Exhibit 1
ACE LIMITED
(a Cayman Islands Company)
20,000,000 Depositary Shares
Each Representing 1/10 of a Share of
7.80% Cumulative Redeemable Preferred Shares, Series C
(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Depositary Share)
TERMS AGREEMENT
May 7, 2003
ACE LIMITED
ACE Global Headquarters
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇
Ladies and Gentlemen:
The undersigned underwriters (the "Underwriters") understand that ACE Limited, a
Cayman Islands Company (the "Company"), proposes to sell 20,000,000 Depositary
Shares (the "Shares"), each Share representing 1/10 of a share of its 7.80%
Cumulative Redeemable Preferred Shares, Series C, $1.00 par value per share (the
"Preferred Shares"). Subject to the terms and conditions set forth herein or
incorporated by reference herein, each Underwriter, severally and not jointly,
agrees to purchase from the Company the number of Shares set forth below
opposite the name of such Underwriter at $24.2125 per Share on the Closing Date.
The Shares shall have the following terms:
Title of Shares: Depositary Shares, each representing 1/10 of a share of 7.80%
Cumulative Redeemable Preferred Shares, Series C
Number of Shares to be issued: 20,000,000
Maximum number of Shares representing Option Preferred Shares to be issued:
3,000,000
Current ratings: ▇▇▇▇▇'▇ Investors Service, Inc. Baa2 (stable outlook)
Standard & Poor's Ratings Services BBB- (negative outlook)
Dividend rate: 7.80% or $19.50 per annum per Preferred Share
($1.95 per Share)
Redemption provisions: As set forth in the Resolutions of the Special Committee
of the Board of Directors of the Company for the
Preferred Shares
Conversion provision, if any: N/A
Initial price to public: 100%
Underwriting Commission: $0.7875 per share
Purchase price: $24.125 per Share plus accrued but unpaid dividends, if any, to
the date of purchase.
Number of
Underwriters Shares
------------ -----------
Citigroup Global Markets Inc. 2,227,500
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated 2,227,500
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. 2,222,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated 2,222,500
Prudential Securities Incorporated 2,222,500
UBS Warburg LLC 2,222,500
Wachovia Securities, Inc. 2,222,500
Banc of America Securities LLC 400,000
Bear, ▇▇▇▇▇▇▇ & Co. Inc. 400,000
Deutsche Bank Securities Inc. 400,000
Quick & ▇▇▇▇▇▇, Inc. 400,000
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. 400,000
ABN AMRO Incorporated 100,000
Banc One Capital Markets, Inc. 100,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. 100,000
Commerzbank Capital Markets Corp. 100,000
Credit Lyonnais Securities (USA) Inc. 100,000
▇▇▇▇▇▇▇▇▇▇ & Co. Inc. 100,000
H&R Block Financial Advisors, Inc. 100,000
HSBC Securities (USA) Inc. 100,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. 100,000
▇▇▇▇▇▇ Brothers Inc. 100,000
McDonald Investments, Inc. 100,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Inc. 100,000
TD Waterhouse Investor Services, Inc. 100,000
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. 100,000
▇▇▇▇▇ Fargo Securities, LLC 100,000
BB&T Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. 40,000
▇▇▇▇▇▇▇▇ & Partners, L.P. 40,000
BNP Paribas Securities Corp. 40,000
▇.▇. ▇▇▇▇ & Associates, Inc. 40,000
CIBC World Markets Corp. 40,000
Comerica Securities, Inc. 40,000
Credit Suisse First Boston LLC 40,000
▇.▇. ▇▇▇▇▇▇▇▇ & Co. 40,000
▇▇▇▇▇▇▇▇▇ & Company LLC 40,000
▇▇▇▇▇▇▇ & Partners Securities, LLC 40,000
2
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated 40,000
▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ Incorporated 40,000
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc. 40,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC 40,000
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. 40,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated 40,000
Mesirow Financial, Inc. 40,000
▇▇▇▇, ▇▇▇▇ & Co., Inc. 40,000
Sandler ▇'▇▇▇▇▇ & Partners, L.P. 40,000
Southwest Securities, Inc. 40,000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated 40,000
▇▇▇▇▇▇▇▇ Capital Partners, L.P. 40,000
The ▇▇▇▇▇▇▇▇ Capital Group, L.P. 40,000
==========
20,000,000
Closing Date: 9:00 A.M. (Eastern Time), May 30, 2003
Place of delivery and payment: Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Company account for wire transfer of payment: State Street Bank and Trust
ABA ▇▇▇▇▇▇▇▇▇
ACE Limited Cash Settlement
DDA ▇▇▇▇-▇▇▇-▇
Ref Fund G0G5
Lock-up pursuant to Section 5(j) of the Underwriting Agreement (as defined
below): yes
At the Closing Date, the Underwriters will pay the Company by wire transfer
to the account specified above $484,250,000.
The following information appearing in the Registration Statement on Form
S-3 (No. 333-88482) (and the related Prospectus dated February 4, 2003 and
Prospectus Supplement dated May 7, 2003 relating to the offer and sale of the
Shares, in the form in which the Prospectus and Prospectus Supplement were filed
with the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act of 1933, as amended), has been furnished by the Underwriters:
1. The information in the third paragraph under the caption "Underwriting"
on Page S-30 of the Prospectus Supplement insofar as it relates to concession
and reallowance.
2. The information in the ninth and tenth paragraphs under the caption
"Underwriting" on page S-31 of the Prospectus Supplement insofar as it relates
to stabilization and syndicate covering transactions.
3
1. The information in the eleventh paragraph under the caption
"Underwriting" on page S-31 of the Prospectus Supplement insofar as it relates
to penalty bids.
No other information in the above mentioned Registration Statement (and the
related Prospectus and Prospectus Supplement) has been furnished by the
Underwriters.
All the provisions contained in the Underwriting Agreement dated May 7,
2003 between the Company and the Underwriters (the "Underwriting Agreement")
attached hereto as Annex A, are herein incorporated by reference in their
entirety and shall be deemed to be a part of this Terms Agreement to the same
extent as if such provisions had been set forth in full herein. Terms defined in
such document are used herein as therein defined.
4
Any notice by the Company to the Underwriters pursuant to this Terms
Agreement shall be sufficient if given in accordance with Section 10 of the
Underwriting Agreement addressed to: Citigroup Global Markets Inc., ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), which shall, for all purposes of this
Agreement, be the "Representative."
