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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 3, 2000
ACE LIMITED
(Exact name of registrant as specified in its charter)
Cayman Islands 1-11778 98-0091805
(State or other jurisdiction (Commission) (I.R.S. Employer
of Incorporation) File Number) Identification No.)
The ACE Building
30 Woodbourne Avenue
Hamilton, Bermuda HM 08
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (441) 295-5200
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
On April 3, 2000, ACE Limited commenced an offering of FELINE PRIDES (SM).
Included as exhibits to this Current Report on Form 8-K are forms of the
agreements to be entered into in connection with the offering of the FELINE
PRIDES.
"FELINE PRIDES" is a service mark of Merrill Lynch & Co., Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 4, 2000 ACE LIMITED
By: /s/ Christopher Z. Marshall
-----------------------------
Christopher Z. Marshall
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.1 Form of Purchase Contract Agreement between ACE Limited and The Bank
of New York, as Purchase Contract Agent
99.2 Form of Pledge Agreement among ACE Limited, The Bank of New York, as
Collateral Agent, Custodial Agent and Securities Intermediary, and The
Bank of New York, as Purchase Contract Agent
99.3 Form of Income PRIDES (included in Exhibit 99.1 hereto)
99.4 Certificate of the Powers, Designations, Preferences and Rights of the
__% Cumulative Redeemable Preferred Shares, Series A, of ACE Limited
99.5 Form of Remarketing Agreement between ACE Limited and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Remarketing Agent
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================================================================================
ACE LIMITED
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
__________________
PURCHASE CONTRACT AGREEMENT
__________________
Dated as of April . , 2000
================================================================================
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
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Section 1.1. Definitions................................................... 1
Section 1.2. Compliance Certificates and Opinions.......................... 9
Section 1.3. Form of Documents Delivered to Agent..........................10
Section 1.4. Acts of Holders; Record Dates.................................10
Section 1.5. Notices.......................................................11
Section 1.6. Notice to Holders; Waiver.....................................12
Section 1.7. Effect of Headings and Table of Contents......................12
Section 1.8. Successors and Assigns........................................12
Section 1.9. Separability Clause...........................................13
Section 1.10. Benefits of Agreement.........................................13
Section 1.11. Governing Law.................................................13
Section 1.12. Legal Holidays................................................13
Section 1.13. Counterparts..................................................13
Section 1.14. Inspection of Agreement.......................................13
ARTICLE II
CERTIFICATE FORMS
Section 2.1. Forms of Certificates Generally...............................14
Section 2.2. Form of Agent's Certificate of Authentication.................15
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms; Denominations................................15
Section 3.2. Rights and Obligations Evidenced by the Certificates..........15
Section 3.3. Execution, Authentication, Delivery and Dating................16
Section 3.4. Temporary Certificates........................................16
Section 3.5. Registration; Registration of Transfer and Exchange...........17
Section 3.6. Book-Entry Interests..........................................18
Section 3.7. Notices to Holders............................................19
Section 3.8. Appointment of Successor Clearing Agency......................19
Section 3.9. Definitive Certificates.......................................19
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates............19
Section 3.11. Persons Deemed Owners.........................................20
Section 3.12. Cancellation..................................................21
Section 3.13. Establishment or Reestablishment of Growth PRIDES.............21
Section 3.14. Establishment or Reestablishment of Income PRIDES.............22
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event...23
Section 3.16. No Consent to Assumption......................................24
ARTICLE IV
THE PREFERRED SHARES
Section 4.1. Payment of Dividend; Rights to Dividends Preserved;
Dividend Rate Reset; Notice...................................24
Section 4.2. Notice and Voting.............................................25
ARTICLE V
THE PURCHASE CONTRACTS
Section 5.1. Purchase of Ordinary Shares...................................26
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Section 5.2. Contract Adjustment Payments..................................27
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments....28
Section 5.4. Payment of Purchase Price.....................................29
Section 5.5. Issuance of Ordinary Shares...................................33
Section 5.6. Adjustment of Settlement Rate.................................33
Section 5.7. Notice of Adjustments and Certain Other Events................38
Section 5.8. Termination Event; Notice.....................................38
Section 5.9. Early Settlement..............................................39
Section 5.10. No Fractional Shares..........................................40
Section 5.11. Charges and Taxes.............................................40
ARTICLE VI
REMEDIES
Section 6.1. Unconditional Right of Holders to Purchase Ordinary Shares
and to Receive Contract Adjustment Payments....................41
Section 6.2. Restoration of Rights and Remedies.............................41
Section 6.3. Rights and Remedies Cumulative.................................41
Section 6.4. Delay or Omission Not Waiver...................................42
Section 6.5. Undertaking for Costs..........................................42
Section 6.6. Waiver of Stay or Extension Laws...............................42
ARTICLE VII
THE AGENT
Section 7.1. Certain Duties and Responsibilities...........................42
Section 7.2. Notice of Default.............................................43
Section 7.3. Certain Rights of Agent.......................................43
Section 7.4. Not Responsible for Recitals or Issuance of Securities........44
Section 7.5. May Hold Securities...........................................44
Section 7.6. Money Held in Custody.........................................44
Section 7.7. Compensation and Reimbursement................................44
Section 7.8. Corporate Agent Required; Eligibility.........................45
Section 7.9. Resignation and Removal; Appointment of Successor.............45
Section 7.10. Acceptance of Appointment by Successor........................46
Section 7.11. Merger, Conversion, Consolidation or Succession to Business...47
Section 7.12. Preservation of Information; Communications to Holders........47
Section 7.13. No Obligations of Agent.......................................47
Section 7.14. Tax Compliance................................................48
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
Section 8.1. Supplemental Agreements Without Consent of Holders............48
Section 8.2. Supplemental Agreements with Consent of Holders...............49
Section 8.3. Execution of Supplemental Agreements..........................49
Section 8.4. Effect of Supplemental Agreements.............................50
Section 8.5. Reference to Supplemental Agreements..........................50
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions...............................50
Section 9.2. Rights and Duties of Successor Corporation....................50
Section 9.3. Opinion of Counsel Given to Agent.............................51
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ARTICLE X
COVENANTS
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Section 10.1. Performance Under Purchase Contracts..........................51
Section 10.2. Maintenance of Office or Agency...............................51
Section 10.3. Company to Reserve Ordinary Shares............................52
Section 10.4. Covenants as to Ordinary Shares...............................52
Section 10.5. Statements of Officer of the Company as to Default............52
EXHIBIT A Form of Income PRIDES Certificate
EXHIBIT B Form of Growth PRIDES Certificate
EXHIBIT C Instruction to Collateral Agent
EXHIBIT D Instruction to Purchase Contract Agent
EXHIBIT E Notice to Settle with Separate Cash
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PURCHASE CONTRACT AGREEMENT, dated as of April __, 2000, between ACE
Limited, a company duly organized and existing under the laws of the Cayman
Islands (the "Company"), and The Bank of New York, a New York banking
association, acting as purchase contract agent for the Holders of Securities
from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when the Certificates
are executed by the Company and authenticated, executed on behalf of the Holders
and delivered by the Agent, as provided in this Agreement, the valid obligations
of the Company, and to constitute these presents a valid agreement of the
Company, in accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular; and nouns and
pronouns of the masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; and
(d) the following terms have the meanings given to them in this Section
1.1(d).
"Act" when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
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"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1.
"Authorized Newspaper" means a daily newspaper, in the English language,
customarily published on each day that is a Business Day in The City of New
York, whether or not published on days that are Legal Holidays, and of general
circulation in The City of New York. The Authorized Newspaper for the purposes
of the Reset Spread Announcement Date, is currently anticipated to be The Wall
Street Journal (NYC edition).
"Bankruptcy Code" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a Person
who is the beneficial owner of such Book-Entry Interest as reflected on the
books of the Clearing Agency or on the books of a Person maintaining an account
with such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such Clearing
Agency).
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of Directors,
a copy of which has been certified by the Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Agent.
"Book-Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions and trust companies in The City of New York are
permitted or required by any applicable law to close.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i).
"Certificate" means an Income PRIDES Certificate or a Growth PRIDES
Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as a depositary for
the Securities and in whose name, or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book-entry transfers and pledges of the Securities.
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"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1.
"Collateral" has the meaning specified in Section 2.1 of the Pledge
Agreement.
"Collateral Agent" means The Bank of New York, a New York banking
association, as Collateral Agent under the Pledge Agreement until a successor
Collateral Agent shall have become such pursuant to the applicable provisions of
the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person
who is then the Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in Section 3.13.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean such
successor.
"Contract Adjustment Payments" means the fee payable by the Company in
respect of each Purchase Contract, equal to ____% per annum of the Stated Amount
in the case of Income PRIDES and ____% per annum of the Stated Amount in the
case of Growth PRIDES, computed on the basis of a 360 day year of twelve 30 day
months, plus any Deferred Contract Adjustment Payments accrued pursuant to
Section 5.3.
"Corporate Trust Office" means the principal corporate trust office of the
Agent at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at 101 Barclay Street,
Floor 21 West, New York, New York 10286, Attention: Corporate Trust
Administration.
"Current Market Price" has the meaning specified in Section 5.5(a)(8).
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depositary" means, initially, DTC until another Clearing Agency becomes
its successor.
"Dividend Rate" means the percentage rate per annum of the Stated Amount of
the Preferred Shares at which dividends thereon are payable, if declared.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
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"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Failed Remarketing" has the meaning specified in Section 5.4(b).
"Global Certificate" means a Certificate that evidences all or part of the
Securities and is registered in the name of a Depositary or a nominee thereof.
"Growth PRIDES" means the collective rights and obligations of a holder of
a Growth PRIDES Certificate in respect of a 1/20th undivided beneficial interest
in a Treasury Security, subject in each case to the Pledge thereof, and the
related Purchase Contract.
"Growth PRIDES Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Growth PRIDES specified on
such certificate.
"Growth PRIDES Register" and "Growth PRIDES Registrar" have the respective
meanings specified in Section 3.5.
"Holder," when used with respect to a Security, means the Person in whose
name the Security evidenced by an Income PRIDES Certificate and/or a Growth
PRIDES Certificate is registered in the related Income PRIDES Register and/or
the Growth PRIDES Register, as the case may be.
"Income PRIDES" means the collective rights and obligations of a Holder of
an Income PRIDES Certificate in respect of a Preferred Share, subject to the
Pledge thereof, and the related Purchase Contract.
"Income PRIDES Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Income PRIDES specified on
such certificate.
"Income PRIDES Register" and "Income PRIDES Registrar" have the respective
meanings specified in Section 3.5.
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Company by the Chairman of the Board, the Vice Chairman, the
President or any Vice President (or other officer performing similar functions)
of the Company and delivered to the Agent.
"Junior Securities" has the meaning specified in Section 5.3.
"NYSE" has the meaning specified in Section 5.1.
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"Officer's Certificate" means a certificate signed by the Chairman of the
Board, the Vice Chairman, the President or any Vice President (or other officer
performing similar functions) of the Company and delivered to the Agent.
"One-Month Treasury Bill" means direct obligations of the United States
(which may be obligations traded on a when-issued basis only) having a maturity
comparable to the remaining term to maturity of the Preferred Shares, as agreed
upon by the Company and the Reset Agent. The rate for the One-Month Treasury
Bill will be the bid side rate displayed at 10:00 A.M., New York City time, on
the third Business Day immediately preceding the Purchase Contract Settlement
Date in the Telerate system (or if the Telerate system is (a) no longer
available on the third Business Day immediately preceding the Purchase Contract
Settlement Date or (b) in the opinion of the Reset Agent (after consultation
with the Company) no longer an appropriate system from which to obtain such
rate, such other nationally recognized quotation system as, in the opinion of
the Reset Agent (after consultation with the Company) is appropriate. If such
rate is not so displayed, the rate for the One-Month Treasury Bill shall be, as
calculated by the Reset Agent, the yield to maturity for the One-Month Treasury
Bill, expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis, and computed by taking the
arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New York
City time, on the third Business Day immediately preceding the Purchase Contract
Settlement Date, of three leading United States government securities dealers
selected by the Reset Agent (after consultation with the Company) (which may
include the Reset Agent or an Affiliate thereof).
"Ordinary Shares" means the ordinary shares, par value US$0.041666667, of
the Company.
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company or an Affiliate and who
shall be reasonably acceptable to the Agent.
"Outstanding Securities," with respect to any Income PRIDES or Growth
PRIDES, means, as of the date of determination, all Income PRIDES or Growth
PRIDES evidenced by Certificates theretofore authenticated, executed and
delivered under this Agreement, except:
(i) If a Termination Event has occurred, (A) Growth PRIDES and (B)
Income PRIDES for which the Stated Amount of the related Preferred Share
has been theretofore deposited with the Agent in trust for the Holders of
such Income PRIDES;
(ii) Income PRIDES and Growth PRIDES evidenced by Certificates
theretofore cancelled by the Agent or delivered to the Agent for
cancellation or deemed cancelled pursuant to the provisions of this
Agreement; and
(iii) Income PRIDES and Growth PRIDES evidenced by Certificates in
exchange for or in lieu of which other Certificates have been
authenticated, executed on behalf of the Holder and delivered pursuant to
this Agreement, other than any such Certificate in respect of which there
shall have been presented to the Agent proof satisfactory to it that such
Certificate is held by a bona fide purchaser in whose hands the
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Income PRIDES or Growth PRIDES evidenced by such Certificate are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
number of the Income PRIDES or Growth PRIDES have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Income PRIDES or
Growth PRIDES owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Income PRIDES or
Growth PRIDES which a Responsible Officer of the Agent knows to be so owned
shall be so disregarded. Income PRIDES or Growth PRIDES so owned which have been
pledged in good faith may be regarded as Outstanding Securities if the pledgee
establishes to the satisfaction of the Agent the pledgee's right so to act with
respect to such Income PRIDES or Growth PRIDES and that the pledgee is not the
Company or any Affiliate of the Company.
"Payment Date" means each ___, ___, ___ and ___, commencing ___, 2000.
"Parity Securities" has the meaning specified in Section 5.3.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Permitted Investments" has the meaning set forth in Section 1.1 of the
Pledge Agreement.
"Pledge" means the pledge under the Pledge Agreement of the Preferred
Shares or the Treasury Securities, in each case constituting a part of the
Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof,
by and among the Company, the Collateral Agent and the Agent, on its own behalf
and as attorney-in-fact for the Holders from time to time of the Securities.
"Predecessor Certificate" means a Predecessor Income PRIDES Certificate or
a Predecessor Growth PRIDES Certificate.
"Predecessor Growth PRIDES Certificate" of any particular Growth PRIDES
Certificate means every previous Growth PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Growth PRIDES evidenced thereby; and, for the purposes of this definition, any
Growth PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Growth PRIDES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Growth PRIDES
Certificate.
"Predecessor Income PRIDES Certificate" of any particular Income PRIDES
Certificate means every previous Income PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Income PRIDES evidenced thereby; and, for the purposes of this definition, any
Income PRIDES Certificate authenticated and delivered
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under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Income PRIDES Certificate shall be deemed to evidence the same rights and
obligations of the Company and the Holder as the mutilated, destroyed, lost or
stolen Income PRIDES Certificate.
"Preferred Shares" means the ___% Cumulative Redeemable Preferred Shares,
Series A, no par value per share, of the Company, each having a stated
liquidation amount of $50.
"Proceeds" has the meaning set forth in Section 1.1 of the Pledge
Agreement.
"Purchase Contract," when used with respect to any Security, means the
contract forming a part of such Security and obligating the Company to (i) sell
and the Holder of such Security to purchase Ordinary Shares and (ii) pay the
Holder Contract Adjustment Payments with respect to the related Income PRIDES or
Growth PRIDES on the terms and subject to the conditions set forth in Article
Five hereof.
"Purchase Contract Settlement Date" means May ___, 2003.
"Purchase Contract Settlement Fund" has the meaning specified in Section
5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Record Date" for the distribution and Contract Adjustment Payments payable
on any Payment Date means, as to any Global Certificate, the Business Day next
preceding such Payment Date, and as to any other Certificate, a day selected by
the Company which shall be more than one Business Day but less than 60 Business
Days prior to such Payment Date.
"Register" means the Income PRIDES Register and the Growth PRIDES Register.
"Registrar" means the Income PRIDES Registrar and the Growth PRIDES
Registrar.
"Remarketing Agent" has the meaning specified in Section 5.4.
"Remarketing Agreement" means the Remarketing Agreement dated April ____ ,
2000 by and among the Company, the Remarketing Agent and the Agent.
"Remarketing Fee" has the meaning specified in Section 5.4.
"Remarketing Underwriting Agreement" has the meaning specified in the
Remarketing Agreement.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Reset Agent" means a nationally recognized investment banking firm chosen
by the Company to determine the Reset Rate. It is currently anticipated that
Merrill Lynch, Pierce, Fenner & Smith Incorporated will act in such capacity.
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"Reset Announcement Date" means the tenth (10th) Business Day immediately
preceding the Purchase Contract Settlement Date.
"Reset Rate" means the dividend rate per annum (to be determined by the
Reset Agent), equal to the sum of (X) the Reset Spread and (Y) the rate of
interest on the One-Month Treasury Bill in effect on the third Business Day
immediately preceding the Purchase Contract Settlement Date, that the Preferred
Shares should bear in order for the Preferred Shares to have an approximate
market value of 100.5% of their aggregate liquidation amount on the third
Business Day immediately preceding the Purchase Contract Settlement Date;
provided, that the Company may limit such Reset Spread to be no higher than
________basis points (___%); and provided, further, that in the event of a
Failed Remarketing, the Reset Rate shall be the dividend rate per annum in
effect on the Business Day immediately preceding the Purchase Contract
Settlement Date.
"Reset Spread" means a spread amount to be determined by the Reset Agent on
the tenth (10th) Business Day immediately preceding the Purchase Contract
Settlement Date.
"Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"Security" means an Income PRIDES or a Growth PRIDES.
"Senior Indebtedness" means indebtedness of any kind of the Company unless
the instrument under which such indebtedness is incurred expressly provides that
it is on parity with or subordinated in right of payment to the Contract
Adjustment Payments.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means $50.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following events:
(i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days; or (ii) a judgment, decree or court order
for the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or of its property, or for the winding
up or liquidation of its affairs, shall have been entered, and, unless such
judgment, decree or order shall have been entered within 60 days prior to the
Purchase Contract Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days, or (iii) at any
time on or prior to the Purchase Contract Settlement Date, the Company shall
file a petition for relief under the Bankruptcy Code, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or answer
or consent seeking reorganization or liquidation under the Bankruptcy Code or
any other similar applicable Federal or State law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a receiver
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or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 5.1.
"Threshold Depreciation Price" has the meaning specified in Section 5.1.
"TIA" means the Trust Indenture Act of 1939, as amended, or any successor
statute.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Security" means a zero coupon U.S. Treasury security (CUSIP
Number __________________) with a principal amount at maturity equal to $1,000
and maturing on May ___, 2003.
"Underwriting Agreement" means the Underwriting Agreement dated April ___,
2000 between the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Banc of America Securities LLC and Donaldson, Lufkin &
Jenrette Securities Corporation.
"Vice President" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with and, if
requested by the Agent, an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement shall include:
(1) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable such
individual to express an
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informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Agent and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 7.1) conclusive in favor of the Agent and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Agent deems sufficient.
(c) The ownership of Securities shall be proved by the Income PRIDES
Register or the Growth PRIDES Register, as the case may be.
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(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Certificate shall bind every future Holder of
the same Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph,
the Holders of the Outstanding Income PRIDES and the Outstanding Growth PRIDES,
as the case may be, on such record date, and no other Holders, shall be entitled
to take the relevant action with respect to the Income PRIDES or the Growth
PRIDES, as the case may be, whether or not such Holders remain Holders after
such record date; provided that no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of the
requisite number of Outstanding Securities on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite number of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Agent in writing and to each Holder of Securities in the manner set forth in
Section 1.6.
With respect to any record date set pursuant to this Section, the Company
may designate any date as the "Expiration Date" and from time to time may change
the Expiration Date to any earlier or later day; provided that no such change
shall be effective unless notice of the proposed new Expiration Date is given to
the Agent in writing, and to each Holder of Securities in the manner set forth
in Section 1.6, on or prior to the existing Expiration Date. If an Expiration
Date is not designated with respect to any record date set pursuant to this
Section, the Company shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Section 1.5. Notices.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with:
(1) the Agent by any Holder or by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the
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Agent at The Bank of New York, 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Administration, or at any other
address previously furnished in writing by the Agent to the Holders and the
Company; or
(2) the Company by the Agent or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the Company at ACE Limited, The ACE
Building, 30 Woodbourne Avenue, Hamilton HM 08, Bermuda, or at any other
address previously furnished in writing to the Agent by the Company; or
(3) the Collateral Agent by the Agent, the Company or any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, addressed to
the Collateral Agent at The Bank of New York, 101 Barclay Street, Floor 21
West, New York, New York 10286, Attention: Corporate Trust Administration,
or at any other address previously furnished in writing by the Collateral
Agent to the Agent, the Company and the Holders.
Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Agent, but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Agent shall constitute a
sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall bind
its successors and assigns, whether so expressed or not.
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Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and, to the extent provided hereby, the Holders, any benefits or any legal or
equitable right, remedy or claim under this Agreement. The Holders from time to
time shall be beneficiaries of this Agreement and shall be bound by all of the
terms and conditions hereof and of the Securities evidenced by their
Certificates by their acceptance of delivery of such Certificates.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Income PRIDES
Certificates or the Growth PRIDES Certificates) payment of the Contract
Adjustment Payments, if any, shall not be made on such date, but such payments
shall be made on the next succeeding Business Day with the same force and effect
as if made on such Payment Date, provided that no interest shall accrue or be
payable by the Company or any Holder for the period from and after any such
Payment Date, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
In any case where any Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Income PRIDES Certificates or the Growth PRIDES Certificates), the Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the immediately following Business Day with the same force and
effect as if performed on the Purchase Contract Settlement Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the parties
hereto on separate counterparts, each of which, when so executed and delivered,
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any
Holder.
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ARTICLE II
CERTIFICATE FORMS
Section 2.1. Forms of Certificates Generally.
The Income PRIDES Certificates (including the form of Purchase Contract
forming part of the Income PRIDES evidenced thereby) shall be in substantially
the form set forth in Exhibit A hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Income PRIDES Certificates, as evidenced by their
execution of the Income PRIDES Certificates.
The definitive Income PRIDES Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing such Income PRIDES
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
The Growth PRIDES Certificates (including the form of Purchase Contracts
forming part of the Growth PRIDES evidenced thereby) shall be in substantially
the form set forth in Exhibit B hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Growth PRIDES may be listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Growth PRIDES Certificates, as evidenced by their
execution of the Growth PRIDES Certificates.
The definitive Growth PRIDES Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing such Growth PRIDES
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
Every Global Certificate authenticated, executed on behalf of the Holders
and delivered hereunder shall bear a legend in substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME
OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
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Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Income PRIDES
shall be in substantially the form set forth on the form of the Income PRIDES
Certificates.
The form of the Agent's certificate of authentication of the Growth PRIDES
shall be in substantially the form set forth on the form of the Growth PRIDES
Certificates.
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms; Denominations.
The aggregate number of Income PRIDES evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to ( if the Underwriters' over-allotment option pursuant to the
Underwriting Agreement is exercised in full), except for Certificates
authenticated, executed and delivered upon registration of transfer of, in
exchange for, or in lieu of, other Certificates pursuant to Section 3.4, 3.5,
3.10, 3.13, 3.14, 5.9 or 8.5. Growth PRIDES will be issued only in the manner
described in Section 3.3 hereof.
The Certificates shall be issuable only in registered form and only in
denominations of a single Income PRIDES or Growth PRIDES and any integral
multiple thereof.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Income PRIDES Certificate shall evidence the number of Income PRIDES
specified therein, with each such Income PRIDES representing the ownership by
the Holder thereof of a beneficial interest in a Preferred Share, subject to the
Pledge of such Preferred Share by such Holder pursuant to the Pledge Agreement,
and the rights and obligations of the Holder thereof and the Company under one
Purchase Contract. The Agent as attorney-in-fact for, and on behalf of, the
Holder of each Income PRIDES shall pledge, pursuant to the Pledge Agreement, the
Preferred Share forming a part of such Income PRIDES, to the Collateral Agent
and grant to the Collateral Agent a security interest in the right, title, and
interest of such Holder in such Preferred Share for the benefit of the Company,
to secure the obligation of the Holder under each Purchase Contract to purchase
the Ordinary Shares of the Company. Prior to the purchase of Ordinary Shares
under each Purchase Contract, the Purchase Contracts shall not entitle the
Holders of Income PRIDES Certificates to any of the rights of a holder of
Ordinary Shares, including, without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as stockholders
in respect of the meetings of stockholders or for the election of directors of
the Company or for any other matter, or any other rights whatsoever as
stockholders of the Company.
Each Growth PRIDES Certificate shall evidence the number of Growth PRIDES
specified therein, with each such Growth PRIDES representing the ownership by
the Holder thereof of a 1/20th undivided beneficial interest in a Treasury
Security, subject to the Pledge of such interest in such Treasury Security by
such Holder pursuant to the Pledge Agreement, and the rights and obligations of
the Holder thereof and the Company under one Purchase Contract. Prior to the
purchase of Ordinary Shares under each Purchase Contract, the Purchase Contracts
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shall not entitle the Holders of Growth PRIDES Certificates to any of the rights
of a holder of Ordinary Shares, including, without limitation, the right to vote
or receive any dividends or other payments or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or for the election of
directors of the Company or for any other matter, or any other rights whatsoever
as stockholders of the Company.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on behalf
of the Holders and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by the Chairman
of the Board, the Vice Chairman, the President or any Vice President (or other
officer performing similar functions) of the Company and delivered to the Agent.
The signature of any of these officers on the Certificates may be manual or
facsimile.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall be valid until such
Certificate has been executed on behalf of the Holder by the manual signature of
an authorized signatory of the Agent, as such Holder's attorney-in-fact. Such
signature by an authorized signatory of the Agent shall be conclusive evidence
that the Holder of such Certificate has entered into the Purchase Contracts
evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A or Exhibit B hereto, as the case may be, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES or Growth PRIDES are listed, or
as may, consistently herewith, be determined
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by the officers of the Company executing such Certificates, as evidenced by
their execution of the Certificates.
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and denominations
and evidencing a like number of Income PRIDES or Growth PRIDES, as the case may
be, as the temporary Certificate or Certificates so surrendered. Until so
exchanged, the temporary Certificates shall in all respects evidence the same
benefits and the same obligations with respect to the Income PRIDES or Growth
PRIDES, as the case may be, evidenced thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a register (the "Income
PRIDES Register") in which, subject to such reasonable regulations as it may
prescribe, the Agent shall provide for the registration of Income PRIDES
Certificates and of transfers of Income PRIDES Certificates (the Agent, in such
capacity, the "Income PRIDES Registrar") and a register (the "Growth PRIDES
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of the Growth PRIDES Certificates
and transfers of Growth PRIDES Certificates (the Agent, in such capacity, the
"Growth PRIDES Registrar").
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Income PRIDES or Growth PRIDES, as the
case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Income PRIDES or Growth PRIDES, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of the
Holder, and deliver the Certificates which the Holder making the exchange is
entitled to receive.
All Certificates issued upon any registration of transfer or exchange of a
Certificate shall evidence the ownership of the same number of Income PRIDES or
Growth PRIDES, as the case may be, and be entitled to the same benefits and
subject to the same obligations, under this Agreement as the Income PRIDES or
Growth PRIDES, as the case may be, evidenced by the Certificate surrendered upon
such registration of transfer or exchange.
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Every Certificate presented or surrendered for registration of transfer or
for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or its attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates, other than any exchanges pursuant to Sections 3.6 and
8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver any Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Business Day immediately preceding the earlier of the Purchase
Contract Settlement Date or the Termination Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall (i) if the Purchase Contract Settlement Date
has occurred, deliver the number of Ordinary Shares issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate, (ii) in the case of Income PRIDES, if a Termination Event shall
have occurred prior to the Purchase Contract Settlement Date, transfer the
aggregate Stated Amount of the Preferred Shares evidenced thereby, or (iii) in
the case of Growth PRIDES, if a Termination Event shall have occurred prior to
the Purchase Contract Settlement Date, transfer the Treasury Securities
evidenced thereby, in each case subject to the applicable conditions and in
accordance with the applicable provisions of Article Five hereof.
Section 3.6. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of one
or more, fully registered Global Certificates, to be delivered to the Depositary
by, or on behalf of, the Company. Such Global Certificate shall initially be
registered on the books and records of the Company in the name of Cede & Co.,
the nominee of the Depositary, and no Beneficial Owner will receive a definitive
Certificate representing such Beneficial Owner's interest in such Global
Certificate, except as provided in Section 3.9. The Agent shall enter into an
agreement with the Depositary if so requested by the Company. Unless and until
definitive, fully registered Certificates have been issued to Beneficial Owners
pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force and effect;
(b) the Company shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Contract Adjustment
Payments and receiving approvals, votes or consents hereunder) as the Holder of
the Securities and the sole holder of the Global Certificate(s) and shall have
no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6 conflict with any
other provisions of this Agreement, the provisions of this Section 3.6 shall
control; and
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(d) the rights of the Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements
between such Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants. The Clearing Agency will make book-entry transfers among
Clearing Agency Participants and receive and transmit payments of Contract
Adjustment Payments to such Clearing Agency Participants.
Section 3.7. Notices to Holders.
Whenever a notice or other communication to the Holders is required to be
given under this Agreement, the Company or the Company's agent shall give such
notices and communications to the Holders and, with respect to any Securities
registered in the name of a Clearing Agency or the nominee of a Clearing Agency,
the Company or the Company's agent shall, except as set forth herein, have no
obligations to the Beneficial Owners.
Section 3.8. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Securities.
