Exhibit 10.4
PLEDGE AGREEMENT
among
ACE LIMITED,
THE BANK OF NEW YORK,
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
THE BANK OF NEW YORK,
as Purchase Contract Agent
Dated as of April 12, 2000
Table of Contents
Page
ARTICLE I
Definitions.
Section 1.1 Definitions.......................................2
ARTICLE II
Pledge; Control and Perfection.
Section 2.1 The Pledge........................................5
Section 2.2 Control and Perfection............................6
ARTICLE III
Distributions on Pledged Collateral.
ARTICLE IV
Substitution, Release, Repledge and Settlement of Preferred Shares.
Section 4.1 Substitution for Preferred Shares and the
Creation of Growth Prides.........................9
Section 4.2 Substitution of Treasury Securities and the
Creation of Income Prides.........................9
Section 4.3 Termination Event................................10
Section 4.4 Cash Settlement..................................10
Section 4.5 Early Settlement.................................12
Section 4.6 Application of Proceeds Settlement...............12
ARTICLE V
Voting Rights --Preferred Shares.
ARTICLE VI
Rights and Remedies
Section 6.1 Rights and Remedies of the Collateral Agent......14
Section 6.2 Substitutions....................................15
ARTICLE VII
Representations and Warranties; Covenants.
Section 7.1 Representations and Warranties...................15
Section 7.2 Covenants........................................16
ARTICLE VIII
The Collateral Agent.
Section 8.1 Appointment, Powers and Immunities...............17
Section 8.2 Instructions of the Company......................17
Section 8.3 Reliance by Collateral Agent.....................18
Section 8.4 Rights in Other Capacities.......................18
Section 8.5 Non-Reliance on Collateral Agent.................18
Section 8.6 Compensation and Indemnity.......................19
Section 8.7 Failure to Act...................................19
Section 8.8 Resignation of Collateral Agent..................20
Section 8.9 Right to Appoint Agent or Advisor................20
Section 8.10 Survival.........................................21
Section 8.11 Exculpation......................................21
ARTICLE IX
Amendment.
Section 9.1 Amendment Without Consent of Holders.............21
Section 9.2 Amendment with Consent of Holders................21
Section 9.3 Execution of Amendments..........................22
Section 9.4 Effect of Amendments.............................22
Section 9.5 Reference to Amendments..........................22
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ARTICLE X
Miscellaneous.
Section 10.1 No Waiver........................................23
Section 10.2 GOVERNING LAW....................................23
Section 10.3 Notices..........................................23
Section 10.4 Successors and Assigns...........................23
Section 10.5 Counterparts.....................................24
Section 10.6 Severability.....................................24
Section 10.7 Expenses, Etc....................................24
Section 10.8 Security Interest Absolute.......................24
Section 10.9 Consent to Jurisdiction; Miscellaneous...........25
Section 10.10 Waiver of Immunities.............................25
Section 10.11 Judgement Currency...............................25
EXHIBIT A
Instruction to Collateral Agent............................................A-1
EXHIBIT B
Instruction to Purchase Contract Agent.....................................B-1
EXHIBIT C
Instruction to Custodial Agent Regarding Remarketing.......................C-1
EXHIBIT D
Instruction to Custodial Agent Regarding Withdrawal from Remarketing.......D-1
ii
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April 12, 2000 (this "Agreement"),
among ACE Limited, a corporation organized and existing under the laws of
the Cayman Islands (the "Company"), The Bank of New York, a New York
banking corporation, not individually but solely as collateral agent (in
such capacity, together with its successors in such capacity, the
"Collateral Agent"), as custodial agent (in such capacity, together with
its successors in such capacity, the "Custodial Agent"), as "securities
intermediary" as defined in Section 8-102(a)(14) of the Code (as defined
herein) (in such capacity, together with its successors in such capacity,
the "Securities Intermediary"), and as purchase contract agent and as
attorney-in-fact of the Holders (as defined in the Purchase Contract
Agreement) from time to time of the Securities (as hereinafter defined) (in
such capacity, together with its successors in such capacity, the "Purchase
Contract Agent") under the Purchase Contract Agreement (as herein after
defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued up to 6,000,000 FELINE
PRIDES of the Company (6,900,000 if the Underwriters' over-allotment option
pursuant to the Underwriting Agreement and Pricing Agreement is exercised
in full), having a stated amount of $50 (the "Stated Amount") per FELINE
PRIDES.
The FELINE PRIDES will initially consist of 6,000,000 units
(referred to as "Income PRIDES") with a face amount, per Income PRIDES,
equal to the Stated Amount. Each Income PRIDES will be comprised of (a) a
stock purchase contract (the "Purchase Contract") under which the holder
will purchase from the Company not later than May 16, 2003 (the "Purchase
Contract Settlement Date"), for an amount of cash equal to the Stated
Amount, a number of ordinary shares, $0.041666667 par value per ordinary
share (the "Ordinary Shares"), of the Company equal to the Settlement Rate
(as defined below), and (b) beneficial ownership of one 8.25% Cumulative
Redeemable Preferred Share, Series A, US$1.00 par value per share (each, a
"Preferred Share") of the Company, having a stated liquidation preference
equal to the Stated Amount.
As provided herein, holders of Income PRIDES may substitute
collateral in order to create units of Growth PRIDES ("Growth PRIDES" and
together, with the Income PRIDES, the "Securities"). Each Growth PRIDES so
created will be comprised of (a) a Purchase Contract under which the holder
will purchase from the Company not later than the Purchase Contract
Settlement Date, for an amount in cash equal to the Stated Amount, a number
of Ordinary Shares of the Company equal to the Settlement Rate, and (b) a
1/20th undivided beneficial interest in a zero-coupon U.S. Treasury
Security (CUSIP No. 912833 FS4) having a principal amount at maturity equal
to $1,000 and maturing on May 15, 2003 (the "Treasury Securities").
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Securities have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of
such Holders, among other things, to execute and deliver this Agreement on
behalf of such Holders and to grant the pledge provided hereby of the
Preferred Shares and any Treasury Securities delivered in exchange therefor
to secure each Holder's obligations under the related Purchase Contract, as
provided herein and subject to the terms hereof. Upon such pledge, the
Preferred Shares and the Treasury Securities will be beneficially owned by
the Holders but will be owned of record by the Purchase Contract Agent
subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its
own behalf and as attorney-in-fact of the Holders from time to time of the
Securities, agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. For all purposes of this agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) the following terms have the meanings assigned to them
in the Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board
Resolution, (iv) Business Day, (v) Cash Settlement, (vi)
Certificate, (vii) Contract Adjustment Payments, (viii) Early
Settlement, (ix) Early Settlement Amount, (x) Early Settlement
Date, (xi) Failed Remarketing, (xii) Holder, (xiii) Opinion of
Counsel, (xiv) Outstanding Securities, (xv) Remarketing Agent,
(xvi) Remarketing Agreement, (xvii) Settlement Rate and (xviii)
Termination Event; and
"Agreement" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Cash" means any coin or currency of the United States as at the
time shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the securities account (number 016570)
maintained at The Bank of New York in the name "The Bank of New York, as
Purchase Contract Agent on behalf of the holders of certain securities of
ACE Limited, Collateral Account subject to the security interest of The
Bank of New York, as Collateral Agent, for the benefit of ACE Limited, as
pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first
paragraph of this Agreement.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the Recitals.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Ordinary Shares" has the meaning specified in the Recitals.
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"Permitted Investments" means any one of the following which shall
mature not later than the next succeeding Business Day: (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or
directly and fully guaranteed or insured, by the United States of America
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof or
such indebtedness constitutes a general obligation of it); (ii) deposits,
certificates of deposit or acceptances with an original maturity of 365
days or less of any institution which is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not
less than US$200,000,000 at the time of deposit; (iii) investments with an
original maturity of 365 days or less of any Person that are fully and
unconditionally guaranteed by a bank of the type referred to in clause (ii);
(iv) investments in commercial paper, other than commercial paper issued by
the Company or its affiliates, of any corporation incorporated under the
laws of the United States or any State thereof, which commercial paper has
a rating at the time of purchase at least equal to "A-1" by Standard &
Poor's Ratings Services ("S&P") or at least equal to "P-1" by ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); and (v) investments in money market
funds registered under the Investment Company Act of 1940, as amended, and
rated in the highest applicable rating category by S&P or Moody's.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Preferred Shares" has the meaning specified in Section
2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section
2.1 hereof.