CITIGROUP GLOBAL MARKETS INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: CITIGROUP GLOBAL MARKETS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Authorized Signatory
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Authorized Signatory
Accepted:
ACE LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: General Counsel & Secretary
Annex A
ACE LIMITED
(a Cayman Islands Company)
20,000,000 Depositary Shares
Each Representing 1/10 of a Share of
7.80% Cumulative Redeemable Preferred Shares, Series C
(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Depositary Share)
UNDERWRITING AGREEMENT
May 7, 2003
CITIGROUP GLOBAL MARKETS INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
2. Introductory. ACE Limited, a Cayman Islands company ("Company"),
proposes to sell from time to time 20,000,000 Depositary Shares (the "Shares"),
each representing 1/10 of a share of its 7.80% Cumulative Redeemable Preferred
Shares, Series C, par value $1.00 per share (liquidation preference $25.00 per
Depositary Share) (the "Initial Preferred Shares"), and grant to the
Underwriters (as defined below), acting severally and not jointly, an option to
purchase up to an additional 3,000,000 Shares, each Share representing one-tenth
of a share of its 7.80% Cumulative Redeemable Preferred Shares, Series C, par
value $1.00 per share (liquidation preference $25.00 per Depositary Share) (the
"Option Preferred Shares" and, together with the Initial Preferred Shares, the
"Preferred Shares"). The Preferred Shares will, when issued, be deposited by the
Company against delivery of depositary receipts (the "Receipts") to be issued by
Mellon Investor Services LLC, as depositary (the "Depositary"), under a deposit
agreement (the "Deposit Agreement") to be dated as of May 30, 2003, among the
Company, the Depositary and the holders from time to time of Receipts, which
will evidence the Shares. Certain terms of the Shares will be set out in a Terms
Agreement referred to in Section 3.
The firm or firms that agree to purchase the Shares are hereinafter
referred to as the "Underwriters" of such securities, and the representative or
representatives of the Underwriters, if any, specified in a Terms Agreement
referred to in Section 3 are hereinafter referred to as the "Representatives,"
provided, however, that if the Terms Agreement does not specify any
representative of the Underwriters, the term "Representatives", as used in this
Agreement (other than in Sections 2(a) and 6(c) and the second sentence of
Section 3), shall mean the Underwriters.
3. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters as of the date hereof
and on the date of each Terms Agreement referred to in Section 3, as of the
Closing Date (as defined below) and, if applicable, as of each Date of Delivery
(as defined below) (in each case, a "Representation Date), that:
(a) Compliance with Registration Requirements. A registration statement
(No. 333-88482) relating to, among other things, the Shares and the Preferred
Shares, including a form of prospectus, has been filed with the Securities and
Exchange Commission ("Commission") and became effective on February 4, 2003.
Such registration statement, as amended at the time of any Terms Agreement
referred to in Section 3, including all material incorporated by reference, is
hereinafter referred to as the "Registration Statement," and the prospectus
included in such Registration Statement, as supplemented as contemplated by
Section 3 to reflect the terms of offering of the Shares, as first filed with
the Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Securities Act of 1933, as amended (the "Securities Act"), including
all material incorporated by reference therein, is hereinafter referred to as
the "Prospectus." A "preliminary prospectus" shall be deemed to refer to any
prospectus and prospectus supplement that omitted information to be included
upon pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) under the Securities Act and was used after such effectiveness and prior
to the initial delivery of the Prospectus to the Underwriters by the Company. No
stop order suspending the effectiveness of the Registration Statement has been
issued under the Securities Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information with respect to the Registration Statement (or any document
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act")) has been complied with. No document has
been or will be prepared or distributed in reliance on Rule 434 under the
Securities Act.
At the respective times the Registration Statement and any post-effective
amendments thereto (including the filing of the Company's Annual Report on Form
10-K for the year ended December 31, 2002 with the Commission) became effective
and at each Representation Date, the Registration Statement and any amendments
thereto complied and will comply in all material respects to the requirements of
the Securities Act and the rules and regulations of the Commission ("Rules and
Regulations") and did not include and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. At the date of the
Prospectus and at each Representation Date, neither the Prospectus nor any
amendments and supplements thereto included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement (or any amendment thereto) or
the Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representatives, if any, expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto).
7
(b) Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at
the time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder and, when read together
with the other information in the Prospectus, at the date of the Prospectus and
at each Representation Date, did not and will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) Independent Accountants. The accountants who certified or shall certify
the financial statements and any supporting schedules thereto of the Company
included in the Registration Statement and the Prospectus are independent public
accountants with respect to the Company and its subsidiaries as required by the
Securities Act and the Rules and Regulations
(d) Financial Statements. The financial statements of the Company included
in the Registration Statement and the Prospectus, together with the related
schedules and notes, as well as those financial statements, schedules and notes
of any other entity included therein, present fairly the financial position of
the Company and its consolidated subsidiaries, or such other entity, as the case
may be, at the dates indicated and the statement of operations, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries, or such
other entity, as the case may be, for the periods specified. Such financial
statements have been prepared in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved, except as indicated therein or in the notes thereto. The
supporting schedules, if any, included in the Registration Statement and the
Prospectus present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information, if any, included in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of the
related audited financial statements included in the Registration Statement and
the Prospectus. The pro forma financial statements of the Company and its
subsidiaries and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled on the
basis described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein.
(e) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
except as otherwise stated therein (i) neither the Company nor any of its
subsidiaries has sustained any material loss or material interference with its
business from any action, notice, order or decree from an insurance regulatory
authority and (ii) there has been (A) no material adverse change in case
reserves or losses or loss expense of the Company and its consolidated
subsidiaries and (B) no material adverse change, nor any development or event
involving a prospective material adverse change, in the financial condition,
business, or results of operations of the Company and its subsidiaries
considered as one enterprise, in either case whether or not arising in the
ordinary course of business (a "Material Adverse Change").
8
(f) Good Standing of the Company. The Company has been duly incorporated
and is subsisting and in good standing under the laws of the Cayman Islands,
with corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus; and the Company is duly
qualified to transact business as a foreign corporation and is in good standing
in all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
so qualify or be in good standing would not reasonably be expected to result in
a Material Adverse Change.
(g) Good Standing of Corporate Subsidiaries. Each subsidiary of the
Company, other than such subsidiaries as would not, individually or in the
aggregate, constitute a "significant subsidiary" as such term is defined in Rule
1-02 of Regulation S-X promulgated under the Securities Act (each, a
"Significant Subsidiary") which is a corporation has been duly incorporated or
organized and is an existing corporation in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the jurisdiction
of its incorporation, with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and each such Significant Subsidiary of the Company is duly
qualified to transact business as a foreign corporation and is in good standing
(with respect to jurisdictions which recognize such concept) in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to so qualify or
be in good standing would not reasonably be expected to result in a Material
Adverse Change; all of the issued and outstanding capital stock of each such
Significant Subsidiary of the Company has been duly authorized and validly
issued and is fully paid and nonassessable; and all of the issued and
outstanding capital stock of each such Significant Subsidiary is owned by the
Company, directly or through subsidiaries, except for de minimis shareholdings
as required to comply with applicable law, and such capital stock is owned free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity (except for restrictions on transferability of the shares of insurance
subsidiaries under applicable law).
(h) Good Standing of Partnership Subsidiaries. Each Significant Subsidiary
of the Company which is a partnership has been duly formed and is an existing
partnership in good standing (with respect to jurisdictions which recognize such
concept) under the laws of the jurisdiction of its formation, with power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus; and each such Significant Subsidiary of the
Company is duly qualified to transact business and is in good standing (with
respect to jurisdictions which recognize such concept) in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to so qualify or
be in good standing would not reasonably be expected to result in a Material
Adverse Change; all of the outstanding equity interests of each such Significant
Subsidiary of the Company have been duly authorized and validly issued; and all
of the equity interests of each such Significant Subsidiary are owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity (other than
immaterial amounts necessary to comply with applicable law).