Section 3.9. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 3.8, (ii)
the Company elects to terminate the book-entry system through the Clearing
Agency with respect to the Securities, or (iii) there shall have occurred and be
continuing a default by the Company in respect of its obligations under one or
more Purchase Contracts, then upon surrender of the Global Certificates
representing the Book-Entry Interests with respect to the Securities by the
Clearing Agency, accompanied by registration instructions, the Company shall
cause definitive Certificates to be delivered to Beneficial Owners in accordance
with the instructions of the Clearing Agency. The Company shall not be liable
for any delay in delivery of such instructions and may conclusively rely on and
shall be protected in relying on, such instructions.
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holder, and deliver in exchange therefor, a new Certificate at the
cost of the Holder, evidencing the same number of Income PRIDES or Growth
PRIDES, as the case may be, and bearing a Certificate number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity at the cost of the Holder as may be required by
them to hold each of them and any agent of any of them harmless, then, in the
absence of notice to the Company or the Agent that such Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of
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any such destroyed, lost or stolen Certificate, a new Certificate, evidencing
the same number of Income PRIDES or Growth PRIDES, as the case may be, and
bearing a Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Business Day immediately preceding the earlier of
the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Purchase
Contract Settlement Date has occurred, deliver the number of Ordinary Shares
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Certificate, or (ii) if a Termination Event shall have
occurred prior to the Purchase Contract Settlement Date, transfer the Preferred
Shares or the Treasury Securities, as the case may be, evidenced thereby, in
each case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
Upon the issuance of any new Certificate under this Section, the Company
and the Agent may require the payment by the Holder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Agent) connected
therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer, the
Company and the Agent, and any agent of the Company or the Agent, may treat the
Person in whose name such Certificate is registered as the owner of the Income
PRIDES or Growth PRIDES evidenced thereby, for the purpose of receiving
dividends on the Preferred Shares, receiving payments of Contract Adjustment
Payments, performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any dividends on the Preferred Shares or the Contract
Adjustment Payments payable in respect of the Purchase Contracts constituting a
part of the Income PRIDES or Growth PRIDES evidenced thereby shall be overdue
and notwithstanding any notice to the contrary, and neither the Company nor the
Agent, nor any agent of the Company or the Agent, shall be affected by notice to
the contrary.
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Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee), as a Holder,
with respect to such Global Certificate or impair, as between such Clearing
Agency and owners of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
Section 3.12. Cancellation.
All Certificates surrendered for delivery of Ordinary Shares on or after
the Purchase Contract Settlement Date, upon the transfer of Preferred Shares or
Treasury Securities, as the case may be, after the occurrence of a Termination
Event or pursuant to an Early Settlement, or upon the registration of a transfer
or exchange of a Security, or a Collateral Substitution or the re-establishment
of an Income PRIDES shall, if surrendered to any Person other than the Agent, be
delivered to the Agent and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the Agent for
cancellation any Certificates previously authenticated, executed and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the
Agent. No Certificates shall be authenticated, executed on behalf of the Holder
and delivered in lieu of or in exchange for any Certificates cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates held by the Agent shall be destroyed by the Agent unless
otherwise directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.13. Establishment or Reestablishment of Growth PRIDES.
A Holder may separate the Preferred Shares from the related Purchase
Contracts in respect of an Income PRIDES by substituting for such Preferred
Shares, Treasury Securities in an aggregate principal amount at maturity equal
to the aggregate Stated Amount of such Preferred Shares (a "Collateral
Substitution"), at any time from and after the date of this Agreement and on or
prior to the fifth Business Day immediately preceding the Purchase Contract
Settlement Date by (a) depositing with the Collateral Agent Treasury Securities
having an aggregate principal amount at maturity equal to the aggregate Stated
Amount of the Preferred Shares comprising part of such Income PRIDES and (b)(i)
in the event that Contract Adjustment Payments are at a higher rate for Growth
PRIDES than for Income PRIDES, by delivering cash in an amount equal to the
excess, if any, of the Contract Adjustment Payments that would have accrued
since the last Payment Date through the date of substitution on the Growth
PRIDES being created by the Holder over the Contract Payment Adjustments on the
related Income PRIDES over the same period, which amount the Agent shall
promptly remit to the Company, and (ii) transferring the related Income PRIDES
to the Agent accompanied by a notice to the Agent, substantially in the form of
Exhibit D hereto, stating that the Holder has transferred the relevant amount of
Treasury Securities to the Collateral Agent and requesting that the Agent
instruct the Collateral Agent to release the Preferred Shares underlying such
Income PRIDES,
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whereupon the Agent shall promptly give such instruction to the Collateral
Agent, substantially in the form of Exhibit C hereto. Upon receipt of the
Treasury Securities described in clause (a) above and the instruction described
in clause (b) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release to the Agent, on behalf of the Holder, Preferred
Shares having a corresponding aggregate Stated Amount of such Preferred Shares
from the Pledge, free and clear of the Company's security interest therein, and
upon receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES;
(ii) transfer the related Preferred Shares to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Growth PRIDES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Income PRIDES.
Holders who elect to separate the Preferred Shares from the related
Purchase Contract and to substitute Treasury Securities for such Preferred
Shares, shall be responsible for any fees or expenses payable to the Collateral
Agent for its services as Collateral Agent in respect of the substitution, and
the Company shall not be responsible for any such fees or expenses.
Holders may make Collateral Substitutions only in integral multiples of 20
Income PRIDES.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Income PRIDES or fails
to deliver an Income PRIDES Certificate to the Agent after depositing Treasury
Securities with the Collateral Agent, the Preferred Shares constituting a part
of such Income PRIDES, and any distributions on such Preferred Share, shall be
held in the name of the Agent or its nominee in trust for the benefit of such
Holder, until such Income PRIDES are so transferred or the Income PRIDES
Certificate is so delivered, as the case may be, or, with respect to an Income
PRIDES Certificate, such Holder provides evidence satisfactory to the Company
and the Agent that such Income PRIDES Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Agent and the
Company.
Except as described in this Section 3.13, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income PRIDES shall
not be separable into its constituent parts, and the rights and obligations of
the Holder in respect of the Preferred Shares, and Purchase Contract comprising
such Income PRIDES may be acquired, and may be transferred and exchanged, only
as an Income PRIDES.
Section 3.14. Establishment or Reestablishment of Income PRIDES.
A Holder of a Growth PRIDES may create or recreate Income PRIDES at any
time on or prior to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date by (a) depositing with the Collateral Agent Preferred
Shares, having an aggregate Stated Amount equal to the aggregate principal
amount at maturity of the Treasury Securities comprising part of
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the Growth PRIDES and (b) (i) in the event that Contract Adjustment Payments are
at a higher rate for Income PRIDES than for Growth PRIDES, by delivering to the
Agent cash in an amount equal to the excess of the Contract Adjustment Payments
that would have accrued since the last Payment Date through the date of
substitution on the Income PRIDES being recreated by such Holders, over the
Contract Adjustment Payments that have accrued over the same time period on the
related Growth PRIDES and (ii) transferring the related Growth PRIDES to the
Agent accompanied by a notice to the Agent, substantially in the form of Exhibit
D hereto, stating that the Holder has transferred the relevant amount of
Preferred Shares, to the Collateral Agent and requesting that the Agent instruct
the Collateral Agent to release the Treasury Securities underlying such Growth
PRIDES, whereupon the Agent shall promptly give such instruction to the
Collateral Agent, substantially in the form of Exhibit C hereto. Upon receipt of
the Preferred Shares described in clause (a) above and the instruction described
in clause (b) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will effect the release of the Treasury Securities having a
corresponding aggregate principal amount at maturity from the Pledge to the
Agent free and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Growth PRIDES;
(ii) transfer the Treasury Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver an
Income PRIDES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Growth PRIDES.
Holders of Growth PRIDES may establish or reestablish Income PRIDES in
integral multiples of 20 Growth PRIDES for 20 Preferred Shares only.
Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Growth PRIDES remains in effect, such Growth PRIDES shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Growth PRIDES in respect of the Treasury Security and
Purchase Contract comprising such Growth PRIDES may be acquired, and may be
transferred and exchanged only as a Growth PRIDES.
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the Agent of
the Preferred Shares or the Treasury Securities, as the case may be, underlying
the Income PRIDES and the Growth PRIDES pursuant to the terms of the Pledge
Agreement, the Agent shall request transfer instructions with respect to such
Preferred Shares or Treasury Securities, as the case may be, from each Holder by
written request mailed to such Holder at its address as it appears in the Income
PRIDES Register or the Growth PRIDES Register, as the case may be. Upon book-
entry transfer of the Income PRIDES or Growth PRIDES or delivery of an Income
PRIDES Certificate or Growth PRIDES Certificate to the Agent with such transfer
instructions, the Agent shall transfer the Preferred Shares or Treasury
Securities, as the case may be, underlying such Income PRIDES or Growth PRIDES,
as the case may be, to such Holder by book-entry transfer, or other
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appropriate procedures, in accordance with such instructions. In the event a
Holder of Income PRIDES or Growth PRIDES fails to effect such transfer or
delivery, the Preferred Shares or Treasury Securities, as the case may be,
underlying such Income PRIDES or Growth PRIDES, as the case may be, and any
distributions thereon, shall be held in the name of the Agent or its nominee in
trust for the benefit of such Holder, until such Income PRIDES or Growth PRIDES
are transferred or the Income PRIDES Certificate or Growth PRIDES Certificate is
surrendered or such Holder provides satisfactory evidence that such Income
PRIDES Certificate or Growth PRIDES Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Agent and the
Company.
Section 3.16. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be deemed expressly
to have withheld any consent to the assumption under Section 365 of the
Bankruptcy Code or otherwise, of the Purchase Contract by the Company, receiver,
liquidator or a person or entity performing similar functions, its trustee in
the event that the Company becomes the debtor under the Bankruptcy Code or
subject to other similar state or federal law providing for reorganization or
liquidation.
ARTICLE IV
THE PREFERRED SHARES
Section 4.1. Payment of Dividend; Rights to Dividends Preserved; Dividend Rate
Reset; Notice.
A distribution on any Preferred Share which is paid on any Payment Date
shall, subject to receipt thereof by the Agent from the Collateral Agent as
provided by the terms of the Pledge Agreement, be paid to the Person in whose
name the Income PRIDES Certificate (or one or more Predecessor Income PRIDES
Certificates) of which such Preferred Share is a part is registered at the close
of business on the Record Date for such Payment Date.
Each Income PRIDES Certificate evidencing Preferred Shares delivered under
this Agreement upon registration of transfer of or in exchange for or in lieu of
any other Income PRIDES Certificate shall carry the rights to accumulated and
unpaid dividends, and to accumulate dividends, which were carried by the
Preferred Shares underlying such other Income PRIDES Certificate.
In the case of any Income PRIDES with respect to which Cash Settlement of
the underlying Purchase Contract is effected on the Business Day immediately
preceding the Purchase Contract Settlement Date pursuant to prior notice, or
with respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date, or with respect to which a Collateral
Substitution is effected, in each case on a date that is after any Record Date
and on or prior to the next succeeding Payment Date, dividends on the Preferred
Shares underlying such Income PRIDES otherwise payable on such Payment Date
shall be payable on such Payment Date notwithstanding such Cash Settlement or
Early Settlement or Collateral Substitution, and such dividends shall, subject
to receipt thereof by the Agent, be payable to the Person in whose name the
Income PRIDES Certificate (or one or more
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Predecessor Income PRIDES Certificates) was registered at the close of business
on the Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Income PRIDES with respect to which Cash
Settlement or Early Settlement of the underlying Purchase Contract is effected
on the Business Day immediately preceding the Purchase Contract Settlement Date
or an Early Settlement Date, as the case may be, or with respect to which a
Collateral Substitution has been effected, dividends on the related Preferred
Shares that would otherwise be payable after the Purchase Contract Settlement
Date or Early Settlement Date shall not be payable hereunder to the Holder of
such Income PRIDES; provided, however, that to the extent that such Holder
continues to hold the separated Preferred Shares that formerly comprised a part
of such Holder's Income PRIDES, such Holder shall be entitled to receive the
dividends on such separated Preferred Shares.
The applicable Dividend Rate on the Preferred Shares on and after the
Purchase Contract Settlement Date will be reset on the third Business Day
immediately preceding the Purchase Contract Settlement Date to the Reset Rate
(such Reset Rate to be in effect on and after the Purchase Contract Settlement
Date). On the Reset Announcement Date, the Reset Spread and the Benchmark Rate
to be used to determine the Reset Rate will be announced by the Company. On the
Business Day immediately following the Reset Announcement Date, the Preferred
Shares Holders will be notified of such Reset Spread and the One-Month Treasury
Bill rate by the Company. Such notice shall be sufficiently given to Holders of
Preferred Shares if published in an Authorized Newspaper in The City of New
York.
Not later than 7 calendar days nor more than 15 calendar days prior to the
Reset Announcement Date, the Company will notify DTC or its nominee (or any
successor Clearing Agency or its nominee) by first-class mail, postage prepaid,
to notify the Beneficial Owners or Clearing Agency Participants holding Income
PRIDES or Growth PRIDES, of such Reset Announcement Date and the procedures to
be followed by such Holders of Income PRIDES who intend to settle their
obligation under the Purchase Contract with separate cash on the Purchase
Contract Settlement Date.
Section 4.2. Notice and Voting.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Preferred
Shares pledged with the Collateral Agent but only to the extent instructed by
the Holders as described below. Upon receipt of notice of any meeting at which
holders of Preferred Shares are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Preferred Shares, the Agent shall, as
soon as practicable thereafter, mail to the Holders of Income PRIDES a notice
(a) containing such information as is contained in the notice or solicitation,
(b) stating that each Holder on the record date set by the Agent therefor
(which, to the extent possible, shall be the same date as the record date for
determining the holders of Preferred Shares entitled to vote) shall be entitled
to instruct the Agent as to the exercise of the voting rights pertaining to the
Preferred Shares underlying their Income PRIDES and (c) stating the manner in
which such instructions may be given. Upon the written request of the Holders of
Income PRIDES on such record date, the Agent shall endeavor insofar as
practicable to vote or cause to be voted, in accordance with the instructions
set forth in such requests, the maximum number of Preferred Shares as to which
any particular voting instructions are received. In the absence of specific
instructions from the Holder
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of an Income PRIDES, the Agent shall abstain from voting the Preferred Share
underlying such Income PRIDES. The Company hereby agrees, if applicable, to
solicit Holders of Income PRIDES to timely instruct the Agent in order to enable
the Agent to vote such Preferred Shares.
ARTICLE V
THE PURCHASE CONTRACTS
Section 5.1. Purchase of Ordinary Shares.
Each Purchase Contract shall, unless an Early Settlement has occurred in
accordance with Section 5.9 hereof, obligate the Holder of the related Security
to purchase, and the Company to sell, on the Purchase Contract Settlement Date
at a price equal to the Stated Amount (the "Purchase Price"), a number of newly
issued Ordinary Shares equal to the Settlement Rate unless, on or prior to the
Purchase Contract Settlement Date, there shall have occurred a Termination Event
with respect to the Security of which such Purchase Contract is a part. The
"Settlement Rate" is equal to (a) if the Applicable Market Value (as defined
below) is equal to or greater than $ ___ (the "Threshold Appreciation Price"),
___ Ordinary Shares per Purchase Contract, (b) if the Applicable Market Value is
less than the Threshold Appreciation Price, but is greater than $ ___ (the
"Threshold Depreciation Price"), the number of Ordinary Shares equal to the
Stated Amount divided by the Applicable Market Value and (c) if the Applicable
Market Value is less than or equal to Threshold Depreciation Price, ___ Ordinary
Shares per Purchase Contract, in each case subject to adjustment as provided in
Section 5.6 (and in each case rounded upward or downward to the nearest
1/10,000th of a share). As provided in Section 5.10, no fractional Ordinary
Shares will be issued upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Price per
Ordinary Share on each of the 20 consecutive Trading Days ending on the third
Trading Day immediately preceding the Purchase Contract Settlement Date.
The "Closing Price" of the Ordinary Shares on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the Ordinary Shares on the New York Stock Exchange (the
"NYSE") on such date or, if the Ordinary Shares are not listed for trading on
the NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Ordinary Shares are so
listed, or if the Ordinary Shares are not so listed on a United States national
or regional securities exchange, as reported by The Nasdaq Stock Market, or, if
the Ordinary Shares are not so reported, the last quoted bid price for the
Ordinary Shares in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of the Ordinary Shares on such date as of 4:00 p.m.,
New York City time, as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
A "Trading Day" means a day on which the Ordinary Shares (A) are not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) have
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Ordinary Shares.
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Each Holder of an Income PRIDES or a Growth PRIDES, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact (including the execution
of Certificates on behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its obligations under such
Purchase Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent as its attorney-in-fact to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to and
agrees to be bound by the Pledge of the Preferred Shares or the Treasury
Securities pursuant to the Pledge Agreement; provided that upon a Termination
Event, the rights of the Holder of such Security under the Purchase Contract may
be enforced without regard to any other rights or obligations. Each Holder of an
Income PRIDES or a Growth PRIDES, by its acceptance thereof, further covenants
and agrees, that, to the extent and in the manner provided in Section 5.4 and
the Pledge Agreement, but subject to the terms thereof, payments in respect of
the Stated Amount of the Preferred Shares or the Proceeds of the Treasury
Securities on the Purchase Contract Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such
transferee), under the terms of this Agreement, the Purchase Contracts
underlying such Certificate and the Pledge Agreement and the transferor shall be
released from the obligations under this Agreement, the Purchase Contracts
underlying the Certificates so transferred and the Pledge Agreement. The Company
covenants and agrees, and each Holder of a Certificate, by its acceptance
thereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.
Section 5.2. Contract Adjustment Payments.
Subject to Section 5.3 herein, the Company shall pay, on each Payment Date,
the Contract Adjustment Payments payable in respect of each Purchase Contract to
the Person in whose name such Growth PRIDES Certificate (or one or more
Predecessor Growth PRIDES Certificates) is registered at the close of business
on the Record Date next preceding such Payment Date. The Contract Adjustment
Payments will be payable at the office of the Agent in The City of New York
maintained for that purpose or, at the option of the Company, by check mailed to
the address of the Person entitled thereto at such Person's address as it
appears on the Income PRIDES Register or Growth PRIDES Register.
Upon the occurrence of a Termination Event, the Company's obligation to pay
Contract Adjustment Payments (including any accrued or Deferred Contract
Adjustment Payments) shall cease.
Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of an Income PRIDES) any other
Certificate shall carry the rights to accrued and unpaid Contract Adjustment
Payments, and to accrue Contract Adjustment Payments, which were carried by the
Purchase Contracts underlying such other Certificates.
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Subject to Section 5.9, in the case of any Security with respect to which
Early Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date that is after any Record Date and on or prior to the next
succeeding Payment Date, Contract Adjustment Payments otherwise payable on such
Payment Date shall be payable on such Payment Date notwithstanding such Early
Settlement, and such Contract Adjustment Payments shall be paid to the Person in
whose name the Security Certificate evidencing such Security (or one or more
Predecessor Security Certificates) is registered at the close of business on
such Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, Contract Adjustment Payments that would otherwise be payable
after the Early Settlement Date with respect to such Purchase Contract shall not
be payable.
The Company's obligations with respect to Contract Adjustment Payments will
be subordinated and junior in right of payment to the Company's obligations
under any Senior Indebtedness.
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) at least ten Business
Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the
date the Company is required to give notice of the Record Date or Payment Date
with respect to payment of such Contract Adjustment Payments to the NYSE or
other applicable self-regulatory organization or to Holders of the Securities,
but in any event not less than one Business Day prior to such Record Date. Any
Contract Adjustment Payments so deferred shall bear additional Contract
Adjustment Payments thereon at the rate of __% per annum (computed on the basis
of 360-day year of twelve 30-day months), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Contract Adjustment
Payments together with the additional Contract Adjustment Payments accrued
thereon, being referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments shall be due on the next
succeeding Payment Date except to the extent that payment is deferred pursuant
to this Section. No Contract Adjustment Payments may be deferred to any date
that occurs later than the Purchase Contract Settlement Date. If the Purchase
Contracts are terminated upon the occurrence of a Termination Event, the
Holder's right to receive Contract Adjustment Payments and Deferred Contract
Adjustment Payments will terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date in lieu of a cash payment a number of shares of Ordinary Shares (in
addition to a number of shares of Ordinary Shares equal to the Settlement Rate)
equal to (x) the aggregate amount of Deferred Contract Adjustment Payments
payable to such Holder divided by (y) the Applicable Market Value.
No fractional shares of Ordinary Shares will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement
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Date. In lieu of fractional shares otherwise issuable with respect to such
payment of Deferred Contract Adjustment Payments, the Holder will be entitled to
receive an amount in cash as provided in Section 5.9.
If the Company does not pay Contract Adjustment Payments on any Payment
Date, then, until all Deferred Contract Adjustment Payments are paid and the
Contract Adjustment Payment for the current and all prior quarterly periods is
paid or set apart for payment, the Company may not declare or pay any dividend
or make any distribution of assets on any classes and series of capital stock of
the Company now or hereafter authorized, issued or outstanding, which by their
terms expressly provide that they rank junior to the Preferred Shares as to
dividend distributions and distributions upon the liquidation, winding up and
dissolution of the Company, including the Ordinary Shares, or which do not
specify their rank (the "Junior Securities") or make any guarantee payments with
respect to the foregoing, or redeem, purchase or otherwise acquire any Junior
Securities.
If the Company does not pay Contract Adjustment Payments on any Payment
Date, then, until all Deferred Contract Adjustment Payments are paid and the
Contract Adjustment Payment for the current and all prior quarterly periods is
paid or set apart for payment, the Company may not declare or pay any dividend
or make any distribution of assets on any classes and series of capital stock of
the Company now or hereafter authorized, issued or outstanding, which by their
terms expressly provide that they rank equally with the Preferred Shares as to
dividend distributions and distributions upon the liquidation, winding up and
dissolution of the Company ("Parity Securities") or make any guarantee payments
with respect to the foregoing, unless such dividends are declared and paid pro
rata so that the amount of Contract Adjustment Payments per Purchase Contract
and the dividends declared and paid on any other Parity Securities in all cases
shall bear to each other the same ratio that the amount of Deferred Contract
Adjustment Payments per Purchase Contract and such other Parity Securities bear
to each other.
If the Company does not pay Contract Adjustment Payments on any Payment
Date, then, until all Deferred Contract Adjustment Payments are paid and the
Contract Adjustment Payment for the current and all prior quarterly periods is
paid or set apart for payment, the Company may not redeem, purchase or otherwise
acquire any Parity Securities.
Notwithstanding anything to the contrary set forth in the immediately
preceding three paragraphs, the payment restrictions set forth in such
paragraphs shall not apply to (A) dividends or distributions in Junior
Securities, (B) redemptions or purchases of any rights outstanding under a
shareholder rights plan of the Company, or any successor to such rights plan, or
the declaration of a dividend of such rights or the issuance of stock under such
plans in the future and (C) purchases of Junior Securities related to the
issuance of Junior Securities under any benefit plans of the Company or its
subsidiaries, as the case may be, for their respective directors, officers or
employees.
Section 5.4. Payment of Purchase Price.
(a) (i) Unless a Holder settles the underlying Purchase Contract through
the early delivery of cash to the Agent in the manner described in Section 5.9,
each Holder of an Income PRIDES must notify the Agent by use of a notice in
substantially the form of Exhibit E hereto of
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its intention to pay in cash ("Cash Settlement") the Purchase Price for the
Ordinary Shares to be purchased pursuant to a Purchase Contract. Such notice
shall be made on or prior to 5:00 p.m., New York City time, on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date. The
Agent shall promptly notify the Collateral Agent of the receipt of such a notice
from a Holder intending to make a Cash Settlement.
(ii) A Holder of an Income PRIDES who has so notified the Agent of its
intention to make a Cash Settlement is required to pay the Purchase Price to the
Collateral Agent prior to 11:00 a.m., New York City time, on the Business Day
immediately preceding the Purchase Contract Settlement Date in lawful money of
the United States by certified or cashiers' check or wire transfer, in each case
in immediately available funds payable to or upon the order of the Company. Any
cash received by the Collateral Agent will be invested promptly by the
Collateral Agent in Permitted Investments and paid to the Company on the
Purchase Contract Settlement Date in settlement of the Purchase Contract in
accordance with the terms of this Agreement and the Pledge Agreement. Any funds
received by the Collateral Agent in respect of the investment earnings from the
investment in such Permitted Investments will be distributed to the Agent when
received for payment to the Holder.
(iii) If a Holder of an Income PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with paragraph (a)(i) above,
such failure shall constitute an event of default and the Holder shall be deemed
to have consented to the disposition of the pledged Preferred Shares pursuant to
the remarketing as described in paragraph (b) below. If a Holder of an Income
PRIDES does notify the Agent as provided in paragraph (a)(i) above of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph (a)(ii) above, such failure shall also constitute a
default; however, the Preferred Shares of such a Holder will not be remarketed
but instead the Collateral Agent, for the benefit of the Company, will exercise
its rights as a secured party with respect to such Preferred Shares, including
those rights specified in paragraph (c) below.
(b) In order to dispose of the Preferred Shares of Income PRIDES Holders
who have not notified the Agent of their intention to effect a Cash Settlement
as provided in paragraph (a)(i) above, the Company shall engage a nationally
recognized investment bank (the "Remarketing Agent") pursuant to the Remarketing
Agreement to sell such Preferred Shares. In order to facilitate the remarketing,
the Agent shall notify, by 10:00 a.m., New York City time, on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date, the
Remarketing Agent of the aggregate number of Preferred Shares to be remarketed.
Concurrently, the Collateral Agent, pursuant to the terms of the Pledge
Agreement, will present for remarketing such Preferred Shares to the Remarketing
Agent. Upon receipt of such notice from the Agent and such Preferred Shares from
the Collateral Agent, the Remarketing Agent will, on the third Business Day
immediately preceding the Purchase Contract Settlement Date, use its reasonable
efforts to remarket such Preferred Shares on such date at a price of
approximately [100.5%] (but not less than 100%) of the aggregate stated
liquidation amount of such Preferred Shares, plus accumulated and unpaid
distributions, if any, thereon. After deducting as the remarketing fee
("Remarketing Fee") an amount not exceeding 25 basis points (.25%) of the
aggregate stated liquidation amount of the remarketed Preferred Shares from any
amount of such proceeds in excess of the aggregate stated liquidation amount of
the remarketed Preferred Shares plus accumulated and unpaid dividends, if any,
then the Remarketing Agent will remit the entire
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amount of the proceeds from such remarketing to the Collateral Agent. Such
portion of the proceeds, equal to the aggregate stated liquidation amount of
such Preferred Shares, will automatically be applied by the Collateral Agent, in
accordance with the Pledge Agreement to satisfy in full such Income PRIDES
holders' obligations to pay the Purchase Price for the Ordinary Shares under the
related Purchase Contracts on the Purchase Contract Settlement Date. Any
proceeds in excess of those required to pay the Purchase Price and the
Remarketing Fee will be remitted to the Agent for payment to the Holders of the
related Income PRIDES. Income PRIDES Holders whose Preferred Shares are so
remarketed will not otherwise be responsible for the payment of any Remarketing
Fee in connection therewith. If, in spite of using its reasonable efforts, the
Remarketing Agent cannot remarket the related Preferred Shares of such Holders
of Income PRIDES at a price not less then 100% of the aggregate stated
liquidation amount of such Preferred Shares plus accumulated and unpaid
dividends, if any, the remarketing will be deemed to have failed (a "Failed
Remarketing") and in accordance with the terms of the Pledge Agreement the
Collateral Agent for the benefit of the Company will exercise its rights as a
secured party with respect to such Preferred Shares, including those actions
specified in paragraph (c) below; provided, that if upon a Failed Remarketing
the Collateral Agent exercises such rights for the benefit of the Company with
respect to such Preferred Shares, any accumulated and unpaid dividends on such
Preferred Shares will become payable by the Company to the Agent for payment to
the Beneficial Owner of the Income PRIDES to which such Preferred Shares
relates. Such payment will be made by the Company on or prior to 11 a.m., New
York City time, on the Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire transfer in immediately
available funds payable to or upon the order of the Agent. The Company will
cause a notice of such Failed Remarketing to be published on the second Business
Day immediately preceding the Purchase Contract Settlement Date in an Authorized
Newspaper in The City of New York.
(c) With respect to any Preferred Shares beneficially owned by Holders who
have elected Cash Settlement but failed to deliver cash as required in (a)(ii)
above, or with respect to Preferred Shares which are subject to a Failed
Remarketing, the Collateral Agent for the benefit of the Company reserves all of
its rights as a secured party with respect thereto and, subject to applicable
law and paragraph (g) below, may, among other things, (i) retain the Preferred
Shares in full satisfaction of the Holders obligations under the Purchase
Contracts or (ii) sell the Preferred Shares in one or more public or private
sales.
(d) (i) Unless a Holder of Growth PRIDES settles the underlying Purchase
Contract through the early delivery of cash to the Agent in the manner described
in Section 5.9, each Holder of a Growth PRIDES or must notify the Agent by use
of a notice in substantially the form of Exhibit E hereto of its intention to
pay in cash the Purchase Price for the Ordinary Shares to be purchased pursuant
to a Purchase Contract on or prior to 5:00 p.m., New York City time, on the
second Business Day immediately preceding the Purchase Contract Settlement Date.
(ii) A Holder of a Growth PRIDES who has so notified the Agent of its
intention to make a Cash Settlement in accordance with paragraph (d)(i)
above is required to pay the Purchase Price to the Collateral Agent prior
to 11:00 a.m., New York City time, on the Business Day immediately
preceding the Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire transfer, in each
case in immediately available funds payable to or upon the order of the
Company. Any cash received by the
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Collateral Agent will be invested promptly by the Collateral Agent in
Permitted Investments and paid to the Company on the Purchase Contract
Settlement Date in settlement of the Purchase Contract in accordance with
the terms of this Agreement and the Pledge Agreement. Any funds received by
the Collateral Agent in respect of the investment earnings from the
investment in such Permitted Investments will be distributed to the Agent
when received for payment to the Holder.