"Preferred Shares" has the meaning specified in the Recitals.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in Sections 8-102(a)(9) of the
Code) and other property from time to time received, receivable or
otherwise distributed upon the sale, exchange, collection or disposition of
the Collateral or any proceeds thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the
Recitals.
"Purchase Contract Settlement Date" has the meaning specified in
the Recitals.
"Remarketing Underwriting Agreement" means the Remarketing
Underwriting Agreement attached as Exhibit A to the Remarketing Agreement.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the Code.
"Separate Preferred Shares" means any Preferred Shares that are
not Pledged Preferred Shares.
"Stated Amount" has the meaning specified in the Recitals.
3
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended
from time to time. Unless otherwise defined herein, all terms defined in
the TRADES Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance
with the instructions of the Collateral Agent, the Purchase Contract Agent
or the Holder, as applicable:
(i) in the case of Collateral consisting of securities which
cannot be delivered by book-entry or which the parties agree are to
be delivered in physical form, delivery in appropriate physical form
to the recipient accompanied by any duly executed instruments of
transfer, assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid transfer to the
recipient; and
(ii) in the case of Collateral consisting of securities
maintained in book-entry form, by causing a "securities intermediary"
(as defined in Section 8-102(a)(14) of the Code) to (i) credit a
"security entitlement" (as defined in Section 8-102(a)(17) of the
Code) with respect to such securities to a "securities account" (as
defined in Section 8-501(a) of the Code) maintained by or on behalf
of the recipient and (ii) to issue a confirmation to the recipient
with respect to such credit. In the case of Collateral to be delivered
to the Collateral Agent, the securities intermediary shall be the
Securities Intermediary and the securities account shall be the
Collateral Account.
"Treasury Security" has the meaning specified in the Recitals.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means,
as to (i) a Preferred Share, the Stated Amount, (ii) Cash, the face amount
thereof and (iii) Treasury Securities, the aggregate principal amount
thereof at maturity.
4
ARTICLE II
Pledge; Control and Perfection.
Section 2.1 The Pledge. The Holders from time to time acting through
the Purchase Contract Agent, as their attorney-in-fact, and the Purchase
Contract Agent, as such attorney-in-fact, hereby pledge and grant to the
Collateral Agent, for the benefit of the Company, as collateral security
for the performance when due by such Holders of their respective
obligations under the related Purchase Contracts, a security interest in
all of the right, title and interest of the Purchase Contract Agent and
such Holders (a) in the Preferred Shares constituting a part of the
Securities and any Treasury Securities delivered in exchange for any
Preferred Shares, and any Preferred Shares delivered in exchange for any
Treasury Securities, in accordance with Section 4.2 hereof, in each case
that have been Transferred to or received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the provisions of
this Agreement; (b) in payments made by Holders pursuant to Section 4.4;
(c) in the Collateral Account and all securities, financial assets, Cash
and other property credited thereto and all Security Entitlements related
thereto; and (d) all Proceeds of the foregoing (all of the foregoing,
collectively, the "Collateral"). Prior to or concurrently with the
execution and delivery of this Agreement, the Purchase Contract Agent, on
behalf of the initial Holders of the Securities, shall cause the Preferred
Shares comprising a part of the Income PRIDES to be Transferred to the
Collateral Agent for the benefit of the Company. Such Preferred Shares
shall be Transferred by physically delivering such Securities to the
Securities Intermediary indorsed in blank and causing the Securities
Intermediary to credit the Collateral Account with such Securities and
sending the Collateral Agent a confirmation of the deposit of such
Securities. In the event a Holder of Income PRIDES so elects, such Holder
may Transfer Treasury Securities to the Collateral Agent for the benefit of
the Company in exchange for the release by the Collateral Agent on behalf
of the Company to the Purchase Contract Agent of Preferred Shares with an
aggregate stated liquidation preference equal to the aggregate principal
amount at maturity of the Treasury Securities so Transferred on behalf of
such Holder. Such Treasury Securities shall be Transferred to the
Collateral Account maintained by the Collateral Agent at the Securities
Intermediary by book-entry transfer to the Collateral Account in accordance
with the TRADES Regulations and other applicable law and by the notation by
the Securities Intermediary on its books that a Security Entitlement with
respect to such Treasury Securities has been credited to the Collateral
Account. For purposes of perfecting the Pledge under applicable law,
including, to the extent applicable, the TRADES Regulations or the Uniform
Commercial Code as adopted and in effect in any applicable jurisdiction,
the Collateral Agent shall be the agent of the Company as provided herein.
The pledge provided in this Section 2.1 is herein referred to as the
"Pledge" and the Preferred Shares or Treasury Securities subject to the
Pledge, excluding any Preferred Shares or Treasury Securities released from
the Pledge as provided in Sections 4.1 and 4.2 hereof, respectively, are
hereinafter referred to as "Pledged Preferred Shares" or the "Pledged
Treasury Securities," respectively. Subject to the Pledge and the
provisions of Section 2.2 hereof, the Holders from time to time shall have
full beneficial ownership of the Collateral. Whenever directed by the
Collateral Agent acting on behalf of the Company, the Securities
Intermediary shall have the right to reregister the Preferred Shares or any
other Securities held in physical form in its name.
Except as may be required in order to release Preferred Shares in
connection with a Holder's election to convert its investment from an
Income PRIDES to a Growth PRIDES, or except as otherwise required to
release Securities as specified herein, neither the Collateral Agent nor
the Securities Intermediary shall relinquish physical possession of any
certificate evidencing a Preferred Share prior to the termination of this
Agreement. If it becomes necessary for the Securities Intermediary to
relinquish physical possession of a certificate in order to release a
portion of the Preferred Shares evidenced thereby from the Pledge, the
Securities Intermediary shall use its best efforts to obtain physical
possession of a replacement certificate evidencing any Preferred Shares
remaining subject to the Pledge hereunder registered to it or endorsed in
blank within fifteen days of the date it relinquished possession. The
Securities Intermediary shall promptly notify the Company and the
Collateral Agent of the Securities Intermediary's failure to obtain
possession of any such replacement certificate as required hereby.
5
Section 2.2 Control and Perfection. (a) In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this
Agreement, the Holders from time to time acting through the Purchase
Contract Agent, as their attorney-in-fact, hereby authorize and direct the
Securities Intermediary (without the necessity of obtaining the further
consent of the Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any instructions
and entitlement orders (as defined in Section 8-102(a)(8) of the Code) that
the Collateral Agent on behalf of the Company may give in writing with
respect to the Collateral Account, the Collateral credited thereto and any
Security Entitlements with respect to any thereof. Such instructions and
entitlement orders may, without limitation, direct the Securities
Intermediary to transfer, redeem, sell, liquidate, assign, deliver or
otherwise dispose of the Preferred Shares, the Treasury Securities and any
Security Entitlements with respect thereto and to pay and deliver any
income, proceeds or other funds derived therefrom to the Company. The
Holders from time to time acting through the Purchase Contract Agent hereby
further authorize and direct the Collateral Agent, as Agent of the Company,
to itself issue instructions and entitlement orders, and to otherwise take
action, with respect to the Collateral Account, the Collateral credited
thereto and any Security Entitlements with respect thereto, pursuant to the
terms and provisions hereof, all without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders. The
Collateral Agent shall be the agent of the Company and shall act as
directed in writing by the Company. Without limiting the generality of the
foregoing, the Collateral Agent shall issue entitlement orders to the
Securities Intermediary when and as directed by the Company.