(i) Capitalization. The authorized, issued and outstanding shares of
capital stock of the Company are as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances thereof, if any, pursuant to reservations,
9
agreements or employee benefit plans or pursuant to the exercise of convertible
securities or options). Such shares of capital stock have been duly authorized
and validly issued by the Company and are fully paid and non-assessable, and
none of such shares of capital stock was issued in violation of preemptive or
other similar rights of any securityholder of the Company.
(j) Authorization and Description of the Shares and Preferred Shares. The
Preferred Shares have been duly authorized by the Company and, when the Shares
have been delivered and paid for in accordance with the Terms Agreement and upon
deposit of the Preferred Shares with the Depositary pursuant to the Deposit
Agreement and the due execution by the Depositary of the Deposit Agreement and
the Receipts, in accordance with the Deposit Agreement, on the Closing Date and
each Date of Delivery, if any, such Shares and Preferred Shares will have been,
validly issued, fully paid and nonassessable, the Shares will have been duly
authorized by the Depositary, and the Shares and Preferred Shares will conform
to the respective description thereof contained in the Prospectus; and the
shareholders of the Company have no preemptive rights with respect to each of
the Shares and Preferred Shares.
(k) No Agreements to Register. There are no contracts, agreements or
understandings between the Company and any person requiring the Company to
include the Shares and Preferred Shares in the securities registered pursuant to
the Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.
(l) Absence of Further Requirements. No consent, approval, authorization,
or order of, or filing with, any governmental agency or body or any court,
domestic or foreign, is required for the consummation of the transactions
contemplated by the Terms Agreement in connection with the issuance, offering
and sale of the Shares by the Company, except such as have been obtained or made
prior to the Closing Date, such as have been obtained and made under the
Securities Act, such filing of the Prospectus as has been made with the Bermuda
Registrar of Companies under the Companies ▇▇▇ ▇▇▇▇ of Bermuda and such as may
be required under state securities laws.
(m) Non-Taxation of Current Payments. Except as disclosed in the
Prospectus, under current laws and regulations of the Cayman Islands and Bermuda
and any political subdivision thereof, all dividends declared and payable on the
Preferred Shares may be paid by the Company to the holder of the Shares in
United States dollars and freely transferred out of the Cayman Islands or
Bermuda and all such payments made to holders of the Shares or therein who are
non-residents of the Cayman Islands or Bermuda will not be subject to income,
withholding or other taxes under laws and regulations of the Cayman Islands or
Bermuda or any political subdivision or taxing authority thereof or therein and
will otherwise be free and clear of any other tax, duty, withholding or
deduction in the Cayman Islands or Bermuda or any political subdivision or
taxing authority thereof or therein and without the necessity of obtaining any
governmental authorization in the Cayman Islands or Bermuda or any political
subdivision or taxing authority thereof or therein.
(n) Absence of Defaults and Conflicts. None of the Company or any
subsidiary thereof is in violation of its charter or by-laws, partnership
agreement or other constitutive documents or in default in the performance or
observance of any obligation, agreement, covenant
10
or condition contained in any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or other agreement or instrument to which the
Company or any subsidiary thereof is a party or by which it or any of them may
be bound, or to which any of the assets, properties or operations of the Company
or any subsidiary thereof is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not reasonably be expected to
result in a Material Adverse Change. The execution, delivery and performance of
the Terms Agreement (including the provisions of this Agreement) and the Deposit
Agreement, the issuance and sale of the Preferred Shares, and the sale of the
Shares, as contemplated herein and in the Prospectus, the consummation of the
transaction contemplated herein, in the Deposit Agreement and in the
Registration Statement and the Prospectus (including, without limitation, the
issuance and sale of the Preferred Shares, the sale of the Shares, and the use
of the proceeds from the sale of the Preferred Shares as described under the
caption "Use of Proceeds") and compliance by the Company with its obligations
hereunder and thereunder do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any assets,
properties or operations of the Company or any subsidiary thereof pursuant to,
any Agreements and Instruments (except for such conflicts, breaches, defaults or
Repayment Events or liens, charges or encumbrances that would not reasonably be
expected to result in a Material Adverse Change); nor will such action result in
any violation of the provisions of the charter or by-laws, partnership agreement
or other constitutive documents of the Company or any subsidiary thereof or, to
the best knowledge of the Company, any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary thereof or over any of their assets, properties or
operations, except for such violations under any applicable law, statute, rule,
regulation, judgement, order, writ or decree as would not reasonably be expected
to result in a Material Adverse Change. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any subsidiary thereof.
(o) Authorization of the Terms Agreement and Deposit Agreement. The Terms
Agreement (including the provisions of this Agreement) has been duly authorized,
executed and delivered by the Company. The Deposit Agreement has been duly
authorized and, as of the Closing Date, will be duly executed and delivered by
the Company.
(p) Possession of Licenses and Permits. The Company and its subsidiaries
possess such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to so possess any such
Governmental Licenses would not, singly or in aggregate, reasonably be expected
to result in a Material Adverse Change. The Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Change. Neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
11
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would reasonably be expected to result in a Material Adverse
Change.
(q) Insurance Laws. Each of the Company and its insurance subsidiaries
(including insurance holding companies) is duly registered, licensed or admitted
as an insurer or an insurance holding company (as applicable) in each
jurisdiction where it is required to be so licensed or admitted to conduct its
business as presently conducted, except where the failure to be so registered,
licensed or admitted would not reasonably be expected to result in a Material
Adverse Change; each of the Company and its insurance subsidiaries has all other
necessary authorizations, approvals, orders, certificates and permits, of and
from, and has made all declarations and filings with, all insurance authorities,
commissions or other insurance regulatory bodies to conduct their respective
businesses as described in the Prospectus, except for where the failure to have
such authorizations, approvals, orders, certificates and permits, or to make
such declarations and filings, would not have a Material Adverse Change; all of
such authorizations, approvals, orders, certificates and permits are in full
force and effect, except where the failure to be in full force and effect would
not have a Material Adverse Change; and neither the Company nor its insurance
subsidiaries has received any notification from any insurance authority,
commission or other insurance regulatory body to the effect that any additional
authorization, approval, order, license, certificate or permit from such
authority, commission or body is needed to be obtained by any of the Company or
its insurance subsidiaries, except for any authorization, approval, order,
license, certificate or permit from any such authority, commission or body the
failure of which to obtain, singly or in the aggregate, would not have a
Material Adverse Change.
Each of the Company and its insurance subsidiaries is in compliance with
all applicable insurance statutes and regulations and has filed all reports,
documents or other information required to be filed under such statutes and
regulations, except where the failure to comply or file would not have a
Material Adverse Change; and each of the Company and its insurance subsidiaries
is in compliance with the insurance laws and regulations of other jurisdictions
which are applicable to the Company and its insurance subsidiaries (as the case
may be), except where the failure to comply would not have a Material Adverse
Change.
(r) Governmental Authorization. Except as set forth in the Registration
Statement and the Prospectus, no authorization, approval or consent of any
governmental authority agency is required (other than any license as an insurer
or insurance holding company and other than those which have already been
obtained) under the laws of any jurisdiction in which the Company or any of its
subsidiaries conduct their respective businesses in connection with the
ownership, directly or indirectly, by the Company of equity interests in any
subsidiary or the repatriation of any amount from or to the Company or any of
its subsidiaries, except to the extent that the failure to obtain such
authorization, approval or consent would not reasonably be expected to result in
a Material Adverse Change.
