ordinary Shares issued after the Distribution Date will
generally be accompanied by Right Certificates only if such Ordinary Shares
are issued pursuant to the exercise of options or under any employee plan
or arrangement or upon the exercise, conversion or exchange of other
securities issued by the Company, or in other circumstances where the
issuance of accompanying Rights Certificates is deemed necessary or
appropriate by the Board of Directors.
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The Rights are not exercisable until the Distribution Date and
will expire at the earlier of June 1, 2009 (the "Final Expiration Date")
and (ii) the redemption of the Rights by the Company as described below.
If any person (other than the Company, its subsidiaries or any
person receiving newly-issued Ordinary Shares directly from the Company)
becomes the beneficial owner of 15% or more of the then outstanding
Ordinary Shares, each holder of a Right will thereafter have the right to
receive, upon exercise at the then current exercise price of the Right,
Ordinary Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise
price of the Right. The Rights Agreement contains an exemption for any
issuance of Ordinary Shares by the Company directly to any person (for
example, in a private placement or an acquisition by the Company in which
Ordinary Shares are used as consideration), even if that person would
become the beneficial owner of 15% or more of the Ordinary Shares, provided
that such person does not acquire any additional Ordinary Shares.
If, at any time following the Shares Acquisition Date, the Company
is acquired in a merger, amalgamation or other business combination
transaction or 50% or more of the Company's assets or earning power are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon exercise at the then current
exercise price of the Right, common stock of the acquiring or surviving
company having a value equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of
the events set forth in the preceding two paragraphs (the "Triggering
Events"), any Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will
immediately become null and void.
The Exercise Price payable, and the number of Preference Shares or
other securities or property issuable, upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution, among other
circumstances, in the event of a stock dividend on, or a subdivision,
split, combination, consolidation or reclassification of, the Preference
Shares or the Ordinary Shares, or a reverse split of the outstanding
Preference Shares or Ordinary Shares.
With certain exceptions, no adjustment in the Exercise Price will
be required until cumulative adjustments require an adjustment of at least
1% in the Exercise Price. The Company will not be required to issue
fractional Preference Shares or Ordinary Shares (other than fractions in
multiples of one-thousandths of a Preference Share) and, in lieu thereof,
an adjustment in cash may be made based on the market price of the
Preference Shares or Ordinary Shares on the last trading date prior to the
date of exercise.
The Preference Shares constitute a new series of "other shares" of
the Company that is nonredeemable and that ranks junior to other series of
preference or preferred shares of the Company that may be issued in the
future. Each Preference Share will be entitled to a minimum preferential
quarterly dividend of $1.00 per share but will be entitled
2
<PAGE>
to an aggregate dividend equal to 1,000 times the dividend declared per
Ordinary Share. In the event of liquidation, each Preference Share will be
entitled to a minimum preferential liquidation payment of $.01 per share
but will be entitled to an aggregate payment of 1,000 times the payment
made per Ordinary Share. Each Preference Shares will have 1,000 votes,
voting together with the Ordinary Shares and other capital stock of the
Company. Finally, in the event of any merger, consolidation, amalgamation
or other transaction in which Ordinary Shares are exchanged, each
Preference Share will be entitled to receive 1,000 times the amount
received per Ordinary Share. These rights are protected by customary
antidilution provisions. Because of the nature of the Preference Shares'
dividend, liquidation and voting rights, the value of the one
one-thousandth of a Preference Share purchasable upon the exercise of each
Right should approximate the value of one Ordinary Share.
At any time after the date of the Rights Agreement until the time
that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which may (at the option of the Company) be paid
in cash, Ordinary Shares or other consideration deemed appropriate by the
Board of Directors. Upon the effectiveness of any action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Board of Directors of the Company is generally responsible for
administering, interpreting and making all decisions and taking all actions
with respect to the Rights Agreement, including, without limitation, the
decision to redeem or exchange the Rights or to amend the Rights Agreement.
The provisions of the Rights Agreement may be amended by the
Company, except that any amendment adopted after the time that a person
becomes an Acquiring Person may not adversely affect the interests of
holders of Rights.