(b) The Securities Intermediary hereby confirms and agrees that:
(i) it is a Person that in the ordinary course of business maintains securities
accounts for others and is acting in that capacity, (ii) all securities or
other property underlying any financial assets credited to the Collateral
Account shall be registered in the name of the Securities Intermediary,
indorsed to the Securities Intermediary or in blank or credited to another
Collateral Account maintained in the name of the Securities Intermediary
and in no case will any financial asset credited to the Collateral Account
be registered in the name of the Purchase Contract Agent, the Collateral
Agent, the Company or any Holder, payable to the order of, or specially
indorsed to, the Purchase Contract Agent, the Collateral Agent, the Company
or any Holder except to the extent the foregoing have been specially
indorsed to the Securities Intermediary or in blank; (iii) all property
delivered to the Securities Intermediary pursuant to this Pledge Agreement
(including, without limitation, any Preferred Shares or Treasury
Securities) will be promptly credited to the Collateral Account; (iv) the
Collateral Account is an account to which financial assets are or may be
credited, and the Securities Intermediary shall, subject to the terms of
this Agreement, treat the Purchase Contract Agent as entitled to exercise
the rights of any financial asset credited to the Collateral Account; (v)
the Securities Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with any other person
relating to the Collateral Account and/or any financial assets credited
thereto pursuant to which it has agreed to comply with entitlement orders
(as defined in Section 8-102(a)(8) of the Code) of such other person; and
(vi) the Securities Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with the
Company, the Collateral Agent or the Purchase Contract Agent purporting to
limit or condition the obligation of the Securities Intermediary to comply
with entitlement orders as set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each item of
property (whether investment property, financial asset, security, instrument
or cash) credited to the Collateral Account shall be treated as a "financial
asset" within the meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any
portion thereof) and any other agreement now existing or hereafter entered
into, the terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, with full power of substitution,
as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in
the name, place and stead of the Purchase Contract Agent and the Holders,
any action necessary or desirable to perfect and to keep perfected the
security interest in the Collateral referred to in Section 2.1. The grant
of such power-of-attorney shall not be deemed to require of the Collateral
Agent any specific duties or obligations not otherwise assumed by the
Collateral Agent hereunder.
6
ARTICLE III
Distributions on Pledged Collateral.
So long as the Purchase Contract Agent is the registered owner of
the Pledged Preferred Shares and is acting in such capacity, it shall
receive all payments thereon. If the Pledged Preferred Shares are
reregistered, such that the Collateral Agent becomes the registered holder,
all payments of the Stated Amount, or cash dividends on, the Pledged
Preferred Shares, as the case may be, and all payments of the principal of,
or cash distributions on, any Pledged Treasury Securities received by the
Collateral Agent that are properly payable hereunder shall be paid by the
Collateral Agent by wire transfer in same day funds:
(i) In the case of (A) cash dividends with respect to the Pledged
Preferred Shares and (B) any payments of the Stated Amount with
respect to any Preferred Shares that have been released from the
Pledge pursuant to Section 4.3 hereof, to the Purchase Contract Agent,
for the benefit of the relevant Holders of Securities, to the account
designated by the Purchase Contract Agent for such purpose, no later
than 2:00 p.m., New York City time, on the Business Day such payment
is received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant
to Section 4.3 hereof, to the Holders of the Growth PRIDES to the
accounts designated by them in writing for such purpose no later than
2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any Pledged
Preferred Shares or the principal of any Pledged Treasury Securities,
to the Company on the Purchase Contract Settlement Date in accordance
with the procedure set forth in Section 4.6(a) or 4.6(b) hereof, in
full satisfaction of the respective obligations of the Holders
under the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided
herein shall be applied by the Purchase Contract Agent pursuant to the
provisions of the Purchase Contract Agreement. If, notwithstanding the
foregoing, the Purchase Contract Agent shall receive any payments of the
Stated Amount on account of any Preferred Share, that, at the time of such
payment, is a Pledged Preferred Share or a Holder of a Growth PRIDES shall
receive any payments of principal on account of any Treasury Securities
that, at the time of such payment, are Pledged Treasury Securities, the
Purchase Contract Agent or such Holder shall hold the same as trustee of an
express trust for the benefit of the Company (and promptly deliver the same
over to the Company) for application to the obligations of the Holders
under the related Purchase Contracts, and the Holders shall acquire no
right, title or interest in any such payments of Stated Amount or principal
so received.
7
ARTICLE IV
Substitution, Release, Repledge and Settlement of Preferred Shares.
Section 4.1 Substitution for Preferred Shares and the Creation of
Growth Prides. At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Income PRIDES
shall have the right to substitute Treasury Securities for the Preferred
Shares securing such Holder's obligations under the Purchase Contract(s)
comprising a part of its Income PRIDES in integral multiples of 20 Income
PRIDES by (a) Transferring to the Collateral Agent Treasury Securities
having a Value equal to the aggregate Stated Amount of the Pledged
Preferred Shares to be released and (b) delivering the related Income
PRIDES to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit B hereto, to the Purchase Contract
Agent stating that such Holder has Transferred Treasury Securities to the
Collateral Agent pursuant to clause (a) above (stating the Value of the
Treasury Securities Transferred by such Holder) and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Preferred Shares related to such Income PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form
provided in Exhibit A. Upon receipt of Treasury Securities from a Holder of
Income PRIDES and the related instruction from the Purchase Contract Agent,
the Collateral Agent shall release the Pledged Preferred Shares and shall
promptly Transfer such Pledged Preferred Shares free and clear of any lien,
pledge or security interest created hereby, to the Purchase Contract Agent.
All items Transferred and/or substituted by any Holder pursuant to this
Section 4.1, Section 4.2 or any other Section of this Agreement shall be
Transferred and/or substituted free and clear of all liens, claims and
encumbrances.
Section 4.2 Substitution of Treasury Securities and the Creation of
Income Prides. At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Growth PRIDES
shall have the right to reestablish Income PRIDES consisting of the
Purchase Contracts and Preferred Shares in integral multiples of 20 Income
PRIDES by (a) Transferring to the Collateral Agent Preferred Shares having
a Value equal to the Value of the Pledged Treasury Securities to be
released and (b) delivering the related Growth PRIDES to the Purchase
Contract Agent, accompanied by a notice, substantially in the form of
Exhibit B hereto, to the Purchase Contract Agent stating that such Holder
has transferred Preferred Shares to the Collateral Agent pursuant to clause
(a) above and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Treasury Securities
related to such Growth PRIDES. The Purchase Contract Agent shall instruct
the Collateral Agent in the form provided in Exhibit A. Upon receipt of the
Preferred Shares from such Holder and the instruction from the Purchase
Contract Agent, the Collateral Agent shall release the Treasury Securities
and shall promptly Transfer such Treasury Securities, free and clear of any
lien, pledge or security interest created hereby, to the Purchase Contract
Agent.
Section 4.3 Termination Event. Upon receipt by the Collateral Agent
of written notice from the Company or the Purchase Contract Agent that there
has occurred a Termination Event, the Collateral Agent shall release all
Collateral from the Pledge and shall promptly Transfer any Pledged
Preferred Shares and Pledged Treasury Securities to the Purchase Contract
Agent for the benefit of the Holders of the Income PRIDES and the Growth
PRIDES, respectively, free and clear of any lien, pledge or security
interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming
a debtor under any applicable uniform bankruptcy laws, and if the
Collateral Agent shall for any reason fail promptly to effectuate the
release and Transfer of all Pledged Preferred Shares or of the Pledged
Treasury Securities, as the case may be, as provided by this Section 4.3,
the Purchase Contract Agent shall (i) use its best efforts to obtain an
opinion of a recognized law firm practicing law in the applicable
jurisdiction to the effect that, as a result of the Company's being the
debtor in such a bankruptcy case, the Collateral Agent will not be
prohibited from releasing or Transferring the Collateral as provided in
this Section 4.3, and shall deliver such opinion to the Collateral Agent
within ten days after the occurrence of such Termination Event, and if (y)
the Purchase Contract Agent shall be unable to obtain such opinion within
ten days after the occurrence of such Termination Event or (z) the
Collateral Agent shall continue, after delivery of such opinion, to refuse
to effectuate the release and Transfer of all Pledged Preferred Shares or
the Pledged Treasury Securities, as the case may be, as provided in this
Section 4.3, then the Purchase Contract Agent shall within fifteen days
after the occurrence of such Termination Event commence an action or
8
proceeding in the court with jurisdiction of the Company's case under the
any such applicable bankruptcy laws seeking an order requiring the
Collateral Agent to effectuate the release and transfer of all Pledged
Preferred Shares or of the Pledged Treasury Securities, as the case may be,
as provided by this Section 4.3 or (ii) commence an action or proceeding
like that described in subsection (i)(z) hereof within ten days after the
occurrence of such Termination Event.