(s) Absence of Proceedings. Except as disclosed in the Prospectus, there
are no pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Change, or would
materially and adversely affect the ability of the Company to perform its
obligations under the Terms Agreement (including the provisions of this
Agreement) or which are otherwise material
12
in the context of the sale of the Shares; and no such actions, suits or
proceedings are, to the Company's knowledge, threatened or contemplated.
(t) Accuracy of Exhibits. There are no contracts or documents which are
required to be described in the Registration Statement, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits thereto
which have not been so described and filed as required.
(u) Reserves. The description of the Company's reserves and reserving
methodology and assumptions described in the Prospectus is accurate and fairly
presents the information set forth therein in all material respects and, since
December 31, 2002, no loss experience has developed which would require or make
it appropriate for the Company to alter or modify such methodology.
(v) Investment Company Act. The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
4. Purchase, Sale and Delivery of Shares.
(a) Shares representing the Initial Preferred Shares. The obligation of the
Underwriters to purchase the Shares representing the Initial Preferred Shares
will be evidenced by an agreement or exchange of other written communications
(the "Terms Agreement") at the time the Company determines to sell the Shares
representing the Initial Preferred Shares. The Terms Agreement will incorporate
by reference the provisions of this Agreement, except as otherwise provided
therein, and will specify the firm or firms that will be Underwriters, the names
of any Representatives, the number of Shares to be purchased by each Underwriter
and the purchase price to be paid by the Underwriters. The Terms Agreement will
also specify the time and date of delivery and payment (such time and date, or
such other time not later than seven full business days thereafter as the
Underwriter first named in the Terms Agreement (the "Lead Underwriter") and the
Company agree as the time for payment and delivery, being herein and in the
Terms Agreement referred to as the "Closing Date"), the place of delivery and
payment and any details of the terms of offering that should be reflected in the
prospectus supplement relating to the offering of the Shares representing the
Initial Preferred Shares. For purposes of Rule 15c6-1 under the Exchange Act,
the Closing Date (if later than the otherwise applicable settlement date) shall
be the date for payment of funds and delivery of securities for all the Shares
representing the Initial Preferred Shares sold pursuant to the offering. The
obligations of the Underwriters to purchase the Shares representing the Initial
Preferred Shares will be several and not joint. It is understood that the
Underwriters propose to offer the Shares representing the Initial Preferred
Shares for sale as set forth in the Prospectus.
(b) Shares representing the Option Preferred Shares. On the basis of the
representations, warranties and agreements herein contained and subject to the
terms and conditions herein set forth, the Company hereby grants an option to
the Underwriters, severally and not jointly, to purchase at their election up to
an additional 3,000,000 Shares representing the Option Preferred Shares, at the
price per Share set forth in the Terms Agreement. The option
13
will expire automatically at the close of business on the 30/th/ calendar day
after the date of the Terms Agreement and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Shares representing
the Initial Preferred Shares upon notice by the Underwriters to the Company
setting forth the aggregate number of additional Shares representing the Option
Preferred Shares as to which the several Underwriters are then exercising the
option and the time, date and place of payment and delivery for such Shares
representing the Option Preferred Shares. Any such time and date of payment and
delivery (a "Date of Delivery") shall be determined by the Underwriters and the
Company, but shall not be later than seven full business days after the exercise
of said options, nor in any event prior to the Closing Date, unless otherwise
agreed upon by the Underwriters and the Company. If the option is exercised as
to all or any portion of the Shares representing the Option Preferred Shares,
each of the Underwriters, severally and not jointly, will purchase that
proportion of the total number of Shares representing the Option Preferred
Shares then being purchased which the number of Shares representing the Initial
Preferred Shares each such Underwriter has severally agreed to purchase bears to
the total number of Shares representing the Initial Preferred Shares, subject to
such adjustments as the Underwriters in their discretion shall make to eliminate
any sales or purchases of a fractional number of Shares representing the Option
Preferred Shares.
(c) Payment. Payment of the purchase price for, and delivery of, the Shares
representing the Initial Preferred Shares shall be made at the offices of Sidley
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, 787 Seventh Avenue, New York, New York, or at such
other place as shall be agreed upon by the Underwriters and the Company and set
forth in the Terms Agreement. In addition, in the event that the Underwriters
have exercised their option to purchase any or all of the Shares representing
the Option Preferred Shares, payment of the purchase price for, and delivery of
such Shares representing the Option Preferred Shares, shall be made at the
above-mentioned offices of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, or at such other
place as shall be agreed upon by the Underwriters and the Company, on the
relevant Date of Delivery as specified in the notice from the Underwriters to
the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriters for the respective accounts of the Underwriters of the Shares
to be purchased by them. It is understood that each Underwriter has authorized
Citigroup Global Markets Inc., for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Shares which it has
severally agreed to purchase. Citigroup Global Markets Inc., individually and
not as representative of the Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Shares representing the Initial
Preferred Shares or the Shares representing the Option Preferred Shares, if any,
to be purchased by any Underwriter whose funds have not been received by the
Closing Date or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. The Receipts shall be in such
denominations and registered in such names as the Lead Underwriter may request
in writing at least one full business day prior to the Closing Date or the
relevant Date of Delivery, as the case may be. The Shares and Receipts will be
made available for examination and packaging by the Underwriters
14
in The City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Date or the relevant Date of Delivery, as the case may
be.
5. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Shares for sale to the public as set forth in
the Prospectus.
6. Certain Agreements of the Company and the Underwriters. The Company
agrees with the several Underwriters that:
(a) Compliance with Securities Regulations. The Company will file the
Prospectus with the Commission pursuant to and in accordance with subparagraph
(2) (or, if applicable, subparagraph (5)) of Rule 424(b) not later than the
second business day following the execution and delivery of the Terms Agreement.
(b) Filing of Amendments. The Company will advise the Lead Underwriter
promptly of any proposal to amend or supplement the Registration Statement or
the Prospectus and will afford the Lead Underwriter a reasonable opportunity to
review and comment upon such proposed amendment or supplement; and the Company
will also advise the Lead Underwriter promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any stop
order proceedings in respect of a Registration Statement and will use its
reasonable best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) Continued Compliance with Securities Laws. If, at any time when a
prospectus relating to the Shares and Preferred Shares is required to be
delivered under the Securities Act in connection with sales by any Underwriter
or dealer, any event occurs as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Securities Act,
the Company will promptly notify the Lead Underwriter of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither the Lead Underwriter's consent to,
nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) Earnings Statement. As soon as practicable, but not later than 16
months, after the date of each Terms Agreement, the Company will make generally
available to its securityholders an earnings statement covering a period of at
least 12 months beginning after the later of (i) the effective date of the
registration statement relating to the Shares and Preferred Shares, (ii) the
effective date of the most recent post-effective amendment to the Registration
Statement to become effective prior to the date of such Terms Agreement and
(iii) the date of the Company's most recent Annual Report on Form 10-K filed
with the Commission prior to the date of such Terms Agreement, which will
satisfy the provisions of Section 11(a) of the Securities Act.