(iii) If a Holder of a Growth PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with paragraph (d)(i)
above, but fails to make such payment as required by paragraph (d)(ii)
above, then upon the maturity of the Pledged Treasury Securities held by
the Collateral Agent on the Business Day immediately prior to the Purchase
Contract Settlement Date, the principal amount at maturity of the Treasury
Securities received by the Collateral Agent will be invested promptly in
overnight Permitted Investments. On the Purchase Contract Settlement Date
an amount equal to the Purchase Price will be remitted to the Company as
payment thereof without receiving any instructions from the Holder. In the
event the sum of the proceeds from the related Pledged Treasury Securities
and the investment earnings earned from such investments is in excess of
the aggregate Purchase Price of the Purchase Contracts being settled
thereby, the Collateral Agent will distribute such excess to the Agent for
the benefit of the Holder of the related Growth PRIDES when received.
(e) Any distribution to Holders of excess funds and interest described
above shall be payable at the office of the Agent in The City of New York
maintained for that purpose or, at the option of the Holder, by check mailed to
the address of the Person entitled thereto at such address as it appears on the
Register.
(f) Unless a Holder settles the underlying Purchase Contract through the
early delivery of cash to the Collateral Agent in the manner described herein,
the Company shall not be obligated to issue any Ordinary Shares in respect of a
Purchase Contract or deliver any certificate therefor to the Holder unless it
shall have received payment in full of the Purchase Price for the Ordinary
Shares to be purchased thereunder in the manner herein set forth.
Upon Cash Settlement of any Purchase Contract, (i) the Collateral Agent
will in accordance with the terms of the Pledge Agreement cause the Pledged
Preferred Shares or the Pledged Treasury Securities underlying the relevant
Security to be released from the Pledge by the Collateral Agent free and clear
of any security interest of the Company and transferred to the Agent for
delivery to the Holder thereof or its designee as soon as practicable and (ii)
subject to the receipt thereof from the Collateral Agent, the Agent shall, by
book-entry transfer, or other appropriate procedures, in accordance with
instructions provided by the Holder thereof, transfer such Preferred Shares or
such Treasury Securities (or, if no such instructions are given to the Agent by
the Holder, the Agent shall hold such Preferred Shares or such Treasury
Securities, and any dividends or distributions thereon, in the name of the Agent
or its nominee in trust for the benefit of such Holder).
(g) The obligations of the Holders to pay the Purchase Price are non-
recourse obligations and are payable solely out of any Cash Settlement or the
proceeds of any Collateral Pledged to secure the obligations of the Holders and
in no event will Holders be liable for any deficiency between the proceeds of
Collateral disposition and the Purchase Price.
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Section 5.5. Issuance of Ordinary Shares.
Unless a Termination Event shall have occurred on or prior to the Purchase
Contract Settlement Date or an Early Settlement shall have occurred, on the
Purchase Contract Settlement Date, upon its receipt of payment in full of the
Purchase Price for the Ordinary Shares purchased by the Holders pursuant to the
foregoing provisions of this Article and subject to Section 5.6(b), the Company
shall issue and deposit with the Agent, for the benefit of the Holders of the
Outstanding Securities, one or more certificates representing the newly issued
Ordinary Shares registered in the name of the Agent (or its nominee) as
custodian for the Holders (such certificates for Ordinary Shares, together with
any dividends or distributions for which a record date and payment date for such
dividend or distribution has occurred after the Purchase Contract Settlement
Date, being hereinafter referred to as the "Purchase Contract Settlement Fund")
to which the Holders are entitled hereunder. Subject to the foregoing, upon
surrender of a Certificate to the Agent on or after the Purchase Contract
Settlement Date, together with settlement instructions thereon duly completed
and executed, the Holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole Ordinary
Shares which such Holder is entitled to receive pursuant to the provisions of
this Article Five (after taking into account all Securities then held by such
Holder) together with cash in lieu of fractional shares as provided in Section
5.10 and any dividends or distributions with respect to such shares constituting
part of the Purchase Contract Settlement Fund, but without any interest thereon,
and the Certificate so surrendered shall forthwith be cancelled. Such shares
shall be registered in the name of the Holder or the Holder's designee as
specified in the settlement instructions provided by the Holder to the Agent. If
any Ordinary Shares issued in respect of a Purchase Contract are to be
registered to a Person other than the Person in whose name the Certificate
evidencing such Purchase Contract is registered, no such registration shall be
made unless the Person requesting such registration has paid any transfer and
other taxes required by reason of such registration in a name other than that of
the registered Holder of the Certificate evidencing such Purchase Contract or
has established to the satisfaction of the Company that such tax either has been
paid or is not payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on the Ordinary Shares in Ordinary Shares, the Settlement Rate, as
in effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which the numerator shall be the number of Ordinary Shares outstanding at the
close of business on the date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (1), the
number of Ordinary Shares at the time outstanding shall not include shares held
in the treasury of the Company but shall include any shares issuable in respect
of any scrip certificates issued in lieu of fractions of Ordinary Shares. The
Company will not pay any dividend or make any distribution on Ordinary Shares
held in the treasury of the Company.
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(2) In case the Company shall issue rights, options or warrants to
all holders of its Ordinary Shares (not being available on an equivalent basis
to Holders of the Securities upon settlement of the Purchase Contracts
underlying such Securities) entitling them, for a period expiring within 45 days
after the record date for the determination of stockholders entitled to receive
such rights, options or warrants, to subscribe for or purchase Ordinary Shares
at a price per share less than the Current Market Price per Ordinary Share on
the date fixed for the determination of stockholders entitled to receive such
rights, options or warrants (other than pursuant to a dividend reinvestment
plan), the Settlement Rate in effect at the opening of business on the day
following the date fixed for such determination shall be increased by dividing
such Settlement Rate by a fraction, the numerator of which shall be the number
of Ordinary Shares outstanding at the close of business on the date fixed for
such determination plus the number of Ordinary Shares which the aggregate of the
offering price of the total number of Ordinary Shares so offered for
subscription or purchase would purchase at such Current Market Price and the
denominator of which shall be the number of Ordinary Shares outstanding at the
close of business on the date fixed for such determination plus the number of
Ordinary Shares so offered for subscription or purchase, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (2), the
number of Ordinary Shares at any time outstanding shall not include shares held
in the treasury of the Company but shall include any shares issuable in respect
of any scrip certificates issued in lieu of fractions of Ordinary Shares. The
Company shall not issue any such rights, options or warrants in respect of
Ordinary Shares held in the treasury of the Company.
(3) In case outstanding Ordinary Shares shall be subdivided or split
into a greater number of Ordinary Shares, the Settlement Rate in effect at the
opening of business on the day following the day upon which such subdivision or
split becomes effective shall be proportionately increased, and, conversely, in
case outstanding Ordinary Shares shall each be combined into a smaller number of
Ordinary Shares, the Settlement Rate in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision, split or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Ordinary Shares evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred to in
paragraph (2) of this Section, any dividend or distribution paid exclusively in
cash and any dividend or distribution referred to in paragraph (1) of this
Section), the Settlement Rate shall be adjusted so that the same shall equal the
rate determined by dividing the Settlement Rate in effect immediately prior to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction, the numerator of which
shall be the Current Market Price per Ordinary Share on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Agent) of the portion of the assets or evidences of
indebtedness so distributed applicable to one Ordinary Share and the denominator
of which shall be such Current Market Price per Ordinary Shares, such adjustment
to become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such
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distribution. In any case in which this paragraph (4) is applicable, paragraph
(2) of this Section shall not be applicable.
(5) In case the Company shall, (I) by dividend or otherwise,
distribute to all holders of its Ordinary Shares cash (excluding any cash that
is distributed in a Reorganization Event to which Section 5.6(b) applies or as
part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (II) the aggregate amount of any
other distributions to all holders of its Ordinary Shares made exclusively in
cash within the 12 months preceding the date of payment of such distribution and
in respect of which no adjustment pursuant to this paragraph (5) or paragraph
(6) of this Section has been made and (III) the aggregate of any cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) of consideration
payable in respect of any tender or exchange offer by the Company or any of its
subsidiaries for all or any portion of the Ordinary Shares concluded within the
12 months preceding the date of payment of the distribution described in clause
(I) above and in respect of which no adjustment pursuant to this paragraph (5)
or paragraph (6) of this Section has been made, exceeds 5% of the product of the
Current Market Price per Ordinary Share on the date for the determination of
holders of Ordinary Shares entitled to receive such distribution times the
number of Ordinary Shares outstanding on such date, then, and in each such case,
immediately after the close of business on such date for determination, the
Settlement Rate shall be increased so that the same shall equal the rate
determined by dividing the Settlement Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the Current Market Price per Ordinary Share on the date fixed
for such determination less an amount equal to the quotient of (x) the combined
amount distributed or payable in the transactions described in clauses (I), (II)
and (III) above and (y) the number of Ordinary Shares outstanding on such date
for determination and (ii) the denominator of which shall be equal to the
Current Market Price per Ordinary Shares on such date for determination.
(6) In case (I) a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Ordinary Shares shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Ordinary
Shares expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the aggregate
amount of any distributions to all holders of the Company's Ordinary Shares made
exclusively in cash within the 12 months preceding the expiration of such tender
or exchange offer and in respect of which no adjustment pursuant to paragraph
(5) of this Section or this paragraph (6) has been made, exceeds 5% of the
product of the Current Market Price per Ordinary Share as of the last time (the
"Expiration Time") tenders could have been made
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pursuant to such tender or exchange offer (as it may be amended) times the
number of Ordinary Shares outstanding (including any tendered shares) on the
Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Settlement
Rate shall be adjusted so that the same shall equal the rate determined by
dividing the Settlement Rate immediately prior to the close of business on the
date of the Expiration Time by a fraction (i) the numerator of which shall be
equal to (A) the product of (I) the Current Market Price per Ordinary Share on
the date of the Expiration Time and (II) the number of Ordinary Shares
outstanding (including any tendered shares) on the Expiration Time less (B) the
amount of cash plus the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the transactions
described in clauses (I), (II) and (III) above (assuming in the case of clause
(I) the acceptance, up to any maximum specified in the terms of the tender or
exchange offer, of Purchased Shares), and (ii) the denominator of which shall be
equal to the product of (A) the Current Market Price per Ordinary Share as of
the Expiration Time and (B) the number of Ordinary Shares outstanding (including
any tendered shares) as of the Expiration Time less the number of all shares
validly tendered and not withdrawn as of the Expiration Time (the shares deemed
so accepted, up to any such maximum, being referred to as the "Purchased
Shares").
(7) The reclassification of Ordinary Shares into securities including
securities other than Ordinary Shares (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve
(a) a distribution of such securities other than Ordinary Shares to all holders
of Ordinary Shares (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of stockholders entitled to
receive such distribution" and the "date fixed for such determination" within
the meaning of paragraph (4) of this Section), and (b) a subdivision, split or
combination, as the case may be, of the number of Ordinary Shares outstanding
immediately prior to such reclassification into the number of Ordinary Shares
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision or
split becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision, split
or combination becomes effective" within the meaning of paragraph (3) of this
Section).
(8) The "Current Market Price" per Ordinary Share on any day means
the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 30 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, shall mean the first date on which the
Ordinary Shares trades regular way on such exchange or in such market without
the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate, shall be calculated to
the nearest 1/10,000th of a Ordinary Share (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment in
the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is
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made to the Settlement Rate pursuant to paragraph (1), (2), (3), (4), (5), (6),
(7) or (10) of this Section 5.6(a), an adjustment shall also be made to the
Applicable Market Value solely to determine which of clauses (a), (b) or (c) of
the definition of Settlement Rate in Section 5.1 will apply on the Purchase
Contract Settlement Date. Such adjustment shall be made by multiplying the
Applicable Market Value by a fraction, the numerator of which shall be the
Settlement Rate immediately after such adjustment pursuant to paragraph (1),
(2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and the denominator
of which shall be the Settlement Rate immediately before such adjustment;
provided, however, that if such adjustment to the Settlement Rate is required to
be made pursuant to the occurrence of any of the events contemplated by
paragraph (1) (2) (3) (4) (5) (7) or (10) of this Section 5.6(a) during the
period taken into consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the Settlement Rate.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of Ordinary Shares
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event. In
the event of (i) any consolidation or merger of the Company with or into another
Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Ordinary Shares outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, transfer,
lease or conveyance to another Person of the property of the Company as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company other than as a result of or after the occurrence of a Termination Event
(any such event, a "Reorganization Event"), the Settlement Rate will be adjusted
to provide that each Holder of Securities will receive on the Purchase Contract
Settlement Date with respect to each Purchase Contract forming a part thereof,
the kind and amount of securities, cash and other property receivable upon such
Reorganization Event (without any interest thereon, and without any right to
dividends or distribution thereon which have a record date that is prior to the
Purchase Contract Settlement Date) by a Holder of the number of Ordinary Shares
issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date had occurred immediately prior to such Reorganization Event
assuming such Holder of Ordinary Shares is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (any such Person,
a "Constituent Person"), or an Affiliate of a Constituent Person to the extent
such Reorganization Event provides for different treatment of Ordinary Shares
held by Affiliates of the Company and non-affiliates and such Holder failed to
exercise his rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such Reorganization Event (provided that
if the kind or amount of securities, cash and other property receivable upon
such Reorganization Event is not the same for each Ordinary Share held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose of
this Section the kind and
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amount of securities, cash and other property receivable upon such
Reorganization Event by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing shares).
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation or dissolution of the Company, the
Company or a liquidating trust created in connection therewith, shall execute
and deliver to the Agent an agreement supplemental hereto providing that the
Holders of each Outstanding Security shall have the rights provided by this
Section 5.6. Such supplemental agreement shall provide for adjustments which,
for events subsequent to the effective date of such supplemental agreement,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section. The above provisions of this Section shall similarly apply
to successive Reorganization Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the Settlement Rate in accordance with
Section 5.6 and prepare and transmit to the Agent an Officer's Certificate
setting forth the Settlement Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon which
such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an
event that requires an adjustment to the Settlement Rate pursuant to
Section 5.6 (or if the Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide a written notice to the
Holders of the Securities of the occurrence of such event and a statement
in reasonable detail setting forth the method by which the adjustment to
the Settlement Rate was determined and setting forth the adjusted
Settlement Rate.
(b) The Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Settlement Rate, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed in making the same. The Agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any Ordinary Shares, or of any
securities or property, which may at the time be issued or delivered with
respect to any Purchase Contract; and the Agent makes no representation with
respect thereto. The Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any Ordinary Shares pursuant to a Purchase
Contract or to comply with any of the duties, responsibilities or covenants of
the Company contained in this Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Contract Adjustment
Payments, if the Company shall have such obligation, and the rights and
obligations of Holders to purchase Ordinary Shares, shall immediately and
automatically terminate, without the necessity of any notice or action by any
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Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Securities shall thereafter represent the
right to receive the Preferred Shares, forming a part of such Securities in the
case of Income PRIDES, or Treasury Securities in the case of Growth PRIDES, in
accordance with the provisions of Section 4.3 of the Pledge Agreement. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
Register.
Section 5.9. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.9, at the option of the Holder thereof, Purchase Contracts underlying
Securities, having an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof, may be settled early ("Early Settlement") in the case of
Income PRIDES on or prior to the fifth Business Day immediately preceding the
Purchase Contract Settlement Date and in the case of Growth PRIDES on or prior
to the second Business Day immediately preceding the Purchase Contract
Settlement Date, in each case, as provided herein. In order to exercise the
right to effect Early Settlement with respect to any Purchase Contracts, the
Holder of the Certificate evidencing Securities shall deliver such Certificate
to the Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment (payable to the Company in
immediately available funds in an amount (the "Early Settlement Amount") equal
to (i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date next
preceding any Payment Date to the opening of business on such Payment Date, an
amount equal to the sum of (x) the Contract Adjustment Payments payable on such
Payment Date with respect to such Purchase Contracts plus (y) in the case of
Income PRIDES Certificates, the dividends on the related Preferred Shares
payable on such Payment Date. Except as provided in the immediately preceding
sentence and subject to the second to last paragraph of Section 5.2, no payment
or adjustment shall be made upon Early Settlement of any Purchase Contract on
account of any Contract Adjustment Payments accrued on such Purchase Contract or
on account of any dividends on the Ordinary Shares issued upon such Early
Settlement. If the foregoing requirements are first satisfied with respect to
Purchase Contracts underlying any Securities at or prior to 5:00 p.m., New York
City time, on a Business Day, such day shall be the "Early Settlement Date" with
respect to such Securities and if such requirements are first satisfied after
5:00 p.m., New York City time, on a Business Day or on a day that is not a
Business Day, the "Early Settlement Date" with respect to such Securities shall
be the next succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Company shall issue, and the Holder shall be entitled to
receive, Ordinary Shares on account of each Purchase Contract as to which Early
Settlement is effected (the "Early Settlement Rate"). The Early Settlement Rate
shall be adjusted in the same manner and at the same time as the Settlement Rate
is adjusted. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the provisions of this Section 5.9, the Company
shall issue and shall deliver to the Agent at the Corporate Trust Office a
certificate or certificates for
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the full number of Ordinary Shares issuable upon such Early Settlement together
with payment in lieu of any fraction of a share, as provided in Section 5.10.
(c) No later than the third Business Day after the applicable Early
Settlement Date the Company shall cause (i) the Ordinary Shares issuable upon
Early Settlement of Purchase Contracts to be issued and delivered, and (ii) the
related Preferred Shares, in the case of Income PRIDES, or the related Treasury
Securities, in the case of Growth PRIDES, to be released from the Pledge by the
Collateral Agent and transferred, in each case to the Agent for delivery to the
Holder thereof or its designee.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of Ordinary Shares from the Company and the Preferred Shares, or
Treasury Securities, as the case may be, from the Collateral Agent, as
applicable, the Agent shall, in accordance with the instructions provided by the
Holder thereof on the applicable form of Election to Settle Early on the reverse
of the Certificate evidencing the related Securities, (i) transfer to the Holder
the Preferred Shares or Treasury Securities, as the case may be, forming a part
of such Securities, and (ii) deliver to the Holder a certificate or certificates
for the full number of Ordinary Shares issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as provided in Section
5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Securities as to which
Early Settlement was not effected.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional Ordinary Shares shall
be issued or delivered upon settlement on the Purchase Contract Settlement Date
or upon Early Settlement of any Purchase Contracts. If Certificates evidencing
more than one Purchase Contract shall be surrendered for settlement at one time
by the same Holder, the number of full Ordinary Shares which shall be delivered
upon settlement shall be computed on the basis of the aggregate number of
Purchase Contracts evidenced by the Certificates so surrendered. Instead of any
fractional Ordinary Share which would otherwise be deliverable upon settlement
of any Purchase Contracts on the Purchase Contract Settlement Date or upon Early
Settlement, the Company, through the Agent, shall make a cash payment in respect
of such fractional interest in an amount equal to the value of such fractional
shares times the Applicable Market Value. The Company shall provide the Agent
from time to time with sufficient funds to permit the Agent to make all cash
payments required by this Section 5.10 in a timely manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the Ordinary Shares pursuant to the
Purchase Contracts and in payment of any Deferred Contract Adjustment Payments;
provided, however, that the Company shall not be required to pay any such tax or
taxes which may be payable in respect of any exchange of or
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substitution for a Certificate evidencing a Security or any issuance of a
Ordinary Share in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Agent, as custodian for such Holder, and the Company
shall not be required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the transfer or
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
ARTICLE VI
REMEDIES
Section 6.1. Unconditional Right of Holders to Purchase Ordinary Shares and to
Receive Contract Adjustment Payments.
The Holder of any Income PRIDES or Growth PRIDES shall have the right,
which is absolute and unconditional, to purchase Ordinary Shares pursuant to the
Purchase Contract constituting a part of such Security and to receive payment of
each installment of the Contract Adjustment Payments with respect to the
Purchase Contract on the respective Payment Date for such Security (subject to
the right of the Company to defer payment thereof pursuant to Section 5.3, the
prepayment of Contract Adjustment Payments pursuant to Section 5.9(a) and to the
forfeiture of any Deferred Contract Adjustment Payments upon Early Settlement
pursuant to Section 5.9(b) or upon the occurrence of a Termination Event) and,
in each such case, to institute suit for the enforcement of any such right to
purchase Ordinary Shares and payment and such rights shall not be impaired
without the consent of such Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon a
default shall impair any such right or remedy or constitute a waiver of any such
right. Every right and remedy given by this Article or by law to the Holders
may be exercised from time to time, and as often as may be deemed expedient, by
such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of Income PRIDES or
Growth PRIDES, by its acceptance of such Income PRIDES or Growth PRIDES shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Agreement, or in any suit
against the Agent for any action taken, suffered or omitted by it as Agent, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by the
Agent, to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of distributions on any Preferred Shares or
Contract Adjustment Payments on any Purchase Contract on or after the respective
Payment Date therefor in respect of any Security held by such Holder, or for
enforcement of the right to purchase Ordinary Shares under the Purchase
Contracts constituting part of any Security held by such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
THE AGENT
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the Securities,
such duties and only such duties as are specifically set forth in this Agreement
and the Pledge Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Agent; and
(2) in the absence of bad faith, willful misconduct or negligence on its
part, the Agent may, with respect to the Securities, conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
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Agent and conforming to the requirements of this Agreement, but in the case of
any certificates or opinions which by any provision hereof are specifically
required to be furnished to the Agent, the Agent shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Agreement.
(b) No provision of this Agreement shall be construed to relieve the Agent
from liability for its own negligent action, its own negligent failure to act,
its own bad faith, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Agent was
negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if adequate indemnity is not provided to it.
(c) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Agent shall be subject to the provisions of this Section.
(d) The Agent is authorized to execute and deliver the Pledge Agreement in
its capacity as Agent.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by the Company hereunder
of which a Responsible Officer of the Agent has actual knowledge, the Agent
shall transmit by mail to the Company and the Holders of Securities, as their
names and addresses appear in the Register, notice of such default hereunder,
unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officer's Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
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(c) whenever in the administration of this Agreement the Agent shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officer's Certificate of the Company;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to make
such further inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Company and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or application by the
Company of the proceeds in respect of the Purchase Contracts.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated from
the other funds except to the extent required by law or provided herein. The
Agent shall be under no obligation to invest or pay interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
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(1) to pay to the Agent from time to time reasonable compensation for all
services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to reimburse the Agent
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Agent in accordance with any provision of this Agreement
(including the reasonable compensation and the reasonable expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence, willful misconduct or bad
faith; and
(3) to indemnify the Agent and any predecessor Agent for, and to hold it
harmless against, any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in connection
with the acceptance or administration of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having (or being a member of a bank holding
company having) a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by Federal or State authority and having a
Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York,
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof to
the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and the
Company.
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(d) if at any time:
(1) the Agent fails to comply with Section 310(b) of the TIA, as if
the Agent were an indenture trustee under an indenture qualified under the
TIA, after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months; or
(2) the Agent shall cease to be eligible under Section 7.8 and shall
fail to resign after written request therefor by the Company or by any such
Holder; or
(3) the Agent shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Agent or of its property shall
be appointed or any public officer shall take charge or control of the
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Agent for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Agent and shall comply
with the applicable requirements of Section 7.10. If no successor Agent shall
have been so appointed by the Company and accepted appointment in the manner
required by Section 7.10, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to give,
notice of each resignation and each removal of the Agent and each appointment of
a successor Agent by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders as their names and addresses appear in the
applicable Register. Each notice shall include the name of the successor Agent
and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every such
successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of the Company or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder.
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(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time of
such acceptance such successor Agent shall be qualified and eligible under this
Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Agent then in office, any successor by merger, conversion or consolidation to
such Agent may adopt such authentication and execution and deliver the
Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Agent, and furnish to the Agent reasonable proof that each such
applicant has owned a Security for a period of at least six months preceding the
date of such application, and such application states that the applicants desire
to communicate with other Holders with respect to their rights under this
Agreement or under the Securities and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, then the
Agent shall, mail to all the Holders copies of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to have
agreed, that the Agent's execution of the Certificates on behalf of the Holders
shall be solely as agent and attorney-in-fact for the Holders, and that the
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article Five hereof.
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Section 7.14. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, will comply
with all applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Securities or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any written direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any time
and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Certificates; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to make provision with respect to the rights of Holders pursuant
to the requirements of Section 5.6(b); or
(5) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein, or to
make any other provisions with respect to such matters or questions arising
under this Agreement, provided such action shall not adversely affect the
interests of the Holders.
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Section 8.2. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority of the
outstanding Purchase Contracts voting together as one class, by Act of said
Holders delivered to the Company and the Agent, the Company, when authorized by
a Board Resolution, and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner the terms of the
Purchase Contracts, or the provisions of this Agreement or the rights of the
Holders in respect of the Securities; provided, however, that, except as
contemplated herein, no such supplemental agreement shall, without the consent
of the Holder of each Outstanding Security affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's Obligations under the Purchase Contract,
impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral (except for the rights of Holders
of Income PRIDES to substitute the Treasury Securities for the Pledged
Preferred Shares or the rights of holders of Growth PRIDES to substitute
Preferred Shares for the Pledged Treasury Securities) or otherwise
adversely affect the Holder's rights in or to such Collateral or adversely
alter the rights in or to such Collateral;
(3) reduce any Contract Adjustment Payments, or change any place
where, or the coin or currency in which, any Contract Adjustment Payments
are payable;
(4) impair the right to institute suit for the enforcement of any
Purchase Contract;
(5) reduce the number of Ordinary Shares to be purchased pursuant to
any Purchase Contract, increase the price to purchase Ordinary Shares upon
settlement of any Purchase Contract, change the Purchase Contract
Settlement Date or otherwise adversely affect the Holder's rights under any
Purchase Contract; or
(6) reduce the percentage of the outstanding Purchase Contracts the
consent of whose Holders is required for any such supplemental agreement;
provided, that if any amendment or proposal referred to above would adversely
affect only the Income PRIDES or the Growth PRIDES, then only the affected class
of Holder as of the record date for the Holders entitled to vote thereon will be
entitled to vote on such amendment or proposal, and such amendment or proposal
shall not be effective except with the consent of Holders of not less than a
majority of such class.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this
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Agreement, the Agent shall be entitled to receive and (subject to Section 7.1)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement. The Agent may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Agent's own rights, duties or
immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.
Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and delivered
after the execution of any supplemental agreement pursuant to this Article may,
and shall if required by the Agent, bear a notation in form approved by the
Agent as to any matter provided for in such supplemental agreement. If the
Company shall so determine, new Certificates so modified as to conform, in the
opinion of the Agent and the Company, to any such supplemental agreement may be
prepared and executed by the Company and authenticated, executed on behalf of
the Holders and delivered by the Agent in exchange for Outstanding Certificates.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except
Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any other
Person or sell, assign, transfer, lease or convey all or substantially all of
its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either the Company
shall be the continuing corporation, or the successor (if other than the
Company) shall expressly assume all the obligations of the Company under the
Purchase Contracts, the Preferred Shares, this Agreement and the Pledge
Agreement by one or more supplemental agreements in form reasonably satisfactory
to the Agent and the Collateral Agent, executed and delivered to the Agent and
the Collateral Agent by such corporation, and (ii) the Company or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, assignment, transfer, lease or conveyance, be in
default in the performance of any covenant or condition hereunder, under any of
the Securities or under the Pledge Agreement.
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor corporation in
accordance with Section 9.1, such successor corporation shall succeed to and be
substituted for the Company with the same effect as if it had been named herein
as the Company. Such successor corporation thereupon may cause
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to be signed, and may issue either in its own name or in the name of ACE Limited
any or all of the Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Agent; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Agreement prescribed, the Agent shall authenticate and execute on behalf of the
Holders and deliver any Certificates which previously shall have been signed and
delivered by the officers of the Company to the Agent for authentication and
execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Agent for
that purpose. All the Certificates so issued shall in all respects have the same
legal rank and benefit under this Agreement as the Certificates theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Certificates had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
Section 9.3. Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
COVENANTS
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New York
an office or agency where Certificates may be presented or surrendered for
acquisition of Ordinary Shares upon settlement of the Purchase Contracts on the
Purchase Contract Settlement Date or Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where Certificates may be
surrendered for registration of transfer or exchange, for a Collateral
Substitution or re-establishment of an Income PRIDES and where notices and
demands to or upon the Company in respect of the Securities and this Agreement
may be served. The Company will give prompt written notice to the Agent of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the
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Company hereby appoints the Agent as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Certificates may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Agent of any such designation or rescission and of any
change in the location of any such other office or agency. The Company hereby
designates as the place of payment for the Securities the Corporate Trust Office
and appoints the Agent at its Corporate Trust Office as paying agent in such
city.
Section 10.3. Company to Reserve Ordinary Shares.
The Company shall at all times prior to the Purchase Contract Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unissued Ordinary Shares the full number of Ordinary Shares
issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.
Section 10.4. Covenants as to Ordinary Shares.
The Company covenants that all Ordinary Shares which may be issued against
tender of payment in respect of any Purchase Contract constituting a part of the
Outstanding Securities will, upon issuance, be duly authorized, validly issued,
fully paid and nonassessable.
Section 10.5. Statements of Officer of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officer's
Certificate, stating whether or not to the best knowledge of the signer thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions hereof, and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which such
Officer may have knowledge.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ACE LIMITED
By:____________________________
Name:
Title:
THE BANK OF NEW YORK
as Purchase Contract Agent
By:____________________________
Name:
Title:
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EXHIBIT A
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF THE
CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON
OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co., or such other name as requested
by an authorized representative of The Depository Trust Company, and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.