As of March 31, 1999, there were 193,864,482 Ordinary Shares
outstanding and 23,576,886 Ordinary Shares reserved for issuance under
employee benefit plans. Each outstanding Ordinary Share on June 1, 1999
will receive one Right. In addition, each Ordinary Share issued after the
Record Date but prior to the earliest of the Distribution Date, the
redemption of the Rights and the Final Expiration Date will receive one
Right, subject to adjustment as provided in the Rights Agreement. 500,000
Preference Shares will be reserved for issuance in the event of exercise of
the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on the Rights being redeemed or
a substantial number of Rights being acquired, and under certain
circumstances the Rights beneficially owned by such a person or group will
3
<PAGE>
become void. The Rights should not interfere with any merger, amalgamation
or other business combination approved by the Board of Directors because,
if the Rights would become exercisable as a result of such merger,
amalgamation or business combination, the Board of Directors may, at its
option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights
at the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an exhibit to a Registration Statement on Form
8-A. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
4
Exhibit 99.2
[Letterhead of ACE Limited]
May 7, 1999
Dear ACE Shareholder:
At a meeting on May 7, 1999, your Board of Directors adopted a shareholder
rights plan. The plan provides for a distribution of one Right for each
ordinary share that you own. We have enclosed a summary description of the
principal features of this plan.
The purpose of the shareholder rights plan is to encourage a potential
buyer to negotiate directly with the Board and to provide the Board with
greater leverage in such negotiations in order to maximize shareholder
value. The plan is not being implemented in response to any known takeover
plan.
The Rights do not become exercisable, and no separate certificates will be
issued for the Rights, except in the special circumstances described in the
enclosed summary. Instead, the Rights will be traded automatically when you
buy or sell ordinary shares of the company. Issuance of the Rights has no
dilutive effect, will not affect earnings per share, will not be taxable to
the company or its shareholders and will not change the way in which our
ordinary shares are traded.
We are very excited about ACE's future and we want to be certain our
shareholders have every opportunity to participate fully in our future.
Adoption of the shareholder rights plan reflects the Board's commitment to
that goal.
Sincerely,
Brian Duperreault
Chairman, President and
Chief Executive officer
Enclosure
Page 1/1
Exhibit 99.3
[Letterhead of ACE Limited]
News
Release
FOR IMMEDIATE RELEASE
Investor Contact: Helen Wilson
(441) 299-9283
Media Contact: Linda Smith
(441) 299-9312
ACE Limited Board of Directors Adopt Shareholder Rights Plan
------------------------------------------------------------
HAMILTON, Bermuda, May 7, 1999 -- ACE Limited (NYSE:ACL) announced today
that its Board of Directors has adopted a shareholder rights plan.
Brian Duperreault, chairman, president and chief executive officer of ACE
Limited said "The purpose of the shareholder rights plan is to protect the
interests of our shareholders by encouraging potential buyers to negotiate
directly with the Board and by providing the Board with the leverage to
maximize shareholder value." Mr. Duperreault further stated that the
adoption of the plan is not in response to any known effort to acquire
control of the company.
Under the shareholder rights plan, each shareholder of record on June 1,
1999 will receive a distribution of one Right for each ordinary share of
the company.
Initially, the Rights will be represented by the company's ordinary share
certificates, will not be traded separately from the ordinary shares and
will not be exercisable.
The Rights will become exercisable only if a person acquires, or announces
a tender offer that would result in ownership of 15% or more of the
company's ordinary shares, at which time each Right would enable the holder
to buy one-thousandth of a share of the company's Series A preference stock
at an exercise price of $150, subject to adjustment. Following the
acquisition of
<PAGE>
15% or more of the company's ordinary shares, the holders of Rights (other
than the acquiring person or group) will be entitled to purchase ordinary
shares at half-price, and in the event of a subsequent merger or other
acquisition of the company, to buy shares of common stock of the acquiring
entity at one-half of the market price of those shares.
The company may redeem the Rights for $.01 per Right, subject to adjustment,
at any time before the acquisition by a person or group of 15% or more of
the company's ordinary shares. The Rights will expire on June 1, 2009.
The company will mail a summary of the shareholder rights plan to its
shareholders. The company will also include the Rights Agreement between
the company and the Rights Agent as an exhibit to its current report on
Form 8-K to be filed with the Securities and Exchange Commission.
On January 12, 1999, ACE Limited announced it had agreed to acquire the
international and domestic property and casualty insurance businesses of
CIGNA Corporation for $3.45 billion in cash. The transaction, which is
subject to receipt of necessary regulatory approvals and other customary
closing conditions, is expected to be completed by July 1, 1999.
The ACE Group of Companies provides insurance and reinsurance for a diverse
group of international clients. Operating subsidiaries are based in
Bermuda, the United States, the United Kingdom (Lloyd's), and the Republic
of Ireland. At March 31, 1999, ACE Limited had approximately $8.9 billion
in assets and approximately $4.0 billion in shareholders' equity.
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