Section 4.4 Cash Settlement. (a) Upon receipt by the Collateral Agent
of (i) a notice from the Purchase Contract Agent promptly after the receipt by
the Purchase Contract Agent of such notice that a Holder of an Income
PRIDES or Growth PRIDES has elected, in accordance with the procedures
specified in Section 5.2(a)(i) or (d)(i) of the Purchase Contract
Agreement, respectively, to settle its Purchase Contract with Cash and (ii)
payment of the amount required to settle such contract by such Holder on or
prior to 11:00 a.m., New York City time, on the Business Day immediately
preceding the Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire transfer in
immediately available funds payable to or upon the order of the Company,
then the Collateral Agent shall promptly invest any Cash received from a
Holder in connection with a Cash Settlement in Permitted Investments. Upon
receipt of the proceeds upon the maturity of the Permitted Investments on
the Purchase Contract Settlement Date, the Collateral Agent shall pay the
portion of such proceeds and deliver any certified or cashiers' checks
received and any funds so wired, in an aggregate amount equal to the
Purchase Price, to the Company on the Purchase Contract Settlement Date,
and shall distribute any funds in respect of the interest earned from the
Permitted Investments to the Purchase Contract Agent for payment to the
relevant Holder.
(b) If a Holder of an Income PRIDES fails to notify the Purchase
Contract Agent of its intention to make a Cash Settlement in accordance with
Section 5.2(a)(i) of the Purchase Contract Agreement, such failure shall
constitute an event of default under the Purchase Contract Agreement and
hereunder, and the Holder shall be deemed to have consented to the disposition
of the Pledged Preferred Shares pursuant to the remarketing as described in
Section 5.2(b) of the Purchase Contract Agreement, which is incorporated
herein by reference. If a Holder of an Income PRIDES does notify the
Purchase Contract Agent as provided in Section 5.2(a)(i) of the Purchase
Contract Agreement of its intention to pay the Purchase Price in cash, but
fails to make such payment as required by Section 5.2(a)(ii) of the
Purchase Contract Agreement, such failure will constitute an event of
default under the Purchase Contract Agreement and hereunder, and the
Preferred Shares of such a Holder will not be remarketed but instead the
Collateral Agent, for the benefit of the Company, will exercise its rights
as a secured party with respect to such Preferred Shares at the written
direction of the Company to retain or dispose of the Collateral in
accordance with applicable law. In addition, in the event of a Failed
Remarketing as described in Section 5.2(b) of the Purchase Contract
Agreement, such Failed Remarketing shall constitute an event of default
hereunder by such Holder and the Collateral Agent, for the benefit of the
Company, will also exercise its rights as a secured party with respect to
such Preferred Shares at the written direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
(c) If a Holder of a Growth PRIDES fails to notify the Purchase
Contract Agent of such Holder's intention to make a Cash Settlement in
accordance with Section 5.2(d)(i) of the Purchase Contract Agreement, or if a
Holder of a Growth PRIDES does notify the Purchase Contract Agent as provided
in paragraph 5.2(d)(i) of the Purchase Contract Agreement of its intention to
pay the Purchase Price in cash, but fails to make such payment as required
by paragraph 5.2(d)(ii) of the Purchase Contract Agreement, such failure
shall constitute an event of default hereunder by such Holder and upon the
maturity of any Pledged Treasury Securities, if any, held by the Collateral
Agent on the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount at maturity of the Pledged Treasury
Securities received by the Collateral Agent shall, upon written direction
of the Company, be invested promptly in any Permitted Investments. On the
Purchase Contract Settlement Date, an amount equal to the Purchase Price
will be remitted to the Company as payment thereof. In the event the sum of
the proceeds from the related Pledged Treasury Securities and the
investment earnings earned from such investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled thereby,
the Collateral Agent will distribute such excess to the Purchase Contract
Agent for the benefit of the Holder of the related Growth PRIDES or Income
PRIDES when received.
9
Section 4.5 Early Settlement. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities
have elected to effect Early Settlement of their respective obligations under
the Purchase Contracts forming a part of such Securities in accordance with
the terms of the Purchase Contracts and the Purchase Contract Agreement
(setting forth the number of such Purchase Contracts as to which such
Holders have elected to effect Early Settlement), and that the Purchase
Contract Agent has received from such Holders, and paid to the Company as
confirmed in writing by the Company, the related Early Settlement Amounts
pursuant to the terms of the Purchase Contracts and the Purchase Contract
Agreement and that all conditions to such Early Settlement have been
satisfied, then the Collateral Agent shall release from the Pledge, (a)
Pledged Preferred Shares in the case of a Holder of Income PRIDES or (b)
Pledged Treasury Securities in the case of a Holder of Growth PRIDES, as
the case may be, with a principal amount at maturity equal to the product
of (i) the Stated Amount times (ii) the number of such Purchase Contracts
as to which such Holders have elected to effect Early Settlement and shall
Transfer all such Pledged Preferred Shares or Pledged Treasury Securities,
as the case may be, free and clear of the Pledge created hereby, to the
Purchase Contract Agent for the benefit of the Holders.
Section 4.6 Application of Proceeds Settlement. (a) In the event a
Holder of Income PRIDES has not elected to make an effective Cash Settlement by
notifying the Purchase Contract Agent in the manner provided for in
paragraph 5.4(a)(i) in the Purchase Contract Agreement or has not made an
Early Settlement of the Purchase Contract(s) underlying its Income PRIDES,
such Holder shall be deemed to have elected to pay for the Ordinary Shares
to be issued under such Purchase Contract(s) from the Proceeds of the
related Pledged Preferred Shares. The Collateral Agent shall, by 10:00
a.m., New York City time, on the fourth Business Day immediately preceding
the Purchase Contract Settlement Date, without any instruction from such
Holder of Income PRIDES, present the related Pledged Preferred Shares to
the Remarketing Agent for remarketing. Upon receiving such Pledged
Preferred Shares, the Remarketing Agent, pursuant to the terms of the
Remarketing Agreement and the Remarketing Underwriting Agreement, will use
its reasonable efforts to remarket such Pledged Preferred Shares on such
date at a price not less than approximately 100.5% of the aggregate Value
of such Pledged Preferred Shares, plus accumulated and unpaid dividends, if
any, thereon. After deducting as the remarketing fee an amount not
exceeding 25 basis points (.25%) of the aggregate Value of the Pledged
Preferred Shares from any amount of such Proceeds in excess of the
aggregate Value, plus such accumulated and unpaid dividends of the
remarketed Pledged Preferred Shares, the Remarketing Agent will remit the
entire amount of the Proceeds of such remarketing to the Collateral Agent.
On the Purchase Contract Settlement Date, the Collateral Agent shall apply
that portion of the Proceeds from such remarketing equal to the aggregate
Value, plus such accumulated and unpaid distributions of such Pledged
Preferred Shares, to satisfy in full the obligations of such Holders of
Income PRIDES to pay the Purchase Price to purchase the Ordinary Shares
under the related Purchase Contracts. The remaining portion of such
Proceeds, if any, shall be distributed by the Collateral Agent to the
Purchase Contract Agent for payment to the Holders. If the Remarketing
Agent advises the Collateral Agent in writing that it cannot remarket the
related Pledged Preferred Shares of such Holders of Income PRIDES at a
price not less than 100% of the aggregate Value of such Pledged Preferred
Shares plus any accumulated and unpaid distributions, thus resulting in a
Failed Remarketing and an event of default under the Purchase Contract
Agreement and hereunder, the Collateral Agent, for the benefit of the
Company will, at the written direction of the Company, retain or dispose of
the Pledged Preferred Shares in accordance with applicable law and satisfy
in full, from any such disposition or retention, such Holder's obligation
to pay the Purchase Price for the Ordinary Shares.
(b) In the event a Holder of Growth PRIDES has not made an Early
Settlement of the Purchase Contract(s) underlying its Growth PRIDES, such
Holder shall be deemed to have elected to pay for the Ordinary Shares to be
issued under such Purchase Contract(s) from the Proceeds of the related Pledged
Treasury Securities. On the Business Day immediately prior to the Purchase
Contract Settlement Date, the Collateral Agent shall invest the Cash proceeds
of the maturing Pledged Treasury Securities in any overnight Permitted
Investments. Without receiving any instruction from any such Holder of
Growth PRIDES, the Collateral Agent shall apply the Proceeds of the related
Pledged Treasury Securities to the settlement of such Purchase Contracts on
the Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related Pledged
Treasury Securities and the investment earnings from the investment in
overnight Permitted Investments is in excess of the aggregate Purchase
Price of the Purchase Contracts being settled thereby, the Collateral Agent
shall distribute such excess, when received, to the Purchase Contract Agent
for the benefit of the Holder.