No.________ Cusip No. ___________
Number of Income PRIDES ___________________
Form of Face of Income PRIDES Certificate
This Income PRIDES Certificate certifies that Cede & Co. is the registered
Holder of the number of Income PRIDES set forth above. Each Income PRIDES
represents (i) beneficial ownership by the Holder of one share of Cumulative
Redeemable Preferred Stock, Series A, no par value per share (the "Preferred
Share"), of ACE Limited, a company duly organized and existing under the laws of
the Cayman Islands (the "Company"), having a stated liquidation amount of $50,
subject to the Pledge of such Preferred Share by such Holder pursuant to the
Pledge Agreement and (ii) the rights and obligations of the Holder under one
Purchase Contract with the Company. All capitalized terms used herein which are
defined in the Purchase Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Preferred Shares constituting part of
each Income PRIDES evidenced hereby have been pledged to the Collateral Agent,
for the benefit of the Company, to secure the obligations of the Holder under
the Purchase Contract comprising a portion of such Income PRIDES.
The Pledge Agreement provides that all payments of the Stated Amount of or
cash dividends on, any Pledged Preferred Shares (as defined in the Pledge
Agreement) constituting part of the Income PRIDES received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer in same day funds
(i) in the case of (A) cash dividends with respect to Pledged Preferred Shares,
and (B) any payments of the Stated Amount with respect to any Preferred Shares
that have been released from the Pledge pursuant to the Pledge Agreement, to the
Agent to the account designated by the Agent, no later than 2:00 p.m., New York
City time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event
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such payment is received by the Collateral Agent on a day that is not a Business
Day or after 12:30 p.m., New York City time, on a Business Day, then such
payment shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day) and (ii) in the case of payments of the Stated Amount
of any Pledged Preferred Shares to the Company on the Purchase Contract
Settlement Date (as defined herein) in accordance with the terms of the Pledge
Agreement, in full satisfaction of the respective obligations of the Holders of
the Income PRIDES of which such Pledged Preferred Shares are a part under the
Purchase Contracts forming a part of such Income PRIDES. Distributions on any
Preferred Share forming part of an Income PRIDES evidenced hereby which are
payable quarterly in arrears on ___, ___, ___ and ___ of each year, commencing
___, 2000 (a "Payment Date"), shall, subject to receipt thereof by the Agent
from the Collateral Agent, be paid to the Person in whose name this Income
PRIDES Certificate (or a Predecessor Income PRIDES Certificate) is registered at
the close of business on the Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this Income
PRIDES Certificate to purchase, and the Company to sell, on May ___, 2003 (the
"Purchase Contract Settlement Date"), at a price equal to $50 (the "Stated
Amount"), a number of ordinary shares, US$0.041666667 par value per share
("Ordinary Shares"), of the Company, equal to the Settlement Rate, unless on or
prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the Income PRIDES of
which such Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase price
(the "Purchase Price") for the Ordinary Shares purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of payment received in respect
of the Stated Amount of the Pledged Preferred Shares pledged to secure the
obligations under such Purchase Contract of the Holder of the Income PRIDES of
which such Purchase Contract is a part.
The Company shall pay on each Payment Date in respect of each Purchase
Contract evidenced hereby an amount (the "Contract Adjustment Payments") equal
to % per annum of the Stated Amount, computed on the basis of a 360 day year of
twelve 30 day months. Such Contract Adjustment Payments shall be payable to the
Person in whose name this Income PRIDES Certificate (or a Predecessor Income
PRIDES Certificate) is registered at the close of business on the Record Date
for such Payment Date.
Dividends on the Preferred Shares and Contract Adjustment Payments will be
payable at the office of the Agent in The City of New York or, at the option of
the Company, by check mailed to the address of the Person entitled thereto as
such address appears on the Income PRIDES Register.
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Income PRIDES Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
ACE LIMITED
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase
Contracts evidenced hereby)
By: THE BANK OF NEW YORK
not indidually but solely as
Attorney-in-Fact of such Holder
By: _______________________________
Name:
Title:
Dated:
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<PAGE>
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificates referred to in the within
mentioned Purchase Contract Agreement.
By: THE BANK OF NEW YORK,
as Purchase Contract Agent
By:______________________________
Authorized Officer
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(Form of Reverse of Income PRIDES Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of April ___ , 2000 (as may be supplemented from time to
time, the "Purchase Contract Agreement"), between the Company and The Bank of
New York, a New York banking association, as Purchase Contract Agent (including
its successors thereunder, herein called the "Agent"), to which Purchase
Contract Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Agent, the Company, and the Holders and
of the terms upon which the Income PRIDES Certificates are, and are to be,
executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this Income
PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price"), a number of Ordinary Shares of the Company equal to the Settlement
Rate, unless, on or prior to the Purchase Contract Settlement Date, there shall
have occurred a Termination Event or an Early Settlement with respect to the
Security of which such Purchase Contract is a part. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined below) is equal to or
greater than $___ (the "Threshold Appreciation Price"), ___ Ordinary Shares per
Purchase Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $___ (the "Threshold Depreciation
Price"), the number of Ordinary Shares per Purchase Contract equal to the Stated
Amount divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to the Threshold Depreciation Price, ___ Ordinary
Shares per Purchase Contract, in each case subject to adjustment as provided in
the Purchase Contract Agreement. No fractional Ordinary Shares will be issued
upon settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.
Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
Income PRIDES to purchase at the Purchase Price, and the Company to sell, a
number of newly issued Ordinary Shares equal to the Early Settlement Rate or the
Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the Closing Price per
Ordinary Share on each of the 20 consecutive Trading Days ending on the third
Trading Day immediately preceding the Purchase Contract Settlement Date.
The "Closing Price" of the Ordinary Shares on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the Ordinary Shares on the New York Stock Exchange (the
"NYSE") on such date or, if the Ordinary Shares is not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Ordinary Shares is so
listed, or if the Ordinary Shares is not so listed on a United States national
or regional securities exchange, as reported by The Nasdaq Stock Market, or, if
the Ordinary Shares is not so reported, the last quoted bid price for the
Ordinary Shares in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the
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<PAGE>
market value of the Ordinary Shares on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company.
A "Trading Day" means a day on which the Ordinary Shares (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Ordinary Shares.
In accordance with the terms of the Purchase Contract Agreement, the Holder
of this Income PRIDES Certificate shall pay the Purchase Price for the Ordinary
Shares purchased pursuant to each Purchase Contract evidenced hereby by
effecting a Cash Settlement, or an Early Settlement or from the proceeds of a
remarketing of the related Pledged Preferred Shares of such holders. A Holder of
Income PRIDES who does not elect, on or prior to 5:00 p.m., New York City time,
on the fifth Business Day immediately preceding the Purchase Contract Settlement
Date, to make an effective Cash Settlement or an Early Settlement, shall pay the
Purchase Price for the Ordinary Shares to be issued under the related Purchase
Contract from the Proceeds of the sale of the related Pledged Preferred Shares
held by the Collateral Agent. Such sale will be made by the Remarketing Agent
pursuant to the terms of the Remarketing Agreement and the Remarketing
Underwriting Agreement on the third Business Day immediately preceding the
Purchase Contract Settlement Date. If, as provided in the Purchase Contract
Agreement, upon the occurrence of a Failed Remarketing the Collateral Agent, for
the benefit of the Company, exercises its rights as a secured creditor with
respect to the Pledged Preferred Shares related to this Income PRIDES
certificate, any accumulated and unpaid dividends on such Pledged Preferred
Shares will become payable by the Company to the holder of this Income PRIDES
Certificate in the manner provided for in the Purchase Contract Agreement.
The Company shall not be obligated to issue any Ordinary Shares in respect
of a Purchase Contract or deliver any certificates therefor to the Holder unless
it shall have received payment in full of the aggregate purchase price for the
Ordinary Shares to be purchased thereunder in the manner herein set forth.
Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Agent and to the Holders, at their addresses as
they appear in the Income PRIDES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Preferred
Share (as defined in the Pledge Agreement) from the Pledge. An Income PRIDES
shall thereafter represent the right to receive the Preferred Share in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Pledged
Preferred Shares. Upon receipt of notice of any meeting at which holders of
Preferred Shares are entitled to vote or upon the solicitation of consents,
waivers or proxies of holders of Preferred Shares, the Agent shall, as soon as
practicable thereafter, mail to the Income PRIDES holders a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Income PRIDES
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holder on the record date set by the Agent therefor (which, to the extent
possible, shall be the same date as the record date for determining the holders
of Preferred Shares entitled to vote) shall be entitled to instruct the Agent as
to the exercise of the voting rights pertaining to the Preferred Shares
constituting a part of such holder's Income PRIDES and (c) stating the manner in
which such instructions may be given. Upon the written request of the Income
PRIDES Holders on such record date, the Agent shall endeavor insofar as
practicable to vote or cause to be voted, in accordance with the instructions
set forth in such requests, the maximum number of Preferred Shares as to which
any particular voting instructions are received. In the absence of specific
instructions from the Holder of an Income PRIDES, the Agent shall abstain from
voting the Preferred Share evidenced by such Income PRIDES.
The Income PRIDES Certificates are issuable only in registered form and
only in denominations of a single Income PRIDES and any integral multiple
thereof. The transfer of any Income PRIDES Certificate will be registered and
Income PRIDES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Income PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A holder who elects to substitute a Treasury
Security for Preferred Shares thereby creating Growth PRIDES, shall be
responsible for any fees or expenses payable in connection therewith. Except as
provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income PRIDES shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Income PRIDES in respect of the Preferred Share and Purchase
Contract constituting such Income PRIDES may be transferred and exchanged only
as an Income PRIDES. The holder of an Income PRIDES may substitute for the
Pledged Preferred Shares securing its obligation under the related Purchase
Contract Treasury Securities in an aggregate principal amount at maturity equal
to the aggregate Stated Amount of the Pledged Preferred Shares in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement. From
and after such Collateral Substitution, the Security for which such Pledged
Treasury Securities secures the Holder's obligation under the Purchase Contract
shall be referred to as a "Growth PRIDES." A Holder may make such Collateral
Substitution only in integral multiples of 20 Income PRIDES for 20 Growth
PRIDES. Such Collateral Substitution may cause the equivalent aggregate
principal amount of this Income PRIDES Certificate to be increased or decreased;
provided, however, the equivalent aggregate principal amount of Income PRIDES
Certificate shall not exceed $400,000,000. All such adjustments to the
equivalent aggregate principal amount of this Income PRIDES Certificate shall be
duly recorded by placing an appropriate notation on the Schedule attached
hereto.
A Holder of Growth PRIDES may create or recreate Income PRIDES by (a)
depositing with the Collateral Agent Preferred Shares having an aggregate Stated
Amount equal to the aggregate principal amount at maturity of the Pledged
Treasury Securities comprising part of the Growth PRIDES in exchange for the
release of such Pledged Treasury Securities in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement and (b) in the event that
Contract Adjustment Payments are at a higher rate for Income PRIDES than for
Growth PRIDES, by delivering to the Agent cash in an amount equal to the excess
of the
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Contract Adjustment Payments that would have accrued since the last payment date
through the date of substitution on the Income PRIDES being created or recreated
by such Holders, over the Contract Adjustment Payments that have accrued over
the same time period on the related Growth PRIDES. Any such recreation may be
effected only in integral multiples of 20 Growth PRIDES for 20 Income PRIDES.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, shall immediately and automatically terminate, without
the necessity of any notice or action by any Holder, the Agent or the Company,
if, on or prior to the Purchase Contract Settlement Date, a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall promptly but in no event later than two Business Days thereafter give
written notice to the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Income PRIDES Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Preferred Shares from the Pledge in accordance with the provisions of the Pledge
Agreement.
Subject to and upon compliance with the provisions of the Purchase Contract
Agreement, at the option of the Holder thereof, Purchase Contracts underlying
Securities having an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof may be settled early ("Early Settlement") as provided in the
Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts evidenced by this Income
PRIDES Certificate, the Holder of this Income PRIDES Certificate shall deliver
this Income PRIDES Certificate to the Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early set forth below duly completed and accompanied by payment in the
form of immediately available funds payable to the order of the Company in an
amount (the "Early Settlement Amount") equal to (i) the product of (A) the
Stated Amount times (B) the number of Purchase Contracts with respect to which
the Holder has elected to effect Early Settlement, plus (ii) if such delivery is
made with respect to any Purchase Contracts during the period from the close of
business on any Record Date for any Payment Date to the opening of business on
such Payment Date, the dividends on the related Preferred Shares payable on such
Payment Date, if declared, with respect to such Purchase Contracts. Upon Early
Settlement of Purchase Contracts by a Holder of the related Securities, the
Pledged Preferred Shares underlying such Securities shall be released from the
Pledge as provided in the Pledge Agreement and the Holder shall be entitled to
receive a number of Ordinary Shares on account of each Purchase Contract forming
part of an Income PRIDES as to which Early Settlement is effected equal to the
Early Settlement Rate. The Early Settlement Rate shall initially be equal to
Ordinary Shares and shall be adjusted in the same manner and at the same time as
the Settlement Rate is adjusted as provided in the Purchase Contract Agreement.
Upon registration of transfer of this Income PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Income
PRIDES Certificate. The Company covenants and agrees, and the Holder, by its
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
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The Holder of this Income PRIDES Certificate, by its acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Income PRIDES evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
his obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on his behalf as its attorney-in-fact, and consents to the
Pledge of the underlying this Income PRIDES Certificate pursuant to the Pledge
Agreement. The Holder further covenants and agrees, that, to the extent and in
the manner provided in the Purchase Contract Agreement and the Pledge Agreement,
but subject to the terms thereof, payments in respect to the Stated Amount of
the Pledged Preferred Shares on the Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Income PRIDES Certificate is
registered as the owner of the Income PRIDES evidenced hereby for the purpose of
receiving payments of dividends payable quarterly on the Preferred Shares, if
declared, receiving payments of Contract Adjustment Payments, performance of the
Purchase Contracts and for all other purposes whatsoever, whether or not any
payments in respect thereof be overdue and notwithstanding any notice to the
contrary, and neither the Company, the Agent nor any such agent shall be
affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of Ordinary Shares.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
------------------------------------
(cust) (minor)
Under Uniform Gifts to Minors Act
------------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
___________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Income PRIDES Certificates and all rights thereunder, hereby
irrevocably constituting and appointing
- -------------------------------------------------------------------------------
attorney to transfer said Income PRIDES Certificates on the books of ACE Limited
with full power of substitution in the premises.
Dated:
------------------------- --------------------------------------
Signature
NOTICE: The signature to this
assignment must correspond with the
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name as it appears upon the face
of the within Income PRIDES
Certificates in every particular,
without alteration or enlargement or
any change whatsoever.
Signature Guarantee:
-------------------
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SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for Ordinary Shares
deliverable upon settlement on or after the Purchase Contract Settlement Date of
the Purchase Contracts underlying the number of Income PRIDES evidenced by this
Income PRIDES Certificate be registered in the name of, and delivered, together
with a check in payment for any fractional share, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:
--------------------------- --------------------------------------
Signature
Signature Guarantee:
------------------
(if assigned to another person)
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please (i) print such Person's
name and address and (ii) provide
a guarantee of your signature:
Please print name
and address of Registered Holder:
- --------------------------------- --------------------------------------
Name Name
- --------------------------------- --------------------------------------
Address Address
- --------------------------------- --------------------------------------
- --------------------------------- --------------------------------------
- --------------------------------- --------------------------------------
Social Security or other
Taxpayer Identification
Number, if any --------------------------------------
A-12
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Income PRIDES evidenced by this Income PRIDES
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Income PRIDES with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for Ordinary Shares deliverable
upon such Early Settlement be registered in the name of, and delivered, together
with a check in payment for any fractional share and any Income PRIDES
Certificate representing any Income PRIDES evidenced hereby as to which Early
Settlement of the related Purchase Contracts is not effected, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. Pledged Preferred Shares deliverable upon such Early Settlement
will be transferred in accordance with the transfer instructions set forth
below. If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:
--------------------------- --------------------------------------
Signature
Signature Guarantee:
--------------------------------------
A-13
<PAGE>
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If Ordinary Shares or Income PRIDES REGISTERED HOLDER
Certificates are to be registered in the
name of and delivered to and Pledged
Preferred Shares are to be
transferred to a Person other than the
Holder, please print such Person's name
and address:
Please print name
and address of
Registered Holder:
- --------------------------------- --------------------------------------
Name Name
- --------------------------------- --------------------------------------
Address Address
- --------------------------------- --------------------------------------
- --------------------------------- --------------------------------------
- --------------------------------- --------------------------------------
Social Security or other
Taxpayer Identification
Number, if any --------------------------------------
Transfer Instructions for Pledged Preferred Shares Transferable Upon Early
Settlement or a Termination Event:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
A-14
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate
have been made:
<TABLE>
<CAPTION>
Principal Amount
of this Global Signature of
Amount of decrease Amount of increase Certificate authorized officer
in Principal in Principal following such of Transfer Agent
Amount of the Amount of the decrease or or Securities
Date Global Certificate Global Certificate increase Custodian
- ---------------- ------------------ ------------------ --------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
A-15
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF A
CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON
OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co., or such other name as requested
by an authorized representative of The Depository Trust Company, and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.
No. ___ Cusip No.______
Number of Growth PRIDES ____________________
Form of Face of Growth PRIDES Certificate
This Growth PRIDES Certificate certifies that Cede & Co. is the registered
Holder of the number of Growth PRIDES set forth above. Each Growth PRIDES
represents (i) a 1/20th undivided beneficial ownership interest in a Treasury
Security, subject to the Pledge of such interest in such Treasury Security by
such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with ACE Limited, a
company duly organized and existing under the laws of the Cayman Islands (the
"Company"). All capitalized terms used herein which are defined in the Purchase
Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Securities constituting part
of each Growth PRIDES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Growth PRIDES.
Each Purchase Contract evidenced hereby obligates the Holder of this Growth
PRIDES Certificate to purchase, and the Company, to sell, on May ____, 2003 (the
"Purchase Contract Settlement Date"), at a price equal to $50 (the "Stated
Amount"), a number of ordinary shares, US$0.041666667 par value per share
("Ordinary Shares"), of the Company equal to the Settlement Rate, unless on or
prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the Growth PRIDES of
which such Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and
B-1
<PAGE>
more fully described on the reverse hereof. The purchase price for the Ordinary
Shares purchased pursuant to each Purchase Contract evidenced hereby will be
paid by application of the Proceeds from the Treasury Securities pledged to
secure the obligations under such Purchase Contract in accordance with the terms
of the Pledge Agreement.
The Company shall pay on each Payment Date in respect of each Purchase
Contract evidenced hereby an amount (the "Contract Adjustment Payments") equal
to ____ % per annum of the Stated Amount, computed on the basis of a 360 day
year of twelve 30 day months. Such Contract Adjustment Payments shall be payable
to the Person in whose name this Growth PRIDES Certificate (or a Predecessor
Growth PRIDES Certificate) is registered at the close of business on the Record
Date for such Payment Date.
Contract Adjustment Payments will be payable at the office of the Agent in
The City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto as such address appears on the Growth
PRIDES Register.
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Growth PRIDES Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
ACE LIMITED
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations of such
Holder under the Purchase Contracts)
By: THE BANK OF NEW YORK,
not individually but solely as
Attorney-in-Fact of such Holder
By:
----------------------------------
Name:
Title:
Dated:
B-3
<PAGE>
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Growth PRIDES referred to in the within-mentioned
Purchase Contract Agreement.
By: THE BANK OF NEW YORK,
as Purchase Contract Agent
By:
----------------------------------
Authorized Officer
B-4
<PAGE>
(Reverse of Growth PRIDES Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of August 12, 1999 (as may be supplemented from time to
time, the "Purchase Contract Agreement") between the Company and The Bank of New
York, a New York banking association, as Purchase Contract Agent (including its
successors thereunder, herein called the "Agent"), to which the Purchase
Contract Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Agent, the Company and the Holders and
of the terms upon which the Growth PRIDES Certificates are, and are to be,
executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this Growth
PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price") a number of Ordinary Shares of the Company equal to the Settlement Rate,
unless, on or prior to the Purchase Contract Settlement Date, there shall have
occurred a Termination Event or an Early Settlement with respect to the Security
of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a)
if the Applicable Market Value (as defined below) is equal to or greater than
$__ (the "Threshold Appreciation Price"), __ Ordinary Shares per Purchase
Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $__ (the "Threshold Depreciation
Price"), the number of Ordinary Shares per Purchase Contract equal to the Stated
Amount divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to the Threshold Depreciation Price, __ Ordinary
Shares per Purchase Contract, in each case subject to adjustment as provided in
the Purchase Contract Agreement. No fractional Ordinary Shares will be issued
upon settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.
Each Purchase Contract evidenced hereby which is settled through Early
Settlement shall obligate the Holder of the related Growth PRIDES to purchase at
the Purchase Price, and the Company to sell, a number of newly issued Ordinary
Shares equal to the Early Settlement Rate.
The "Applicable Market Value" means the average of the Closing Prices per
Ordinary Share on each of the 20 consecutive Trading Days ending on the third
Trading Day immediately preceding the Purchase Contract Settlement Date.
The "Closing Price" of the Ordinary Shares on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the Ordinary Shares on the New York Stock Exchange (the
"NYSE") on such date or, if the Ordinary Shares is not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Ordinary Shares is so
listed, or if the Ordinary Shares is not so listed on a United States national
or regional securities exchange, as reported by The Nasdaq Stock Market, or, if
the Ordinary Shares is not so reported, the last quoted bid price for the
Ordinary Shares in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of the Ordinary Shares on such date as determined by
a nationally recognized independent investment banking firm retained for this
purpose by the Company.
B-5
<PAGE>
A "Trading Day" means a day on which the Ordinary Shares (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Ordinary Shares.
In accordance with the terms of the Purchase Contract Agreement, the Holder
of this Growth PRIDES Certificate shall pay the Purchase Price for the Ordinary
Shares purchased pursuant to each Purchase Contract evidenced hereby by
effecting either an Early Settlement of each such Purchase Contract or by
applying a principal amount of the Pledged Treasury Securities underlying such
Holder's Growth PRIDES equal to the Stated Amount of such Purchase Contract to
the purchase of the Ordinary Shares.
The Company shall not be obligated to issue any Ordinary Shares in respect
of a Purchase Contract or deliver any certificates therefor to the Holder unless
it shall have received payment in full of the aggregate purchase price for the
Ordinary Shares to be purchased thereunder in the manner herein set forth.
Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Agent and to the Holders, at their addresses as
they appear in the Growth PRIDES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities (as defined in the Pledge Agreement) forming a part of each Growth
PRIDES from the Pledge. A Growth PRIDES shall thereafter represent the right to
receive the Treasury Securities forming a part of such Growth PRIDES in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
The Growth PRIDES Certificates are issuable only in registered form and
only in denominations of a single Growth PRIDES and any integral multiple
thereof. The transfer of any Growth PRIDES Certificate will be registered and
Growth PRIDES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Growth PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A Holder who elects to substitute Preferred
Shares for Treasury Securities, thereby recreating Income PRIDES, shall be
responsible for any fees or expenses payable in connection therewith. Except as
provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying a Growth PRIDES remains in effect, such Growth PRIDES shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Growth PRIDES in respect of the Treasury Security and the
Purchase Contract constituting such Growth PRIDES may be transferred and
exchanged only as a Growth PRIDES. The Holder of a Growth PRIDES may substitute
for the Pledged Treasury Securities securing its obligation under the related
Purchase Contract Preferred Shares with a Stated Amount equal to the aggregate
principal amount of the Pledged Treasury Securities in accordance with the terms
of the Purchase Contract Agreement and the Pledge Agreement. From and after such
Collateral Substitution, the
B-6
<PAGE>
Security for which such Preferred Shares secures the Holder's obligation under
the Purchase Contract shall be referred to as an "Income PRIDES." A Holder may
make such Collateral Substitution only in integral multiples of 20 Growth PRIDES
for 20 Preferred Shares. Such Collateral Substitution may cause the equivalent
aggregate principal amount of this Growth PRIDES Certificate to be increased or
decreased; provided, however, the equivalent aggregate principal amount
outstanding under this Growth PRIDES Certificate shall not exceed $400,000,000.
All such adjustments to the equivalent aggregate principal amount of this Growth
PRIDES Certificate shall be duly recorded by placing an appropriate notation on
the Schedule attached hereto.
A Holder of Income PRIDES may create or recreate a Growth PRIDES by (a)
delivering to the Collateral Agent Treasury Securities in an aggregate principal
amount equal to the aggregate Stated Amount of the Pledged Preferred Shares in
exchange for the release of such Pledged Preferred Shares in accordance with the
terms of the Purchase Contract Agreement and the Pledge Agreement and (b) in the
event that Contract Adjustment Payments are at a higher rate for Growth PRIDES
than for Income PRIDES, by delivering to the Agent cash in an amount equal to
the excess of the Contract Adjustment Payments that would have accrued since the
last payment date through the date of substitution on the Growth PRIDES being
created or recreated by such Holders, over the Contract Adjustment Payments that
have accrued over the same time period on the related Income PRIDES. Any such
recreation of a Growth PRIDES may be effected only in multiples of 20 Income
PRIDES for 20 Growth PRIDES.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Agent or the Company, if, on or prior
to the Purchase Contract Settlement Date, a Termination Event shall have
occurred. Upon the occurrence of a Termination Event, the Company shall promptly
but in no event later than two business days thereafter give written notice to
the Agent, the Collateral Agent and to the Holders, at their addresses as they
appear in the Growth PRIDES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Treasury Securities
from the Pledge in accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase Contract
Agreement, at the option of the Holder thereof, Purchase Contracts underlying
Securities having an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof may be settled early ("Early Settlement") as provided in the
Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts evidenced by this Growth
PRIDES Certificate, the Holder of this Growth PRIDES Certificate shall deliver
this Growth PRIDES Certificate to the Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early set forth below duly completed and accompanied by payment in the
form of immediately available funds payable to the order of the Company in an
amount (the "Early Settlement Amount") equal to (i) the product of (A) the
Stated Amount times (B) the number of Purchase Contracts with respect to which
the Holder has elected to effect Early Settlement, plus (ii) if such delivery is
made with respect to any Purchase Contracts during the period from the close of
business on any Record Date for any Payment Date to the opening of business on
such Payment Date, an amount equal to the Contract Adjustment
B-7
<PAGE>
Payments payable on such Payment Date with respect to such Purchase Contracts.
Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Treasury Securities underlying such Securities shall be
released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of Ordinary Shares on account of each
Purchase Contract forming part of a Growth PRIDES as to which Early Settlement
is effected equal to the Early Settlement Rate. The Early Settlement Rate shall
initially be equal to Ordinary Shares and shall be adjusted in the same manner
and at the same time as the Settlement Rate is adjusted as provided in the
Purchase Contract Agreement.
Upon registration of transfer of this Growth PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Growth
PRIDES Certificate. The Company covenants and agrees, and the Holder, by his
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Growth PRIDES Certificate, by his acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Growth PRIDES evidenced hereby on his behalf as its
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
its obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on his behalf as his attorney-in-fact, and consents to the
Pledge of the Treasury Securities underlying this Growth PRIDES Certificate
pursuant to the Pledge Agreement. The Holder further covenants and agrees, that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect to
the Stated Amount of the Pledged Treasury Securities on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Growth PRIDES Certificate is
registered as the owner of the Growth PRIDES evidenced hereby for the purpose of
receiving payments of interest on the Treasury Securities, receiving payments of
Contract Adjustment Payments, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the Company,
the Agent nor any such agent shall be affected by notice to the contrary.
B-8
<PAGE>
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of Ordinary Shares.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
B-9
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
-----------------------------------
(cust) (minor)
Under Uniform Gifts to Minors Act
-----------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
______________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Growth PRIDES Certificates and all rights thereunder, hereby
irrevocably constituting and appointing
- --------------------------------------------------------------------------------
attorney to transfer said Growth PRIDES Certificates on the books of ACE Limited
with full power of substitution in the premises.
Dated: ----------------- -----------------------------
Signature
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Growth PRIDES
B-10
<PAGE>
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guarantee:__________________
B-11
<PAGE>
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for Ordinary Shares
deliverable upon settlement on or after the Purchase Contract Settlement Date of
the Purchase Contracts underlying the number of Growth PRIDES evidenced by this
Growth PRIDES Certificate be registered in the name of, and delivered, together
with a check in payment for any fractional share, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:________________________ ______________________________
Signature
Signature Guarantee:
If shares are to be registered in
the name of and delivered REGISTERED HOLDER
to a Person other than the Holder,
please print such Person's name
and address:
Please print name
and address of
Registered Holder:
- ------------------------------ ------------------------------
Name Name
- ------------------------------ ------------------------------
Address Address
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
Social Security or other
Taxpayer Identification
Number, if any ------------------------------
B-12
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Growth PRIDES Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Growth PRIDES evidenced by this Growth PRIDES
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Growth PRIDES with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for Ordinary Shares deliverable
upon such Early Settlement be registered in the name of, and delivered, together
with a check in payment for any fractional share and any Growth PRIDES
Certificate representing any Growth PRIDES evidenced hereby as to which Early
Settlement of the related Purchase Contracts is not effected, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. Pledged Treasury Securities deliverable upon such Early
Settlement will be transferred in accordance with the transfer instructions set
forth below. If shares are to be registered in the name of a Person other than
the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:______________________ ________________________________
Signature
Signature Guarantee: _________________________
B-13
<PAGE>
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If Ordinary Shares or Growth REGISTERED HOLDER
PRIDES Certificates are to be registered
in the name of and delivered to and Pledged
Treasury Securities are to be transferred
to a Person other than the Holder, please
print such Person's name and address:
Please print name
and address of
Registered Holder:
- --------------------------------- ------------------------------------
Name Name
- --------------------------------- ------------------------------------
Address Address
- --------------------------------- -----------------------------------
- --------------------------------- -----------------------------------
- --------------------------------- -----------------------------------
Social Security or other
Taxpayer Identification
Number, if any -----------------------------------
Transfer Instructions for Pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:
- ---------------------------------
- ---------------------------------
- ---------------------------------
B-14
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been
made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Global Signature of
decrease in increase in Certificate authorized officer
Principal Amount Principal Amount following such of Transfer Agent
of the Global of the Global decrease or or Securities
Date Certificate Certificate increase Custodian
- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
</TABLE>
B-15
<PAGE>
EXHIBIT C
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company"),
We hereby notify you in accordance with Section 4.1 of the Pledge
Agreement, dated as of April . , 2000, among the Company, yourselves, as
Collateral Agent, and ourselves, as Purchase Contract Agent and as attorney-in-
fact for the holders of [Income PRIDES] [Growth PRIDES] from time to time, that
the holder of securities listed below (the "Holder") has elected to substitute
[$_____ aggregate principal amount at maturity of Treasury Securities] [$_______
Stated Amount of Preferred Shares] in exchange for the [Pledged Preferred
Shares] [Pledged Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
transferred [Treasury Securities] [Preferred Shares] to you, as Collateral
Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Preferred Shares], and upon the payment by such Holder of
any applicable fees, to release the [Preferred Shares] [Treasury Securities]
related to such [Income PRIDES] [Growth PRIDES] to us in accordance with the
Holder's instructions.