15
(e) Delivery of Registration Statement and Prospectuses. The Company will
furnish to the Representatives copies of the Registration Statement (two of
which will be signed and will include all exhibits), any related preliminary
prospectus, any related preliminary prospectus supplement, the Prospectus and
all amendments and supplements to such documents, in each case in such
quantities as the Lead Underwriter requests. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day following
the later of the execution and delivery of the Terms Agreement. All other
documents shall be so furnished as soon as available. The Company will pay the
expenses of printing and distributing to the Underwriters all such documents.
(f) Blue Sky Qualification. The Company will arrange for the qualification
of the Shares for sale under the laws of such jurisdictions as the Lead
Underwriter designates and will continue such qualifications in effect so long
as required for the distribution provided that the Company shall not be required
to qualify as a foreign corporation or to consent to the service of process
under the laws of any such state (except service of process with respect to the
offering and sale of the Shares) or subject itself to any taxation in respect of
doing business.
(g) Delivery of Annual Report. During the period of two years after the
date of any Terms Agreement, the Company will furnish to the Representatives
and, upon request, to each of the other Underwriters, as soon as practicable
after the end of each fiscal year, a copy of its annual report to stockholders
for such year; and the Company will furnish to the Representatives as soon as
available, a copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
stockholders.
(h) Payment of Expenses. The Company will pay all expenses incident to the
performance of its obligations under the Terms Agreement (including the
provisions of this Agreement), for any filing fees and other expenses (including
fees and disbursements of counsel) incurred in connection with qualification of
the Shares for sale under the laws of such jurisdictions as the Lead Underwriter
designates and the printing of memoranda relating thereto, for the filing fee
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. of the Shares, for any travel expenses of the Company's
officers and employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Shares and for
expenses incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters.
(i) Documentary, Stamp or Similar Issue Taxes. The Company will indemnify
and hold harmless the Underwriters against any documentary, stamp or similar
issue tax, including any interest and penalties, on the creation, issue and sale
of the Shares and on the execution and delivery of the Terms Agreement
(including the provisions of this Agreement). All payments to be made by the
Company hereunder shall be made without withholding or deduction for or on
account of any present or future taxes, duties or governmental charges
whatsoever unless the Company is compelled by law to deduct or withhold such
taxes, duties or charges. In that event, the Company shall pay such additional
amounts as may be necessary in order that the net amounts received after such
withholding or deduction shall equal the amounts that would have been received
if no withholding or deduction had been made.
16
(j) Restriction on Sale of Securities. For a period of 30 days after the
date of the initial public offering of any Shares, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Securities Act
relating to, any additional preferred shares or securities convertible into or
exchangeable or exercisable for such preferred shares, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing, without
the prior written consent of the Lead Underwriter, other than (x) issuances of
preferred shares, options, or other securities or rights pursuant to any
employee or director compensation, options, savings, benefit or other plan of
the company, (y) any issuance upon exercise, conversion or exchange of any
securities or obligations outstanding on the date hereof and (z) any issuances
of equity securities as consideration for an acquisition.
(k) Delivery of Tax Information to Shareholders. The Company will use its
best efforts to provide to holders of the Shares ("Shareholders") the
information required by Shareholders to complete their U.S. income tax returns
in the manner specified in the Prospectus and, to that end, to (i) send a letter
shortly after the end of each fiscal year asking each corporate policyholder to
represent whether the insured or any director or officer of the insured was a
U.S. shareholder of the Company, within the meaning of Section 953(c)(1)(A) of
the Internal Revenue Code of 1986 (the "Code"), or related to a U.S. Shareholder
of the Company at any time during the preceding 12 months or to use another
method which the Company reasonably believes will elicit similar information;
(ii) if the gross "related person insurance income" ("RPII") of any of its
insurance subsidiaries for any fiscal year is 20% or more of such insurance
subsidiary's gross insurance income within the meaning of Section 953(c)(3)(B)
of the Code, send a letter shortly after the end of such fiscal year to all
record owners (other than The Depository Trust Company ("DTC") and DTC
participants) asking them to notify the Company's transfer agent (on a form
attached to the letter) within 30 days of the percentage of shares held by them
that are beneficially owned by U.S. persons, the percentage that are
beneficially owned by non-U.S. persons, and the percentage for which beneficial
ownership is not known; and (iii) if the gross RPII of any of its insurance
subsidiaries for any fiscal year is 20% or more of such insurance subsidiary's
gross insurance income within the meaning of Section 953(c)(3)(B) of the Code,
(A) prepare IRS Form 5471 (or any successor form) with all insurance subsidiary
information and (B) as soon as practicable after the end of such fiscal year,
send copies of Form 5471 and a letter instructing U.S. shareholders how to
complete Form 5471 to all record owners (other than DTC and DTC participants).
(l) Listing. Promptly after the date of this Agreement, Application will be
made to list the Shares on the New York Stock Exchange.
(m) The Underwriters will undertake to sell the Shares to a minimum of 400
beneficial holders, in order to satisfy one of the requirements for listing the
Shares on the New York Stock Exchange.
7. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Shares will be subject to
the accuracy in all material respects of the representations and warranties on
the part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the
17
performance by the Company of its obligations hereunder in all material respects
and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the Representatives
shall have received a letter, dated the date of delivery thereof of
PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statement comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards No.
71, Interim Financial Information, on any unaudited financial statements
included in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the
Company, inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) the unaudited financial statements included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations or any
material modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than
three business days prior to the date of the Terms Agreement, there
was any change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available balance sheet
read by such accountants, there was any decrease in consolidated net
assets or reserves, as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(C) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the
latest available income statement read by such accountants there were
any decreases, as compared with the corresponding period of the
previous year, in consolidated net sales, net operating income or in
the total or per share amounts of consolidated net income, except in
all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
18
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statement (in each case to the extent that
such dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's accounting
system or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such letter
and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter.
All financial statements and schedules included in material incorporated
by reference into the Prospectus shall be deemed included in the Registration
Statements for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement
prior to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of the Terms Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the financial condition, business or results
of operations of the Company or its subsidiaries which, in the judgment of the
Representatives, is material and adverse and makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and payment for
the Shares; (ii) any downgrading in the rating of any debt securities of the
Company or the insurance claims paying ability rating or other insurance rating
of the Company or any of its Significant Subsidiaries, in each case by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436 (g) under the Securities Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading, of such
rating) or of the insurance claims paying ability or other insurance rating of
the Company or any of its Significant Subsidiaries; (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States;
(iv) any banking moratorium declared by U.S. federal, New York or Bermuda
authorities; or (v) any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the judgment
of the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Shares.