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(c) Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement, on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, but no earlier
than the Payment Date immediately preceding the Purchase Contract
Settlement Date, holders of Separate Preferred Shares may elect to have
their Separate Preferred Shares remarketed by delivering their Separate
Preferred Shares, together with a notice of such election, substantially in
the form of Exhibit C hereto, to the Custodial Agent. The Custodial Agent
will hold such Separate Preferred Shares in an account separate from the
Collateral Account. A holder of Separate Preferred Shares electing to have
its Separate Preferred Shares remarketed will also have the right to
withdraw such election by written notice to the Custodial Agent,
substantially in the form of Exhibit D hereto, on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date,
upon which notice the Custodial Agent will return such Separate Preferred
Shares to such holder. On the fourth Business Day immediately preceding the
Purchase Contract Settlement Date, the Custodial Agent will deliver to the
Remarketing Agent for remarketing all Separate Preferred Shares delivered
to the Custodial Agent pursuant to this Section 4.6(c) and not withdrawn
pursuant to the terms hereof prior to such date. The portion of the
proceeds from such remarketing equal to the aggregate Value of such
Separate Preferred Shares will automatically be remitted by the Remarketing
Agent to the Custodial Agent for the benefit of the holders of such
Separate Preferred Shares. In addition, after deducting as the remarketing
fee an amount not exceeding 25 basis points (.25%) of the Value of the
remarketed Separate Preferred Shares, from any amount of such proceeds in
excess of the aggregate Value of the remarketed Separate Preferred Shares
plus any accumulated and unpaid dividends thereon, the Remarketing Agent
will remit to the Custodial Agent the remaining portion of the proceeds, if
any, for the benefit of such holders. If, despite using its reasonable
efforts, the Remarketing Agent advises the Custodial Agent in writing that
it cannot remarket the related Separate Preferred Shares of such holders at
a price not less than 100% of the aggregate Value of such Separate
Preferred Shares plus accumulated and unpaid dividends and thus resulting
in a Failed Remarketing, the Remarketing Agent will promptly return such
Preferred Shares to the Custodial Agent for redelivery to such holders.
ARTICLE V
Voting Rights --Preferred Shares.
Provided no default hereunder or under the Purchase Contract
exists, the Purchase Contract Agent may exercise, or refrain from
exercising, any and all voting and other consensual rights pertaining to
the Pledged Preferred Shares or any part thereof for any purpose not
inconsistent with the terms of this Agreement and in accordance with the
terms of the Purchase Contract Agreement; provided, that the Purchase
Contract Agent shall not exercise or, as the case may be, shall not refrain
from exercising such right if, in the judgment of the Company, such action
would impair or otherwise have a material adverse effect on the value of
all or any of the Pledged Preferred Shares; and provided, further, that the
Purchase Contract Agent shall give the Company and the Collateral Agent at
least five days' prior written notice of the manner in which it intends to
exercise, or its reasons for refraining from exercising, any such right.
Upon receipt of any notices and other communications in respect of any
Pledged Preferred Shares, including notice of any meeting at which holders
of Preferred Shares are entitled to vote or solicitation of consents,
waivers or proxies of holders of Preferred Shares, the Collateral Agent
shall use reasonable efforts to send promptly to the Purchase Contract
Agent such notice or communication, and as soon as reasonably practicable
after receipt of a written request therefor from the Purchase Contract
Agent, execute and deliver to the Purchase Contract Agent such proxies and
other instruments in respect of such Pledged Preferred Shares (in form and
substance satisfactory to the Collateral Agent) as are prepared by the
Purchase Contract Agent with respect to the Pledged Preferred Shares.
11
ARTICLE VI
Rights and Remedies
Section 6.1 Rights and Remedies of the Collateral Agent. (a) In
addition to the rights and remedies specified in Section 4.4 hereof or
otherwise available at law or in equity, after an event of default hereunder,
the Collateral Agent shall have all of the rights and remedies with respect to
the Collateral of a secured party under the Uniform Commercial Code (or any
successor thereto) as in effect in the State of New York from time to time
(the "Code") (whether or not the Code is in effect in the jurisdiction
where the rights and remedies are asserted) and the TRADES Regulations and
such additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted. Wherever reference is made in this Agreement to
any section of the Code, such reference shall be deemed to include a
reference to any provision of the Code which is a successor to, or
amendment of, such section. Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by applicable
law, (i) retention of the Pledged Preferred Shares or other Collateral in
full satisfaction of the Holders' obligations under the Purchase Contracts
or (ii) sale of the Pledged Preferred Shares or other Collateral in one or
more public or private sales. Each Holder through the Purchase Contract
Agent agrees and acknowledges that the Collateral is of a type customarily
sold in a recognized market and that, accordingly, no notice of intended
disposition of the Collateral need be given by the Collateral Agent.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is
unable to make payments to the Company on account of principal payments of
any Pledged Treasury Securities as provided in Article III hereof in
satisfaction of the obligations of the Holder of Growth PRIDES of which
such Pledged Treasury Securities is a part under the related Purchase
Contracts, the inability to make such payments shall constitute an event of
default hereunder and the Collateral Agent shall have and may exercise,
with reference to such Pledged Treasury Securities and such obligations of
such Holder, any and all of the rights and remedies available to a secured
party under the Code and the TRADES Regulations after default by a debtor,
and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby
irrevocably authorized to receive and collect all payments of (i) the
Stated Amount of or, cash dividends on, the Pledged Preferred Shares, or
(ii) the principal amount at maturity of the Pledged Treasury Securities,
subject, in each case, to the provisions of Section 3, and as otherwise
granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact
for each Holder of Securities, in the event such Holder becomes the Holder of a
Growth PRIDES, agrees that, from time to time, upon the written request of
the Company, Collateral Agent, the Purchase Contract Agent or such Holder
shall execute and deliver such further documents and do such other acts and
things as the Collateral Agent may reasonably request in order to maintain
the Pledge, and the perfection and priority thereof, and to confirm the
rights of the Collateral Agent hereunder. The Purchase Contract Agent shall
have no liability to any Holder for executing any documents or taking any
such acts requested by the Collateral Agent hereunder, except for liability
for its own negligent act, its own negligent failure to act, its bad faith
or its own willful misconduct.
Section 6.2 Substitutions. Whenever a Holder has the right to
substitute Treasury Securities or Preferred Shares, as the case may be, for
Collateral held by the Collateral Agent, such substitution shall not constitute
a novation of the security interest created hereby.
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ARTICLE VII
Representations and Warranties; Covenants.
Section 7.1 Representations and Warranties. The Holders from time to
time, acting through the Purchase Contract Agent as their attorney-in-fact (it
being understood that the Purchase Contract Agent shall not be liable for
any representation or warranty made by or on behalf of a Holder), hereby
represent and warrant to the Collateral Agent, which representations and
warranties shall be deemed repeated on each day a Holder Transfers
Collateral that:
(a) such Holder has the power to grant a security interest in
and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form, is the sole
holder of such Collateral and is the sole beneficial owner of, or
has the right to Transfer, the Collateral it Transfers to the
Collateral Agent, free and clear of any security interest, lien,
encumbrance, call, liability to pay money or other restriction
other than the security interest and lien granted under Section
2.1 hereof;
(c) upon the Transfer of the Collateral to the Collateral
Account, the Collateral Agent, for the benefit of the Company, will
have a valid and perfected first priority security interest therein
(assuming that any central clearing operation or any Intermediary
or other entity not within the control of the Holder involved in
the Transfer of the Collateral, including the Collateral Agent,
gives the notices and takes the action required of it hereunder
and under applicable law for perfection of that interest and
assuming the establishment and exercise of control pursuant to
Section 2.2 hereof); and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in the creation of
any security interest, lien or other encumbrance on the Collateral
other than the security interest and lien granted under Section
2.1 hereof or violate any provision of any existing law or
regulation applicable to it or of any mortgage, charge, pledge,
indenture, contract or undertaking to which it is a party or which
is binding on it or any of its assets.