Date:-------------------- --------------------------
By:
-----------------------
Name:
Title:
Signature Guarantee:------
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Shares] for the [Pledged Preferred Shares]
[Pledged Treasury Securities]:
C-1
<PAGE>
________________ _________________________________
Name Social Security or other Taxpayer
Identification Number, if any
________________
Address
________________
________________
C-2
<PAGE>
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company"),
The undersigned Holder hereby notifies you that it has delivered to The
Bank of New York, as Collateral Agent, [$_______ aggregate principal amount at
maturity of Treasury Securities] [$_______ Stated Amount of Preferred Shares] in
exchange for the [Pledged Preferred Shares] [Pledged Treasury Securities] held
by the Collateral Agent, in accordance with Section 4.1 of the Pledge Agreement,
dated April , 2000, among you, the Company and the Collateral Agent. The
undersigned Holder has paid the Collateral Agent all applicable fees relating to
such exchange. The undersigned Holder hereby instructs you to instruct the
Collateral Agent to release to you on behalf of the undersigned Holder the
[Pledged Preferred Shares] [Pledged Treasury Securities] related to such [Income
PRIDES] [Growth PRIDES].
Date:
----------------------------- ------------------------------------
By:
---------------------------------
Signature Guarantee:
----------------
Dated:
Please print name and address of Registered Holder:
- ---------------------------------- -----------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
- ----------------------------------
- ----------------------------------
- ----------------------------------
D-1
<PAGE>
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company"),
The undersigned Holder hereby irrevocably notifies you in accordance with
Section 5.3 of the Purchase Contract Agreement, dated as of April ____ , 2000
between the Company, yourselves, as Purchase Contract Agent and as Attorney-in-
Fact for the Holders of the Purchase Contracts, that such Holder has elected to
pay to the Collateral Agent, on or prior to 11:00 a.m. New York City time, on
the Business Day immediately preceding the Purchase Contract Settlement Date,
(in lawful money of the United States by [certified or cashiers check] [wire
transfer] in immediately available funds), $_________ as the Purchase Price for
the Ordinary Shares issuable to such Holder by the Company under the related
Purchase Contract on the Purchase Contract Settlement Date. The undersigned
Holder hereby instructs you to notify promptly the Collateral Agent of the
undersigned Holders election to make such cash settlement with respect to the
Purchase Contracts related to such Holder's [Income PRIDES] [Growth PRIDES].
Date:
----------------------------- ----------------------------------
By:
-------------------------------
Signature Guarantee:
--------------
Dated:
Please print name and address of Registered Holder:
- ---------------------------------- ----------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
- ----------------------------------
- ----------------------------------
- ----------------------------------
E-1
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PLEDGE AGREEMENT
among
ACE LIMITED,
THE BANK OF NEW YORK,
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
THE BANK OF NEW YORK,
as Purchase Contract Agent
Dated as of April _, 2000
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Table of Contents
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Page
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ARTICLE I
Definitions
Section 1.1 Definitions.............................................. 2
ARTICLE II
Pledge; Control and Perfection.
Section 2.1 The Pledge............................................... 5
Section 2.2 Control and Perfection................................... 6
ARTICLE III
Distributions on Pledged Collateral.
ARTICLE IV
Substitution, Release, Repledge and Settlement of Preferred Shares.
Section 4.1 Substitution for Preferred Shares and the Creation of
Growth Prides............................................ 9
Section 4.2 Substitution of Treasury Securities and the Creation of
Income Prides............................................ 10
Section 4.3 Termination Event........................................ 10
Section 4.4 Cash Settlement.......................................... 11
Section 4.5 Early Settlement......................................... 12
Section 4.6 Application of Proceeds Settlement....................... 12
ARTICLE V
Voting Rights--Preferred Shares.
ARTICLE VI
Rights and Remedies
Section 6.1 Rights and Remedies of the Collateral Agent.............. 15
Section 6.2 Substitutions............................................ 16
ARTICLE VII
Representations and Warranties; Covenants.
Section 7.1 Representations and Warranties........................... 16
Section 7.2 Covenants................................................ 16
ARTICLE VIII
The Collateral Agent.
Section 8.1 Appointment, Powers and Immunities....................... 17
Section 8.2 Instructions of the Company.............................. 18
Section 8.3 Reliance by Collateral Agent............................. 18
Section 8.4 Rights in Other Capacities............................... 18
Section 8.5 Non-Reliance on Collateral Agent......................... 19
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Section 8.6 Compensation and Indemnity............................... 19
Section 8.7 Failure to Act........................................... 19
Section 8.8 Resignation of Collateral Agent.......................... 20
Section 8.9 Right to Appoint Agent or Advisor........................ 21
Section 8.10 Survival................................................. 21
Section 8.11 Exculpation.............................................. 21
ARTICLE IX
Amendment.
Section 9.1 Amendment Without Consent of Holders..................... 21
Section 9.2 Amendment with Consent of Holders........................ 22
Section 9.3 Execution of Amendments.................................. 22
Section 9.4 Effect of Amendments..................................... 22
Section 9.5 Reference to Amendments.................................. 23
ARTICLE X
Miscellaneous.
Section 10.1 No Waiver................................................ 23
Section 10.2 GOVERNING LAW............................................ 23
Section 10.3 Notices.................................................. 23
Section 10.4 Successors and Assigns................................... 24
Section 10.5 Counterparts............................................. 24
Section 10.6 Severability............................................. 24
Section 10.7 Expenses, Etc............................................ 24
Section 10.8 Security Interest Absolute............................... 24
Section 10.9 Consent to Jurisdiction; Miscellaneous................... 25
Section 10.10 Waiver of Immunities..................................... 25
Section 10.11 Judgement Currency....................................... 25
EXHIBIT A
Instruction to Collateral Agent............................................. A-1
EXHIBIT B
Instruction to Purchase Contract Agent...................................... B-1
EXHIBIT C
Instruction to Custodial Agent Regarding Remarketing........................ C-1
EXHIBIT D
Instruction to Custodial Agent Regarding Withdrawal from Remarketing........ D-1
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April __, 2000 (this "Agreement"), among ACE
Limited, a corporation organized and existing under the laws of the Cayman
Islands (the "Company"), The Bank of New York, a New York banking corporation,
not individually but solely as collateral agent (in such capacity, together with
its successors in such capacity, the "Collateral Agent"), as custodial agent (in
such capacity, together with its successors in such capacity, the "Custodial
Agent") and as "securities intermediary" as defined in Section 8-102(a)(14) of
the Code (as defined herein) (in such capacity, together with its successors in
such capacity, the "Securities Intermediary"), and The Bank of New York, not
individually but solely as purchase contract agent and as attorney-in-fact of
the Holders (as defined in the Purchase Contract Agreement) from time to time of
the Securities (as hereinafter defined) (in such capacity, together with its
successors in such capacity, the "Purchase Contract Agent") under the Purchase
Contract Agreement (as herein after defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued up to __ FELINE PRIDES of the Company (__ if the
Underwriters' over-allotment option pursuant to the Underwriting Agreement and
Pricing Agreement is exercised in full), having a stated amount of $50 (the
"Stated Amount") per FELINE PRIDES.
The FELINE PRIDES will initially consist of __ units (referred to as
"Income PRIDES") with a face amount, per Income PRIDES, equal to the Stated
Amount. Each Income PRIDES will be comprised of (a) a stock purchase contract
(the "Purchase Contract") under which (i) the holder will purchase from the
Company not later than __ (the "Purchase Contract Settlement Date"), for an
amount of cash equal to the Stated Amount, a number of ordinary shares,
$0.041666667 par value per ordinary share (the "Ordinary Shares"), of the
Company equal to the Settlement Rate (as defined below), and (ii) the Company
will pay to the Holder, on a quarterly basis, unsecured contract adjustment
payments ("Contract Adjustment Payments") at the rate of __% of the Stated
Amount per annum, and (b) beneficial ownership of one __% Cumulative Redeemable
Preferred Share, Series A, US$__ par value per share (each, a "Preferred Share")
of the Company, having a stated liquidation preference equal to the Stated
Amount.
As provided herein, holders of Income PRIDES may substitute collateral in
order to create units of Growth PRIDES ("Growth PRIDES" and together, with the
Income PRIDES, the "Securities"). Each Growth PRIDES so created will be
comprised of (a) a Purchase Contract under which (i) the holder will purchase
from the Company not later than the Purchase Contract Settlement Date, for an
amount in cash equal to the Stated Amount, a number of Ordinary Shares of the
Company equal to the Settlement Rate and (ii) the Company will pay to the Holder
thereof Contract Adjustment Payments at the rate of __% of the Stated Amount per
annum, and (b) a 1/20th undivided beneficial interest in a zero-coupon U.S.
Treasury Security (CUSIP No. __)
<PAGE>
having a principal amount at maturity equal to $1,000 and maturing on __ (the
"Treasury Securities").
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders, from time to time, of the Securities have irrevocably
authorized the Purchase Contract Agent, as attorney-in-fact of such Holders,
among other things, to execute and deliver this Agreement on behalf of such
Holders and to grant the pledge provided hereby of the Preferred Shares and any
Treasury Securities delivered in exchange therefor to secure each Holder's
obligations under the related Purchase Contract, as provided herein and subject
to the terms hereof. Upon such pledge, the Preferred Shares and the Treasury
Securities will be beneficially owned by the Holders but will be owned of record
by the Purchase Contract Agent subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own
behalf and as attorney-in-fact of the Holders from time to time of the
Securities, agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. For all purposes of this agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(c) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board Resolution,
(iv) Business Day, (v) Cash Settlement, (vi) Certificate, (vii) Contract
Adjustment Payments, (viii) Early Settlement, (ix) Early Settlement Amount,
(x) Early Settlement Date, (xi) Failed Remarketing, (xii) Holder, (xiii)
Opinion of Counsel, (xiv) Outstanding Securities, (xv) Remarketing Agent,
(xvi) Remarketing Agreement, (xvii) Settlement Rate and (xviii) Termination
Event; and
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means Title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
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"Cash" means any coin or currency of the United States as at the time shall
be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the securities account (number __) maintained at
The Bank of New York in the name "The Bank of New York, as Purchase Contract
Agent on behalf of the holders of certain securities of ACE Limited, Collateral
Account subject to the security interest of The Bank of New York, as Collateral
Agent, for the benefit of ACE Limited, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of this
Agreement.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor shall have become such, and thereafter
"Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the Recitals.
"Intermediary" means any entity that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Ordinary Shares" has the meaning specified in the Recitals.
"Permitted Investments" means any one of the following which shall mature
not later than the next succeeding Business Day: (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof or such indebtedness
constitutes a general obligation of it); (ii) deposits, certificates of deposit
or acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than US$200,000,000 at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) investments in commercial paper, other than commercial paper
issued by the Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which commercial paper has a
rating at the time of purchase at least equal to "A-1" by Standard & Poor's
Ratings Services ("S&P") or at least equal to "P-1" by Moody's Investors
Service, Inc. ("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, and rated in the highest
applicable rating category by S&P or Moody's.
3
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"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Preferred Shares" has the meaning specified in Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Preferred Shares" has the meaning specified in the Recitals.
"Proceeds" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in Sections 8-102(a)(9) of the Code) and other
property from time to time received, receivable or otherwise distributed upon
the sale, exchange, collection or disposition of the Collateral or any proceeds
thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first paragraph
of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the Recitals.
"Purchase Contract Settlement Date" has the meaning specified in the
Recitals.
"Remarketing Underwriting Agreement" means the Remarketing Underwriting
Agreement attached as Exhibit A to the Remarketing Agreement.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first paragraph
of this Agreement.
"Security Entitlement" has the meaning set forth in Section 8-102(a)(17) of
the Code.
"Separate Preferred Shares" means any Preferred Shares that are not Pledged
Preferred Shares.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
"TRADES Regulations" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
4
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"Transfer" means, with respect to the Collateral and in accordance with the
instructions of the Collateral Agent, the Purchase Contract Agent or the Holder,
as applicable:
(i) in the case of Collateral consisting of securities which
cannot be delivered by book-entry or which the parties agree are to be
delivered in physical form, delivery in appropriate physical form to
the recipient accompanied by any duly executed instruments of
transfer, assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid transfer to the
recipient; and
(ii) in the case of Collateral consisting of securities
maintained in book-entry form by causing a "securities intermediary"
(as defined in Section 8-102(a)(14) of the Code) to (i) credit a
"security entitlement" (as defined in Section 8-102(a)(17) of the
Code) with respect to such securities to a "securities account" (as
defined in Section 8-501(a) of the Code) maintained by or on behalf of
the recipient and (ii) to issue a confirmation to the recipient with
respect to such credit. In the case of Collateral to be delivered to
the Collateral Agent, the Securities Intermediary shall be the
Securities Intermediary and the securities account shall be the
Collateral Account.
"Treasury Security" has the meaning specified in the Recitals.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to (i)
a Preferred Share, the Stated Amount, (ii) Cash, the face amount thereof and
(iii) Treasury Securities, the aggregate principal amount thereof at maturity.
ARTICLE II
Pledge; Control and Perfection.
Section 2.1 The Pledge. The Holders from time to time acting through the
Purchase Contract Agent, as their attorney-in-fact, and the Purchase Contract
Agent, as such attorney-in-fact, hereby pledge and grant to the Collateral
Agent, for the benefit of the Company, as collateral security for the
performance when due by such Holders of their respective obligations under the
related Purchase Contracts, a security interest in all of the right, title and
interest of the Purchase Contract Agent and such Holders (a) in the Preferred
Shares constituting a part of the Securities and any Treasury Securities
delivered in exchange for any Preferred Shares, and any Preferred Shares
delivered in exchange for any Treasury Securities, in accordance with Section
4.2 hereof, in each case that have been Transferred to or received by the
Collateral Agent and not released by the Collateral Agent to such Holders under
the provisions of this Agreement; (b) in payments made by Holders pursuant to
Section 4.4; (c) in the Collateral Account and all securities, financial assets,
Cash and other property credited thereto and all Security Entitlements related
thereto; and (d) all Proceeds of the foregoing (all of the foregoing,
collectively, the "Collateral"). Prior to or concurrently with the execution and
delivery of this Agreement, the Purchase Contract Agent, on behalf of the
initial Holders of the Securities, shall cause the
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Preferred Shares comprising a part of the Income PRIDES to be Transferred to the
Collateral Agent for the benefit of the Company. Such Preferred Shares shall be
Transferred by physically delivering such Securities to the Securities
Intermediary indorsed in blank and causing the Securities Intermediary to credit
the Collateral Account with such Securities and sending the Collateral Agent a
confirmation of the deposit of such Securities. In the event a Holder of Income
PRIDES so elects, such Holder may Transfer Treasury Securities to the Collateral
Agent for the benefit of the Company in exchange for the release by the
Collateral Agent on behalf of the Company of Preferred Shares with an aggregate
stated liquidation preference equal to the aggregate principal amount at
maturity of the Treasury Securities so Transferred to the Purchase Contract
Agent on behalf of such Holder. Such Treasury Securities shall be Transferred to
the Collateral Account maintained by the Collateral Agent at the Securities
Intermediary by book-entry transfer to the Collateral Account in accordance with
the TRADES Regulations and other applicable law and by the notation by the
Securities Intermediary on its books that a Security Entitlement with respect to
such Treasury Securities has been credited to the Collateral Account. For
purposes of perfecting the Pledge under applicable law, including, to the extent
applicable, the TRADES Regulations or the Uniform Commercial Code as adopted and
in effect in any applicable jurisdiction, the Collateral Agent shall be the
agent of the Company as provided herein. The pledge provided in this Section 2.1
is herein referred to as the "Pledge" and the Preferred Shares or Treasury
Securities subject to the Pledge, excluding any Preferred Shares or Treasury
Securities released from the Pledge as provided in Sections 4.1 and 4.2 hereof,
respectively, are hereinafter referred to as "Pledged Preferred Shares" or the
"Pledged Treasury Securities," respectively. Subject to the Pledge and the
provisions of Section 2.2 hereof, the Holders from time to time shall have full
beneficial ownership of the Collateral. Whenever directed by the Collateral
Agent acting on behalf of the Company, the Securities Intermediary shall have
the right to reregister the Preferred Shares or any other Securities held in
physical form in its name.
Except as may be required in order to release Preferred Shares in
connection with a Holder's election to convert its investment from an Income
PRIDES to a Growth PRIDES, or except as otherwise required to release Securities
as specified herein, neither the Collateral Agent nor the Securities
Intermediary shall relinquish physical possession of any certificate evidencing
a Preferred Share prior to the termination of this Agreement. If it becomes
necessary for the Securities Intermediary to relinquish physical possession of a
certificate in order to release a portion of the Preferred Shares evidenced
thereby from the Pledge, the Securities Intermediary shall use its best efforts
to obtain physical possession of a replacement certificate evidencing any
Preferred Shares remaining subject to the Pledge hereunder registered to it or
endorsed in blank within fifteen days of the date it relinquished possession.
The Securities Intermediary shall promptly notify the Company and the Collateral
Agent of the Securities Intermediary's failure to obtain possession of any such
replacement certificate as required hereby.
Section 2.2 Control and Perfection. (a) In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the Purchase Contract
Agent or any of the Holders), and the Securities Intermediary agrees, to
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comply with and follow any instructions and entitlement orders (as defined in
Section 8-102(a)(8) of the Code) that the Collateral Agent on behalf of the
Company may give in writing with respect to the Collateral Account, the
Collateral credited thereto and any Security Entitlements with respect to any
thereof. Such instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem, sell, liquidate, assign,
deliver or otherwise dispose of the Preferred Shares, the Treasury Securities
and any Security Entitlements with respect thereto and to pay and deliver any
income, proceeds or other funds derived therefrom to the Company. The Holders
from time to time acting through the Purchase Contract Agent hereby further
authorize and direct the Collateral Agent, as Agent of the Company, to itself
issue instructions and entitlement orders, and to otherwise take action, with
respect to the Collateral Account, the Collateral credited thereto and any
Security Entitlements with respect thereto, pursuant to the terms and provisions
hereof, all without the necessity of obtaining the further consent of the
Purchase Contract Agent or any of the Holders. The Collateral Agent shall be the
agent of the Company and shall act as directed in writing by the Company.
Without limiting the generality of the foregoing, the Collateral Agent shall
issue entitlement orders to the Securities Intermediary when and as directed by
the Company.
(b) The Securities Intermediary hereby confirms and agrees that: (i) all
securities or other property underlying any financial assets credited to the
Collateral Account shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank or credited to
another Collateral Account maintained in the name of the Securities Intermediary
and in no case will any financial asset credited to the Collateral Account be
registered in the name of the Purchase Contract Agent, the Collateral Agent, the
Company or any Holder, payable to the order of, or specially indorsed to, the
Purchase Contract Agent, the Collateral Agent, the Company or any Holder except
to the extent the foregoing have been specially indorsed to the Securities
Intermediary or in blank; (ii) all property delivered to the Securities
Intermediary pursuant to this Pledge Agreement (including, without limitation,
any Preferred Shares or Treasury Securities) will be promptly credited to the
Collateral Account; (iii) the Collateral Account is an account to which
financial assets are or may be credited, and the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Purchase Contract Agent as
entitled to exercise the rights of any financial asset credited to the
Collateral Account; (iv) the Securities Intermediary has not entered into, and
until the termination of this Agreement will not enter into, any agreement with
any other person relating to the Collateral Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply with entitlement
orders (as defined in Section 8-102(a)(8) of the Code) of such other person; and
(v) the Securities Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with the Company, the
Collateral Agent or the Purchase Contract Agent purporting to limit or condition
the obligation of the Securities Intermediary to comply with entitlement orders
as set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each item of property
(whether investment property, financial asset, security, instrument or cash)
credited to the Collateral Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the Code.
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(d) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, with full power of substitution,
as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in
the name, place and stead of the Purchase Contract Agent and the Holders, any
action necessary or desirable to perfect and to keep perfected the security
interest in the Collateral referred to in Section 2.1. The grant of such power-
of-attorney shall not be deemed to require of the Collateral Agent any specific
duties or obligations not otherwise assumed by the Collateral Agent hereunder.
ARTICLE III
Distributions on Pledged Collateral.
So long as the Purchase Contract Agent is the registered owner of the
Pledged Preferred Shares, it shall receive all payments thereon. If the Pledged
Preferred Shares are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of the Stated Amount, or cash dividends on, the
Pledged Preferred Shares, as the case may be, and all payments of the principal
of, or cash distributions on, any Pledged Treasury Securities received by the
Collateral Agent that are properly payable hereunder shall be paid by the
Collateral Agent by wire transfer in same day funds:
(i) In the case of (A) cash dividends with respect to the
Pledged Preferred Shares and (B) any payments of the Stated Amount
with respect to any Preferred Shares that have been released from the
Pledge pursuant to Section 4.3 hereof, to the Purchase Contract Agent,
for the benefit of the relevant Holders of Securities, to the account
designated by the Purchase Contract Agent for such purpose, no later
than 2:00 p.m., New York City time, on the Business Day such payment
is received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant
to Section 4.3 hereof, to the Holders of the Growth PRIDES to the
accounts designated by them in writing for such purpose no later than
2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day); and
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(iii) In the case of payments of the Stated Amount of any
Pledged Preferred Shares or the principal of any Pledged Treasury
Securities, to the Company on the Purchase Contract Settlement Date in
accordance with the procedure set forth in Section 4.6(a) or 4.6(b)
hereof, in full satisfaction of the respective obligations of the
Holders under the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein
shall be applied by the Purchase Contract Agent pursuant to the provisions of
the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the Stated Amount on account of any
Preferred Share, that, at the time of such payment, is a Pledged Preferred Share
or a Holder of a Growth PRIDES shall receive any payments of principal on
account of any Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or such Holder shall
hold the same as trustee of an express trust for the benefit of the Company (and
promptly deliver the same over to the Company) for application to the
obligations of the Holders under the related Purchase Contracts, and the Holders
shall acquire no right, title or interest in any such payments of Stated Amount
or principal so received.
ARTICLE IV
Substitution, Release, Repledge and Settlement of Preferred Shares.
Section 4.1 Substitution for Preferred Shares and the Creation of Growth
Prides. At any time on or prior to the fifth Business Day immediately preceding
the Purchase Contract Settlement Date, a Holder of Income PRIDES shall have the
right to substitute Treasury Securities for the Preferred Shares securing such
Holder's obligations under the Purchase Contract(s) comprising a part of its
Income PRIDES in integral multiples of 20 Income PRIDES by (a) Transferring to
the Collateral Agent Treasury Securities having a Value equal to the aggregate
Stated Amount of the Pledged Preferred Shares to be released and (b)(i) in the
event that Contract Adjustment Payments are at a higher rate for Growth PRIDES
than for Income PRIDES, delivering to the Purchase Contract Agent cash in an
amount equal to the Contract Adjustment Payments that would have accrued since
the last date that Contract Adjustment Payments were made through the date of
substitution on the Growth PRIDES being created by the Holder, which amount the
Purchase Contract Agent shall promptly remit to the Company, and (ii) delivering
the related Income PRIDES to the Purchase Contract Agent, accompanied by a
notice, substantially in the form of Exhibit B hereto, to the Purchase Contract
Agent stating that such Holder has Transferred Treasury Securities to the
Collateral Agent pursuant to clause (a) above (stating the Value of the Treasury
Securities Transferred by such Holder) and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release from the Pledge the Pledged
Preferred Shares related to such Income PRIDES. The Purchase Contract Agent
shall instruct the Collateral Agent in the form provided in Exhibit A. Upon
receipt of Treasury Securities from a Holder of Income PRIDES and the related
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Pledged Preferred Shares and shall promptly Transfer such Pledged Preferred
shares free and clear of any lien, pledge or security interest created hereby,
to the Purchase Contract Agent. All items Transferred and/or substituted
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by any Holder pursuant to this Section 4.1, Section 4.2 or any other Section of
this Agreement shall be Transferred and/or substituted free and clear of all
liens, claims and encumbrances.
Section 4.2 Substitution of Treasury Securities and the Creation of Income
Prides. At any time on or prior to the fifth Business Day immediately preceding
the Purchase Contract Settlement Date, a Holder of Growth PRIDES shall have the
right to reestablish Income PRIDES consisting of the Purchase Contracts and
Preferred Shares in integral multiples of 20 Income PRIDES by (a) Transferring
to the Collateral Agent Preferred Shares having a Value equal to the Value of
the Pledged Treasury Securities to be released and (b) (i) in the event that
Contract Adjustment Payments are at a higher rate for Income PRIDES than for
Growth PRIDES, by delivering to the Purchase Contract Agent cash in an amount
equal to the excess of the Contract Adjustment Payments that would have accrued
since the last payment date through the date of substitution on the Income
PRIDES being recreated by such Holders, over the Contract Adjustment Payments
that have accrued over the same time period on the related Growth PRIDES and
(ii) delivering the related Growth PRIDES to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to the
Purchase Contract Agent stating that such Holder has transferred Preferred
Shares to the Collateral Agent pursuant to clause (a) above and requesting that
the Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Treasury Securities related to such Growth PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form provided
in Exhibit A. Upon receipt of the Preferred Shares from such Holder and the
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Treasury Securities and shall promptly Transfer such Treasury Securities,
free and clear of any lien, pledge or security interest created hereby, to the
Purchase Contract Agent.
Section 4.3 Termination Event. Upon receipt by the Collateral Agent of
written notice from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Collateral
from the Pledge and shall promptly Transfer any Pledged Preferred Shares and
Pledged Treasury Securities to the Purchase Contract Agent for the benefit of
the Holders of the Income PRIDES and the Growth PRIDES, respectively, free and
clear of any lien, pledge or security interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a debtor
under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail
promptly to effectuate the release and Transfer of all Pledged Preferred Shares
or of the Pledged Treasury Securities, as the case may be, as provided by this
Section 4.3, the Purchase Contract Agent shall (i) use its best efforts to
obtain an opinion of a nationally recognized law firm reasonably acceptable to
the Collateral Agent to the effect that, as a result of the Company's being the
debtor in such a bankruptcy case, the Collateral Agent will not be prohibited
from releasing or Transferring the Collateral as provided in this Section 4.3,
and shall deliver such opinion to the Collateral Agent within ten days after the
occurrence of such Termination Event, and if (y) the Purchase Contract Agent
shall be unable to obtain such opinion within ten days after the occurrence of
such Termination Event or (z) the Collateral Agent shall continue, after
delivery of such opinion, to refuse to effectuate the release and Transfer of
all Pledged Preferred Shares or the Pledged Treasury Securities, as the case may
be, as provided in this Section 4.3, then the Purchase
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Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Preferred Shares or of the Pledged Treasury Securities, as the case may
be, as provided by this Section 4.3 or (ii) commence an action or proceeding
like that described in subsection (i)(z) hereof within ten days after the
occurrence of such Termination Event.
Section 4.4 Cash Settlement. (a) Upon receipt by the Collateral Agent of
(i) a notice from the Purchase Contract Agent promptly after the receipt by the
Purchase Contract Agent of such notice that a Holder of an Income PRIDES or
Growth PRIDES has elected, in accordance with the procedures specified in
Section 5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively, to
settle its Purchase Contract with Cash and (ii) payment of the amount required
to settle such contract by such Holder on or prior to 11:00 a.m., New York City
time, on the Business Day immediately preceding the Purchase Contract Settlement
Date in lawful money of the United States by certified or cashiers' check or
wire transfer in immediately available funds payable to or upon the order of the
Company, then the Collateral Agent shall promptly invest any Cash received from
a Holder in connection with a Cash Settlement in Permitted Investments. Upon
receipt of the proceeds upon the maturity of the Permitted Investments on the
Purchase Contract Settlement Date, the Collateral Agent shall pay the portion of
such proceeds and deliver any certified or cashiers' checks received and any
funds so wired, in an aggregate amount equal to the Purchase Price, to the
Company on the Purchase Contract Settlement Date, and shall distribute any funds
in respect of the interest earned from the Permitted Investments to the Purchase
Contract Agent for payment to the relevant Holders.
(b) If a Holder of an Income PRIDES fails to notify the Purchase Contract
Agent of its intention to make a Cash Settlement in accordance with Section
5.4(a)(i) of the Purchase Contract Agreement, such failure shall constitute an
event of default under the Purchase Contract Agreement and hereunder, and the
Holder shall be deemed to have consented to the disposition of the Pledged
Preferred Shares pursuant to the remarketing as described in Section 5.4(b) of
the Purchase Contract Agreement, which is incorporated herein by reference. If a
Holder of an Income PRIDES does notify the Purchase Contract Agent as provided
in Section 5.4(a)(i) of the Purchase Contract Agreement of its intention to pay
the Purchase Price in cash, but fails to make such payment as required by
Section 5.4(a)(ii) of the Purchase Contract Agreement, such failure will
constitute an event of default under the Purchase Contract Agreement and
hereunder, and the Preferred Shares of such a Holder will not be remarketed but
instead the Collateral Agent, for the benefit of the Company, will exercise its
rights as a secured party with respect to such Preferred Shares at the direction
of the Company to retain or dispose of the Collateral in accordance with
applicable law. In addition, in the event of a Failed Remarketing as described
in Section 5.4(b) of the Purchase Contract Agreement, such Failed Remarketing
shall constitute an event of default hereunder by such Holder and the Collateral
Agent, for the benefit of the Company, will also exercise its rights as a
secured party with respect to such Preferred Shares at the direction of the
Company to retain or dispose of the Collateral in accordance with applicable
law.