19
(d) The Representatives shall have received on the Closing Date a signed
opinion of ▇▇▇▇▇▇ and ▇▇▇▇▇▇, Cayman Islands counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly existing
and in good standing as an exempted company, under the laws of the Cayman
Islands, and has the corporate power and corporate authority to own,
lease and operate its property, and to conduct its business, as described
in the Registration Statement and the Prospectus, and to enter into and
perform its obligations under, or as contemplated under, the Terms
Agreement, including the provisions of this Agreement;
(ii) The Preferred Shares have been duly authorized and, when the
Preferred Shares have been paid for in accordance with the Terms
Agreement on the Closing Date and each Date of Delivery, if any, such
Preferred Shares will have been validly issued and may properly be
credited as fully paid and not subject to further calls or assessments by
the Company; the terms of the Preferred Shares conform, as to Cayman
Islands legal matters, to the description thereof contained in the
Prospectus; the issue of the Preferred Shares will not be subject to
preemptive or other similar rights arising under the Company's Memorandum
and Articles of Association or Cayman Islands law; all corporate action
required to be taken for the authorization and issue of the Preferred
Shares has been validly taken;
(iii) the Terms Agreement, including the provisions of this
Agreement, have been duly authorized, executed and delivered by the
Company;
(iv) The Deposit Agreement has been duly authorized, executed and
delivered by the Company;
(v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, each of the Deposit
Agreement and the Terms Agreement, including the provisions of this
Agreement, and the consummation by the Company of the transactions
contemplated by each of the Terms Agreement, including the provisions of
this Agreement, and the Deposit Agreement, do not and will not (A)
violate any provision of the Memorandum and Articles of Association of
the Company; (B) contravene any provision of any law, public rule or
regulation of the Cayman Islands applicable to the Company; (C) to the
best of such counsel's knowledge, contravene any existing published order
or decree of the courts of the Cayman Islands by which the Company is
bound or by which its properties or assets may be affected; or (D)
require any consent, approval or authorization or order of, or
qualification with, any Cayman Islands governmental agency in connection
with the offer and sale of the Preferred Shares;
(vi) to the best of such counsel's knowledge, but based only upon a
search of the cause list at the offices of the Grand Courts of the Cayman
Islands, there was no action, suit or proceeding to which the Company is
a party or to which the assets, properties or operations of the Company
is subject, before the courts of the Cayman Islands at the close of
business on a recent date to be specified in such opinion;
20
(vii) all statements made in the Prospectus with regard to statutes,
regulations, rules, treaties and other laws of the Cayman Islands
(including, but not limited to, insurance, regulatory and tax matters and
the Companies Law (2002 Revision) of the Cayman Islands) and enforcement
of judgments in the Cayman Islands are accurate;
(viii) pursuant to this Agreement, and to the extent that the laws of
the Cayman Islands are relevant, the Company has legally, validly,
effectively and irrevocably submitted to the jurisdiction of the United
States Federal and New York State courts sitting in the Borough of
Manhattan in The City of New York, State of New York, and has legally,
validly and effectively appointed ACE USA, Inc. as the authorized agent
of the Company for the purposes described in Section 14 of this Agreement
assuming this to be the case as a matter of the applicable United States
Federal and New York State laws;
(ix) the choice of the laws of the State of New York, United States
of America as the governing law of the Terms Agreement, including the
provisions of this Agreement, is a valid and effective choice of law and
in an action brought before a court of competent jurisdiction in the
Cayman Islands, the laws of the State of New York would, to the extent
specifically pleaded and proved as a fact by expert evidence, be
recognized and applied by such court to all issues concerning the formal
and essential validity of the Terms Agreement, including the provisions
of this Agreement, and the interpretation thereof, except that in any
such action such court will apply those laws of the Cayman Islands as
such court characterizes as procedural and will not apply those laws of
New York as such court characterizes as procedural;
(x) although there is no statutory enforcement in the Cayman
islands of a judgment obtained in New York, the courts of the Cayman
Islands will recognize and enforce a foreign judgment of a court of
competent jurisdiction, based on the principle that a judgment of a
competent foreign court imposes upon the judgment debtor an obligation to
pay the sum for which judgment has been given provided such judgment is
final, for a liquidated sum, not in respect of taxes or a fine or
penalty, and was not obtained in a manner and is not of a kind the
enforcement of which is contrary to the public policy of the Cayman
Islands. A Cayman Islands court may stay proceedings if concurrent
proceedings are being brought elsewhere. For the purposes of enforcement
of a judgment granted against the Company in respect of the Terms
Agreement, including the provisions of this Agreement, a court in the
Cayman Islands would recognize the jurisdiction of the applicable federal
or state court to the jurisdiction of which the Company has submitted
rendering such judgment if service of process on the Company is effected
pursuant to and in accordance with the provisions of this Agreement; and
(xi) on the basis that the Company carries on its business as set
forth in the Prospectus, there is no requirement that it be licensed
under the Insurance Law, 1979, as amended of the Cayman Islands.
(e) The Representatives shall have received on the Closing Date a signed
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda counsel for the Company, dated the
Closing Date, to the effect that:
21
(i) each of ACE Bermuda Insurance Ltd., Corporate Officers and
Directors Assurance Ltd. and ACE Tempest Reinsurance Ltd. (collectively,
the "Bermuda Insurance Subsidiaries") (A) is validly existing under the
laws of Bermuda as a company with limited liability and is in good
standing under the laws of Bermuda (meaning that such company has not
failed to make any filing with any Bermuda government authority or to pay
any Bermuda government fee or tax, the failure of which would make such
company immediately liable to be struck off the Register of Companies and
thereby cease to exist under the laws of Bermuda) and (B) the corporate
objects and powers contained in the Memorandum of Association of each of
the Bermuda Insurance Subsidiaries are sufficient to allow them to carry
on their business and to own, lease and operate its properties as both
are described in the Prospectus;
(ii) the Company is validly registered under the Companies ▇▇▇ ▇▇▇▇
as a Permit Company and is in good standing under the laws of Bermuda
(meaning that such company has not failed to make any filing with any
Bermuda government authority or to pay any Bermuda government fee or tax
which is required to be paid in respect of Permit Companies in Bermuda);
(iii) based solely upon a certified copy of the Register of Members
for each of the Bermuda Insurance Subsidiaries, and without further
inquiry, (A) all of the issued shares in the share capital of each of the
Bermuda Insurance Subsidiaries have been duly and validly authorized and
issued and are fully paid and nonassessable (meaning that no further sums
are required to be paid by the holders thereof in connection with the
issue of such shares); and (B) the Company is the registered holder of
all the issued shares of each of the Bermuda Insurance Subsidiaries;
(iv) each of the Bermuda Insurance Subsidiaries is duly registered
as an insurer under the Insurance Act of 1978 (Bermuda) and the
regulations promulgated thereunder (together, the "Insurance Act") and,
as so registered, each Bermuda Insurance Subsidiary may conduct the
insurance business as described in the Prospectus; and based solely on
the Certificates of Compliance and without independent inquiry, each of
the Bermuda Insurance Subsidiaries has filed with the appropriate Bermuda
governmental authority all reports, documents or other information
required to be filed under the Insurance Act;
(v) the Company is not registered as an insurer under the Insurance
Act and is therefore not required to comply with the requirements of the
Insurance Act applicable to registered insurers;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, each of the Deposit
Agreement and the Terms Agreement, including the provisions of this
Agreement and the consummation by the Company of the transactions
contemplated by each of the Terms Agreement, including the provisions of
this Agreement, and the Deposit Agreement, do not and will not (A)
violate any provision of the Memorandum of Association or By-laws of any
of the Bermuda Insurance Subsidiaries or any applicable law, regulation,
order or decree in Bermuda; (B) based solely upon the Cause Book,
contravene any judgment, order or
22
decree by the Bermuda Supreme Court against the Company or the Bermuda
Insurance Subsidiaries; or (C) require any consent, approval or
authorization or order of, or qualification with, any Bermuda
governmental agency;
(vii) based solely upon the Cause Book and without further inquiry,
there is no action, suit or proceeding now pending before the Bermuda
Supreme Court against the Company or the Bermuda Insurance Subsidiaries
or any of their respective properties; and
(viii) all statements made in the Prospectus with respect to
statutes, regulations, rules, treaties and other laws of Bermuda
(including, but not limited to, statements made with respect to the
Insurance Act and Bermuda tax matters) fairly and accurately present the
information set forth therein and such counsel's opinion as to such
matters.