Section 7.2 Covenants. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood that
the Purchase Contract Agent shall not be liable for any covenant made by or
on behalf of a Holder), hereby covenant to the Collateral Agent that for so
long as the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any mortgage, charge,
lien, pledge or any other security interest whatsoever over the
Collateral or any part of it other than pursuant to this
Agreement;
(b) neither the Purchase Contract Agent nor such Holders will
sell or otherwise dispose (or attempt to dispose) of the Collateral
or any part of it except for the beneficial interest therein, subject
to the pledge hereunder, transferred in connection with the Transfer
of the Securities; and
(c) if any Collateral is delivered to any Holder or to the
Purchase Contract Agent, such Holder or the Purchase Contract Agent
will deliver the sum to the Collateral Agent, properly indorsed when
required, and in the form received.
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ARTICLE VIII
The Collateral Agent.
Section 8.1 Appointment, Powers and Immunities. The Collateral Agent
shall act as Agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. Each of
the Collateral Agent, the Custodial Agent and the Securities Intermediary: (a)
shall have no duties or responsibilities except those expressly set forth
in this Agreement and no implied covenants or obligations shall be inferred
from this Agreement against any of them, nor shall any of them be bound by
the provisions of any agreement by any party hereto beyond the specific
terms hereof; (b) shall not be responsible for any recitals contained in
this Agreement, or in any certificate or other document referred to or
provided for in, or received by it under, this Agreement, the Income
PRIDES, Growth PRIDES or the Purchase Contract Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement (other than as against the Collateral Agent), the Securities or
the Purchase Contract Agreement or any other document referred to or
provided for herein or therein or for any failure by the Company or any
other Person (except the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be) to perform any of its
obligations hereunder or thereunder or for the perfection, priority or,
except as expressly required hereby, maintenance of any security interest
created hereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder (except in the case of the
Collateral Agent, pursuant to directions furnished under Section 8.2
hereof, subject to Section 8.6 hereof); (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in connection
herewith or therewith, except for its own negligence, bad faith or willful
misconduct; and (e) shall not be required to advise any party as to selling
or retaining, or taking or refraining from taking any action with respect
to, the Securities or other property deposited hereunder. Subject to the
foregoing, during the term of this Agreement, the Collateral Agent shall
take all reasonable action in connection with the safekeeping and
preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent,
the Custodial Agent or the Securities Intermediary to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder. In no event shall the Collateral Agent, the
Custodial Agent or the Securities Intermediary be liable for any amount in
excess of the Value of the Collateral. Notwithstanding the foregoing, the
Collateral Agent, the Custodial Agent, the Purchase Contract Agent and
Securities Intermediary, each in its individual capacity, hereby waive any
right of setoff, bankers lien, liens or perfection rights as securities
intermediary or any counterclaim with respect to any of the Collateral.
Section 8.2 Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as the case may
be, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction
shall not conflict with the provisions of any law or of this Agreement and
(ii) the Collateral Agent, the Custodial Agent and the Securities
Intermediary shall be adequately indemnified as provided herein. Nothing in
this Section 8.2 shall impair the right of the Collateral Agent in its
discretion to take any action or omit to take any action which it deems
proper and which is not inconsistent with such direction.
Section 8.3 Reliance by Collateral Agent. Each of the Securities
Intermediary, the Custodial Agent and the Collateral Agent shall be
entitled conclusively to rely upon any certification, order, judgment,
opinion, notice or other communication (including, without limitation, any
thereof by telephone or facsimile) believed by it in good faith to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons (without being required to determine the
correctness of any fact stated therein), and upon advice and statements of
14
legal counsel and other experts selected by the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be. As to
any matters not expressly provided for by this Agreement, the Collateral
Agent, the Custodial Agent and the Securities Intermediary shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with
this Agreement.
Section 8.4 Rights in Other Capacities. The Collateral Agent, the
Custodial Agent and the Securities Intermediary and their affiliates may
(without having to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of
banking, trust or other business with the Purchase Contract Agent, any Holder
of Income PRIDES or Growth PRIDES and any holder of Separate Preferred Shares
(and any of their respective subsidiaries or affiliates) as if it were not
acting as the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the Custodial
Agent and the Securities Intermediary and their affiliates may accept fees
and other consideration from the Purchase Contract Agent, any Holder of
Income PRIDES or Growth PRIDES or any holder of Separate Preferred Shares
without having to account for the same to the Company; provided that each
of the Securities Intermediary, the Custodial Agent and the Collateral
Agent covenants and agrees with the Company that it shall not accept,
receive or permit there to be created in favor of itself and shall take no
affirmative action to permit there to be created in favor of any other
Person, any security interest, lien or other encumbrance of any kind in or
upon the Collateral and the Collateral shall not be commingled with any
other assets of any such Person.
Section 8.5 Non-Reliance on Collateral Agent. None of the Securities
Intermediary, the Custodial Agent or the Collateral Agent shall be required
to keep itself informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the Purchase
Contract Agreement, the Income PRIDES or Growth PRIDES or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder of Income
PRIDES or Growth PRIDES. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not have any duty or responsibility to
provide the Company or the Remarketing Agent with any credit or other
information concerning the affairs, financial condition or business of the
Purchase Contract Agent, any Holder of Income PRIDES or Growth PRIDES or
any holder of Separate Preferred Shares (or any of their respective
subsidiaries or affiliates) that may come into the possession of the
Collateral Agent, the Custodial Agent or the Securities Intermediary or any
of their respective affiliates.
Section 8.6 Compensation and Indemnity. The Company agrees: (i) to
pay each of the Collateral Agent and the Custodial Agent from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Custodial Agent, as the case may be, for all
services rendered by each of them hereunder and (ii) to indemnify the
Collateral Agent, the Custodial Agent and the Securities Intermediary for,
and to hold each of them harmless from and against, any loss, liability or
reasonable out-of-pocket expense incurred without negligence, willful
misconduct or bad faith on its part, arising out of or in connection with
the acceptance or administration of its powers and duties under this
Agreement, including the reasonable out-of-pocket costs and expenses
(including reasonable fees and expenses of counsel) of defending itself
against any claim or liability in connection with the exercise or
performance of such powers and duties. The Collateral Agent, the Custodial
Agent and the Securities Intermediary shall each promptly notify the
Company of any third party claim which may give rise to the indemnity
hereunder and give the Company the opportunity to participate in the
defense of such claim with counsel reasonably satisfactory to the
indemnified party, and no such claim shall be settled without the written
consent of the Company, which consent shall not be unreasonably withheld.
15
Section 8.7 Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Custodial Agent
shall be entitled, after prompt notice to the Company and the Purchase
Contract Agent, at its sole option, to refuse to comply with any and all
claims, demands or instructions with respect to such property or funds so
long as such dispute or conflict shall continue, and neither the Collateral
Agent nor the Custodial Agent shall be or become liable in any way to any
of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent and the
Custodial Agent shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined
by a court of competent jurisdiction or settled by agreement between the
conflicting parties as evidenced in a writing, satisfactory to the
Collateral Agent or the Custodial Agent, as the case may be, or (ii) the
Collateral Agent or the Custodial Agent, as the case may be, shall have
received security or an indemnity reasonably satisfactory to the Collateral
Agent or the Custodial Agent, as the case may be, sufficient to save the
Collateral Agent or the Custodial Agent, as the case may be, harmless from
and against any and all loss, liability or reasonable out-of-pocket expense
which the Collateral Agent or the Custodial Agent, as the case may be, may
incur by reason of its acting without bad faith, willful misconduct or
gross negligence. The Collateral Agent or the Custodial Agent may in
addition elect to commence an interpleader action or seek other judicial
relief or orders as the Collateral Agent or the Custodial Agent, as the
case may be, may deem necessary. Notwithstanding anything contained herein
to the contrary, neither the Collateral Agent nor the Custodial Agent shall
be required to take any action that is in its opinion contrary to law or to
the terms of this Agreement, or which would in its opinion subject it or
any of its officers, employees or directors to liability.