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(c) If a Holder of a Growth PRIDES fails to notify the Purchase Contract
Agent of such Holder's intention to make a Cash Settlement in accordance with
Section 5.4(d)(i) of the Purchase Contract Agreement, or if a Holder of a Growth
PRIDES does notify the Purchase Contract Agent as provided in paragraph
5.4(d)(i) of the Purchase Contract Agreement of its intention to pay the
Purchase Price in cash, but fails to make such payment as required by paragraph
5.4(d)(ii) of the Purchase Contract Agreement, such failure shall constitute an
event of default hereunder by such Holder and upon the maturity of any Pledged
Treasury Securities, if any, held by the Collateral Agent on the Business Day
immediately preceding the Purchase Contract Settlement Date, the principal
amount at maturity of the Pledged Treasury Securities received by the Collateral
Agent shall, upon written direction of the Company, be invested promptly in
Permitted Investments. On the Purchase Contract Settlement Date, an amount equal
to the Purchase Price will be remitted to the Company as payment thereof. In the
event the sum of the proceeds from the related Pledged Treasury Securities and
the investment earnings earned from such investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled thereby, the
Collateral Agent will distribute such excess to the Purchase Contract Agent for
the benefit of the Holder of the related Growth PRIDES or Income PRIDES when
received.
Section 4.5 Early Settlement. Upon written notice to the Collateral Agent
by the Purchase Contract Agent that one or more Holders of Securities have
elected to effect Early Settlement of their respective obligations under the
Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a) Pledged Preferred Shares in the case of a Holder of
Income PRIDES or (b) Pledged Treasury Securities in the case of a Holder of
Growth PRIDES, as the case may be, with a principal amount at maturity equal to
the product of (i) the Stated Amount times (ii) the number of such Purchase
Contracts as to which such Holders have elected to effect Early Settlement and
shall Transfer all such Pledged Preferred Shares or Pledged Treasury Securities,
as the case may be, free and clear of the Pledge created hereby, to the Purchase
Contract Agent for the benefit of the Holders.
Section 4.6 Application of Proceeds Settlement. (a) In the event a Holder
of Income PRIDES has not elected to make an effective Cash Settlement by
notifying the Purchase Contract Agent in the manner provided for in paragraph
5.4(a)(i) in the Purchase Contract Agreement or has not made an Early Settlement
of the Purchase Contract(s) underlying its Income PRIDES, such Holder shall be
deemed to have elected to pay for the Ordinary Shares to be issued under such
Purchase Contract(s) from the Proceeds of the related Pledged Preferred Shares.
The Collateral Agent shall, by 10:00 a.m., New York City time, on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date,
without any instruction from such Holder of Income PRIDES, present the related
Pledged Preferred Shares to the Remarketing Agent for remarketing. Upon
receiving such Pledged Preferred Shares, the Remarketing Agent,
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pursuant to the terms of the Remarketing Agreement and the Remarketing
Underwriting Agreement, will use its reasonable efforts to remarket such Pledged
Preferred Shares on such date at a price not less than approximately 100.5% of
the aggregate Value of such Pledged Preferred Shares, plus accumulated and
unpaid dividends, if any, thereon. After deducting as the remarketing fee an
amount not exceeding 25 basis points (.25%) of the aggregate Value of the
Pledged Preferred Shares from any amount of such Proceeds in excess of the
aggregate Value, plus such accumulated and unpaid dividends of the remarketed
Pledged Preferred Shares, the Remarketing Agent will remit the entire amount of
the Proceeds of such remarketing to the Collateral Agent. On the Purchase
Contract Settlement Date, the Collateral Agent shall apply that portion of the
Proceeds from such remarketing equal to the aggregate Value, plus such
accumulated and unpaid distributions of such Pledged Preferred Shares, to
satisfy in full the obligations of such Holders of Income PRIDES to pay the
Purchase Price to purchase the Ordinary Shares under the related Purchase
Contracts. The remaining portion of such Proceeds, if any, shall be distributed
by the Collateral Agent to the Purchase Contract Agent for payment to the
Holders. If the Remarketing Agent advises the Collateral Agent in writing that
it cannot remarket the related Pledged Preferred Shares of such Holders of
Income PRIDES at a price not less than 100% of the aggregate Value of such
Pledged Preferred Shares plus any accumulated and unpaid distributions, thus
resulting in a Failed Remarketing and an event of default under the Purchase
Contract Agreement and hereunder, the Collateral Agent, for the benefit of the
Company will, at the written direction of the Company, retain or dispose of the
Pledged Preferred Shares in accordance with applicable law and satisfy in full,
from any such disposition or retention, such Holder's obligation to pay the
Purchase Price for the Ordinary Shares.
(b) In the event a Holder of Growth PRIDES has not made an Early
Settlement of the Purchase Contract(s) underlying its Growth PRIDES, such Holder
shall be deemed to have elected to pay for the Ordinary Shares to be issued
under such Purchase Contract(s) from the Proceeds of the related Pledged
Treasury Securities. On the Business Day immediately prior to the Purchase
Contract Settlement Date, the Collateral Agent shall, at the written direction
of the Purchase Contract Agent, invest the Cash proceeds of the maturing Pledged
Treasury Securities in overnight Permitted Investments. Without receiving any
instruction from any such Holder of Growth PRIDES, the Collateral Agent shall
apply the Proceeds of the related Pledged Treasury Securities to the settlement
of such Purchase Contracts on the Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related Pledged Treasury
Securities and the investment earnings from the investment in overnight
Permitted Investments is in excess of the aggregate Purchase Price of the
Purchase Contracts being settled thereby, the Collateral Agent shall distribute
such excess, when received, to the Purchase Contract Agent for the benefit of
the Holders.
(c) Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement, on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, but no earlier than
the Payment Date immediately preceding the Purchase Contract Settlement Date,
holders of Separate Preferred Shares may elect to have their Separate Preferred
Shares remarketed by delivering their Separate Preferred Shares, together with a
notice of such election, substantially in the form of Exhibit C hereto, to the
Custodial Agent. The Custodial Agent will hold such Separate
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Preferred Shares in an account separate from the Collateral Account. A holder of
Separate Preferred Shares electing to have its Separate Preferred Shares
remarketed will also have the right to withdraw such election by written notice
to the Custodial Agent, substantially in the form of Exhibit D hereto, on or
prior to the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, upon which notice the Custodial Agent will return such Separate
Preferred Shares to such holder. On the fourth Business Day immediately
preceding the Purchase Contract Settlement Date, the Custodial Agent will
deliver to the Remarketing Agent for remarketing all Separate Preferred Shares
delivered to the Custodial Agent pursuant to this Section 4.6(c) and not
withdrawn pursuant to the terms hereof prior to such date. The portion of the
proceeds from such remarketing equal to the aggregate Value of such Separate
Preferred Shares will automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such Separate Preferred
Shares. In addition, after deducting as the remarketing fee an amount not
exceeding 25 basis points (.25%) of the Value of the remarketed Separate
Preferred Shares, from any amount of such proceeds in excess of the aggregate
Value of the remarketed Separate Preferred Shares plus any accumulated and
unpaid dividends thereon, the Remarketing Agent will remit to the Custodial
Agent the remaining portion of the proceeds, if any, for the benefit of such
holders. If, despite using its reasonable efforts, the Remarketing Agent advises
the Custodial Agent in writing that it cannot remarket the related Separate
Preferred Shares of such holders at a price not less than 100% of the aggregate
Value of such Separate Preferred Shares plus accumulated and unpaid dividends
and thus resulting in a Failed Remarketing, the Remarketing Agent will promptly
return such Preferred Shares to the Custodial Agent for redelivery to such
holders.
ARTICLE V
Voting Rights--Preferred Shares.
The Purchase Contract Agent may exercise, or refrain from exercising, any
and all voting and other consensual rights pertaining to the Pledged Preferred
Shares or any part thereof for any purpose not inconsistent with the terms of
this Agreement and in accordance with the terms of the Purchase Contract
Agreement; provided, that the Purchase Contract Agent shall not exercise or, as
the case may be, shall not refrain from exercising such right if, in the
judgment of the Company, such action would impair or otherwise have a material
adverse effect on the value of all or any of the Pledged Preferred Shares; and
provided, further, that the Purchase Contract Agent shall give the Company and
the Collateral Agent at least five days' prior written notice of the manner in
which it intends to exercise, or its reasons for refraining from exercising, any
such right. Upon receipt of any notices and other communications in respect of
any Pledged Preferred Shares, including notice of any meeting at which holders
of Preferred Shares are entitled to vote or solicitation of consents, waivers or
proxies of holders of Preferred Shares, the Collateral Agent shall use
reasonable efforts to send promptly to the Purchase Contract Agent such notice
or communication, and as soon as reasonably practicable after receipt of a
written request therefor from the Purchase Contract Agent, execute and deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged Preferred Shares (in form and
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substance satisfactory to the Collateral Agent) as are prepared by the Purchase
Contract Agent with respect to the Pledged Preferred Shares.
ARTICLE VI
Rights and Remedies
Section 6.1 Rights and Remedies of the Collateral Agent. (a) In addition
to the rights and remedies specified in Section 4.4 hereof or otherwise
available at law or in equity, after an event of default hereunder, the
Collateral Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code (or any
successor thereto) as in effect in the State of New York from time to time (the
"Code") (whether or not the Code is in effect in the jurisdiction where the
rights and remedies are asserted) and the TRADES Regulations and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted. Wherever reference is made in this Agreement to any section of the
Code, such reference shall be deemed to include a reference to any provision of
the Code which is a successor to, or amendment of, such section. Without
limiting the generality of the foregoing, such remedies may include, to the
extent permitted by applicable law, (i) retention of the Pledged Preferred
Shares or other Collateral in full satisfaction of the Holders' obligations
under the Purchase Contracts or (ii) sale of the Pledged Preferred Shares or
other Collateral in one or more public or private sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any Pledged
Treasury Securities as provided in Article III hereof in satisfaction of the
obligations of the Holder of Growth PRIDES of which such Pledged Treasury
Securities is a part under the related Purchase Contracts, the inability to make
such payments shall constitute an event of default hereunder and the Collateral
Agent shall have and may exercise, with reference to such Pledged Treasury
Securities and such obligations of such Holder, any and all of the rights and
remedies available to a secured party under the Code and the TRADES Regulations
after default by a debtor, and as otherwise granted herein or under any other
law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the Stated Amount of or,
cash dividends on, the Pledged Preferred Shares, or (ii) the principal amount at
maturity of the Pledged Treasury Securities, subject, in each case, to the
provisions of Section 3, and as otherwise granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact
for each Holder of Securities, in the event such Holder becomes the Holder of a
Growth PRIDES, agrees that, from time to time, upon the written request of the
Collateral Agent, the Purchase Contract Agent or such Holder shall execute and
deliver such further documents and do such other acts and things as the
Collateral Agent may reasonably request in order to maintain the Pledge, and the
perfection and priority thereof, and to confirm the rights of the Collateral
Agent hereunder. The Purchase Contract Agent shall have no liability to any
Holder for executing any documents
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or taking any such acts requested by the Collateral Agent hereunder, except for
liability for its own negligent act, its own negligent failure to act, its bad
faith or its own willful misconduct.
Section 6.2 Substitutions. Whenever a Holder has the right to substitute
Treasury Securities or Preferred Shares, as the case may be, for Collateral held
by the Collateral Agent, such substitution shall not constitute a novation of
the security interest created hereby.
ARTICLE VII
Representations and Warranties; Covenants.
Section 7.1 Representations and Warranties. The Holders from time to time,
acting through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and lien
on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and, in
the case of Collateral delivered in physical form, is the sole holder of
such Collateral and is the sole beneficial owner of, or has the right to
Transfer, the Collateral it Transfers to the Collateral Agent, free and
clear of any security interest, lien, encumbrance, call, liability to pay
money or other restriction other than the security interest and lien
granted under Section 2.1 hereof;
(c) upon the Transfer of the Collateral to the Collateral Account, the
Collateral Agent, for the benefit of the Company, will have a valid and
perfected first priority security interest therein (assuming that any
central clearing operation or any Intermediary or other entity not within
the control of the Holder involved in the Transfer of the Collateral,
including the Collateral Agent, gives the notices and takes the action
required of it hereunder and under applicable law for perfection of that
interest and assuming the establishment and exercise of control pursuant to
Section 2.2 hereof); and
(d) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any security
interest, lien or other encumbrance on the Collateral other than the
security interest and lien granted under Section 2.1 hereof or violate any
provision of any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking to which it is
a party or which is binding on it or any of its assets.
Section 7.2 Covenants. The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being understood that the
Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
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(a) neither the Purchase Contract Agent nor such Holders will create
or purport to create or allow to subsist any mortgage, charge, lien, pledge
or any other security interest whatsoever over the Collateral or any part
of it other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell or
otherwise dispose (or attempt to dispose) of the Collateral or any part of
it except for the beneficial interest therein, subject to the pledge
hereunder, transferred in connection with the Transfer of the Securities.
ARTICLE VIII
The Collateral Agent.
Section 8.1 Appointment, Powers and Immunities. The Collateral Agent shall
act as Agent for the Company hereunder with such powers as are specifically
vested in the Collateral Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. Each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary: (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement
and no implied covenants or obligations shall be inferred from this Agreement
against any of them, nor shall any of them be bound by the provisions of any
agreement by any party hereto beyond the specific terms hereof; (b) shall not be
responsible for any recitals contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by it under, this
Agreement, the Income PRIDES, Growth PRIDES or the Purchase Contract Agreement,
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement (other than as against the Collateral Agent), the
Securities or the Purchase Contract Agreement or any other document referred to
or provided for herein or therein or for any failure by the Company or any other
Person (except the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be) to perform any of its obligations hereunder or
thereunder or for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except in the case of the Collateral Agent, pursuant to directions
furnished under Section 8.2 hereof, subject to Section 8.6 hereof); (d) shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other document or instrument referred to or provided for herein or
in connection herewith or therewith, except for its own negligence, bad faith or
willful misconduct; and (e) shall not be required to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, the Securities or other property deposited hereunder. Subject to the
foregoing, during the term of this Agreement, the Collateral Agent shall take
all reasonable action in connection with the safekeeping and preservation of the
Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent, the
Custodial Agent or the Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, the Custodial Agent or
the Securities Intermediary be liable for any amount in excess of the
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Value of the Collateral. Notwithstanding the foregoing, the Collateral Agent,
the Custodial Agent, the Purchase Contract Agent and Securities Intermediary,
each in its individual capacity, hereby waive any right of setoff, bankers lien,
liens or perfection rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
Section 8.2 Instructions of the Company. The Company shall have the right,
by one or more instruments in writing executed and delivered to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as the case may be,
to direct the time, method and place of conducting any proceeding for the
realization of any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, the Custodial Agent or
the Securities Intermediary, as the case may be, or to direct the taking or
refraining from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the provisions of any
law or of this Agreement and (ii) the Collateral Agent, the Custodial Agent and
the Securities Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 shall impair the right of the Collateral Agent in
its discretion to take any action or omit to take any action which it deems
proper and which is not inconsistent with such direction.
Section 8.3 Reliance by Collateral Agent. Each of the Securities
Intermediary, the Custodial Agent and the Collateral Agent shall be entitled
conclusively to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone or
facsimile) believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon advice and
statements of legal counsel and other experts selected by the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case may be. As to
any matters not expressly provided for by this Agreement, the Collateral Agent,
the Custodial Agent and the Securities Intermediary shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Company in accordance with this Agreement.
Section 8.4 Rights in Other Capacities. The Collateral Agent, the
Custodial Agent and the Securities Intermediary and their affiliates may
(without having to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of banking,
trust or other business with the Purchase Contract Agent, any Holder of Income
PRIDES or Growth PRIDES and any holder of Separate Preferred Shares (and any of
their respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, and the Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent, any Holder of Income PRIDES or Growth PRIDES or any
holder of Separate Preferred Shares without having to account for the same to
the Company; provided that each of the Securities Intermediary, the Custodial
Agent and the Collateral Agent covenants and agrees with the Company that it
shall not accept, receive or permit there to be created in favor of itself and
shall take no affirmative action to permit there to be created in favor of any
other Person, any security interest, lien or other encumbrance of any
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kind in or upon the Collateral and the Collateral shall not be commingled with
any other assets of any such Person.
Section 8.5 Non-Reliance on Collateral Agent. None of the Securities
Intermediary, the Custodial Agent or the Collateral Agent shall be required to
keep itself informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the Purchase
Contract Agreement, the Income PRIDES or Growth PRIDES or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Purchase Contract Agent or any Holder of Income PRIDES or Growth
PRIDES. The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall not have any duty or responsibility to provide the Company or
the Remarketing Agent with any credit or other information concerning the
affairs, financial condition or business of the Purchase Contract Agent, any
Holder of Income PRIDES or Growth PRIDES or any holder of Separate Preferred
Shares (or any of their respective subsidiaries or affiliates) that may come
into the possession of the Collateral Agent, the Custodial Agent or the
Securities Intermediary or any of their respective affiliates.
Section 8.6 Compensation and Indemnity. The Company agrees: (i) to pay
each of the Collateral Agent and the Custodial Agent from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Custodial Agent, as the case may be, for all services
rendered by each of them hereunder and (ii) to indemnify the Collateral Agent,
the Custodial Agent and the Securities Intermediary for, and to hold each of
them harmless from and against, any loss, liability or reasonable out-of-pocket
expense incurred without negligence, willful misconduct or bad faith on its
part, arising out of or in connection with the acceptance or administration of
its powers and duties under this Agreement, including the reasonable out-of-
pocket costs and expenses (including reasonable fees and expenses of counsel) of
defending itself against any claim or liability in connection with the exercise
or performance of such powers and duties. The Collateral Agent, the Custodial
Agent and the Securities Intermediary shall each promptly notify the Company of
any third party claim which may give rise to the indemnity hereunder and give
the Company the opportunity to participate in the defense of such claim with
counsel reasonably satisfactory to the indemnified party, and no such claim
shall be settled without the written consent of the Company, which consent shall
not be unreasonably withheld.
Section 8.7 Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Custodial Agent shall
be entitled, after prompt notice to the Company and the Purchase Contract Agent,
at its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent nor the Custodial
Agent shall be or become liable in any way to any of the parties hereto for its
failure or refusal to comply with such conflicting claims, demands or
instructions. The Collateral Agent and the Custodial Agent shall be entitled to
refuse to act until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent jurisdiction or
settled by agreement between the
19
<PAGE>
conflicting parties as evidenced in a writing, satisfactory to the Collateral
Agent or the Custodial Agent, as the case may be, or (ii) the Collateral Agent
or the Custodial Agent, as the case may be, shall have received security or an
indemnity reasonably satisfactory to the Collateral Agent or the Custodial
Agent, as the case may be, sufficient to save the Collateral Agent or the
Custodial Agent, as the case may be, harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which the Collateral Agent or the
Custodial Agent, as the case may be, may incur by reason of its acting without
bad faith, willful misconduct or gross negligence. The Collateral Agent or the
Custodial Agent may in addition elect to commence an interpleader action or seek
other judicial relief or orders as the Collateral Agent or the Custodial Agent,
as the case may be, may deem necessary. Notwithstanding anything contained
herein to the contrary, neither the Collateral Agent nor the Custodial Agent
shall be required to take any action that is in its opinion contrary to law or
to the terms of this Agreement, or which would in its opinion subject it or any
of its officers, employees or directors to liability.
Section 8.8 Resignation of Collateral Agent. Subject to the appointment
and acceptance of a successor Collateral Agent or Custodial Agent as provided
below, (a) the Collateral Agent and the Custodial Agent may resign at any time
by giving notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Income PRIDES or Growth PRIDES, (b) the
Collateral Agent and the Custodial Agent may be removed at any time by the
Company and (c) if the Collateral Agent or the Custodial Agent fails to perform
any of its material obligations hereunder in any material respect for a period
of not less than 20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the Collateral
Agent or the Custodial Agent may be removed by the Purchase Contract Agent. The
Purchase Contract Agent shall promptly notify the Company of any removal of the
Collateral Agent pursuant to clause (c) of the immediately preceding sentence.
Upon any such resignation or removal, the Company shall have the right to
appoint a successor Collateral Agent or Custodial Agent, as the case may be. If
no successor Collateral Agent or Custodial Agent, as the case may be, shall have
been so appointed and shall have accepted such appointment within 30 days after
the retiring Collateral Agent's or Custodial Agent's giving of notice of
resignation or such removal, then the retiring Collateral Agent or Custodial
Agent, as the case may be, may petition any court of competent jurisdiction for
the appointment of a successor Collateral Agent or Custodial Agent, as the case
may be. Each of the Collateral Agent and the Custodial Agent shall be a bank
which has an office in New York, New York with a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Collateral Agent
or Custodial Agent, as the case may be, hereunder by a successor Collateral
Agent or Custodial Agent, as the case may be, such successor shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent or Custodial Agent, as the case may be, and the
retiring Collateral Agent or Custodial Agent, as the case may be, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor. The retiring Collateral Agent or
Custodial Agent shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent or Custodial Agent hereunder. After any retiring
Collateral Agent's or Custodial Agent's resignation hereunder as Collateral
Agent or Custodial Agent, the provisions of this Section 8.8 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Collateral Agent or Custodial
20
<PAGE>
Agent. Any resignation or removal of the Collateral Agent hereunder shall be
deemed for all purposes of this Agreement as the simultaneous resignation or
removal of the Custodial Agent and the Securities Intermediary.
Section 8.9 Right to Appoint Agent or Advisor. The Collateral Agent shall
have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents pursuant to this Section 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
Section 8.10 Survival. The provisions of this Article 8 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Custodial Agent.
Section 8.11 Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent, the Custodial
Agent or the Securities Intermediary or their officers, employees or agents be
liable under this Agreement to any third party for indirect, special, punitive,
or consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, or any of them,
incurred without any act or deed that is found to be attributable to gross
negligence, bad faith or willful misconduct on the part of the Collateral Agent,
the Custodial Agent or the Securities Intermediary.
ARTICLE IX
Amendment.
Section 9.1 Amendment Without Consent of Holders. Without the consent of
any Holders or the holders of any Separate Preferred Shares, the Company, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the
Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company so long as such covenants or such surrender do not
adversely affect the validity, perfection or priority of the security
interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
21
<PAGE>
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the Holders.
Section 9.2 Amendment with Consent of Holders. With the consent of the
Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company, when
duly authorized, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary may amend this Agreement for the
purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Income PRIDES and Growth PRIDES;
provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Income PRIDES and Growth PRIDES
adversely affected thereby,
(1) change the amount or type of Collateral underlying an Income
PRIDES or Growth PRIDES (except for the rights of holders of Income
PRIDES to substitute the Treasury Securities for the Pledged Preferred
Shares, or the rights of Holders of Growth PRIDES to substitute
Preferred Shares for the Pledged Treasury Securities), impair the
right of the Holder of any Income PRIDES or Growth PRIDES to receive
distributions on the underlying Collateral or otherwise adversely
affect the Holder's rights in or to such Collateral; or
(2) otherwise effect any action that would require the consent
of the Holder of each Outstanding Income PRIDES or Growth PRIDES
affected thereby pursuant to the Purchase Contract Agreement if such
action were effected by an agreement supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Amendments. In executing any amendment permitted
by this Section, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent shall be entitled to receive and
(subject to Section 6.1 hereof, with respect to the Collateral Agent, and
Section 7.1 of the Purchase Contract Agreement, with respect to the Purchase
Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent, if any, to the execution and
delivery of such amendment have been satisfied.
22
<PAGE>
Section 9.4 Effect of Amendments. Upon the execution of any amendment
under this Article 9, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
Section 9.5 Reference to Amendments. Security Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Section may, and shall if required by the Collateral
Agent or the Purchase Contract Agent, bear a notation in form approved by the
Purchase Contract Agent and the Collateral Agent as to any matter provided for
in such amendment. If the Company shall so determine, new Security Certificates
so modified as to conform, in the opinion of the Collateral Agent, the Purchase
Contract Agent and the Company, to any such amendment may be prepared and
executed by the Company and authenticated, executed on behalf of the Holders and
delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security Certificates.
ARTICLE X
Miscellaneous.
Section 10.1 No Waiver. No failure on the part of any party hereto or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any party hereto or
any of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
Section 10.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without limiting
the foregoing, the above choice of law is expressly agreed to by the Securities
Intermediary, the Collateral Agent and the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, in connection
with the establishment and maintenance of the Collateral Account. The Company,
the Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby submit to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
Section 10.3 Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents
23
<PAGE>
under, this Agreement) shall be given or made in writing (including, without
limitation, by telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or, as to any
party, at such other address as shall be designated by such party in a notice to
the other parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
Section 10.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent, and the Holders from time to time of the Income
PRIDES and Growth PRIDES, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Purchase Contract
Agent.
Section 10.5 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 10.6 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
Section 10.7 Expenses, Etc. The Company agrees to reimburse the
Collateral Agent and the Custodial Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent and the Custodial Agent (including,
without limitation, the reasonable fees and expenses of counsel to the
Collateral Agent and the Custodial Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the terms of
this Agreement; (b) all reasonable costs and expenses of the Collateral Agent
(including, without limitation, reasonable fees and expenses of counsel) in
connection with (i) any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its obligations
under the Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred to
herein and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
Section 10.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective of:
24
<PAGE>
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase Contracts,
or any other amendment or waiver of any term of, or any consent to any
departure from any requirement of, the Purchase Contract Agreement or any
Purchase Contract or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a borrower, a guarantor or a pledgor.
Section 10.9 Consent to Jurisdiction; Miscellaneous. Each of the parties
hereto hereby expressly and irrevocably submits to the non-exclusive
jurisdiction of any competent court in the place of its domicile and any United
States Federal or New York State court sitting in the Borough of Manhattan in
The City of New York in any action, suit or proceeding arising out of or
relating to this Underwriting Agreement or the transactions contemplated hereby
to the extent that such court has subject matter jurisdiction over the
controversy, and expressly and irrevocably waives, to the extent permitted under
applicable law, any immunity from the jurisdiction thereof and any claim or
defense in such action, suit or proceeding based on a claim of improper venue,
forum non conveniens or any similar basis to which it might otherwise be
entitled in any such action, suit or proceeding. The Company irrevocably
appoints ACE USA, Inc., 1133 Avenue of the Americas, 32nd Floor, New York, New
York 10036 as its authorized agent in the Borough of Manhattan in The City of
New York upon which process may be served in any such action, suit or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to the Company by the person serving the same to the
address provided in Section 10.9, shall be deemed in every respect effective
service of process upon the Company, in any such action, suit or proceeding.
The Company further agrees to take any and all action as may be necessary to
maintain such designation and appointment of such agent in full force and effect
for a period of seven years from the date of this Agreement.
Section 10.10 Waiver of Immunities. To the extent that the Company or
any of its properties, assets or revenues may have or may hereafter become
entitled to, or have attributed to them, any right of immunity, on the grounds
of sovereignty, from any legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any court, from service of process, from
attachment upon or prior to judgment, or from attachment in aid of execution of
judgment, or from execution of judgment, other legal process or proceeding for
the giving of any relief or for the enforcement of any judgment, in any
jurisdiction in which proceedings may at any time be commenced, with respect to
their obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement or any additional agreement, the Company hereby
irrevocably and unconditionally, to the extent permitted by applicable law,
waives and agrees not to plead or claim any such immunity and consents to such
relief and enforcement.
Section 10.11 Judgement Currency. The Company agrees to indemnify each of
the Purchase Contract Agent and the Collateral Agent against any loss incurred
by such party as a
25
<PAGE>
result of any judgment or order being given or made for any amount due hereunder
and such judgment or order being expressed and paid in a currency (the "Judgment
Currency") other than United States dollars and as a result of any variation as
between (i) the rate of exchange at which the United States dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order,
and (ii) the rate of exchange at which such party is able to purchase United
States dollars with the amount of the Judgment Currency actually received by
such party. The foregoing indemnity shall constitute a separate and independent
obligation of the Company and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversion into, the relevant currency.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ACE LIMITED
By: _______________________________
Name:
Title:
Address for Notices:
ACE Limited
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08 Bermuda
Attention: General Counsel and Secretary
Telecopy:
THE BANK OF NEW YORK, as Purchase Contract Agent
and as attorney-in-fact of the Holders from time
to time of the Income PRIDES and Growth PRIDES
By: _______________________________
Name:
Title:
Address for Notices:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 815-5915
THE BANK OF NEW YORK, as Collateral Agent,
Custodial Agent and as Securities Intermediary
By: _______________________________
Name:
Title:
27
<PAGE>
Address for Notices:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 815-5915
28
<PAGE>
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated as of April __, 2000 (the "Pledge Agreement") among the
Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Income PRIDES] [Growth PRIDES] from time to time, that the
holder of the Securities listed below (the "Holder") has elected to substitute
[$_____ aggregate principal amount at maturity of Treasury Securities] [$_______
Stated Amount of Preferred Shares in exchange for an equal Value of [Pledged
Preferred Shares] [Pledged Treasury Securities] held by you in accordance with
the Pledge Agreement and has delivered to us a notice stating that the Holder
has Transferred [Treasury Securities] [Preferred Shares] to you, as Collateral
Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Preferred Securities], to release the [Preferred Shares]
[Treasury Securities] related to such [Income PRIDES] [Growth PRIDES] to us in
accordance with the Holder's instructions. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.