(ix) The choice of the Foreign Laws as the governing law of the
Terms Agreement, including the provisions of this Agreement, is a valid
choice of law and would be recognized and given effect to in any action
brought before a court of competent jurisdiction in Bermuda, except for
those laws (A) which such courts considers to be procedural in nature,
(B) which are revenue or penal laws or (C) the application of which would
be inconsistent with public policy, as such term is interpreted under the
laws of Bermuda. The submission in the Terms Agreement, including the
provisions of this Agreement, to the non-exclusive jurisdiction of the
Foreign Courts is valid and binding upon the Company.
(f) The Representatives shall have received on the Closing Date a signed
opinion of ▇▇▇▇▇ ▇. ▇▇▇▇, Esq., General Counsel of the Company, dated the
Closing Date, to the effect that:
(i) the Company is qualified to do business, and is in good
standing, as a foreign corporation, under the laws of each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or to be in good standing, would not singly or
in the aggregate have a Material Adverse Change;
(ii) each of ACE Bermuda Insurance Ltd., ACE Tempest Reinsurance
Ltd., ACE USA, Inc. and ACE INA Holdings Inc. is qualified to transact
business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which it owns or leases
real property or in which the conduct of its business requires such
qualification, except where the failure to be so qualified or to be in
good standing (with respect to jurisdictions which recognize such
concept) would not singly or in the aggregate result in a Material
Adverse Change;
(iii) except as set forth in the Registration Statement and the
Prospectus, such counsel does not know of any outstanding (A) securities
or obligations of the Company convertible into or exchangeable for any
shares of capital stock of the Company or any of its subsidiaries; (B)
rights, warrants or options to acquire or purchase from the Company any
shares of capital stock of the Company or any such convertible or
exchangeable securities or obligations; or (C) obligations or
understandings of the Company to issue or
23
sell any shares of capital stock of the Company or any of its
subsidiaries, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or obligations; and
(iv) to the best of such counsel's knowledge, and other than as
disclosed in the Prospectus, there are no threatened legal proceedings
against the Company or any of its subsidiaries which, if determined
adversely to the Company or such subsidiary, would result in a Material
Adverse Change.
(g) The Representatives shall have received on the Closing Date a signed
opinion of Mayer, Brown, ▇▇▇▇ & Maw, United States counsel for the Company,
dated the Closing Date, to the effect that:
(i) each of ACE INA Holdings Inc. and ACE USA, Inc. is duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware;
(ii) the execution and delivery by the Company of, and the
performance by the Company of its respective obligations under, each of
the Deposit Agreement and the Terms Agreement, including the provisions
of this Agreement, and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection with
the transactions contemplated by the Registration Statement and the
Prospectus and the consummation by the Company of the transactions
contemplated by each of the Terms Agreement, including the provisions of
this Agreement, and the Deposit Agreement, do not and will not (A)
contravene any provision of any United States federal or New York State
law, rule or regulation, in each case which, in such counsel's opinion,
based on such counsel's experience, are normally applicable to
transactions of the type contemplated by this Agreement ("United States
Applicable Laws"), except that such counsel need not express any opinion
in this paragraph with respect to state securities laws; (B) contravene
any judgment, order or decree known to such counsel without independent
inquiry of any United States federal or New York State court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or by which the Company or any of its subsidiaries is
bound or by which their properties or assets may be affected; (C)
conflict with, result in any breach of or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, or give rise to any right to accelerate the maturity or
require the prepayment of any indebtedness or the purchase of any capital
stock under, or result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company or any of its
subsidiaries, pursuant to the terms of any agreement or instrument filed
as an exhibit to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 or any agreement or instrument otherwise
known to such counsel to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound, or to which any of
the assets, properties or operations of the Company or any of its
subsidiaries is subject, or the certificate of incorporation or by-laws
of ACE INA Holdings Inc. or ACE USA, Inc., except for such conflicts,
breaches, violations, defaults, accelerations, repayments, repurchases,
liens, charges or encumbrances that would not singly or in the aggregate
result in a Material Adverse
24
Change; or (D) based upon such counsel's review of the United States
Applicable Laws, require any consent, approval or authorization or order
of, or qualification with, any United States federal or state governmental
agency or authority or court, except such as have been obtained under the
Securities Act and such as may be required under state securities or blue
sky laws or state insurance laws in connection with the offer and sale of
the Shares;
(iii) each of the Shares, Preferred Shares, Deposit Agreement and
this Agreement conform in all material respects to the statements relating
thereto contained in the Prospectus and are in substantially the form to be
filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement;
(iv) Assuming due authorization, execution and delivery by the
Company, the Deposit Agreement constitutes a valid and binding agreement of
the Company enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(v) such counsel does not know, after inquiry of Company officers
and based solely on such inquiry, of any action, suit or proceeding before
or by any United States federal or state government, governmental
instrumentality or court now pending or threatened against or affecting the
Company or any of its subsidiaries or any of their respective properties
that is required to be described in the Registration Statement or the
Prospectus and is not so described or of any contract or other document
that is required to be described in the Registration Statement or the
Prospectus, or to be filed as an exhibit to the Registration Statement,
that is not described or filed, as required;
(vi) the Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules and other financial data included therein or omitted
therefrom, as to which such counsel need express no opinion) when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations of the Commission thereunder;
(vii) the documents incorporated by reference in the Prospectus
(other than the financial statements and supporting schedules and other
financial data included therein or omitted therefrom, as to which such
counsel need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Securities Act or the
Exchange Act , as applicable, and the Rules and Regulations of the
Commission thereunder;
(viii) the statements in the Registration Statement and the prospectus
insofar as they are descriptions of contracts, agreements, instruments or
proceedings, or constitute
25
statements or summaries of United States federal or New York State laws or
legal conclusions with respect thereto, are accurate and present fairly the
information required to be shown; and
(ix) the Company is not, and upon the issuance and sale of the Shares
as contemplated in this Agreement and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment
company" within the meaning of the 1940 Act.
Such counsel shall also state that it has been advised by the Commission
that the Registration Statement became effective under the Securities Act; that
any required filings of the Prospectus pursuant to Rule 424(b) have been made in
the manner and within the time period required by Rule 424(b); and that, based
solely on conversations with the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for the purpose have been instituted, are pending or, to such counsel's
knowledge, are contemplated under the Securities Act.
Such counsel shall also state that they have examined various documents and
participated in conferences with representatives of the Company and its
accountants and with representatives of the Underwriter and its counsel at which
times the contents of the Registration Statement and the Prospectus and related
matters were discussed, and that, although they are not passing upon and assume
no responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus or making any
representation that they have independently verified or checked the accuracy,
completeness or fairness of such statements, except as set forth above, no facts
have come to such counsel's attention that cause such counsel to believe that
the Registration Statement or any post-effective amendment thereto, at the time
the Registration Statement or any post-effective amendment thereto (including
the filing of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 with the Commission) became effective or as of the date of
this Agreement, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; or that the Prospectus or any amendment or
supplement thereto, at the date of the Prospectus, at the date of any such
amendment or supplement or at the Closing Date, included or includes any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (such
counsel need not express a belief with respect to the financial statements and
supporting schedules and other financial data included in or omitted from the
Registration Statement or any post-effective amendment thereto or the Prospectus
or any amendment or supplement thereto).