Section 8.8 Resignation of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent or Custodial Agent
as provided below, (a) the Collateral Agent and the Custodial Agent may resign
at any time by giving not less than 20 days prior notice thereof to the Company
and the Purchase Contract Agent as attorney-in-fact for the Holders of
Income PRIDES or Growth PRIDES, (b) the Collateral Agent and the Custodial
Agent may be removed at any time by the Company and (c) if the Collateral
Agent or the Custodial Agent fails to perform any of its material
obligations hereunder in any material respect for a period of not less than
20 days after receiving written notice of such failure by the Purchase
Contract Agent and such failure shall be continuing, the Collateral Agent
or the Custodial Agent may be removed by the Purchase Contract Agent. The
Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the
right to appoint a successor Collateral Agent or Custodial Agent, as the
case may be. If no successor Collateral Agent or Custodial Agent, as the
case may be, shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Collateral Agent's or
Custodial Agent's giving of notice of resignation or such removal, then the
retiring Collateral Agent or Custodial Agent, as the case may be, may, at
the expense of the Company, petition any court of competent jurisdiction
for the appointment of a successor Collateral Agent or Custodial Agent, as
the case may be. Each of the Collateral Agent and the Custodial Agent shall
be a bank which has an office in New York, New York with a combined capital
and surplus of at least $50,000,000. Upon the acceptance of any appointment
as Collateral Agent or Custodial Agent, as the case may be, hereunder by a
successor Collateral Agent or Custodial Agent, as the case may be, such
successor shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent or Custodial
Agent, as the case may be, and the retiring Collateral Agent or Custodial
Agent, as the case may be, shall take all appropriate action to transfer
any money and property held by it hereunder (including the Collateral) to
such successor. The retiring Collateral Agent or Custodial Agent shall,
upon such succession, be discharged from its duties and obligations as
Collateral Agent or Custodial Agent hereunder. After any retiring
Collateral Agent's or Custodial Agent's resignation hereunder as Collateral
Agent or Custodial Agent, the provisions of this Section 8.8 shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as the Collateral Agent or Custodial Agent.
Any resignation or removal of the Collateral Agent hereunder shall be
deemed for all purposes of this Agreement as the simultaneous resignation
or removal of the Custodial Agent and the Securities Intermediary.
16
Section 8.9 Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents
or advisors selected in good faith. The appointment of agents pursuant to
this Section 8.9 shall be subject to prior consent of the Company, which
consent shall not be unreasonably withheld.
Section 8.10 Survival. The provisions of this Article 8 shall survive
termination of this Agreement and the resignation or removal of the
Collateral Agent or the Custodial Agent.
Section 8.11 Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent, the
Custodial Agent or the Securities Intermediary or their officers, employees
or agents be liable under this Agreement to any third party for indirect,
special, punitive, or consequential loss or damage of any kind whatsoever,
including lost profits, whether or not the likelihood of such loss or
damage was known to the Collateral Agent, the Custodial Agent or the
Securities Intermediary, or any of them, incurred without any act or deed
that is found to be attributable to gross negligence, bad faith or willful
misconduct on the part of the Collateral Agent, the Custodial Agent or the
Securities Intermediary.
ARTICLE IX
Amendment.
Section 9.1 Amendment Without Consent of Holders. Without the consent
of any Holders or the holders of any Separate Preferred Shares, the Company,
the Collateral Agent, the Custodial Agent, the Securities Intermediary and
the Purchase Contract Agent, at any time and from time to time, may amend
this Agreement, in form satisfactory to the Company, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Purchase Contract
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company so long as such covenants or such surrender do not
adversely affect the validity, perfection or priority of the security
interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary
or Purchase Contract Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided
such action shall not adversely affect the interests of the Holders.
Section 9.2 Amendment with Consent of Holders. With the consent of
the Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company,
when duly authorized, the Company, the Purchase Contract Agent, the
Collateral Agent, the Custodial Agent and the Securities Intermediary may
amend this Agreement for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in respect of the
Income PRIDES and Growth PRIDES; provided, however, that no such
supplemental agreement shall, without the consent of the Holder of each
Outstanding Income PRIDES and Growth PRIDES adversely affected thereby,
(1) change the amount or type of Collateral underlying an
Income PRIDES or Growth PRIDES (except for the rights of holders
of Income PRIDES to substitute the Treasury Securities for the
Pledged Preferred Shares, or the rights of Holders of Growth PRIDES
to substitute Preferred Shares for the Pledged Treasury Securities),
impair the right of the Holder of any Income PRIDES or Growth PRIDES
to receive distributions on the underlying Collateral or otherwise
adversely affect the Holder's rights in or to such Collateral; or
(2) otherwise effect any action that would require the
consent of the Holder of each Outstanding Income PRIDES or Growth
PRIDES affected thereby pursuant to the Purchase Contract Agreement
if such action were effected by an agreement supplemental thereto;
or
17
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent shall be entitled to
receive and (subject to Section 6.1 hereof, with respect to the Collateral
Agent, and Section 7.1 of the Purchase Contract Agreement, with respect to the
Purchase Contract Agent) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions
precedent, if any, to the execution and delivery of such amendment have
been satisfied.
Section 9.4 Effect of Amendments. Upon the execution of any amendment
under this Article 9, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes;
and every Holder of Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered under the Purchase Contract
Agreement shall be bound thereby.
Section 9.5 Reference to Amendments. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Section may, and shall if required
by the Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine,
new Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract
Agent in accordance with the Purchase Contract Agreement in exchange for
Outstanding Security Certificates.
ARTICLE X
Miscellaneous.
Section 10.1 No Waiver. No failure on the part of any party hereto or
any of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by any party
hereto or any of its agents of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
Section 10.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly agreed to by
the Securities Intermediary, the Collateral Agent and the Holders from time
to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and maintenance of
the Collateral Account.
18
Section 10.3 Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be
given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof or, as to any party, at such
other address as shall be designated by such party in a notice to the other
parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
Section 10.4 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, and the Holders from time to
time of the Income PRIDES and Growth PRIDES, by their acceptance of the
same, shall be deemed to have agreed to be bound by the provisions hereof
and to have ratified the agreements of, and the grant of the Pledge
hereunder by, the Purchase Contract Agent.
Section 10.5 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
Section 10.6 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in order to carry out
the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
Section 10.7 Expenses, Etc. The Company agrees to reimburse the
Collateral Agent and the Custodial Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent and the Custodial Agent (including,
without limitation, the reasonable fees and expenses of counsel to the
Collateral Agent and the Custodial Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the
terms of this Agreement; (b) all reasonable costs and expenses of the
Collateral Agent (including, without limitation, reasonable fees and
expenses of counsel) in connection with (i) any enforcement or proceedings
resulting or incurred in connection with causing any Holder of Securities
to satisfy its obligations under the Purchase Contracts forming a part of
the Securities and (ii) the enforcement of this Section 10.7; and (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this
Agreement or any other document referred to herein and all costs, expenses,
taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated hereby.
19
Section 10.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective
of:
(a) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of
the obligations of Holders of Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase
Contract Agreement or any Purchase Contract or any other agreement
or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor
or a pledgor.
Section 10.9 Consent to Jurisdiction; Miscellaneous. Each of the
parties hereto hereby expressly and irrevocably submits to the
non-exclusive jurisdiction of any competent court in the place of its
domicile and any United States Federal or New York State court sitting in
the Borough of Manhattan in The City of New York in any action, suit or
proceeding arising out of or relating to this Underwriting Agreement or the
transactions contemplated hereby to the extent that such court has subject
matter jurisdiction over the controversy, and expressly and irrevocably
waives, to the extent permitted under applicable law, any immunity from the
jurisdiction thereof and any claim or defense in such action, suit or
proceeding based on a claim of improper venue, forum non conveniens or any
similar basis to which it might otherwise be entitled in any such action,
suit or proceeding. The Company irrevocably appoints ACE USA, Inc., 1133
Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as its
authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any such action, suit or proceeding, and
agrees that service of process upon such agent, and written notice of said
service to the Company by the person serving the same to the address
provided in Section 10.9, shall be deemed in every respect effective
service of process upon the Company, in any such action, suit or
proceeding. The Company further agrees to take any and all action as may be
necessary to maintain such designation and appointment of such agent in
full force and effect for a period of seven years from the date of this
Agreement.