Date:
---------------------------- -----------------------------------------
By:
-------------------------------------
Name:
Title:
Signature Guarantee:
-------------------------------------
A-1
<PAGE>
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Shares] for the [Pledged Preferred Shares]
[Pledged Treasury Securities]:
________________________________ _________________________________
Name Social Security or other Taxpayer
Identification Number, if any
________________________________
Address
________________________________
________________________________
A-2
<PAGE>
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company")
The undersigned Holder hereby notifies you that it has delivered to The
Bank of New York, as Collateral Agent, [$_______ aggregate principal amount at
maturity of Treasury Securities] [$ aggregate Stated Amount of Preferred Shares
in exchange for an equal Value of [Pledged Preferred Shares] [Pledged Treasury
Securities] held by the Collateral Agent, in accordance with Section 4.1 of the
Pledge Agreement, dated April _ _ , 2000 (the "Pledge Agreement"), between you,
the Company and the Collateral Agent. The undersigned Holder hereby instructs
you to instruct the Collateral Agent to release to you on behalf of the
undersigned Holder the [Pledged Preferred Shares] [Pledged Treasury Securities]
related to such [Income PRIDES] [Growth PRIDES]. Capitalized terms used herein
but not defined shall have the meaning set forth in the Pledge Agreement.
Date:___________________ _________________________
Signature Guarantee:____________________
Please print name and address of Registered Holder:
________________________ _________________________
Name Social Security or other
Taxpayer Identification
Number, if any
________________________
Address
________________________
________________________
B-1
<PAGE>
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: Preferred Shares of ACE Limited (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c) of
the Pledge Agreement, dated as of April __, 2000 (the "Pledge Agreement"), among
the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent, and yourselves, as Purchase Contract Agent and as attorney-in-
fact for the Holders of Income PRIDES and Growth PRIDES from time to time, that
the undersigned elects to deliver $__________ stated liquidation amount of
Preferred Shares for delivery to the Remarketing Agent on the fourth Business
Day immediately preceding the Purchase Contract Settlement Date for remarketing
pursuant to Section 4.6(c) of the Pledge Agreement. The undersigned will, upon
request of the Remarketing Agent, execute and deliver any additional documents
deemed by the Remarketing Agent or by the Company to be necessary or desirable
to complete the sale, assignment and transfer of the Preferred Shares tendered
hereby.
The undersigned hereby instructs you, upon receipt of the Proceeds of such
remarketing from the Remarketing Agent to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under "A.
Payment Instructions." The undersigned hereby instructs you, in the event of
Failed Remarketing, upon receipt of the Preferred Shares tendered herewith from
the Remarketing Agent, to be delivered to the person(s) and the address(es)
indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents and warrants that
the undersigned has full power and authority to tender, sell, assign and
transfer the Preferred Shares tendered hereby and that the undersigned is the
record owner of any Preferred Shares tendered herewith in physical form or a
participant in The Depositary Trust Company ("DTC") and the beneficial owner of
any Preferred Shares tendered herewith by book-entry transfer to your account at
DTC and (ii) agrees to be bound by the terms and conditions of Section 4.6(c) of
the Pledge Agreement. Capitalized terms used herein but not defined shall have
the meaning set forth in the Pledge Agreement.
C-1
<PAGE>
Date:
------------------------
-----------------------------------------
By:
-------------------------------------
Name:
Title:
Signature Guarantee:
--------------------
Please print name and address:
- ------------------------------ -----------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
- ------------------------------
Address
- ------------------------------
- ------------------------------
C-2
<PAGE>
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name of the person(s)
set forth below and mailed to the address set forth below.
Name(s)
--------------------------------------
(Please Print)
Address
--------------------------------------
(Please Print)
- ----------------------------------------------
- ----------------------------------------------
(Zip Code)
- ----------------------------------------------
(Tax Identification or Social Security Number)
B. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Preferred Shares which are in physical
form should be delivered to the person(s) set forth below and mailed to the
address set forth below.
Name(s)
--------------------------------------
(Please Print)
Address
--------------------------------------
(Please Print)
- ----------------------------------------------
- ----------------------------------------------
(Zip Code)
- ----------------------------------------------
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Preferred Shares which are in book-entry
form should be credited to the account at The Depositary Trust Company set forth
below.
-------------------------------------
DTC Account Number
Name of Account Party:
--------------------------
C-3
<PAGE>
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: Preferred Shares of ACE Limited (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c) of
the Pledge Agreement, dated as of April __, 2000 (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent and yourselves, as Purchase Contract Agent and as attorney-in-
fact for the Holders of Income PRIDES and Growth PRIDES from time to time, that
the undersigned elects to withdraw the $_____ aggregate stated liquidation
amount of Preferred Shares delivered to the Custodial Agent on ___________, for
remarketing pursuant to Section 4.6(c) of the Pledge Agreement. The undersigned
hereby instructs you to return such Preferred Shares to the undersigned in
accordance with the undersigned's instructions. With this notice, the
Undersigned hereby agrees to be bound by the terms and conditions of Section
4.6(c) of the Pledge Agreement. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date:
---------------------------- -----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Signature Guarantee:
--------------------
Please print name and address:
- ---------------------------------- -----------------------------------------
(Name) Social Security or other Taxpayer
-----------------------------------------
Identification Number, if any
- ----------------------------------
D-1
<PAGE>
Address
- ----------------------------------
- ----------------------------------
D-2
<PAGE>
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Preferred Shares which are in physical
form should be delivered to the person(s) set forth below and mailed to the
address set forth below.
Name(s)
--------------------------------------
(Please Print)
Address
--------------------------------------
(Please Print)
- ----------------------------------------------
- ----------------------------------------------
(Zip Code)
- ----------------------------------------------
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Preferred Shares which are in book-entry
form should be credited to the account at The Depositary Trust Company set forth
below.
-------------------------------------
DTC Account Number
Name of Account Party:
--------------------------
D-3
<PAGE>
ACE LIMITED
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
___% CUMULATIVE REDEEMABLE PREFERRED SHARES, SERIES A
NO PAR VALUE PER SHARE
LIQUIDATION VALUE US$50 PER SHARE
The undersigned, the __________ of ACE Limited, a corporation duly
organized under the laws of the Cayman Islands (the "Company"), DOES HEREBY
CERTIFY that the following resolutions have been duly adopted by the Board of
Directors of the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Company by the provisions of the Memorandum of
Association and Articles of Association, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the preferred shares of
the Company (the "Preferred Shares") which shall consist of ______ shares, and
this Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof, set forth in the Articles of Association of
the Company which are applicable to the shares of this Series) as follows:
(i) Designation. The designation of this Series shall be the ___%
Cumulative Redeemable Preferred Shares, Series A. The number of shares of this
Series shall be _______. The liquidation preference of this Series shall be
US$50 per share.
(ii) Rank. The Preferred Shares shall, with respect to dividend rights and
dividend rights and upon liquidation, winding up and dissolution, rank (i)
senior to the Company's ordinary shares, US$0.041666667 par value per share (the
"Ordinary Shares"), and to all classes and series of capital stock of the
Company now or hereafter authorized, issued or outstanding, which by their terms
expressly provide that they rank junior to the Preferred Shares as to dividend
distributions and distributions upon the liquidation, winding up and dissolution
of the Company, or which do not specify their rank (collectively with the
Ordinary Shares, the "Junior Securities"); (ii) on a parity with each other
class of capital stock or series of preferred shares issued by the Company after
the date hereof, the terms of which specifically provide that such class or
series will rank on a parity with the Preferred Shares as to dividend
distributions and distributions upon the liquidation, winding up and dissolution
of the Company (collectively referred to as the "Parity Securities"); and (iii)
junior to each other class or series of capital stock issued by the Company
after the date hereof, the terms of which specifically provide that such class
or series will rank senior to the Preferred Shares as to dividend distributions
and
<PAGE>
distributions upon the liquidation, winding up and dissolution of the Company
(collectively referred to as the "Senior Securities").
(iii) Dividends. Dividends are payable on the Preferred Shares as follows:
----- ---------
(a) The holders of the shares of this Series shall be entitled to
receive, out of funds legally available for that purpose, and when, as and
if declared by the Board of Directors of the Company, dividends payable in
cash at the annual rate of: (i) until May ___, 2003, ___% per annum and
(ii) thereafter, at the Reset Rate, in each case, of the liquidation
preference per Preferred Share.
(b) The dividend rate will be reset on the third Business Day
immediately preceding May___, 2003 and dividends shall accumulate on the
Preferred Shares at the Reset Rate from May___, 2003 to but excluding June
___, 2003. The Reset Agent shall determine the Reset Rate in the manner
provided in the Purchase Contract Agreement. On the Reset Announcement
Date, the Reset Spread and the One-Month Treasury Bill Rate to be used to
determine the Reset Rate will be announced by the Company. On the Business
Day immediately following the Reset Announcement Date, the Preferred Shares
holders will be notified of such Reset Spread and One-Month Treasury Bill
Rate by the Company. Such notice shall be sufficiently given to holders of
the shares of this Series if published in an Authorized Newspaper in The
City of New York. Not later than 7 calendar days nor more than 15 calendar
days prior to the Reset Announcement Date, the Company will notify DTC or
its nominee (or any successor Clearing Agency or its nominee) by first-
class mail, postage prepaid, to notify the beneficial owners or Clearing
Agency Participants holding Preferred Shares or Income PRIDES of such Reset
Announcement Date.
(c) Dividends on the Preferred Shares shall be fully cumulative and
shall accumulate, without interest, from April___, 2000, and shall be
payable in arrears in cash in equal quarterly payments on _______, _______,
_______ and _______ of each year, commencing _______, 2000 (each, a
"Dividend Payment Date"), to holders of record on the books and records of
the Company (1) so long as the Preferred Shares remain in book-entry only
form, at the close of business on the Business Day immediately preceding
the relevant Dividend Payment Date and (2) with respect to the Preferred
Shares not in book-entry form, as of the relevant record date established
by a resolution of the Board of Directors which shall be more than one
Business Day but less than 60 Business Days immediately preceding the
relevant Dividend Payment Date. If any date on which dividends on the
Preferred Shares are to be made is not a Business Day, payment of the
dividends payable on such date will be made on the next succeeding day that
is a Business Day, without any interest or other payment in respect of any
delay.
(d) Holders of the shares of this Series shall be entitled to receive
such dividends in preference to and in priority over dividends upon the
Junior Securities, but subject to the rights of holders of Senior
Securities. The Preferred Shares shall be on a parity as to dividends with
all Parity Securities.
2
<PAGE>
(e) Except as described below, dividends on the Preferred Shares shall be
paid only in cash. The amount of dividends payable shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of dividends payable
for any period will be computed on the basis of the actual number of days
elapsed in that 90-day period. All dividends paid with respect to the Preferred
Shares pursuant to this section shall be paid pro rata to the holders entitled
thereto.
(f) In the event the Company does not declare or pay dividends on the
Preferred Shares through May ___, 2003, on May ___, 2003, instead of a cash
payment in respect of such dividends, holders of the shares of this Series will
be entitled to receive a number of Ordinary Shares of the Company equal to (1)
the aggregate liquidation preference of the Preferred Shares held by such holder
plus accumulated and unpaid dividends thereon, divided by (2) the average of the
closing prices per Ordinary Share on each of the twenty consecutive Trading Days
ending on the third Trading Day immediately preceding May ___, 2003.
(g) Accumulated but unpaid dividends for any past dividend period may be
declared by the Board of Directors and paid on any date fixed by the Board of
Directors, whether or not a Dividend Payment Date, to holders of record on the
books and records of the Company on any date fixed by the Board of Directors.
Holders of the shares of this Series shall not be entitled to any dividends in
excess of full cumulative dividends, as herein provided, on the Preferred
Shares. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment on the Preferred Shares that may be in arrears.
(h) Payment Restrictions.
(1) So long as any Preferred Shares are outstanding, if the Company
does not pay dividends on the Preferred Shares on any Dividend Payment
Date, then, until all accumulated and unpaid dividends are paid and the
full quarterly dividend on the Preferred Shares for the current and all
prior dividend periods is declared or set apart for payment, the Company
may not declare or pay any dividend or make any distribution of assets on
any Junior Securities or make any guarantee payments with respect to the
foregoing, or redeem, purchase or otherwise acquire any Junior Securities.
(2) So long as any Preferred Shares are outstanding, if the Company
does not pay dividends on the Preferred Shares on any Dividend Payment
Date, then, until all accumulated and unpaid dividends are paid and the
full quarterly dividend on the Preferred Shares for the current and all
prior dividend periods is declared or set apart for payment, the Company
may not declare or pay any dividend or make any distribution of assets on
any Parity Securities or make any guarantee payments with respect to the
foregoing, unless such dividends are declared and paid pro rata so that the
amount of dividends declared and paid per share on the Preferred Shares and
any other Parity Securities in all cases shall bear to each other the
3
<PAGE>
same ratio that the amount of accumulated but unpaid dividends per share on
the Preferred Shares and such other Parity Securities bear to each other.
(3) So long as any Preferred Shares are outstanding, if the Company
does not pay dividends on the Preferred Shares on any Dividend Payment
Date, then, until all accumulated and unpaid dividends are paid and the
full quarterly dividend on the Preferred Shares for the current and all
prior dividend periods is declared or set apart for payment, the Company
may not redeem, purchase or otherwise acquire any Parity Securities.
(4) Notwithstanding anything to the contrary set forth in Sections
(iii)(g)(1), (2) and (3) above, the payment restrictions set forth in such
Sections shall not apply to (A) dividends or distributions in Junior
Securities, (B) redemptions or purchases of any rights outstanding under a
shareholder rights plan of the Company, or any successor to such rights
plan, or the declaration of a dividend of such rights or the issuance of
stock under such plans in the future and (C) purchases of Junior Securities
related to the issuance of Junior Securities under any benefit plans of the
Company or its subsidiaries, as the case may be, for their respective
directors, officers or employees.
(i) Any dividend payment made on the shares of this Series shall be
credited first against the dividends accumulated with respect to the earliest
dividend period for which dividends have not been paid.
(iv) Remarketing.
---- -----------
(a) In accordance with the Remarketing Agreement and subject to the terms
of the Remarketing Underwriting Agreement, beneficial owners of Preferred Shares
that comprise components of Income PRIDES who have failed to notify the Purchase
Contract Agent on or prior to the fifth Business Day immediately preceding May
___, 2003 of their intention to settle the related Purchase Contract by Cash
Settlement on the Business Day immediately preceding May ___, 2003, will be
remarketed on the third Business Day immediately preceding May ___, 2003 in the
manner described in Section 5.4(b) of the Purchase Contract Agreement.
(b) In accordance with the Remarketing Agreement and subject to the terms
of the Remarketing Underwriting Agreement, on or prior to the fifth Business Day
immediately preceding May ___, 2003, but no earlier than the Dividend Payment
Date immediately preceding May ___, 2003, beneficial owners of Preferred Shares
that are separately traded from the Income PRIDES as the result of the creation
of Growth PRIDES (the "Separate Preferred Shares") may elect to have their
Preferred Shares remarketed by delivering the Preferred Shares to the Collateral
Agent together with a notice of such election to the collateral agent. Holders
of Preferred Shares electing to have their Preferred Shares remarketed will also
have the right to withdraw such election on or prior to the fifth Business Day
immediately preceding May ___, 2003. Such Preferred Shares shall be remarketed
in the manner described in Section 5.4(b) of the
4
<PAGE>
Purchase Contract Agreement. In the event of a Failed Remarketing, the
Remarketing Agent shall promptly return the Separate Preferred Shares to the
Collateral Agent for release to the holders thereof.
(v) Repayment at Option of Holders.
--- ------------------------------
(a) If a Failed Remarketing has occurred, each holder of Separate
Preferred Shares shall have the right to require the Company to repay all or a
portion of such shares owned by such holder (the "Put Option") on May ____, 2003
(the "Put Option Exercise Date"), upon at least three Business Days' prior
notice, at a repayment price of $50 per share plus an amount equal to the
accumulated and unpaid dividends to the date of payment (the "Put Option
Repayment Price").
(b) In order for the Preferred Shares to be repaid on the Put Option
Exercise Date, the Company must receive on or prior to 4:00 p.m. on the third
Business Day immediately preceding the Put Option Exercise Date, at the office
of the Transfer Agent maintained for that purpose in The City of New York, the
Preferred Shares to be repaid with the form entitled "Option to Elect Repayment"
on the reverse thereof or otherwise accompanying such Preferred Share duly
completed. Any such notice received by the Company shall be irrevocable. All
questions as to the validity, eligibility (including time of receipt) and
acceptance of the Preferred Shares for repayment shall be determined by the
Company, whose determination shall be final and binding.
(c) Payment of the Put Option Repayment Price to holders of Preferred
Shares shall be made at the office of the Transfer Agent maintained for that
purpose in The City of New York, provided that the Transfer Agent has received
from the Company a sufficient amount of cash in connection with the related
repayment of the Preferred Shares no later than 1:00 p.m., New York City time,
on the Put Option Exercise Date by check or wire transfer in immediately
available funds at such place and to such account as may be designated by such
holders. If the Transfer Agent holds immediately available funds sufficient to
pay the Put Option Repayment Price of such Preferred Shares, then, immediately
prior to the close of business on the Put Option Exercise Date, such Preferred
Shares will cease to be outstanding and dividends thereon will cease to
accumulate, whether or not Preferred Shares are delivered to the Transfer Agent,
and all other rights of the holder in respect of the Preferred Shares shall
terminate and lapse (other than the right to receive the Put Option Repayment
Price but without interest on such Put Option Repayment Price). The Company
shall not be required to register or cause to be registered the transfer of any
Preferred Shares for which repayment has been elected. If payment of the Put
Option Repayment Price in respect of Preferred Shares is improperly withheld or
refused and not paid either by the Transfer Agent or the Company, dividends on
such Preferred Shares will continue to accumulate, from the original Put Option
Exercise Date to the actual date of payment, in which case the actual payment
date will be considered the Put Option Exercise Date for purposes of calculating
the Put Option Repayment Price.
5
<PAGE>
(d) The Company will request, not later than 10 nor more than 15
calendar days prior to May ___, 2003 [(the date on which some or all of the
Preferred Shares could be remarketed in the manner described in Section
5.4(b) of the Purchase Contract Agreement)] that DTC notify the holders of
the Separate Preferred Shares as well as the Income PRIDES and Growth
PRIDES holders of such remarketing and of the procedures that must be
followed if a holder of Separate Preferred Shares wishes to exercise such
holder's rights with respect to the Put Option.
(vi) Mandatory Redemption. The Preferred Shares are not redeemable
prior to June ___, 2003. On June ___, 2003 (the "Redemption Date"), the
Preferred Shares shall be redeemed by the Company in whole for cash, out of any
source of funds legally available, at a redemption price equal to 100% of the
liquidation preference per Preferred Share plus all accumulated and unpaid
dividends thereon (the "Redemption Price"). The Preferred Shares are not subject
to any sinking fund.
(vii) Procedure for Mandatory Redemption.
----- ----------------------------------
(a) Upon redemption of the Preferred Shares pursuant to Section (vi)
hereof, notice of such redemption shall be mailed by first-class mail,
postage prepaid, not less than thirty (30) days nor more than sixty (60)
days prior to the Redemption Date to holders of record of the Preferred
Shares at their respective addresses as they shall appear in the books and
records of the company; provided, however, that the failure to give such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the proceeding for the redemption of the Preferred Shares
except as to the holder to whom the Company has failed to give such notice
or except as to the holder to whom notice was defective. Each such notice
shall state: (1) the Redemption Date; (2) the redemption price; (3) the
place or places where certificates for such Preferred Shares are to be
surrendered for payment of the redemption price; (4) that dividends on the
Preferred Shares to be redeemed will cease to accumulate thereon unless the
Company shall default in payment of the Redemption Price; and (5) the CUSIP
number of the Preferred Shares being redeemed.
(b) If a notice of redemption shall have been given as aforesaid and
the Company shall have deposited on or before the Redemption Date a sum
sufficient to redeem the shares of this Series as to which a notice of
redemption has been given in trust with the Transfer Agent with irrevocable
instructions and authority to pay the Redemption Price to the holders
thereof, or if no such deposit is made, then upon the Redemption Date
(unless the Company shall default in making payment of the Redemption
Price), all rights of the holders thereof as shareholders of the Company by
reason of the ownership of such shares (except their right to receive the
Redemption Price thereof without interest) shall cease and terminate, and
such shares shall no longer be deemed outstanding for any purpose. The
Company shall be entitled to receive, from time to time, from the Transfer
Agent the interest, if any, earned on such moneys deposited with it, and
the holders of any shares so redeemed shall have no claim to any such
interest. In case the holder of any shares of this Series so called for
redemption shall not claim the Redemption Price for its shares within six
(6) years after the date of redemption, the Transfer Agent shall, upon
demand, pay
6
<PAGE>
over to the Company such amount remaining on deposit, and the Transfer
Agent shall thereupon be relieved of all responsibility to the holder of
such shares, and such holder shall look only to the Company for payment
thereof. After such six-year period, the right of any shareholder or other
Person to receive such payment may be forfeited in the manner and with the
effect provided under applicable law.
(c) Not later than 1:00 p.m., New York City Time, on the Business Day
immediately preceding the Redemption Date, the Company shall irrevocably
deposit with the Transfer Agent sufficient funds for the payment of the
Redemption Price for the shares to be redeemed on the Redemption Date and
shall give the Transfer Agent irrevocable instructions to apply such funds,
and, if applicable and so specified in the instructions, the income and
proceeds therefrom, to the payment of such Redemption Price. The Company
may direct the Transfer Agent to invest any such available funds, provided
that the proceeds of any such investment will be available to the Transfer
Agent in The City of New York at the opening of business on such Redemption
Date.
(d) [Except as otherwise expressly set forth in this paragraph and
under applicable law, nothing contained in this certificate shall limit any
legal right of the Company to purchase or otherwise acquire any shares of
this Series at any price, whether higher or lower than the Redemption
Price, in private negotiated transactions, the over-the-counter market or
otherwise; provided that the Company may not purchase or otherwise acquire
shares of this Series unless all accumulated and unpaid dividends on all
outstanding shares of the this Series for all dividend period(s)
terminating on or before the date of such purchase or acquisition shall
have been or are being contemporaneously paid or set apart for payment.]
(e) If the Company shall not have funds legally available for the
redemption of all of the shares of this Series on the Redemption Date, the
Company shall redeem on the Redemption Date only the number of shares of
this Series as it shall have legally available funds to redeem, as
determined in an equitable manner, and the remainder of the shares of this
Series shall be redeemed, at the option of the Company, on the earliest
practicable date next following the day on which the Company shall first
have funds legally available for the redemption of such shares.
(f) Prior to calling the shares of this Series for redemption in
accordance with this Section, the Company, by resolution of its Board of
Directors, shall, to the extent of the redemption amount, to the extent of
any such funds legally available therefor and to the extent permitted by
law, declare a dividend on the shares of this Series payable on or prior to
the Redemption Date in an amount equal to any accumulated and unpaid
dividends on the shares of this Series as of such date.
(viii) Liquidation Preference.
------ ----------------------
(a) The liquidation preference of shares of this Series, in case of
the voluntary or involuntary liquidation, dissolution or winding-up of the
Company, shall be US$50 per
7
<PAGE>
share, plus the amount per share of any dividends accumulated thereon and
remaining unpaid at the date of such liquidation, dissolution or winding-
up.
(b) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the holders of shares of this
Series shall be entitled to receive the liquidation price of such shares
held by them in preference to and in priority over any distributions upon
all Junior Securities, but subject to the rights of holders of Senior
Securities. Upon payment in full of the liquidation price to which the
holders of shares of this Series are entitled, the holders of shares of
this Series will not be entitled to any further participation in any
distribution of assets by the Company. If the assets of the Company are not
sufficient to pay in full the liquidation price payable to the holders of
shares of this Series and the liquidation price payable to the holders of
all Parity Shares, the holders of all such shares shall share ratably in
such distribution of assets in accordance with the amounts which would be
payable on such distribution if the amounts to which the holders of shares
of this Series and the holders of Parity Shares are entitled were paid in
full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets
for cash, securities or other property shall be considered a liquidation,
dissolution or winding-up of the Company within the meaning of this Section
(viii).
(ix) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Section (vii) above shall have the status of authorized but
unissued Preferred Shares, without designation as to series, subject to
reissuance by the Board of Directors of the Company as shares of this Series or
shares of any one or more other series.
(x) Voting Rights. Except as indicated below or as otherwise required by
applicable law, holders of shares of this Series will not have voting rights.
(a) If at any time dividends payable on the shares of this Series
are in arrears and unpaid in an aggregate amount equal to or exceeding the
aggregate amount of dividends payable thereon for six quarterly dividend
periods, the holders of the shares of this Series, together with the
holders of any other series of Parity Securities as to which dividends are
in arrears and unpaid in an aggregate amount equal to or exceeding the
aggregate amount of dividends payable for six quarterly dividend periods
(but only if the holders of the shares of such other series would otherwise
have a right to elect Directors as a result of a dividend arrearage), will
have the special and exclusive right (superseding the separate right of
such other series to elect Directors so long as shares of this Series
remain outstanding, except as otherwise expressly provided in the
certificate of designation establishing such other series), voting
separately as a class with any such other series, to elect two Directors of
the Company, such Directors to be in addition to the number of Directors
constituting the Board of Directors of the Company immediately prior to the
accrual of such right. Such right of the holders of shares of this Series
to elect two Directors shall, when vested, continue until all accumulated
dividends on the shares of
8
<PAGE>
this Series shall have been paid in full and, when so paid, such right of
the holders of shares of this Series to elect two Directors separately as a
class shall terminate, subject to revesting in the event of each and every
subsequent default in an aggregate amount equivalent to six full quarterly
dividends.
(b) At any time when such special voting power has vested in the
holders of the shares of this Series as described in Section (x)(1) above,
a proper officer of the Company will, upon the written request of the
holders of record of at least 10% of the shares of this Series then
outstanding addressed to the Secretary of the Company, call an
extraordinary meeting of the holders of such Series for the purpose of
electing directors. Such meeting will be held at the earliest practicable
date in such place as may be designated pursuant to the Articles of
Association (or if there be no designation, at the principal office of the
Company in Hamilton, Bermuda). If such meeting shall not be called by the
proper officers of the Company within 20 days after the Secretary of the
Company has been personally served with such request, or within 30 days
after mailing the same within the United States by registered or certified
mail addressed to the Secretary of the Company at its principal office,
then the holders of record of at least 10% of such class or series then
outstanding may designate in writing one of their number to call such
meeting at the Company's expense, and such meeting may be called by such
Person so designated upon the notice required for annual meetings of
shareholders and will be held in Hamilton, Bermuda. Any holder of the
shares of such class or series so designated will have access to the stock
books of the Company for the purpose of causing meetings of shareholders to
be called pursuant to these provisions. Notwithstanding the foregoing, no
such extraordinary meeting will be called during the period within 90 days
immediately preceding the date fixed for the next annual meeting of
shareholders.
(c) At any annual or extraordinary meeting at which the holders of any
class or series of Parity Securities have the special right, voting
separately as a class, to elect directors as described above, the presence,
in person or by proxy, of the holders of 33 1/3% of such class or series
will be required to constitute a quorum of such class or series for the
election of any director by the holders of such class or series, voting as
a class. At any such meeting or adjournment thereof, (1) the absence of a
quorum of such class or series, voting as a class, and the absence of a
quorum for the election of such other directors will not prevent the
election of the directors to be elected by such class or series, voting as
a class, and (2) in the absence of either or both such quorums, a majority
of the holders present in person or by proxy of any class or series of
shares for which a quorum is lacking will have power to adjourn the meeting
for the election of directors which they are entitled to elect, from time
to time until a quorum shall be present, without notice other than
announcement at the meeting.
(d) During any period in which the holders of any class or series of
Parity Securities have the right to vote as a class for directors as
described above, any vacancies in the Board of Directors will be filled
only by vote of a majority (even if that be only a single director) of the
remaining directors theretofore elected by the holders of such class or
series which elected the directors whose office shall have become vacant.
During such period the directors so elected by the holders of such class or
series will continue in office
9
<PAGE>
(1) until the next succeeding annual meeting or until their successors, if
any, are elected by such holders and qualify or (2) unless required by
applicable law to continue in office for a longer period, until termination
of the right of the holders of such class or to vote as a class for
directors, if earlier. If and to the extent permitted by applicable law,
immediately upon any termination of the right of the holders of any class
or series of preferred shares to vote as a class for directors as provided
herein, the term of office of the directors then in office so elected by
the holders of such class or series will terminate.
(e) Whether or not the Company is being wound up, the rights attached
to any class or series of Parity Securities may only be varied with the
consent in writing of the holders of three-fourths of the issued shares of
that class or series, or with the sanction of a special resolution approved
by at least 66 2/3% of the votes cast by the holders of the shares of that
class or series at a duly convened meeting where at least one-third of the
issued shares of that class or series are represented, either in person or
by proxy. The rights attached to any class or series of Parity Securities
will not be deemed to be varied by the creation or issue of any shares or
any securities convertible into or evidencing the right to purchase shares
ranking prior to or equally with such class or series of the Parity
Securities with respect to the payment of dividends or of assets upon
liquidation, dissolution or winding up. Holders of the shares of this
Series are not entitled to vote on any amalgamation, consolidation, merger
or statutory share exchange, except to the extent that such a transaction
would vary the rights attached to any such class or series of Parity
Securities, in which case any such variation is subject to the approval
process described above. Holders of the shares of this Series are not
entitled to vote on any sale of all or substantially all of the assets of
the Company.
(f) On any item on which the holders of the shares of this Series are
entitled to vote, such holders will be entitled to one vote for each
preferred share held.
(xi) Miscellaneous. The number of authorized shares of this Series may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the capital
stock of the Company entitled to vote.
(xii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(xiii) Certain Definitions. As used in this certificate, the following
terms shall have the following respective meanings:
"Authorized Newspaper" means a daily newspaper, in the English language,
customarily published on each day that is a Business Day in The City of New
York, whether or not published on days that are legal holidays, and of general
circulation in The City of New York. The Authorized Newspaper for the purposes
of the Reset Spread Announcement Date, is currently anticipated to be The Wall
Street Journal (NYC edition).