(h) The Representatives shall have received from Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
LLP, counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the Registration Statements and the Prospectus and other
related matters as the Representatives may require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
26
(i) The Representatives shall have received a certificate, dated such
Closing Date, of the Chairman and Chief Executive Officer or General Counsel and
Secretary of the Company and of the Chief Financial Officer; chief accounting
officer or chief investment officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state that:
(i) there has not been, since the date of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change, or any development or event involving a prospective material adverse
change, in the financial condition, business or results of operations of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (ii) the representations and
warranties of the Company in Section 2 are true and correct with the same force
and effect as though expressly made at and as of the Closing Date, (iii) the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing Date, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted, are pending or,
to the best of such officers' knowledge, are threatened by the Commission.
(j) The Representatives shall have received a letter, dated such Closing
Date, of PricewaterhouseCoopers LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three days prior to such Closing Date
for the purposes of this subsection.
(k) In the event that the Underwriters exercise their option to
purchase; all or any portion of the Shares representing the Option
Preferred Shares, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company or any of
its subsidiaries hereunder shall be true and correct as of each Date of
Delivery, and, at the relevant Date of Delivery the Underwriters shall have
received:
(i) The favorable opinions of ▇▇▇▇▇▇ and Calder, Cayman Islands
counsel for the Company, in form and substance satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Shares
representing the Option Preferred Shares and otherwise to the same effect
as the opinions required by Section 6(d) hereof.
(ii) The favorable opinions of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda
counsel for the Company, in form and substance satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Shares
representing the Option Preferred Shares and otherwise to the same effect
as the opinions required by Section 6(e) hereof.
(iii) The favorable opinions of ▇▇▇▇▇ ▇. ▇▇▇▇, Esq., General Counsel
of the Company, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Shares
representing the Option Preferred Shares and otherwise to the same effect
as the opinions required by Section 6(f) hereof.
(iv) The favorable opinions of Mayer, Brown, ▇▇▇▇ & Maw, United
States counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to the
Shares representing the Option Preferred Shares and otherwise to the same
effect as the opinions required by Section 6(g) hereof.
27
(v) The favorable opinion of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel
for the Underwriters, in form and substance reasonably satisfactory to the
Underwriters, dated such Date of Delivery, relating to the Shares
representing the Option Preferred Shares and otherwise to the same effect
as the opinion required by Section 6(h) hereof.
(vi) A certificate, dated such Date of Delivery, of the Chairman,
President and Chief Executive Officer or General Counsel and Secretary of
the Company and of the Chief Financial Officer; chief accounting officer or
chief investment officer of the Company, confirming that the certificate
delivered at the Closing Date pursuant to Section 6(i) hereof remains true
and correct as of such Date of Delivery.
(vii) A letter from PricewaterhouseCoopers LLP, in form and substance
satisfactory to the Underwriters and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished to the
Underwriters pursuant to Section 6(j) hereof, except that the "specified
date" on the letter furnished pursuant to this paragraph shall be a date
not more than three business days prior to such Date of Delivery.
The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as the Representatives
reasonably request. The Lead Underwriter may in its sole discretion waive on
behalf of the Underwriters compliance with any conditions to the obligations of
the Underwriters hereunder and under the Terms Agreement.
8. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any, related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in the Terms Agreement.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus or
28
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the company by such
Underwriter through the Representatives specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above . In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the
29
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Securities Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed a Registration Statement and to each person, if any, who controls
the company within the meaning of the Securities Act.
9. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Shares under the Terms Agreement and the aggregate
number of Shares that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of Shares
that the Underwriters are obligated to purchase on the Closing Date, the Lead
Underwriter may make arrangements satisfactory to the Company for the purchase
of such Shares by other persons, including any of the Underwriters, but if no
such arrangements are made by the Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
under the Terms Agreement (including the provisions of this Agreement), to
purchase the Shares that such defaulting Underwriters
30
agreed but failed to purchase on the Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Shares with respect to which
such default or defaults occur exceeds 10% of the total number of Shares that
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to the Lead Underwriter and the Company for the purchase of such
Shares by other persons are not made within 36 hours after such default, the
Terms Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Shares.
If the Terms Agreement is terminated pursuant to Section 8 or if for any reason
the purchase of the Shares by the Underwriters is not consummated, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Company and the
Underwriters pursuant to Section 7 shall remain in effect, and if any Shares
have been purchased hereunder the representations and warranties in Section 2
and all obligations under Section 5 shall also remain in effect. If the purchase
of the Shares by the Underwriters is not consummated for any reason other than
solely because of the termination of the Terms Agreement pursuant to Section 8
or the occurrence of any event specified in clause (iii), (iv) or (v) of Section
6(c), the Company will reimburse the Underwriters for all out-of pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Shares.
11. Notices. All communications hereunder will be in writing and effective
only on receipt and, if sent to the Underwriters, will be mailed, delivered or
telegraphed and confirmed to them at their addresses furnished to the Company in
the Terms Agreement, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at ACE Global Headquarters, ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇: General Counsel and Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 7 will
be mailed, delivered or telegraphed and confirmed to such Underwriter.
12. Successors. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and the
Underwriters and their respective successors and the officers and directors and
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder.
13. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with the financing described in the Terms
Agreement, and any action under the Terms Agreement (including the provisions of
this Agreement) taken by the Representatives jointly or by the Lead Underwriter
will be binding upon all the Underwriters.
31
14. Counterparts. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of laws. The Company hereby
submits to the non-exclusive jurisdiction of the Federal and state courts in the
Borough of Manhattan in The City of New York in any suit or proceeding arising
out of or relating to the Terms Agreement (including the provisions of this
Agreement) or the transactions contemplated thereby. The Company irrevocably
appoints ACE USA, Inc., 1133 Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ as its authorized agent in the Borough of Manhattan in The City of
New York upon which process may be served in any such 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, shall be deemed in every respect effective service of process upon
the Company in any such 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.
The obligation of the Company in respect of any sum due to any Underwriter
shall, notwithstanding any judgment in a currency other than United States
dollars, not be discharged until the first business day, following receipt by
such Underwriter of any sum adjudged to be so due in such other currency, on
which (and only to the extent that) such Underwriter may in accordance with
normal banking procedures purchase United States dollars with such other
currency; if the United States dollars so purchased are less than the sum
originally due to such Underwriter hereunder, the Company agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify such Underwriter
against such loss. If the United States dollars so purchased are greater than
the sum originally due to such Underwriter hereunder, such Underwriter agrees to
pay to the Company an amount equal to the excess of the dollars so purchased
over the sum originally due to such Underwriter hereunder.
32
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Underwriting Agreement, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
Very truly yours,
ACE LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: General Counsel & Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
CITIGROUP GLOBAL MARKETS INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: CITIGROUP GLOBAL MARKETS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Authorized Signatory
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Authorized Signatory