Section 10.10 Waiver of Immunities. To the extent that the Company or
any of its properties, assets or revenues may have or may hereafter become
entitled to, or have attributed to them, any right of immunity, on the
grounds of sovereignty, from any legal action, suit or proceeding, from
set-off or counterclaim, from the jurisdiction of any court, from service
of process, from attachment upon or prior to judgment, or from attachment
in aid of execution of judgment, or from execution of judgment, other legal
process or proceeding for the giving of any relief or for the enforcement
of any judgment, in any jurisdiction in which proceedings may at any time
be commenced, with respect to their obligations, liabilities or any other
matter under or arising out of or in connection with this Agreement or any
additional agreement, the Company hereby irrevocably and unconditionally,
to the extent permitted by applicable law, waives and agrees not to plead
or claim any such immunity and consents to such relief and enforcement.
20
Section 10.11 Judgment Currency. The Company agrees to indemnify
each of the Purchase Contract Agent and the Collateral Agent against any loss
incurred by such party as a result of any judgment or order being given or
made for any amount due hereunder and such judgment or order being
expressed and paid in a currency (the "Judgment Currency") other than
United States dollars and as a result of any variation as between (i) the
rate of exchange at which the United States dollar amount is converted into
the Judgment Currency for the purpose of such judgment or order, and (ii)
the rate of exchange at which such party is able to purchase United States
dollars with the amount of the Judgment Currency actually received by such
party. The foregoing indemnity shall constitute a separate and independent
obligation of the Company and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of, or conversion into, the relevant currency.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
ACE LIMITED
By:__________________________________
Name:
Title:
Address for Notices:
ACE Limited
The ACE Building
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: General Counsel and Secretary
Telecopy:
THE BANK OF NEW YORK, as Purchase
Contract Agent and as attorney-in-fact of
the Holders from time to time of the Income
PRIDES and Growth PRIDES
By:__________________________________
Name:
Title:
Address for Notices:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THE BANK OF NEW YORK, as Collateral Agent,
Custodial Agent and as Securities
Intermediary
By:__________________________________
Name:
Title:
Address for Notices:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
21
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of April 12, 2000 (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, Custodial Agent and
Securities Intermediary and ourselves, as Purchase Contract Agent and as
attorney-in-fact for the holders of [Income PRIDES] [Growth PRIDES] from
time to time, that the holder of the Securities listed below (the "Holder")
has elected to substitute [$_____ aggregate principal amount at maturity of
Treasury Securities] [$_______Stated Amount of Preferred Shares in exchange
for an equal Value of [Pledged Preferred Shares] [Pledged Treasury
Securities] held by you in accordance with the Pledge Agreement and has
delivered to us a notice stating that the Holder has Transferred [Treasury
Securities] [Preferred Shares] to you, as Collateral Agent. We hereby
instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged
Preferred Securities], to release the [Preferred Shares] [Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES] to us in
accordance with the Holder's instructions. Capitalized terms used herein
but not defined shall have the meaning set forth in the Pledge Agreement.
Date:_____________________ ____________________________
By:____________________________________
Name:
Title:
Signature Guarantee:
____________________________________
A-1
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Shares] for the [Pledged Preferred Shares]
[Pledged Treasury Securities]:
_________________________ ________________________________________
Name Social Security or other Taxpayer
Identification Number, if any
_________________________
Address
_________________________
_________________________
A-2
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: FELINE PRIDES of ACE Limited (the "Company")
The undersigned Holder hereby notifies you that it has delivered
to The Bank of New York, as Collateral Agent, [$_______ aggregate principal
amount at maturity of Treasury Securities] [$ aggregate Stated Amount of
Preferred Shares in exchange for an equal Value of [Pledged Preferred
Shares] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section 4.1 of the Pledge Agreement, dated April 12, 2000
(the "Pledge Agreement"), between you, as Purchase Contract Agent and
Collateral Agent, and the Company. The undersigned Holder hereby instructs
you as Purchase Contract Agent to instruct the Collateral Agent to release
to you on behalf of the undersigned Holder the [Pledged Preferred Shares]
[Pledged Treasury Securities] related to such [Income PRIDES] [Growth
PRIDES]. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date:_________________________ _________________________
Signature Guarantee:_____________________
Please print name and address of Registered Holder:
______________________________ ___________________________________________
Name Social Security or other Taxpayer
Identification Number, if any
______________________________
Address
B-1
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Preferred Shares of ACE Limited (the "Company")
The undersigned hereby notifies you in accordance with Section
4.6(c) of the Pledge Agreement, dated as of April 12, 2000 (the "Pledge
Agreement"), among the Company, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and yourselves, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Income PRIDES and Growth
PRIDES from time to time, that the undersigned elects to deliver
$__________ stated liquidation amount of Preferred Shares for delivery to
the Remarketing Agent on the fourth Business Day immediately preceding the
Purchase Contract Settlement Date for remarketing pursuant to Section
4.6(c) of the Pledge Agreement. The undersigned will, upon request of the
Remarketing Agent, execute and deliver any additional documents deemed by
the Remarketing Agent or by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Preferred Shares tendered
hereby.
The undersigned hereby instructs you, upon receipt of the Proceeds
of such remarketing from the Remarketing Agent to deliver such Proceeds to
the undersigned in accordance with the instructions indicated herein under
"A. Payment Instructions." The undersigned hereby instructs you, in the
event of Failed Remarketing, upon receipt of the Preferred Shares tendered
herewith from the Remarketing Agent, to be delivered to the person(s) and
the address(es) indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Preferred Shares tendered hereby and that the
undersigned is the record owner of any Preferred Shares tendered herewith
in physical form or a participant in The Depositary Trust Company ("DTC")
and the beneficial owner of any Preferred Shares tendered herewith by
book-entry transfer to your account at DTC and (ii) agrees to be bound by
the terms and conditions of Section 4.6(c) of the Pledge Agreement.
Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.
Date:_______________________
___________________________________
By:________________________________
Name:
Title:
Signature Guarantee:__________________
Please print name and address:
______________________________ _______________________________________
Name Social Security or other Taxpayer
Identification Number, if any
______________________________
Address
C-1
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name of the
person(s) set forth below and mailed to the address set forth below.
Name(s)____________________________
(Please Print)
Address____________________________
(Please Print)
___________________________________
___________________________________
(Zip Code)
______________________________________________
(Tax Identification or Social Security Number)
B. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Preferred Shares which are in
physical form should be delivered to the person(s) set forth below and
mailed to the address set forth below.
Name(s)___________________________
(Please Print)
Address___________________________
(Please Print)
___________________________________
___________________________________
(Zip Code)
______________________________________________
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Preferred Shares which are in
book-entry form should be credited to the account at The Depositary Trust
Company set forth below.
________________________
DTC Account Number
Name of Account Party:______________________
C-2
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Preferred Shares of ACE Limited (the "Company")
The undersigned hereby notifies you in accordance with Section
4.6(c) of the Pledge Agreement, dated as of April 12, 2000 (the "Pledge
Agreement") among the Company, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent and yourselves, as Purchase Contract Agent
and as attorney-in-fact for the Holders of Income PRIDES and Growth PRIDES
from time to time, that the undersigned elects to withdraw the $_____
aggregate stated liquidation amount of Preferred Shares delivered to the
Custodial Agent on ___________, for remarketing pursuant to Section 4.6(c)
of the Pledge Agreement. The undersigned hereby instructs you to return
such Preferred Shares to the undersigned in accordance with the
undersigned's instructions. With this notice, the Undersigned hereby agrees
to be bound by the terms and conditions of Section 4.6(c) of the Pledge
Agreement. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date:___________________ ___________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
Signature Guarantee:_________________
Please print name and address:
_________________________________ ____________________________________
(Name) Social Security or other Taxpayer
____________________________________
Identification Number, if any
____________________________________
Address
D-1
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Preferred Shares which are in
physical form should be delivered to the person(s) set forth below and
mailed to the address set forth below.
Name(s)__________________________
(Please Print)
Address__________________________
(Please Print)
_________________________________
(Zip Code)
________________________________________________
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Preferred Shares which are in
book-entry form should be credited to the account at The Depositary Trust
Company set forth below.
____________________________
DTC Account Number
Name of Account Party:___________________________