10
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"Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions and trust companies in The City of New York are
permitted or required by any applicable law to close.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i) of the
Purchase Contract Agreement.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as
amended,that is acting as a depositary for the shares of this Series and in
whose name, or in the name of a nominee of that organization, shall be
registered a global certificate and which shall undertake to effect book-entry
transfers and pledges of the shares of this Series.
(1) "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Collateral Agent" means The Bank of New York, as Collateral Agent under
the Pledge Agreement until a successor Collateral Agent shall have become such
pursuant to the applicable provisions of the Pledge Agreement, and thereafter
"Collateral Agent" shall mean the Person who is then the Collateral Agent
thereunder.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument.
"Contract Adjustment Payments" has the meaning set forth in the Purchase
Contract Agreement.
"Dividend Payment Date" has the meaning set forth in Section (iii)(c).
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Failed Remarketing" has the meaning set forth in Section 5.4(b) of the
Purchase Contract Agreement.
"Growth PRIDES" means the collective rights and obligations of a holder of
a Growth PRIDES certificate in respect of a 1/20th undivided beneficial interest
in a treasury security, subject in each case to the pledge thereof under the
Pledge Agreement, and the related Purchase Contract.
"Income PRIDES" means the collective rights and obligations of a holder of
an Income PRIDES certificate in respect of a Preferred Share, subject to the
pledge thereof under the Pledge Agreement, and the related Purchase Contract.
"Junior Securities" has the meaning set forth in Section (ii).
11
<PAGE>
"One-Month Treasury Bill" means direct obligations of the United States
(which may be obligations traded on a when-issued basis only) having a maturity
comparable to the remaining term to maturity of the Preferred Shares, as agreed
upon by the Company and the Reset Agent. The rate for the One-Month Treasury
Bill will be the bid side rate displayed at 10:00 A.M., New York City time, on
the third Business Day immediately preceding the May ___, 2003 in the Telerate
system (or if the Telerate system is (a) no longer available on the third
Business Day immediately preceding May ___, 2003 or (b) in the opinion of the
Reset Agent (after consultation with the Company) no longer an appropriate
system from which to obtain such rate, such other nationally recognized
quotation system as, in the opinion of the Reset Agent (after consultation with
the Sponsor) is appropriate. If such rate is not so displayed, the rate for the
One-Month Treasury Bill shall be, as calculated by the Reset Agent, the yield to
maturity for the One-Month Treasury Bill, expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis,
and computed by taking the arithmetic mean of the secondary market bid rates, as
of 10:30 A.M., New York City time, on the third Business Day immediately
preceding May ___, 2003, of three leading United States government securities
dealers selected by the Reset Agent (after consultation with the Company) (which
may include the Reset Agent or an affiliate thereof).
"Ordinary Shares" has the meaning set forth in Section (ii).
"Parity Securities " has the meaning set forth in Section (ii).
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof,
by and among the Company, the Collateral Agent and the Agent, on its own behalf
and as attorney-in-fact for the Holders from time to time of the Securities.
"Preferred Shares" has the meaning set forth in the preamble.
"Purchase Contract," when used with respect to any Income PRIDES or Growth
PRIDES, means the contract forming a part of such security and obligating the
Company to (i) sell and the holder of such Security to purchase Ordinary Shares
and (ii) pay the holder Contract Adjustment Payments with respect to the related
Income PRIDES or Growth PRIDES on the terms and subject to the conditions set
forth in Article Five of the Purchase Contract Agreement.
"Purchase Contract Agent" means The Bank of New York.
"Purchase Contract Agreement" means the agreement between the Company and
the Purchase Contract Agent, dated April ___, 2000.
"Put Option" has the meaning set forth in Section (v).
"Put Option Exercise Price" has the meaning set forth in Section (v).
12
<PAGE>
"Put Option Repayment Price" has the meaning set forth in Section (v).
"Redemption Date" has the meaning set forth in Section (iv).
"Redemption Price" has the meaning set forth in Section (iv).
"Remarketing Agent" means a nationally recognized investment banking firm
chosen by the Company to remarket the Preferred Shares. It is currently
anticipated that Merrill Lynch, Pierce, Fenner & Smith Incorporated will act in
such capacity
"Remarketing Agreement" means the Remarketing Agreement dated April ,
2000 by and among the Company, the Remarketing Agent and the Purchase Contract
Agent.
"Remarketing Underwriting Agreement" has the meaning specified in the
Remarketing Agreement.
"Reset Agent" means a nationally recognized investment banking firm chosen
by the Company to determine the Reset Rate. It is currently anticipated that
Merrill Lynch, Pierce, Fenner & Smith Incorporated will act in such capacity.
"Reset Announcement Date" means the tenth (10th) Business Day immediately
preceding May ___, 2003.
"Reset Rate" means the dividend rate per annum (to be determined by the
Reset Agent), equal to the sum of (X) the Reset Spread and (Y) the rate of
interest on the One-Month Treasury Bill in effect on the third Business Day
immediately preceding May __, 2003, that the Preferred Shares should bear in
order for the Preferred Shares to have an approximate market value of 100.5% of
their aggregate liquidation amount on the third Business Day immediately
preceding May ___, 2003; provided, that the Company may limit such Reset Spread
to be no higher than basis points ( %); and provided, further, that in
the event of a Failed Remarketing, the Reset Rate shall be the dividend rate per
annum in effect on the Business Day immediately preceding May ___, 2003.
"Reset Spread" means a spread amount to be determined by the Reset Agent on
the tenth (10th) Business Day immediately preceding May ___, 2003.
"Senior Securities" has the meaning set forth in Section (ii).
"Series" has the meaning set forth in the preamble.
"Separate Preferred Shares" has the meaning set forth in Section (iv)(b).
"Trading Day" has the meaning specified in Section 5.1 of the Purchase
Contract Agreement.
"Transfer Agent" means The Bank of New York.
13
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned ________ and attested to by its
_____________ this ___ day of April, 2000.
______________________________
Name:
Title:
ATTEST:
_____________________________
Name:
Title:
14
<PAGE>
REMARKETING AGREEMENT
REMARKETING AGREEMENT, dated as of April ., 2000 (the "Remarketing
Agreement") by and among ACE Limited, a company organized and existing under the
laws of the Cayman Islands ("the "Company"), The Bank of New York, a New York
banking corporation, not individually but solely as Purchase Contract Agent and
as attorney-in-fact of the holders of Purchase Contracts (each as defined in the
Purchase Contract Agreement (as defined herein)), and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Remarketing Agent").
WITNESSETH:
WHEREAS, the Company will issue its FELINE PRIDES (the "FELINE PRIDES") in
an aggregate Stated Amount of $ . under the Purchase Contract Agreement, dated
as of April ., 2000, by and between the Purchase Contract Agent and the Company
(the "Purchase Contract Agreement"); and
WHEREAS, the Company will issue concurrently in connection with the
issuance of the FELINE PRIDES .% Cumulative Redeemable Preferred Shares, Series
A, par value US$ . per Preferred Share (the "Preferred Shares") in an aggregate
stated liquidation amount of $ .; and
WHEREAS, the FELINE PRIDES will initially consist of . units referred to as
"Income PRIDES"; and
WHEREAS, the Preferred Shares will be pledged pursuant to the Pledge
Agreement (the "Pledge Agreement"), dated as of April ., 2000, by and among the
Company, The Bank of New York, as collateral agent (the "Collateral Agent"), and
the Purchase Contract Agent, to secure an Income PRIDES holder's obligations
under the related Purchase Contract on the Purchase Contract Settlement Date;
and
WHEREAS, the Preferred Shares of such holders of Preferred Share electing
to have their Preferred Shares remarketed, or of such Income PRIDES holders who
have elected not to settle the Purchase Contracts related to their Income PRIDES
from the proceeds of a Cash Settlement and who have not early settled their
Purchase Contracts, will be remarketed by the Remarketing Agent on the third
Business Day immediately preceding the Purchase Contract Settlement Date; and
WHEREAS, the applicable dividend rate on the Preferred Shares that remain
outstanding on and after the Purchase Contract Settlement Date will be reset on
the third Business Day immediately preceding the Purchase Contract Settlement
Date, to the Reset Rate to be determined by the Reset Agent as the rate that
such Preferred Shares should bear in order to have an approximate market value
of 100.5% of the aggregate stated liquidation amount of the Preferred Shares on
the third Business Day immediately preceding the Purchase Contract Settlement
Date, provided that in the determination of such Reset Rate, the Company may
limit the Reset Spread (a component of the Reset Rate) to be no higher than .
basis points (.%); and
<PAGE>
WHEREAS, the Company has requested Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") to act as the Reset Agent
and as the Remarketing Agent, and as such to perform the services described
herein; and
WHEREAS, Merrill Lynch is willing to act as Reset Agent and Remarketing
Agent and as such to perform such duties on the terms and conditions expressly
set forth herein;
NOW, THEREFORE, for and in consideration of the covenants herein made, and
subject to the conditions herein set forth, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not defined in this
-----------
Agreement shall have the meanings assigned to them in the Purchase Contract
Agreement or, if not therein defined, the Pledge Agreement.
Section 2. Appointment and Obligations of Remarketing Agent. The Company
------------------------------------------------
hereby appoints Merrill Lynch and Merrill Lynch hereby accepts such appointment,
(i) as the Reset Agent to determine in consultation with the Company, in the
manner provided for by the terms of the Preferred Shares, the Reset Rate, that
in the opinion of the Reset Agent, will, when applied to the Preferred Shares,
enable a Preferred Share to have an approximate market value of approximately
100.5% of the aggregate stated liquidation amount in the case of such Preferred
Share provided that the Company may limit such Reset Rate to be no higher than
the rate on the One-month Treasury Bill plus . basis points (.%), and (ii) as
the exclusive Remarketing Agent to remarket the Preferred Shares, of such
Preferred Shareholders electing to have their Preferred Shares remarketed, or of
such Income PRIDES holders who have not early settled the related Purchase
Contracts and have failed to notify the Purchase Contract Agent, on or prior to
the fifth Business Day immediately preceding the Purchase Contract Settlement
Date, of their intention to settle the related Purchase Contracts through Cash
Settlement, for settlement on the Purchase Contract Settlement Date, pursuant to
the Remarketing Underwriting Agreement with the Company and the Purchase
Contract Agent, substantially in the form attached hereto as Exhibit A (with
such changes as the Company, the Purchase Contract Agent and the Remarketing
Agent may agree upon, it being understood that changes may be necessary in the
representations, warranties, covenants and other provisions of the Remarketing
Underwriting Agreement due to changes in law or facts and circumstances).
Pursuant to the Remarketing Underwriting Agreement, the Remarketing Agent,
either as the sole remarketing underwriter or as the representative of a
syndicate including the Remarketing Agent and one or more other remarketing
underwriters designated by the Remarketing Agent, will agree, subject to the
terms and conditions set forth therein, that the Remarketing Agent and any such
other remarketing underwriters will purchase severally the Preferred Shares to
be sold by the holder or holders of Preferred Shares or Income PRIDES on the
third Business Day immediately preceding the Purchase Contract Settlement Date
and use their reasonable efforts to remarket such Preferred Shares (such
purchase and remarketing being hereinafter referred to as the "Remarketing"), at
a price of approximately 100.5% of such Preferred Shares aggregate stated
liquidation amount plus any accumulated and unpaid dividends. Notwithstanding
the preceding sentence, the Remarketing Agent shall not remarket any Preferred
Shares for a price less than 100% of the aggregate stated liquidation preference
of such Preferred Shares, plus accumulated and unpaid dividends. The proceeds of
such remarketing shall be paid to the Collateral Agent in accordance
2
<PAGE>
with Section 4.6 of the Pledge Agreement and Section 5.4 of the Purchase
Contract Agreement (each of which Sections are incorporated herein by
reference).
Section 3. Fees. With respect to the Remarketing, the Remarketing Agent
----
shall retain as Remarketing Fee an amount not exceeding 25 basis points (.25%)
of the aggregate stated liquidation amount of the remarketed securities from any
amount received in connection with such Remarketing in excess of the aggregate
stated liquidation amount of such remarketed Preferred Shares plus any
accumulated and unpaid dividends. In addition, the Reset Agent shall receive
from the Company a reasonable and customary fee as the Reset Agent Fee (the
"Reset Agent Fee"); provided, however, that if the Remarketing Agent shall also
act as the Reset Agent, then the Reset Agent shall not be entitled to receive
any such Reset Agent Fee. Payment of such Reset Agent Fee shall be made by the
Company on the third Business Day immediately preceding the Purchase Contract
Settlement Date in immediately available funds or, upon the instructions of the
Reset Agent by certified or official bank check or checks or by wire transfer.
Section 4. Replacement and Resignation of Remarketing Agent. (a) The
------------------------------------------------
Company may in its absolute discretion replace Merrill Lynch in its capacity
hereunder as the Remarketing Agent and/or as the Reset Agent by giving notice
prior to 3:00 p.m., New York City time, on the eleventh Business Day immediately
prior to the Purchase Contract Settlement Date. Any such replacement shall
become effective upon the Company's appointment of a successor to perform the
services that would otherwise be performed hereunder by the Remarketing Agent
and/or the Reset Agent. Upon providing such notice, the Company shall use all
reasonable efforts to appoint such a successor and to enter into a remarketing
agreement with such successor as soon as reasonably practicable.
(b) Merrill Lynch may resign at any time and be discharged from its duties
and obligations hereunder as the Remarketing Agent and/or as the Reset Agent by
giving notice prior to 3:00 p.m., New York City time, on the eleventh Business
Day immediately prior to the Purchase Contract Settlement Date. Any such
resignation shall become effective upon the Company's appointment of a successor
to perform the services that would otherwise be performed hereunder by the
Remarketing Agent and/or the Reset Agent. Upon receiving notice from the
Remarketing Agent and/or the Reset Agent that it wishes to resign hereunder, the
Company shall appoint such a successor and enter into a remarketing agreement
with it as soon as reasonably practicable.
Section 5. Dealing in the Securities. The Remarketing Agent, when acting
-------------------------
hereunder or under the Remarketing Underwriting Agreement or acting in its
individual or any other capacity, may, to the extent permitted by law, buy,
sell, hold or deal in any of the Preferred Shares. With respect to any Preferred
Shares owned by it, the Remarketing Agent may exercise any vote or join in any
action with like effect as if it did not act in any capacity hereunder. The
Remarketing Agent, in its individual capacity, either as principal or agent, may
also engage in or have an interest in any financial or other transaction with
the Company as freely as if it did not act in any capacity hereunder.
Section 6. Registration Statement and Prospectus. In connection with the
-------------------------------------
Remarketing, if and to the extent required (in the opinion of counsel for either
the Remarketing Agent or the Company) by applicable law, regulations or
interpretations in effect at the time of such
3
<PAGE>
Remarketing, the Company shall use its reasonable efforts to have a registration
statement relating to the Preferred Shares effective under the Securities Act of
1933 by the third Business Day immediately preceding the Purchase Contract
Settlement Date, shall furnish a current prospectus and/or prospectus supplement
to be used in such Remarketing by the remarketing underwriter or underwriters
under the Remarketing Underwriting Agreement, and shall pay all expenses
relating thereto.
Section 7. Conditions to the Remarketing Agent's Obligations. The
-------------------------------------------------
obligations of the Remarketing Agent and any other remarketing underwriters to
purchase and remarket the Preferred Shares shall be subject to the terms and
conditions of the Remarketing Underwriting Agreement.
(a) If at any time during the term of this Agreement, the Company is in
default with respect to the payment of a dividend on the Preferred Shares, then
the obligations and duties of the Remarketing Agent under this Agreement shall
be suspended until such default has been cured. The Company will give the
Remarketing Agent notice of all such defaults.
Section 8. Termination of Remarketing Agreement. This Agreement shall
------------------------------------
terminate as to the Remarketing Agent on the effective date of its replacement
pursuant to Section 4(a) hereof or pursuant to Section 4(b) hereof.
Notwithstanding any such termination, the obligations set forth in Section 3
hereof shall survive and remain in full force and effect until all amounts
payable under said Section 3 shall have been paid in full.
Section 9. Remarketing Agent's Performance; Duty of Care. The duties and
---------------------------------------------
obligations of the Remarketing Agent hereunder shall be determined solely by the
express provisions of this Agreement and the Remarketing Underwriting Agreement.
Section 10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 11. Term of Agreement. Unless otherwise terminated in accordance
-----------------
with the provisions hereof and except as otherwise provided herein, this
Agreement shall remain in full force and effect from the date hereof until the
first day thereafter on which no Preferred Shares are outstanding.
Section 12. Successors and Assigns. The rights and obligations of the
----------------------
Company hereunder may not be assigned or delegated to any other person without
the prior written consent of Merrill Lynch as the Remarketing Agent and/or as
the Reset Agent. The rights and obligations of Merrill Lynch as the Remarketing
Agent and/or as the Reset Agent hereunder may not be assigned or delegated to
any other person without the prior written consent of the Company. This
Agreement shall inure to the benefit of and be binding upon the Company and
Merrill Lynch as the Remarketing Agent and/or as the Reset Agent and their
respective successors and assigns. The terms "successors" and "assigns" shall
not include any purchaser of Securities merely because of such purchase.
Section 13. Headings. Section headings have been inserted in this
--------
Agreement as a matter of convenience of reference only, and it is agreed that
such section headings are not a part of this Agreement and will not be used in
the interpretation of any provision of this Agreement.
4
<PAGE>
Section 14. Severability. If any provision of this Agreement shall be held
------------
or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as
applied in any particular case in any or all jurisdictions because it conflicts
with any provisions of any constitution, statute, rule or public policy or for
any other reason, such circumstances shall not have the effect of rendering the
provision in question invalid, inoperative or unenforceable in any other case,
circumstances or jurisdiction, or of rendering any other provision or provisions
of this Agreement invalid, inoperative or unenforceable to any extent
whatsoever.
Section 15. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be regarded as an original and all of which shall constitute
one and the same document.
Section 16. Amendments. This Agreement may be amended by any instrument in
----------
writing signed by the parties hereto.
Section 17. Notices. Unless otherwise specified, any notices, requests,
-------
consents or other communications given or made hereunder or pursuant hereto
shall be made in writing or transmitted by any standard form of
telecommunication, including telephone, telegraph or telecopy, and confirmed in
writing. All written notices and confirmations of notices by telecommunication
shall be deemed to have been validly given or made when delivered or mailed,
registered or certified mail, return receipt requested and postage prepaid. All
such notices, requests, consents or other communications shall be addressed as
follows: if to the Company, ACE Limited, The ACE Building, 30 Woodbourne Avenue,
Hamilton HM 08 Bermuda, Attention: General Counsel and Secretary; if to the
Remarketing Agent or Reset Agent (if Merrill Lynch & Co. is the Remarketing
Agent or the Reset Agent), to Merrill Lynch & Co., World Financial Center, North
Tower, New York, New York 10281, Attention: ___________, with a copy to Brown &
Wood LLP, One World Trade Center, New York, NY 10048, Attention: L. Markus
Wiltshire; and if to the Purchase Contract Agent, to 101 Barclay Street, Floor
21 West New York, New York 10286, Attention: Corporate Trust Administration, or
to such other address as any of the above shall specify to the other in writing.
Section 18. Consent to Jurisdiction; Miscellaneous. Each of the parties
--------------------------------------
hereto hereby expressly and irrevocably submits to the non-exclusive
jurisdiction of any competent court in the place of its domicile and any United
States Federal or New York State court sitting in the Borough of Manhattan in
The City of New York in any action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby to the extent
that such court has subject matter jurisdiction over the controversy, and
expressly and irrevocably waives, to the extent permitted under applicable law,
any immunity from the jurisdiction thereof and any claim or defense in such
action, suit or proceeding based on a claim of improper venue, forum non
----- ---
conveniens or any similar basis to which it might otherwise be entitled in any
- ----------
such action, suit or proceeding. The Company irrevocably appoints ACE USA,
Inc., 1133 Avenue of the Americas, 32/nd/ Floor, New York, New York 10036 as its
authorized agent in the Borough of Manhattan in The City of New York upon which
process may be served in any such action, suit or proceeding, and agrees that
service of process upon such agent, and written notice of said service to the
Company by the person serving the same to the address provided in Section 18,
shall be deemed in every respect effective service of process upon the Company,
in any such action, suit or proceeding. The Company further agrees to take any
and all action as may be
5
<PAGE>
necessary to maintain such designation and appointment of such agent in full
force and effect for a period of seven years from the date of this Agreement.
Section 19. Waiver of Immunities. To the extent that the Company or any of
--------------------
its properties, assets or revenues may have or may hereafter become entitled to,
or have attributed to them, any right of immunity, on the grounds of
sovereignty, from any legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any court, from service of process, from
attachment upon or prior to judgment, or from attachment in aid of execution of
judgment, or from execution of judgment, other legal process or proceeding for
the giving of any relief or for the enforcement of any judgment, in any
jurisdiction in which proceedings may at any time be commenced, with respect to
their obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement or any additional agreement, the Company hereby
irrevocably and unconditionally, to the extent permitted by applicable law,
waives and agrees not to plead or claim any such immunity and consents to such
relief and enforcement.
Section 20. Judgement Currency. The Company agrees to indemnify each of the
------------------
Remarketing Agent and the Purchase Contract Agent against any loss incurred by
such party as a result of any judgment or order being given or made for any
amount due hereunder and such judgment or order being expressed and paid in a
currency (the "Judgment Currency") other than United States dollars and as a
result of any variation as between (i) the rate of exchange at which the United
States dollar amount is converted into the Judgment Currency for the purpose of
such judgment or order, and (ii) the rate of exchange at which the such party is
able to purchase United States dollars with the amount of the Judgment Currency
actually received by such party. The foregoing indemnity shall constitute a
separate and independent obligation of the Company and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "rate of exchange" shall include any premiums and costs of exchange payable
in connection with the purchase of, or conversion into, the relevant currency.
6
<PAGE>
IN WITNESS WHEREOF, each of the Company, the Purchase Contract Agent and
the Remarketing Agent has caused this Agreement to be executed in its name and
on its behalf by one of its duly authorized officers as of the date first above
written.
ACE LIMITED
By: _______________________________
Name:
Title:
CONFIRMED AND ACCEPTED:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ________________________________
Authorized Signatory
THE BANK OF NEW YORK
not individually but solely as Purchase Contract
Agent and as attorney-in-fact for the holders of
the Purchase Contracts
By: ________________________________
Name:
Title:
7
<PAGE>
Exhibit A to
Remarketing Agreement
FORM OF REMARKETING UNDERWRITING AGREEMENT
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Remarketing Underwriter") hereby agrees to purchase the Preferred Shares
(the "Securities"), that have been tendered by the holders of the Income PRIDES
for sale on ..
1. Definitions. Capitalized terms used and not defined in this Agreement
shall have the meanings assigned to them in the purchase contract agreement (the
"Purchase Contract Agreement"), the pledge agreement (the "Pledge Agreement"),
the underwriting agreement (the "Underwriting Agreement"), each as identified in
Schedule I hereto.
2. Registration Statement and Prospectus. If required (in the opinion of
counsel to either the Remarketing Underwriter or the Company) by applicable law,
the Company has filed with the Securities and Exchange Commission, and there has
become effective, a registration statement on Form S-3 (No.__________________),
including a prospectus, relating to the Securities. Such registration
statement, as amended to the date of this Agreement, is hereinafter referred to
as the "Registration Statement," the prospectus included in the Registration
Statement is hereinafter referred to as the "Basic Prospectus" and the Basic
Prospectus, as amended or supplemented to the date of this Agreement to relate
to the Securities and to the remarketing of the Securities, is hereinafter
referred to as the "Final Prospectus" (including in each case all documents
incorporated by reference).
3. Provisions Incorporated by Reference. (a) Subject to Section 3(b), the
provisions of the Underwriting Agreement shall be incorporated, as applicable,
into this Agreement and made applicable to the obligations of the Remarketing
Underwriter, except as explicitly amended hereby.
(b) With respect to the provisions of the Underwriting Agreement
incorporated herein, for the purposes hereof, (i) all references therein to the
"Underwriter" or "Underwriters" shall be deemed to refer to the Remarketing
Underwriter; (ii) all references therein to the "Securities" which are the
subject thereof shall be deemed to refer to the Securities as defined herein;
(iii) all references therein to the "Closing Date" shall be deemed to refer to
the Remarketing Closing Date specified in Schedule I hereto (the "Remarketing
Closing Date"); (iv) all references therein to the "Registration Statement" and
the "Prospectus" shall be deemed to refer to the Registration Statement and the
Final Prospectus, respectively, as defined herein.
4. Purchase and Sale; Remarketing Underwriting Fee. Subject to the terms
and conditions and in reliance upon the representations and warranties herein
set forth or incorporated herein, the Remarketing Underwriter agrees to purchase
from the registered holder or holders thereof in the manner specified in Section
5 hereof, the principal amount of Securities
A-1
<PAGE>
set forth in Schedule I hereto at a purchase price not less than 100% of such
Securities' aggregate stated liquidation amount plus any accumulated and unpaid
dividends thereon. In connection therewith, the registered holder or holders
thereof agree, in the manner specified in Section 5 hereof, to pay to the
Remarketing Underwriter a Remarketing Underwriting Fee equal to an amount not
exceeding 25 basis points (.25%) of the aggregate stated liquidation amount of
the Securities, from any amount received in connection with such Remarketing in
excess of the aggregate stated liquidation amount of the Securities plus any
accumulated and unpaid dividends. The right of each holder of Securities to have
Securities tendered for purchase shall be limited to the extent that (i) the
Remarketing Underwriter conducts a remarketing pursuant to the terms of the
Remarketing Agreement, (ii) Securities tendered have not been called for
redemption, (iii) the Remarketing Underwriter is able to find a purchaser or
purchasers for tendered Securities and (iv) such purchaser or purchasers deliver
the purchase price therefor to the Remarketing Underwriter. The Remarketing
Underwriter is not obligated to purchase any Securities that would otherwise
remain unsold in a remarketing. Neither the Company nor the Remarketing
Underwriter shall be obligated in any case to provide funds to make payment upon
tender of Securities for remarketing.
5. Delivery and Payment. Delivery of payment for the remarketed Securities
and payment of the Remarketing Underwriting Fee shall be made on the Remarketing
Closing Date at the location and time specified in Schedule I hereto (or such
later date not later than five business days after such date as the Remarketing
Underwriter shall designate), which date and time may be postponed by agreement
between the Remarketing Underwriter, the Company and the [registered holder or
holders thereof]. Delivery of payment for the remarketed Securities shall be [to
or upon the order of the [registered holder or holders of the remarketed
Securities] by certified or official bank check or checks drawn on or by a New
York Clearing House bank and payable in immediately available funds][in
immediately available funds by wire transfer to an account or accounts
designated by the [Company] [registered holder or holders of the remarketed
Securities] or, if the remarketed Securities are represented by a Global
Security, by any method of transfer agreed upon by the Remarketing Underwriter
and the depositary for the Securities.
[It is understood that any registered holder or, if the Securities are
represented by a Global Security, any beneficial owner, that has an account at
the Remarketing Underwriter and tenders its Securities through such account will
not be required to pay any fee or commission to the Remarketing Underwriter.]
If the Securities are not represented by a Global Security, certificates
for the Securities shall be registered in such names and denominations as the
Remarketing Underwriter may request not less than three full business days in
advance of the Remarketing Closing Date, and the Company and the [registered
holder or holders thereof] agree to have such certificates available for
inspection, packaging and checking by the Remarketing Underwriter in New York,
New York not later than 1:00 p.m. on the Business Day prior to the Remarketing
Closing Date.
6. Notices. Unless otherwise specified, any notices, requests, consents or
other communications given or made hereunder or pursuant hereto shall be made in
writing or
A-2
<PAGE>
transmitted by any standard form of telecommunication, including telephone,
telegraph or telecopy, and confirmed in writing. All written notices and
confirmations of notices by telecommunication shall be deemed to have been
validly given or made when delivered or mailed, registered or certified mail,
return receipt requested and postage prepaid. All such notices, requests,
consents or other communications shall be addressed as follows: if to the
Company, to ACE Limited, The Ace Building, 30 Woodbourne Avenue, Hamilton HM 08
Bermuda, Attention: General Counsel and Secretary; if to the Remarketing
Underwriter, to Merrill Lynch & Co., World Financial Center, North Tower, New
York, New York 10281, Attention: ____________, with a copy to Brown & Wood LLP,
One World Trade Center, New York, NY 10048, Attention: L. Markus Wiltshire; and
if to the Purchase Contract Agent, to 101 Barclay Street, Floor 21 West New
York, New York 10286 Attention: Corporate Trust Administration, or to such
other address as any of the above shall specify to the other in writing.
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Company, the Purchase Contract Agent and the Remarketing Underwriter.
Very truly yours,
ACE LIMITED
By:
-------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------------------
Authorized Signatory
THE BANK OF NEW YORK
not individually but solely as Purchase Contract
Agent and as attorney-in-fact for the holders
of the Purchase Contracts
By:
----------------------------------------------
Name:
Title:
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SCHEDULE I
Purchase Contract Agreement dated as of April ., 2000 by and between Ace
Limited, a Cayman Islands company, and The Bank of New York, a New York banking
corporation
Pledge Agreement dated as of April ., 2000 by and between Ace Limited, a Cayman
Islands company, and The Bank of New York, as Collateral Agent, Custodial Agent
and Securities Intermediary, and as Purchase Contract Agent
Registration Statement No. 333-78841
Principal Amount of Securities: $. ($. if the Underwriters' over-allotment
option is exercised)
Underwriting Agreement, dated as of April ., 2000 between Ace Limited and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, [co-
managers]
Remarketing Underwriting Fee: .25% (.0025)
Remarketing Closing Date, Time and Location:
SCH-I-1
